Exhibit 3.1

 

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ALUMIS INC.

 

(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)

 

Alumis Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

 

DOES HEREBY CERTIFY:

 

1.            That the name of this corporation is Alumis Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on January 29, 2021 under the name “FL2021-001, Inc.”

 

2.            That the Board of Directors duly adopted resolutions proposing to amend and restate the Amended and Restated Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

 

RESOLVED, that the Amended and Restated Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:

 

First: The name of this corporation is Alumis Inc. (the “Corporation”).

 

Second: The address of the corporation’s registered office in the State of Delaware is 3500 South DuPont Hwy in the City of Dover, County of Kent, 19901. The name of the corporation’s registered agent at such address is Incorporating Services, Ltd.

 

Third: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

 

Fourth: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 225,000,000 shares of Class A Common Stock, $0.0001 par value per share (“Class A Common Stock”), (ii) 168,489,897 shares of Class B Common Stock, $0.0001 par value per share (“Class B Common Stock”), and (iii) 202,643,727 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”). The Class A Common Stock and the Class B Common Stock are referred to together as the “Common Stock.”

 

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

 

 

A.            COMMON STOCK

 

1.            General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

 

2.            Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); provided, however, Class B Common Stock, immediately prior to such time as the Corporation has a class of equity securities registered under the Securities Act of 1933, as amended (the “Securities Act”), shall be non-voting except as may be required by law. Except as set forth in the previous sentence, the Class A Common Stock and the Class B Common Stock shall be treated equally and in the same manner in all respects, including with respect to dividends, distributions, stock splits, stock dividends, stock combinations or similar events. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding (on an as converted basis)) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Amended and Restated Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

 

B.            PREFERRED STOCK

 

10,500,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series Seed Preferred Stock”, 7,500,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A Preferred Stock”, 40,200,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B Preferred Stock”, 9,760,088 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-1 Preferred Stock,” 18,000,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-2 Preferred Stock,” 1,778,830 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-2A Preferred Stock,” 82,529,809 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C Preferred Stock,” and 32,375,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C-1 Preferred Stock,” in each case with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. The Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock shall collectively be referred to as the “Voting Preferred Stock,” and together with the Common Stock, the “Voting Stock.” The Series B-2A Preferred Stock shall be referred to as the “Nonvoting Preferred Stock.” The Nonvoting Preferred Stock of a given class or series of stock shall be identical in every respect to the Voting Preferred Stock of the same class or series of stock, except with respect to voting rights for directors or for the size of the Board of Directors. Unless otherwise indicated, references to “sections” or “subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.

 

 

1.            Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in this Amended and Restated Certificate of Incorporation) the holders of the Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the applicable Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Preferred Stock dividend. As used herein, “Original Issue Price” shall mean (i) with respect to the Series Seed Preferred Stock, $1.00 per share, (ii) with respect to the Series A Preferred Stock, $4.00 per share (iii) with respect to the Series B-1 Preferred Stock, $4.00 per share, (iv) with respect to the Series B Preferred Stock, $5.00 per share, (v) with respect to the Series B-2 Preferred Stock, $5.00 per share, (vi) with respect to the Series B-2A Preferred Stock, $5.00 per share, (vii) with respect to the Series C Preferred Stock, $3.13826 per share, and (viii) with respect to the Series C-1 Preferred Stock, $4.00 per share, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock or a series thereof

 

2.            Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

 

2.1            Preferential Payments to Holders of Series B Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series B-2A Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series B Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series B-2A Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock (collectively, the “Senior Preferred Stock”) then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined below), as applicable, on a pari passu basis based on their respective Senior Preferred Stock Liquidation Amounts (as defined below) and before any payment shall be made to the holders of Series A Preferred Stock, Series Seed Preferred Stock and Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Original Issue Price of the applicable series of Senior Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of the applicable series of Senior Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Senior Preferred Stock Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Senior Preferred Stock the full amount to which they shall be entitled under this Section 2.1, the holders of shares of Senior Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

 

2.2            Preferential Payments to Holders of Series A Preferred Stock and Series Seed Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment in full of the Senior Preferred Stock Liquidation Amount, the holders of shares of Series A Preferred Stock and Series Seed Preferred Stock (collectively, the “Junior Preferred Stock”) then outstanding shall be entitled to be paid out of the remaining assets of the Corporation available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Junior Preferred Stock then outstanding shall be entitled to be paid out of the remaining consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined below), as applicable, on a pari passu basis based on their respective Junior Preferred Stock Liquidation Amounts (as defined below) and before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Original Issue Price of the applicable series of Junior Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of such series ofJunior Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Junior Preferred Stock Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Junior Preferred Stock the full amount to which they shall be entitled under this Section 2.2, the holders of shares of Junior Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

2.3            Payments to Holders of Common Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment in full of the Senior Preferred Stock Liquidation Amount and the Junior Preferred Stock Liquidation Amount, the remaining assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Preferred Stock pursuant to Section 2.1 and Section 2.2 or the remaining Available Proceeds, as the case may be, shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

 

 

2.4            Deemed Liquidation Events.

 

2.4.1        Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless both (a) the holders of a majority of the outstanding shares of Preferred Stock, voting together as a single class and on an as-converted basis (the “Requisite Holders”), (b) the holders of a majority of the Series C Preferred Stock and Series C-1 Preferred Stock, voting together as a single class and on an as-converted basis (together, the “Requisite Series C Holders”), and (c) the holders of a majority of the Series B Preferred Stock, Series B-2 Preferred Stock and Series B-2A Preferred Stock, voting together as a single class and on an as-converted basis (together, the “Requisite Series B Holders”), elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event:

 

(a)            a merger, consolidation, statutory conversion, transfer, domestication or continuance in which

 

(i)

the Corporation is a constituent party or

 

(ii)

a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

 

except any such merger, consolidation, statutory conversion, transfer, domestication or continuance involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger, consolidation, statutory conversion, transfer, domestication or continuance continue to represent, or are converted into or exchanged for shares of capital stock or other equity interests that represent, immediately following such merger, consolidation, statutory conversion, transfer, domestication or continuance, a majority, by voting power, of the capital stock or other equity interests of (I) the surviving or resulting corporation or entity; or (2) if the surviving or resulting corporation or entity is a wholly owned subsidiary of another corporation or entity immediately following such merger, consolidation, statutory conversion, transfer, domestication or continuance, the parent corporation or entity of such surviving or resulting corporation or entity, in each case, on a fully diluted basis; or

 

(b)            (1) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or (2) the sale, lease, transfer, exclusive license or other disposition (whether by merger, consolidation, statutory conversion, domestication, continuance or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

 

 

2.4.2        Effecting a Deemed Liquidation Event.

 

(a)            The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Section 2.4.1(a)(i) unless the agreement or plan with respect to such transaction, or terms of such transaction (any such agreement, plan or terms, the “Transaction Document”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be paid to the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 23.

 

(b)            In the event of a Deemed Liquidation Event referred to in Section 2.4.1(a)(ii) or 2.4.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the thirtieth (30th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause; (ii) to require the redemption of such shares of Preferred Stock, and (iii) if the Requisite Holders so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after delivery of notice of such Deemed Liquidation Event (the “Redemption Request”), the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the ninetieth (90th) day after such written request, to first redeem all outstanding shares of Senior Preferred Stock at a price per share equal to the Senior Preferred Stock Liquidation Amount, and thereafter to redeem all outstanding shares of Junior Preferred Stock at a price per share equal to the applicable Junior Preferred Stock Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to first redeem all outstanding shares of Senior Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Senior Preferred Stock to the fullest extent of such Available Proceeds, and shall thereafter redeem the remaining shares of Senior Preferred Stock as soon as it may lawfully do so under Delaware law governing distributions to stockholders. After the redemption in full of the Senior Preferred Stock, if the Available Proceeds are not sufficient to redeem all outstanding shares of Junior Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Junior Preferred Stock to the fullest extent of such Available Proceeds, and shall thereafter redeem the remaining shares of Junior Preferred Stock as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Section 2.4.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event in any way other than to pay the distribution or redemption provided for in this Section 2.4.2 (except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business).

 

 

2.4.3        Redemption Procedures. Following its receipt of a Redemption Request, the Corporation shall send written notice of the planned redemption of Preferred Stock (the “Redemption Notice”) to each holder of record of Preferred Stock, which shall state:

 

(a)            the date of such redemption (the “Redemption Date”) and the amount to be paid per share in redemption pursuant to Section 2.4.2 above;

 

(b)            the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Section 4.1); and

 

(c)            for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed.

 

2.4.4        Surrender of Certificates; Payment; Termination of Rights. On or before the Redemption Date, each holder of shares of Preferred Stock to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Preferred Stock shall promptly be issued to such holder. Upon the payment of the applicable Redemption Price for a share of Preferred Stock in accordance herewith, such share of Preferred Stock shall cease to be outstanding and cease to have any rights, privileges or preferences.

 

2.4.5        Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such Deemed Liquidation Event. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.

 

2.4.6        Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Section 2.4.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Transaction Document shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 2.3 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 2.1, 2.2 and 2.3 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Section 2.4.6, consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.

 

 

3.            Voting.

 

3.1            General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of this Amended and Restated Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class and on an as-converted to Common Stock basis.

 

3.2            Election of Directors. The holders of the Nonvoting Preferred Stock shall have no voting rights with respect to the election of the members of the Board of Directors of the Corporation, and the shares of Nonvoting Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on such matter (the “Nonvoting Restriction”); provided, however, that the Nonvoting Restriction shall cease to apply upon the earlier to occur of (i) the closing of a Qualified Public Offering (as defined below) or (ii) a Deemed Liquidation Event, except, in each case to the extent that any governmental filings would be triggered by such cessation, such cessation would not take effect until the required parties have submitted any required filings (to be made at the discretion of each holder of Nonvoting Preferred Stock) and observed any required waiting periods. At any time when at least 1,875,000 shares of Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the holders of record of the shares of Series A Preferred Stock, voting exclusively and as a separate class on an as-converted to Common Stock basis, shall be entitled to elect one ( I ) director of the Corporation (the “Series A Director”). At any time when at least 10,050,000 shares of Series B Preferred Stock, Series B-1 Preferred Stock and/or Series B-2 Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the holders of record of the shares of Series B Preferred Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock, voting exclusively and as a separate class on an as-converted to Common Stock basis, shall be entitled to elect two (2) directors of the Corporation (the “Series B Directors”). At any time when at least 10,316,222 shares of Series C Preferred Stock and/or Series C- I Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the holders of record of the shares of Series C Preferred Stock and Series C-1 Preferred Stock, voting exclusively and as a separate class on an as-converted to Common Stock basis, shall be entitled to elect two (2) directors of the Corporation (the “Series C Directors”, and together with the Series A Director and the Series B Directors, the “Preferred Directors”). The holders of record of the shares of Common Stock, voting exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation. The holders of Common Stock and Voting Preferred Stock, voting together as a single class on an as-converted basis, shall be entitled to elect all remaining members of the Board of Directors of the Corporation, if any. Any director elected as provided in the preceding four sentences may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. If the holders of shares of Voting Preferred Stock and/or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the foregoing sentences of this Section 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the Voting Preferred Stock and/or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class. Notwithstanding the provisions of Section 223(a)(1) and 223(a)(2) of the General Corporation Law, any newly created directorships resulting from any increase in the authorized number of directors or amendment of this Amended and Restated Certificate of Incorporation may be filled by a majority of the directors then in office, though less than a quorum, or by a sole director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced; provided, however, that where the holders of shares of such class or series have the right to elect a director to such newly created directorship pursuant to an amendment of this Amended and Restated Certificate of Incorporation or any voting agreement executed among the Corporation and certain of its shareholders, the Board of Directors shall not be entitled to fill such newly created directorship and the holders of shares of such class or series shall fill such newly created directorship as provided for therein. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Section 3.2, a vacancy in any directorship filled by the holders of any class or classes or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or classes or series or by any remaining director or directors elected by the holders of such class or classes or series pursuant to this Section 3.2.

 

 

3.3            Preferred Stock Protective Provisions. At any time when at least 16,990,022 shares of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, and subject to the further requirements of Section 3.4, Section 3.5, Section 3.6, Section 3.7 and/or Section 3.8, as applicable, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion, or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class (except that, with respect to Section 3.3.9, the Requisite Holders shall mean the holders of a majority of the outstanding shares of Voting Preferred Stock, voting together as a single class and on an as-converted basis), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

 

3.3.1        liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any Deemed Liquidation Event or any other merger, consolidation, statutory conversion, transfer, domestication or continuance, or consent to any of the foregoing;

 

3.3.2        amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Preferred Stock or any series thereof;

 

3.3.3        create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock of the Corporation unless the same ranks junior to the Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption;

 

3.3.4        (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with the Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Preferred Stock in respect of any such right, preference, or privilege or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to the Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with the Preferred Stock in respect of any such right, preference or privilege;

 

3.3.5        purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof or (iv) as approved by the Board of Directors;

 

3.3.6        create, or authorize the creation of, or issue, or authorize the issuance of any debt security or create any lien or security interest (except for purchase money liens or statutory liens of landlords, mechanics, materialmen, workmen, warehousemen and other similar persons arising or incurred in the ordinary course of business) or incur other indebtedness for borrowed money, including but not limited to obligations and contingent obligations under guarantees, or permit any subsidiary to take any such action with respect to any debt security, lien, security interest or other indebtedness for borrowed money, unless such debt security, lien, security interest or other indebtedness has received the prior approval of the Board of Directors;

 

 

3.3.7        create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Corporation, or permit any subsidiary to create, or authorize the creation of, or issue or obligate itself to issue, any shares of any class or series of capital stock, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary;

 

3.3.8        sell, assign, license, transfer, pledge, or encumber the Corporation’s primary asset, ESK-001; or

 

3.3.9        increase or decrease the authorized number of directors constituting the Board of Directors.

 

3.4        Series C Preferred Stock and Series C-1 Preferred Stock Protective Provisions. At any time when at least 10,316,222 shares of Series C Preferred Stock and Series C¬I Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Series C Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

3.4.1        amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the rights, preferences and privileges of the Series C Preferred Stock and/or Series C-1 Preferred Stock without similarly affecting the entire class of Preferred Stock;

 

3.4.2        reclassify, amend or modify existing securities in a manner that adversely affects the rights, preferences or privileges of the Series C Preferred Stock and/or Series C-I Preferred Stock, or increase the authorized number of shares of the Series C Preferred Stock;

 

3.4.3        amend, waive or modify Section 2.1; or

 

3.4.4        purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof

 

 

3.5            Series C Preferred Stock Protective Provisions. At any time when at least 10,316,222 shares of Series C Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of a majority of the outstanding shares of Series C Preferred Stock (voting together as a single class and on an as-converted basis) given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

3.5.1        amend, waive or modify the Original Issue Price of the Series C Preferred Stock or the applicable Conversion Price of the Series C Preferred Stock (including any anti-dilution rights with respect thereto).

 

3.6            Series C-1 Preferred Stock Protective Provisions. At any time when at least 8,093,750 shares of Series C-1 Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of a majority of the outstanding shares of Series C-1 Preferred Stock (voting together as a single class and on an as-converted basis) given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

3.6.1        increase the authorized number of shares of the Series C-1 Preferred Stock;

 

3.6.2        amend, waive or modify the Original Issue Price of the Series C-1 Preferred Stock or the applicable Conversion Price of the Series C-1 Preferred Stock (including any anti-dilution rights with respect thereto); or

 

3.6.3        issue any shares of the Series C-1 Preferred Stock other than pursuant to Section 1.4 of the Series C Purchase Agreement (as defined below).

 

3.7            Series B Preferred Stock, Series B-2 Preferred Stock and Series B 2A Preferred Stock Protective Provisions. At any time when at least 10,050,000 shares of Series B Preferred Stock, Series B-2 Preferred Stock and/or Series B-2A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of the Requisite Series B Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

 

3.7.1        amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the rights, preferences and privileges of the Series B Preferred Stock, the Series B-2 Preferred Stock and/or the Series B-2A Preferred Stock without similarly affecting the entire class of Preferred Stock;

 

3.7.2        reclassify, amend or modify existing securities in a manner that adversely affects the rights, preferences or privileges of the Series B Preferred Stock, the Series B-2 Preferred Stock and/or the Series B-2A Preferred Stock, or increase the authorized number of shares of Series B Preferred Stock, Series B-2 Preferred Stock, Series B-2A Preferred Stock or Class B Common Stock;

 

3.7.3        amend, waive or modify the Original Issue Price of the Series B Preferred Stock, the Series B-2 Preferred Stock and/or the Series B-2A Preferred Stock, the applicable Conversion Price (as defined below) of the Series B Preferred Stock, Series B-2 Preferred Stock and/or the Series B-2A Preferred Stock (including any anti-dilution rights with respect thereto) or Section 2.1; or

 

3.7.4        purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof.

 

3.8            Founder Preferred Stock Protective Provisions. At any time when at least 4,500,000 shares of Series B-1 Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock (collectively, the “Founder Preferred Stock”) (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion or otherwise, effect any of the following without (in addition to any other vote required by law or this Amended and Restated Certificate of Incorporation) the written consent or affirmative vote of a majority of the outstanding shares of Founder Preferred Stock (voting together as a single class and on an as-converted basis) given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

 

3.8.1        amend, alter or repeal any provision of this Amended and Restated Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the rights, preferences and privileges of the Founder Preferred Stock without similarly affecting the entire class of Preferred Stock;

 

3.8.2        reclassify, amend or modify existing securities in a manner that adversely affects the rights, preferences or privileges of either the Series Seed Preferred Stock, the Series A Preferred Stock or the Series B-1 Preferred Stock, or increase the authorized number of shares of either the Series Seed Preferred Stock, the Series A Preferred Stock or the Series B-1 Preferred Stock;

 

3.8.3        amend, waive or modify the Original Issue Price of either the Series Seed Preferred Stock, the Series A Preferred Stock or the Series B-1 Preferred Stock, the applicable Conversion Price of either the Series Seed Preferred Stock, the Series A Preferred Stock or the Series B-1 Preferred Stock (including any anti-dilution rights with respect thereto) or Section 2.2; or

 

3.8.4        purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof.

 

4.            Optional Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

4.1            Right to Convert.

 

4.1.1        Voting Preferred Stock into Nonvoting Preferred Stock. Each share of Series B-2 Preferred Stock shall be convertible at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into one share of Series B-2A Preferred Stock.

 

4.1.2        Nonvoting Preferred Stock into Voting Preferred Stock. Each share of Series B-2A Preferred Stock shall be convertible at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into one share of Series B-2 Preferred Stock. Notwithstanding anything to the contrary in this Section 4.1.2, if any conversion would require a holder or its ultimate parent entity (as that tern is defined in the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”)) to make any filings under the HSR Act, then such conversion will not become effective until all applicable waiting periods have expired with respect to such filings.

 

4.1.3        Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Class A Common Stock as is determined by dividing the applicable Original Issue Price by the applicable Conversion Price in effect at the time of conversion. Notwithstanding the preceding sentence, each share of Preferred Stock may, at the option of the holder thereof in accordance with Section 4.3.1, convert, without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Class B Common Stock as is determined by dividing such applicable Original Issue Price by such applicable Conversion Price in effect at the time of conversion of each share of Preferred Stock. The “Conversion Price” of each series of Preferred Stock shall initially be equal to the Original Issue Price of such series of Preferred Stock. Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Class A Common Stock or Class B Common Stock, as applicable, shall be subject to adjustment as provided below. Notwithstanding anything to the contrary in this Section 4.1.3, if any conversion would require a holder or its ultimate parent entity (as that term is defined in the HSR Act) to make any filings under the HSR Act, then such conversion will not become effective until all applicable waiting periods have expired with respect to such filings. Notwithstanding the foregoing, or any other provision of this Amended and Restated Certificate of Incorporation, no shares of Series C Preferred Stock and/or Series C- I Preferred Stock may be converted into shares of Common Stock pursuant to this Section 4.1.3 at any time during the Restricted Investment Period (as defined in the Series C Purchase Agreement) (the “Elective Conversion Restriction”); provided that this Elective Conversion Restriction shall not limit or modify any other provision of this Amended and Restated Certificate of Incorporation or any other agreement between the Corporation and the holders of Series C Preferred Stock and/or Series C- I Preferred Stock that requires the conversion of shares of Series C Preferred Stock and/or Series C¬I Preferred Stock into Common Stock or that calculates votes or other rights of holders of Series C Preferred Stock and/or Series C-1 Preferred Stock on an as-converted to Common Stock basis

 

 

4.1.4        Termination of Conversion Rights. In the event of a notice of redemption of any shares of Preferred Stock pursuant to Section 2.4.3, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock; provided that the foregoing termination of Conversion Rights shall not affect the amount(s) otherwise paid or payable in accordance with Sections 2.1 and 2.2 pursuant to such liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event.

 

4.2            Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

 

4.3            Mechanics of Conversion.

 

4.3.1        Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent, (b) with respect to the Preferred Stock, the number of shares of Class A Common Stock and/or Class B Common Stock such Preferred Stock shall be converted into and (c), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (and in any event within five (5) business days) (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Section 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.

 

4.3.2        Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Class A Common Stock and Class B Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Amended and Restated Certificate of Incorporation. Before taking any action which would cause an adjustment reducing any Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the applicable series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price.

 

 

4.3.3        Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

4.3.4        No Further Adjustment. Upon any such conversion, no adjustment to a Conversion Price shall be made for any declared but unpaid dividends on the shares of the applicable series of Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

 

4.3.5        Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

 

4.4            Adjustments to Conversion Price for Diluting Issues.

 

4.4.1        Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:

 

(a)            “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

(b)            “Original Issue Date” shall mean the date on which the first share of Series C Preferred Stock was issued.

 

(c)            “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

 

 

(d)            “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 4.4.3 below, deemed to be issued) by the Corporation after the Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

 

(i)

shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Preferred Stock that is made pro rata (on an as converted basis) to each class or series of Preferred Stock;

 

(ii)

shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Sections 4.5, 4.6, 4.7 or 4.8;

 

(iii)

shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation;

 

(iv)

shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

 

(v)

shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation, including the approval of at least one Series B Director;

 

(vi)

shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances and the related acquisition are approved by the Board of Directors of the Corporation, including the approval of at least one Series B Director;

 

(vii)

shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board of Directors of the Corporation, including the approval of at least one Series B Director; or

 

 

(viii)

shares of Voting Preferred Stock issued pursuant to the conversion of Nonvoting Preferred Stock or shares of Nonvoting Preferred Stock issued pursuant to the conversion of Voting Preferred Stock, in each case, including any shares of Common Stock deemed to be issuable upon such conversion.

 

4.4.2        No Adjustment of Conversion Price. No adjustment in the Conversion Price of any series of Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from a majority of the then outstanding shares of such series of Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

 

4.4.3        Deemed Issue of Additional Shares of Common Stock.

 

(a)            If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

(b)            If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to a Conversion Price pursuant to the terms of Section 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either ( 1 ) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower of (i) the applicable Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the applicable Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

 

 

(c)            If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities, but including any amendment thereto if such amendment was not made in consideration for additional value to the Corporation pursuant to the definition of “Exempted Securities”), the issuance of which did not result in an adjustment to a Conversion Price pursuant to the terms of Section 4.4.4 (either because the consideration per share (determined pursuant to Section 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than such Conversion Price then in effect, or because such Option or Convertible Security was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Section 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

(d)            Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to a Conversion Price pursuant to the terms of Section 4.4.4, such Conversion Price shall be readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

 

(e)            If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to such Conversion Price provided for in this Section 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Section 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to such Conversion Price that would result under the terms of this Section 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to such Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

 

 

4.4.4        Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4.4.3), without consideration or for a consideration per share less than a Conversion Price in effect immediately prior to such issuance or deemed issuance, then such Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP₂ =CP₁* (A + B) + (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

(a)            “CP₂” shall mean the applicable Conversion Price in effect immediately after such issuance or deemed issuance of Additional Shares of Common Stock

 

(b)            “CP₁” shall mean the applicable Conversion Price in effect immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock;

 

(c)            “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

 

(d)            “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued or deemed issued at a price per share equal to CPI (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CPI); and

 

(e)            “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

 

4.4.5        Determination of Consideration. For purposes of this Section 4.4, the consideration received by the Corporation for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:

 

(a)            Cash and Property: Such consideration shall:

 

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

 

 

(ii)

insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

 

(iii)

in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

 

(b)            Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

 

(i)

The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

 

(ii)

the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

 

4.4.6        Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to a Conversion Price pursuant to the terms of Section 4.4.4, and such issuance dates occur within a period of no more than ninety (90) days from the first such issuance to the final such issuance, then, upon the final such issuance, such Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

 

4.5            Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, each Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, each Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this Section 4.5 shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

4.6            Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event each Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the applicable Conversion Price then in effect by a fraction:

 

(1)            the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue), and

 

(2)            the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue), plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

 

 

Notwithstanding the foregoing (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, each applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter each such Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of a series of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of such series of Preferred Stock had been converted into Common Stock on the date of such event.

 

4.7            Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

 

4.8            Adjustment for Merger or Reorganization. etc. Subject to the provisions of Section 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Sections 4.4, 4.6 or 4.7, then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of Conversion Prices) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Preferred Stock. For the avoidance of doubt, nothing in this Section 4.8 shall be construed as preventing the holders of Preferred Stock from seeking any appraisal rights to which they are otherwise entitled under the General Corporation Law in connection with a merger triggering an adjustment hereunder, nor shall this Section 4.8 be deemed conclusive evidence of the fair value of the shares of Preferred Stock in any such appraisal proceeding.

 

 

4.9            Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the applicable series of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of shares of any series of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Price then in effect with respect to such series of Preferred Stock, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of such series of Preferred Stock. Notwithstanding anything to the contrary herein, in the event that any adjustment to a Conversion Price can be made pursuant to multiple provisions of this Subsection 4, such adjustment shall be made pursuant to the provision of this Subsection 4 which results in the greatest benefit to the holders of the applicable class or series of Preferred Stock.

 

4.10          Notice of Record Date. In the event:

 

(a)            the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(b)            of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

 

(c)            of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

 

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

 

5.            Mandatory Conversion.

 

5.1            Trigger Events. Upon either (a) immediately prior to the closing of the sale of shares of Common Stock to the public at a price of at least $3.76591 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, resulting in at least $75,000,000 of proceeds, net of the underwriting discount and commissions, to the Corporation and in connection with such offering the Common Stock is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or another exchange or marketplace approved the Board of Directors (“Qualified Public Offering”), or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Requisite Holders and the Requisite Series C Holders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Class A Common Stock (provided that, a holder of shares of Preferred Stock may elect, upon written notice to the Corporation (delivered as provided in Section 4.3.1)) at least seven (7) days prior to a Qualified Public Offering, to have all or a portion of its shares of Preferred Stock automatically convert into shares of Class B Common Stock), in each case, at the then effective conversion rate as calculated pursuant to Section 4.1.3 (which, with respect to any conversion into Class B Common Stock, may be effective, at such holder’s election, immediately prior to the effectiveness of the registration statement for such Qualified Public Offering) and (ii) such shares may not be reissued by the Corporation. Notwithstanding the foregoing, in the event any holder fails to timely deliver notice of the conversion of Preferred Stock into Class B Common Stock, all of the Preferred Stock held by such holder shall be converted into shares of Class A Common Stock. Notwithstanding anything to the contrary in this Section 5.1, if any holder of shares of Preferred Stock elects or is required to convert any such shares into Common Stock pursuant to this Section 5.1 or otherwise, and if such conversion would require that holder or its ultimate parent entity (as that term is defined in the HSR Act) to make any filings under the HSR Act, then such conversion will not become effective until all applicable waiting periods have expired with respect to such filings.

 

5.2            Mandatory Conversion upon Transfer. Upon transfer of any share of Nonvoting Preferred Stock by a stockholder, such share shall automatically convert into Voting Preferred Stock in the hands of a transferee that is: (A) the Corporation or an affiliate of the Corporation; or (B) a third party transferee that is not an affiliate of such stockholder, but only if (i) such transfer is in a widespread public distribution or (ii) the transferee would control a majority of the Voting Stock (determined on an as-converted basis) of the Corporation without accounting for any transfer from such stockholder.

 

5.3            Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time (except with respect to mandatory conversion triggered by events described in Section 5.1(a), in which case such notice shall be delivered at least ten (10) business days in advance of the filing of a registration statement with respect to the Qualified Public Offering). Upon receipt of such notice, unless the conversion would be subject to a filing requirement under the HSR Act, in which case the conversion will not occur until the expiration or termination of all applicable HSR Act waiting periods, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Section 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time or, if later, upon the expiration or termination of all waiting periods under the HSR Act applicable to such conversion (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 5.3. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Section 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

 

 

5.4            Special Mandatory Conversion.

 

5.4.1        Second Tranche Trigger Event. Except as otherwise provided in the Series C Stock Purchase Agreement by and among the Corporation and the purchasers party thereto dated as of the Original Issue Date, as may be amended from time to time (the “Series C Purchase Agreement”), in the event that any holder of shares of Series C Preferred Stock, Series C-1 Preferred Stock or its Affiliate (as defined in the Series C Purchase Agreement) becomes a Defaulting Purchaser (as defined in Series C Purchase Agreement), then each 10 shares of Series C Preferred Stock and Series C-1 Preferred Stock held by such holder shall automatically, and without any further action on the part of such holder, be converted into one share of Class A Common Stock immediately prior to the consummation of the Second Tranche Closing (as defined in Series C Purchase Agreement), effective upon, subject to, and concurrently with, the consummation of the Second Tranche Closing. Such conversion is referred to as the “Special Mandatory Conversion.”

 

5.4.2        Procedural Requirements. Upon the Special Mandatory Conversion, each holder of shares of Series C Preferred Stock and/or Series C-1 Preferred Stock converted pursuant to Section 5.4.1 shall be sent written notice of the Special Mandatory Conversion and the place designated for mandatory conversion of all such shares of Series C Preferred Stock and/or Series C-1 Preferred Stock pursuant to this Section 5.4. Upon receipt of such notice, each holder of such shares of Series C Preferred Stock and/or Series C-1 Preferred Stock in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series C Preferred Stock and Series C-1 Preferred Stock converted pursuant to Section 5.4, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender any certificates for such shares at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders therefor (or lost certificate affidavit and agreement), to receive the items provided for in the next sentence of this Section 5.4.2. As soon as practicable after the Special Mandatory Conversion and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock so converted, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay any declared but unpaid dividends on the shares of Series C Preferred Stock and Series C-1 Preferred Stock converted. Such converted Series C Preferred Stock shall initially remain authorized and may be reissued; provided that the Corporation may later take action (without the need for stockholder action) to reduce the authorized number of such shares of Series C Preferred Stock.

 

 

6.            Conversion Rights — Class B Common Stock into Class A Common Stock. Subject to the provisions of Section 7 of this Article Fourth, each holder of shares of Class B Common Stock shall have the right to convert each share of Class B Common Stock held by such holder into one (1) share of Class A Common Stock at such holder’s election, at any time and from time to time, and without the payment of additional consideration by the holder thereof. Any such conversion shall be made upon written notice to the Corporation as provided in Section 4.3.1 of this Article Fourth, mutatis mutandis.

 

7.            Certain Limitations.

 

The limitations set forth in this Section 7 apply notwithstanding any other provision of this Amended and Restated Certificate:

 

7.1            The Corporation shall not issue shares of Class B Common Stock other than upon conversion of shares of Preferred Stock.

 

7.2            At any time following the Corporation’s registration of any class of equity securities under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”) the holder(s) of shares of Class B Common Stock shall not be entitled to convert a number of shares of Class B Common Stock into shares of Class A Common Stock, as applicable, in excess of that number of shares of Class A Common Stock or Preferred Stock which, upon giving effect of immediately prior to such conversion, would cause the holder(s) thereof to (i) beneficially own (for purposes of Section 13(d) of the Exchange Act when aggregated with affiliates with whom such holder is required to aggregate beneficial ownership for purposes of Section 13(d) of the Exchange Act), in excess of the Maximum Percentage of the total number of issued and outstanding shares of Class A Common Stock (including shares of Class A Common Stock issuable upon conversion of Preferred Stock) following such conversion or (ii) hold combined voting power of the securities of the Corporation, when aggregated with affiliates with whom such holder is required to aggregate beneficial ownership for purposes of Section 13(d) of the Exchange Act, in excess of the Maximum Percentage of the combined voting power of all securities of the Corporation then outstanding after such conversion. The “Maximum Percentage” means initially 4.99%, which may be increased or decreased to such other percentage as any holder of outstanding shares of Class B Common Stock may designate in writing upon 61 days’ notice (delivered as provided in Section 9 below) to the Corporation, provided, however, that no holder may make such an election to change the percentage unless all holders managed by the same investment advisor as such electing holder make the same election. For purposes of this Section 7.2 beneficial ownership and whether a holder is a member of a Section 13(d) group shall be calculated and determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

 

 

7.3            Other than with respect to voting, the Class A Common Stock and Class B Common Stock are intended to be economically equivalent securities. Therefore, the Corporation shall not give effect to any stock split, stock dividend, stock combination or similar event affecting the Class A Common Stock or Class B Common Stock without effecting the same such stock split, stock dividend, stock combination or similar event for the Class B Common Stock or Class A Common Stock, respectively. In addition, the Corporation shall not declare, pay or set aside any dividends or distributions on shares of Class A Common Stock or Class B Common Stock unless the Corporation declares, pays or sets aside the same dividend or distribution on each share of Class B Common Stock or Class A Common Stock, provided that dividends payable in Common Stock shall be paid in the same class.

 

8.            Redemption. The Preferred Stock shall not be redeemable at the option of the holder thereof or the Corporation.

 

9.            Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption.

 

10.            Waiver. Except as otherwise set forth herein, (a) any of the rights, powers, preferences and other terms of the Preferred Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the holders that would otherwise be required to amend such right, powers, preferences, and other terms and (b) at any time more than one series of Preferred Stock is issued and outstanding, any of the rights, powers, preferences and other terms of any series of Preferred Stock set forth herein may be waived on behalf of all holders of such series of Preferred Stock by the affirmative written consent or vote of the holders of such series that would otherwise be required to amend such right, power, preference or other term.

 

 

11.            Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

 

Fifth: Subject to any additional vote required by this Amended and Restated Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

 

Sixth: Subject to any additional vote required by this Amended and Restated Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the Bylaws of the Corporation. Each director shall be entitled to one vote on each matter presented to the Board of Directors.

 

Seventh: Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

 

Eighth: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

 

Ninth: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.

 

Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

 

Tenth: To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.

 

Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not (a) adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification or (b) increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

 

 

Eleventh: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee, affiliate or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, the persons referred to in clauses (i) and (ii) are “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation while such Covered Person is performing services in such capacity. Any repeal or modification of this Article Eleventh will only be prospective and will not affect the rights under this Article Eleventh in effect at the time of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained elsewhere in this Amended and Restated Certificate of Incorporation, the affirmative vote of the Requisite Holders, will be required to amend or repeal, or to adopt any provisions inconsistent with this Article Eleventh. For the avoidance of any doubt, any opportunity presented to a director in such director’s capacity as a member, service provider or manager of any holder of Preferred Stock (including their respective affiliates and legal entities) need not be presented to the Corporation and any such opportunity shall be an Excluded Opportunity hereunder.

 

Twelfth: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

 

Thirteenth: For purposes of Section 500 of the California Corporations Code (to the extent applicable), in connection with any repurchase of shares of Common Stock permitted under this Amended and Restated Certificate of Incorporation from employees, officers, directors or consultants of the Corporation in connection with a termination of employment or services pursuant to agreements or arrangements approved by the Board of Directors (in addition to any other consent required under this Amended and Restated Certificate of Incorporation), such repurchase may be made without regard to any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined in Section 500 of the California Corporations Code). Accordingly, for purposes of making any calculation under California Corporations Code Section 500 in connection with such repurchase, the amount of any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined therein) shall be deemed to be zero (0).

 

* * *

 

3.            That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of this corporation in accordance with Section 228 of the General Corporation Law.

 

4.            That this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

 

 

IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on March 1, 2024.

 

	/s/ Martin Babler
	Martin Babler, Chief Executive Officer

 

Signature Page to the
Amended and Restated Certificate of Incorporation

 

 

 

Exhibit 3.3

 

BYLAWS OF

 

FL2021-001, INC.

 

(A DELAWARE CORPORATION)

 

 

Table of Contents

 

Page

 

Article I	OFFICES	1
1.1	Registered Office	1
1.2	Offices	1
Article II	MEETINGS OF STOCKHOLDERS	1
2.1	Location	1
2.2	Timing	1
2.3	Notice of Meeting	1
2.4	Stockholders’ Records	2
2.5	Special Meetings	2
2.6	Notice of Meeting	2
2.7	Business Transacted at Special Meeting	2
2.8	Quorum; Meeting Adjournment; Presence by Remote Means	2
2.9	Voting Thresholds	3
2.10	Number of Votes Per Share	3
2.11	Action by Written Consent of Stockholders; Electronic Consent; Notice of Action	3
Article III	DIRECTORS	4
3.1	Authorized Directors	4
3.2	Vacancies	4
3.3	Board Authority	5
3.4	Location of Meetings	5
3.5	First Meeting	5
3.6	Regular Meetings	5
3.7	Special Meetings	5
3.8	Quorum	6
3.9	Action Without a Meeting	6
3.10	Telephonic Meetings	6
3.11	Committees	6
3.12	Minutes of Meetings	6
3.13	Compensation of Directors	7

 

 

Table of Contents 

(continued)

 

Page

 

3.14	Removal of Directors	7
Article IV	NOTICES	7
4.1	Notice	7
4.2	Waiver of Notice	7
4.3	Electronic Notice	7
Article V	OFFICERS	8
5.1	Required and Permitted Officers	8
5.2	Appointment of Required Officers	8
5.3	Appointment of Permitted Officers	8
5.4	Officer Compensation	8
5.5	Term of Office; Vacancies	8
5.6	Chairman Presides	8
5.7	Absence of Chairman	9
5.8	Powers of Chief Executive Officer	9
5.9	Chief Executive Officer’s Signature Authority	9
5.10	Absence of Chief Executive Officer	9
5.11	Powers of President	9
5.12	Absence of President	9
5.13	Duties of Secretary	10
5.14	Duties of Assistant Secretary	10
5.15	Duties of Treasurer	10
5.16	Disbursements and Financial Reports	10
5.17	Treasurer’s Bond	10
5.18	Duties of Assistant Treasurer	10
Article VI	CERTIFICATE OF STOCK	11
6.1	Stock Certificates	11
6.2	Facsimile Signatures	11
6.3	Lost Certificates	11
6.4	Transfer of Stock	11
6.5	Fixing a Record Date	12

 

 

Table of Contents 

(continued)

 

Page

 

6.6	Registered Stockholders	12
Article VII	GENERAL PROVISIONS	12
7.1	Dividends	12
7.2	Reserve for Dividends	12
7.3	Checks	12
7.4	Fiscal Year	12
7.5	Corporate Seal	12
7.6	Indemnification	13
7.7	Conflicts with Certificate of Incorporation	14
Article VIII AMENDMENTS		14
Article IX	LOANS TO OFFICERS	14
Article X	RECORDS AND REPORTS	14

 

 

BYLAWS
OF
FL2021-001, INC.

 

Article I
OFFICES

 

1.1            Registered Office. The registered office shall be in the City of Dover, County of Kent, State of Delaware.

 

1.2            Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

 

Article II
MEETINGS OF STOCKHOLDERS

 

2.1            Location. All meetings of the stockholders for the election of directors shall be held in San Francisco, CA, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting; provided, however, that the Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211 of the Delaware General Corporations Law (“DGCL”). Meetings of stockholders for any other purpose may be held at such time and place, if any, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof, or a waiver by electronic transmission by the person entitled to notice.

 

2.2            Timing. Annual meetings of stockholders, commencing with the year 2022, shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting.

 

2.3            Notice of Meeting. Written notice of any stockholder meeting stating the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given to each stockholder entitled to vote at such meeting not fewer than ten (10) nor more than sixty (60) days before the date of the meeting.

 

 

2.4            Stockholders’ Records. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address (but not the electronic address or other electronic contact information) of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

 

2.5            Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the Chief Executive Officer and shall be called by the Chief Executive Officer or secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning at least twenty-five percent (25%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

 

2.6            Notice of Meeting. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. The means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting shall also be provided in the notice.

 

2.7            Business Transacted at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

 

2.8            Quorum; Meeting Adjournment; Presence by Remote Means.

 

(a)           Quorum; Meeting Adjournment. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

 

(b)           Presence by Remote Means. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

 

(i)            participate in a meeting of stockholders; and

 

(ii)           be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

 

2.9           Voting Thresholds. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

 

2.10         Number of Votes Per Share. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote by such stockholder or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

 

2.11         Action by Written Consent of Stockholders; Electronic Consent; Notice of Action.

 

(a)           Action by Written Consent of Stockholders. Unless otherwise provided by the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken, is signed in a manner permitted by law by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Written stockholder consents shall bear the date of signature of each stockholder who signs the consent in the manner permitted by law and shall be delivered to the corporation as provided in subsection (b) below. No written consent shall be effective to take the action set forth therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation in the manner provided above, written consents signed by a sufficient number of stockholders to take the action set forth therein are delivered to the corporation in the manner provided above.

 

 

(b)           Electronic Consent. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the corporation can determine (1) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (2) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the corporation or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board of Directors of the corporation.

 

(c)           Notice of Action. Prompt notice of any action taken pursuant to this Section 2.11 shall be provided to the stockholders in accordance with Section 228(e) of the DGCL.

 

Article III
DIRECTORS

 

3.1           Authorized Directors. The number of directors that shall constitute the whole Board of Directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting of the stockholders, except as provided in Section 3.2 of this Article, and each director elected shall hold office until his or her successor is elected and qualified. Directors need not be stockholders.

 

3.2            Vacancies. Unless otherwise provided in the corporation’s certificate of incorporation, as it may be amended, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board of Directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

 

 

3.3            Board Authority. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

 

3.4            Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

 

3.5            First Meeting. The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

 

3.6            Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

 

3.7            Special Meetings. Special meetings of the Board of Directors may be called by the Chief Executive Officer upon notice to each director; special meetings shall be called by the Chief Executive Officer or secretary in like manner and on like notice on the written request of two (2) directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the Chief Executive Officer or secretary in like manner and on like notice on the written request of the sole director. Notice of any special meeting shall be given to each director at his or her business or residence in writing, or by telegram, facsimile transmission, telephone communication or electronic transmission (provided, with respect to electronic transmission, that the director has consented to receive the form of transmission at the address to which it is directed). If mailed, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company at least twenty-four (24) hours before such meeting. If by facsimile transmission or other electronic transmission, such notice shall be transmitted at least twenty-four (24) hours before such meeting. If by telephone, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws as provided under Section 8.1 of Article VIII hereof. A meeting may be held at any time without notice if all the directors are present (except as otherwise provided by law) or if those not present waive notice of the meeting in writing, either before or after such meeting.

 

 

3.8            Quorum. At all meetings of the Board of Directors, the greater of (a) a majority of the directors at any time in office, and (b) one-third of the number of directors fixed by the Board of Directors or by the stockholders pursuant to Section 3.1 of Article III hereof shall constitute a quorum for the transaction of business and any act of a majority of the directors present at any meeting at which there is a quorum shall be an act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

3.9            Action Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing, writings, electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee.

 

3.10         Telephonic Meetings. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or any committee, by means of conference telephone or other means of communication by which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.

 

3.11         Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

 

In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

 

Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these bylaws.

 

3.12         Minutes of Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

 

 

3.13         Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

 

3.14         Removal of Directors. Unless otherwise provided by the certificate of incorporation or these bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

 

Article IV
NOTICES

 

4.1            Notice. Unless otherwise provided in these bylaws, whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his or her address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.

 

4.2            Waiver of Notice. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

 

4.3            Electronic Notice.

 

(a)           Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders and directors, any notice to stockholders or directors given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder or director to whom the notice is given. Any such consent shall be revocable by the stockholder or director by written notice to the corporation. Any such consent shall be deemed revoked if (1) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent and (2) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

 

(b)           Effective Date of Notice. Notice given pursuant to subsection (a) of this section shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder or director has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder or director of such specific posting, upon the later of (i) such posting and (ii) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder or director. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

(c)            Form of Electronic Transmission. For purposes of these bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

Article V
OFFICERS

 

5.1            Required and Permitted Officers. The officers of the corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer and/or a president, a treasurer and a secretary. The Board of Directors may elect from among its members a Chairman of the Board and a Vice-Chairman of the Board. The Board of Directors may also choose one or more vice-presidents, assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.

 

5.2            Appointment of Required Officers. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a Chief Executive Officer and/or a president, a treasurer, and a secretary and may choose vice-presidents.

 

5.3            Appointment of Permitted Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

 

5.4           Officer Compensation. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors.

 

5.5           Term of Office; Vacancies. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

 

THE CHAIRMAN OF THE BOARD

 

5.6            Chairman Presides. Unless the Board of Directors appoints a Chairman of the Board, the Chief Executive Officer shall be the Chairman of the Board, so long as the Chief Executive Officer is a director of the corporation. The Chairman of the Board shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time, assigned to him or her by the Board of Directors and as may be provided by law.

 

 

5.7            Absence of Chairman. In the absence of the Chairman of the Board, the Vice-Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. He or she shall have and may exercise such powers as are, from time to time, assigned to him or her by the Board of Directors and as may be provided by law.

 

THE CHIEF EXECUTIVE OFFICER

 

5.8            Powers of Chief Executive Officer. The Chief Executive Officer shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.

 

5.9           Chief Executive Officer’s Signature Authority. The Chief Executive Officer shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Executive Officer may sign certificates for shares of stock of the corporation.

 

5.10         Absence of Chief Executive Officer. In the absence of the Chief Executive Officer or in the event of his or her inability or refusal to act, the president shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.

 

THE PRESIDENT AND VICE-PRESIDENTS

 

5.11         Powers of President. Unless the Board of Directors appoints a president of the corporation, the Chief Executive Officer shall be the president of the corporation. The president of the corporation shall have such powers as required by law and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

 

5.12         Absence of President. In the absence of the president or in the event of his or her inability or refusal to act, the vice-president, if any, (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

 

 

THE SECRETARY AND ASSISTANT SECRETARY

 

5.13         Duties of Secretary. The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He or she shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision he or she shall be. He or she shall have custody of the corporate seal of the corporation and he or she, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his or her signature.

 

5.14         Duties of Assistant Secretary. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

 

THE TREASURER AND ASSISTANT TREASURERS

 

5.15         Duties of Treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.

 

5.16         Disbursements and Financial Reports. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors, at its regular meetings or when the Board of Directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the corporation.

 

5.17         Treasurer’s Bond. If required by the Board of Directors, the treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the corporation.

 

5.18         Duties of Assistant Treasurer. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of the treasurer’s inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

 

 

Article VI
CERTIFICATE OF STOCK

 

6.1            Stock Certificates. Every holder of stock in the corporation shall be entitled to have a certificate, signed by or in the name of the corporation by any two authorized officers of the corporation, certifying the number of shares owned by him or her in the corporation.

 

Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.

 

If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

6.2            Facsimile Signatures. Any or all of the signatures on the certificate may be facsimile. In the event that any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the corporation with the same effect as if such officer, transfer agent or registrar were still acting as such at the date of issue.

 

6.3            Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issuance of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

 

6.4           Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

 

 

6.5            Fixing a Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

6.6            Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote as such owner, to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

Article VII
GENERAL PROVISIONS

 

7.1            Dividends. Dividends upon the capital stock of the corporation, if any, subject to the provisions of the certificate of incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the certificate of incorporation.

 

7.2            Reserve for Dividends. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their sole discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors think conducive to the interests of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

 

7.3            Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

7.4            Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

 

7.5            Corporate Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

 

 

7.6            Indemnification. The corporation shall, to the fullest extent authorized under the laws of the State of Delaware, as those laws may be amended and supplemented from time to time, indemnify any director made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of being a director of the corporation or a predecessor corporation or a director or officer of another corporation, if such person served in such position at the request of the corporation; provided, however, that the corporation shall indemnify any such director or officer in connection with a proceeding initiated by such director or officer only if such proceeding was authorized by the Board of Directors of the corporation. The indemnification provided for in this Section 7.6 shall: (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under these bylaws, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director, and (iii) inure to the benefit of the heirs, executors and administrators of a person who has ceased to be a director. The corporation’s obligation to provide indemnification under this Section 7.6 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person.

 

Expenses incurred by a director of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he or she is or was a director of the corporation (or was serving at the corporation’s request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized by relevant sections of the DGCL. Notwithstanding the foregoing, the corporation shall not be required to advance such expenses to an agent who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors of the corporation that alleges willful misappropriation of corporate assets by such agent, disclosure of confidential information in violation of such agent’s fiduciary or contractual obligations to the corporation or any other willful and deliberate breach in bad faith of such agent’s duty to the corporation or its stockholders.

 

The foregoing provisions of this Section 7.6 shall be deemed to be a contract between the corporation and each director who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

 

The Board of Directors in its sole discretion shall have power on behalf of the corporation to indemnify any person, other than a director, made a party to any action, suit or proceeding by reason of the fact that he or she, his or her testator or intestate, is or was an officer or employee of the corporation.

 

 

To assure indemnification under this Section 7.6 of all directors, officers and employees who are determined by the corporation or otherwise to be or to have been “fiduciaries” of any employee benefit plan of the corporation that may exist from time to time, Section 145 of the DGCL shall, for the purposes of this Section 7.6, be interpreted as follows: an “other enterprise” shall be deemed to include such an employee benefit plan, including without limitation, any plan of the corporation that is governed by the Act of Congress entitled “Employee Retirement Income Security Act of 1974,” as amended from time to time; the corporation shall be deemed to have requested a person to serve the corporation for purposes of Section 145 of the DGCL, as administrator of an employee benefit plan where the performance by such person of his or her duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed “fines.”

 

7.7            Conflicts with Certificate of Incorporation. In the event of any conflict between the provisions of the corporation’s certificate of incorporation and these bylaws, the provisions of the certificate of incorporation shall govern.

 

Article VIII
AMENDMENTS

 

8.1            These bylaws may be altered, amended or repealed, or new bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the certificate of incorporation at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal bylaws is conferred upon the Board of Directors by the certificate of incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal bylaws.

 

Article IX
LOANS TO OFFICERS

 

9.1            The corporation may lend money to, or guarantee any obligation of or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

 

Article X
RECORDS AND REPORTS

 

10.1         The application and requirements of Section 1501 of the California General Corporation Law are hereby expressly waived to the fullest extent permitted thereunder.

 

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CERTIFICATE OF SECRETARY OF

 

FL2021-001, INC.

 

January 29, 2021

 

The undersigned, Phyllis Solomon, hereby certifies that they are the duly elected and acting Secretary of FL2021-001, Inc. a Delaware corporation (the “Corporation”), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by Action by Written Consent in Lieu of Organizational Meeting by the Directors on the date hereof.

 

	/s/ Phyllis Solomon
	Phyllis Solomon, Secretary

 

 

 

Exhibit 4.2

 

Certain information has been excluded from this agreement (indicated by “[***]”) because such information is both not material and the type that the registrant customarily and actually treats as private or confidential.

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made as of the 4^th day of March, 2024 by and among Alumis Inc., a Delaware corporation (the “Company”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor”.

 

RECITALS

 

WHEREAS, the Company and certain of the Investors (the “New Investors”) are parties to that certain Series C Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”);

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, and Series B-2A Preferred Stock, and possess certain rights, and are subject to certain obligations, under that certain Amended and Restated Investors’ Rights Agreement dated as of May 9, 2023, by and among the Company and the Existing Investors (the “Prior Agreement”); and

 

WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the New Investors to invest funds in the Company pursuant to the Purchase Agreement, the undersigned Existing Investors and the Company desire to amend and restate the Prior Agreement in its entirety and the Existing Investors desire to accept the rights and obligations under this Agreement in lieu of those granted under the Prior Agreement.

 

NOW, THEREFORE, the Existing Investors and the Company hereby agree that the Prior Agreement is hereby amended and restated in its entirety by this Agreement, and the parties to this Agreement further agree as follows:

 

1.             Definitions. For purposes of this Agreement:

 

1.1            “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer, director or trustee of such Person, or any venture capital fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment adviser of, or shares the same management company or investment adviser with, such Person.

 

1.2            “Board of Directors” means the board of directors of the Company.

 

1.3            “Certificate of Incorporation” means the Company’s Amended and Restated Certificate of Incorporation, as amended and/or restated from time to time.

 

1.4            “CFIUS” means the Committee on Foreign Investment in the United States.

 

 

1.5            “CFIUS Approval” means, following the submission of a CFIUS Filing with respect to a Potential CFIUS Transaction, the applicable Major Investor and the Company shall have received a written notification from CFIUS stating that: (i) CFIUS has concluded that the Potential CFIUS Transaction is not a “covered transaction” and not subject to review under the DPA; (ii) CFIUS has completed an assessment, review, or investigation of the Potential CFIUS Transaction under the DPA and there are no unresolved national security concerns with respect to such Potential CFIUS Transaction; or (iii) CFIUS has sent a report to the President of the United States (the “President”) requesting the President’s decision with respect to the Potential CFIUS Transaction and either (A) the President has announced a decision not to take any action to suspend, prohibit, or place any limitations on the Potential CFIUS Transaction or (B) the period under the DPA subsequent to the President’s receipt of the CFIUS report during which the President may announce their decision to take action to suspend, prohibit, or place any limitations on the Potential CFIUS Transaction has expired; or (iv) CFIUS is not able to complete action under the DPA with respect to the Potential CFIUS Transaction on the basis of a Declaration, but CFIUS has not requested that Investor and Company submit a Notice and has not initiated a unilateral CFIUS review or announced an intention to do so.

 

1.6            “CFIUS Filing” means a “Declaration” or “Notice” within the meaning of the DPA.

 

1.7            “Class A Common Stock” means, collectively, shares of the Company’s Class A Common Stock, par value $0.0001 per share.

 

1.8            “Class B Common Stock” means, collectively, shares of the Company’s Class B Common Stock, par value $0.0001 per share.

 

1.9            “Common Stock” means, collectively, shares of the Class A Common Stock and Class B Common Stock.

 

1.10            “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.11            “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

 

1.12            “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.13            “Excluded Registration” means (i) a registration relating to the sale or grant of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

 

1.14            “FOIA Party” means a Person that, in the reasonable determination of the Board of Directors, may be subject to, and thereby required to disclose non-public information furnished by or relating to the Company under, the Freedom of Information Act, 5 U.S.C. 552 (“FOIA”), any state public records access law, any state or other jurisdiction’s laws similar in intent or effect to FOIA, or any other similar statutory or regulatory requirement.

 

1.15            “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.16            “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits forward incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.17            “GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

 

1.18            “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.19            “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.

 

1.20            “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.21            “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

1.22            “Major Investor” means (i) any Investor that, individually or together with such Investor’s Affiliates, holds at least 1,000,000 shares of Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) and (ii) Matrix Capital Management Master Fund, LP (“Matrix”) and (iii) Baker Bros. Advisors LP and its Affiliates (collectively, “Baker Bros.”) and (iv) Foresite Capital (as defined below); it being understood that for purposes of this Agreement, Foresite Capital Fund V, L.P. (“Foresite Capital”), Labs Co-Invest V, LLC and Foresite Capital Opportunity Fund V, L.P. shall be deemed Affiliates of one another, and (v) Samsara BioCapital, LP (“Samsara”) and its Affiliates and (vi) venBio Global Strategic Fund IV, L.P. (“venBio”) and its Affiliates.

 

1.23            “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.24            “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.25            “Potential CFIUS Transaction” means any subsequent offering or issuance of New Securities pursuant to Section 4.1.

 

 

1.26            “Preferred Director” means any director of the Company that the holders of record of a class, classes or series of Preferred Stock are entitled to elect, exclusively and as a separate class, pursuant to the Certificate of Incorporation.

 

1.27            “Preferred Stock” shall mean, collectively, the Series C Preferred Stock, Series C-1 Preferred Stock, Series B-2 Preferred Stock, Series B-2A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock.

 

1.28            “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock (other than any Common Stock issuable or issued pursuant to the Special Mandatory Conversion (as defined in the Certificate of Incorporation); (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1, and excluding for purposes of Section 2, Section 5.3 and Section 6.6, any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement.

 

1.29            “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

1.30            “Requisite Preferred Director Vote” means the approval of the Board of Directors, including a majority of the Preferred Directors then seated.

 

1.31            “Restricted Securities” means the securities of the Company required to be notated with the legend set forth in Section 2.12(b) hereof.

 

1.32            “SEC” means the Securities and Exchange Commission.

 

1.33            “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.34            “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.35            “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.36            “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

 

1.37            “Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.0001 per share.

 

 

1.38            “Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, par value $0.0001 per share.

 

1.39            “Series B-1 Preferred Stock” means shares of the Company’s Series B-1 Preferred Stock, par value $0.0001 per share.

 

1.40            “Series B-2 Preferred Stock” means shares of the Company’s Series B-2 Preferred Stock, par value $0.0001 per share.

 

1.41            “Series B-2A Preferred Stock” means shares of the Company’s Series B-2A Preferred Stock, par value $0.0001 per share.

 

1.42            “Series C Preferred Stock” means shares of the Company’s Series C Preferred Stock, par value $0.0001 per share.

 

1.43            “Series C-1 Preferred Stock” means shares of the Company’s Series C-1 Preferred Stock, par value $0.0001 per share.

 

1.44            “Series Seed Preferred Stock” means shares of the Company’s Series Seed Preferred Stock, par value $0.0001 per share.

 

2.             Registration Rights. The Company covenants and agrees as follows:

 

2.1            Demand Registration.

 

 (a)            Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of at least 40% of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to at least forty percent (40%) of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of Selling Expenses, would exceed $20 million), then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3.

 

 (b)            Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least twenty percent (20%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $3 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3.

 

 

 (c)            Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period.

 

 (d)           The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a): (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected one registration pursuant to Section 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b) (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two registrations pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d); provided, that if such withdrawal is during a period the Company has deferred taking action pursuant to Section 2.1(c), then the Initiating Holders may withdraw their request for registration and such registration will not be counted as “effected” for purposes of this Section 2.1(d).

 

2.2            Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration at least 30 days prior to the filing of the registration statement for such offering. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration on the same terms and conditions as the other securities proposed to be sold. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

 

2.3            Underwriting Requirements.

 

 (a)            If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by a majority in interest of the Initiating Holders and shall be reasonably acceptable to the Company. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting; provided, however, that no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of Registrable Securities, authority to enter into the underwriting agreement, and intended method of distribution, and the liability of such Holder shall be several and not joint and shall be limited to an amount equal to the net proceeds from the offering received by such Holder. Notwithstanding any other provision of this Section 2.3, if the underwriter(s) in good faith advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

 

 (b)            In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

 

 (c)            For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.4            Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

 (a)            prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to twelve (12) months or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such 12 month period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration;

 

 (b)            prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

 (c)            furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

 (d)           use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

 (e)            in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

 (f)            use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

 

 (g)           provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

 (h)           promptly make available for inspection by the selling Holders, any underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

 (i)             notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

 (j)            after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

2.5            Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.6            Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $50,000, of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

 

2.7            Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8            Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

 

 (a)            To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, its Affiliates and their respective partners, members, managers, officers, directors, and stockholders; legal counsel and accountants; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or Affiliate or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed, nor shall the Company be liable for any Damages to the extent (and solely to the extent) that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

 (b)            To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any reasonable and documented out of pocket legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

 

 (c)            Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8. Neither an indemnified party nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent (which shall not be unreasonably withheld, conditioned or delayed). No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

 (d)            To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

 (e)            Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

 (f)            Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

 

2.9            Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

 (a)            make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

 (b)            use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

 (c)            furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10           Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would (i) provide to such holder or prospective holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to Registrable Securities acquired by any additional Investor that becomes a party to this Agreement in accordance with Section 6.9.

 

2.11           “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 2.11 shall apply only to the IPO, shall not apply to (a) the sale of any shares to an underwriter pursuant to an underwriting agreement; (b) any shares purchased in the IPO or thereafter; (c) transfer of any shares owned by a Holder in the Company to its Affiliates or any of the Holder’s stockholders, members, partners or other equity holders; provided that the Affiliate, stockholder, member, partner or other equity holder of the Holder agrees to be bound in writing by the restrictions set forth herein; or (d) to the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock). The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Company stockholders that are subject to such agreements, based on the number of shares subject to such agreements.

 

 

2.12          Restrictions on Transfer.

 

 (a)            The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop- transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

 (b)            Each certificate, instrument, or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be notated with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

 

 (c)            The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel, who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144; or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.12. Notwithstanding the foregoing, the Company shall be obligated to reissue promptly unlegended certificates or book entries at the request of any Holder thereof if the Company has completed its IPO and the Holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification and legend, provided that the second legend listed above shall be removed only at such time as the Holder of such certificate is no longer subject to any restrictions hereunder. Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13          Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Sections 2.1 or 2.2 shall terminate upon the earliest to occur of:

 

 (a)            the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation;

 

 (b)           such time after consummation of the IPO as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration;

 

 (c)            the 5^th anniversary of the IPO.

 

3.            Information and Observer Rights.

 

3.1            Delivery of Financial Statements. The Company shall deliver to each Major Investor, provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company; and provided, further, that Matrix, Baker Bros., Foresite Capital, Samsara, venBio, and their respective Affiliates shall not be deemed to be a competitor hereunder:

 

(a)            as soon as practicable, but in any event within one-hundred twenty (120) days after the end of each fiscal year beginning with the fiscal year ended December 31, 2022, annual audited financial statements for each fiscal year of the Company, including (i) an audited balance sheet as of the end of such year, (ii) audited statements of income and of cash flows for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all prepared in accordance with GAAP, audited and certified by independent public accountants of nationally or regionally recognized standing;

 

 

 (b)            as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of the fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

 (c)            as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Major Investors to calculate their respective percentage equity ownership in the Company;

 

 (d)            as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board of Directors, including the Requisite Preferred Director Vote, and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

 

 (e)            with respect to the financial statements called for in Section 3.1(a) and Section 3.1(b), an instrument executed by the President or other authorized officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Section 3.1(b) and subject to normal adjustments recommended by the Company’s independent public accountants) and fairly present the financial condition of the Company and its results of operation for the periods specified therein; and

 

 (f)            such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 3.1 to provide information (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in a form acceptable to the Company); or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date thirty (30) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

 

3.2            Inspection. The Company shall permit each Major Investor (and its attorneys, accountants and other representatives), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records as such Major Investor may reasonably request; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company and with reasonable advance notification as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3            Observer Rights. The Company shall invite a representative of Foresite Capital to attend all meetings of the Board of Directors and meetings of any committee of the Board of Directors (other than executive sessions of such meetings) in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that such representative shall agree to hold in confidence and trust respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could (x) adversely affect the attorney-client privilege between the Company and its counsel, (y) result in the disclosure of trade secrets or (z) result in a conflict of interest.

 

3.4            Termination of Information and Observer Rights. The covenants set forth in Section 3.1, Section 3.2, and Section 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first.

 

3.5            Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose or divulge for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.5 by such Investor), (b) is or has been independently developed or conceived by such Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to such Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3.5; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; (iv) to the extent required in connection with any routine or periodic examination or similar process by any regulatory or self-regulatory body or authority not specifically directed at the Company or the confidential information obtained from the Company pursuant to the terms of the Agreement, including, without limitation, quarterly or annual reports or (v) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that such Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

 

4.            Rights to Future Stock Issuances.

 

4.1            Right of First Offer. Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself, (ii) its Affiliates and (iii) its beneficial interest holders, such as limited partners, members or any other Person having “beneficial ownership,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act, of such Major Investor (“Investor Beneficial Owners”); provided that each such Affiliate or Investor Beneficial Owner (x) is not a competitor of the Company or FOIA Party, unless such party’s purchase of New Securities is otherwise consented to by the Board of Directors, (y) agrees to enter into this Agreement and each of the Amended and Restated Voting Agreement and the Amended and Restated Right of First Refusal and Co-Sale Agreement of even date herewith among the Company, the Investors and the other parties named therein, as an “Investor” under each such agreement (provided that any competitor of the Company or FOIA Party shall not be entitled to any rights as a Major Investor under Sections 3.1, 3.2 and 4.1 hereof), and (z) agrees to purchase at least such number of New Securities as are allocable hereunder to the Major Investor holding the fewest number of shares of Preferred Stock and any other Derivative Securities. Notwithstanding the foregoing, Matrix, Baker Bros., Foresite Capital, Samsara, venBio, and their respective Affiliates shall not be deemed a competitor for the purposes hereunder.

 

 (a)            The Company shall give written notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

 (b)            By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held by such Major Investor) bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and any other Derivative Securities then outstanding). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares. The closing of any sale pursuant to this Section 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.1(c).

 

 

 (c)            If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Section 4.1.

 

 (d)           The right of first offer in this Section 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Certificate of Incorporation); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Series C Preferred Stock and/or Series C-1 Preferred Stock pursuant to the Purchase Agreement. In addition to the foregoing, the right of first offer in this Section 4.1 shall not be applicable with respect to any Major Investor in any subsequent offering of New Securities if (x) (A) at the time of such offering, the Major Investor is not an “accredited investor,” as that term is then defined in Rule 501(a) of the Securities Act and (B) such offering of New Securities is otherwise being offered only to accredited investors or (y) issuing New Securities to such Major Investor would constitute a “covered transaction” pursuant to the DPA requiring a CFIUS Filing, unless either (A) such Major Investor agrees to pay the Company’s reasonable attorneys’ fees and other costs associated with such CFIUS Filing, including but not limited to fees and costs associated with the preparation, submission, and assessment of a CFIUS Declaration, the preparation, submission, and review and investigation of a CFIUS Notice, and any filing fees payable to CFIUS in connection with the submission of a CFIUS Notice, or (B) the Board of Directors waives such requirement set forth in clause (A).

 

4.2            Termination. The covenants set forth in Section 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first.

 

5.             Additional Covenants.

 

5.1            Insurance. The Company shall maintain Directors and Officers liability insurance, from financially sound and reputable insurers, in an amount and on terms and conditions satisfactory to the Board of Directors, until such time as the Board of Directors, including the Requisite Preferred Director Vote, determines that such insurance should be discontinued. The Director and Officer’s liability insurance shall not be cancelable by the Company without prior approval by the Board of Directors, including the Requisite Preferred Director Vote. Notwithstanding any other provision of this Section 5.1 to the contrary, the Company shall not cease to maintain a Directors and Officers liability insurance policy in an amount satisfactory to the Board of Directors until such time as the Board of Directors, including the Requisite Preferred Director Vote, determines otherwise.

 

5.2            Employee Agreements. The Company will cause (i) each Person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement in a form approved by the Requisite Preferred Director Vote. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without the unanimous consent of the Board of Directors.

 

 

5.3            Employee Stock. Unless otherwise approved by the Board of Directors, all employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting (A) in the case of new employees and consultants of the Company, following twelve (12) months of continued employment or service and (B) in the case of existing employees and consultants of the Company, following twelve (12) months of the grant date, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 2.11. Without the prior approval by the Board of Directors, the Company shall not amend, modify, terminate, waive or otherwise alter, in whole or in part, any stock purchase, stock restriction or option agreement with any existing employee or service provider if such amendment would cause it to be inconsistent with this Section 5.3. In addition, unless otherwise approved by the Board of Directors, the Company shall retain (and not waive) a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock. Without the prior written consent of a majority of the Registrable Securities and Baker Bros. for as long as it holds any Registrable Securities, the Company shall not at any time (including following the IPO), either directly or indirectly or by amendment, merger, consolidation or otherwise, authorize, approve, or adopt any “evergreen” option plan or other equity incentive plan of the Company or any of its subsidiaries pursuant to which the number of shares of Common Stock of the Company available for equity awards thereunder would increase automatically (without further stockholder approval) on an annual basis by an amount that exceeds 4% of the total number of shares of Common Stock then issued and outstanding (calculated on a fully diluted basis).

 

5.4            Board Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors. Each non-employee director shall be entitled in such person’s discretion to be a member of any committee of the Board of Directors.

 

5.5            Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Certificate of Incorporation, or elsewhere, as the case may be.

 

5.6            Indemnification Matters. The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board of Directors by the Investors (each an “Investor Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their Affiliates (collectively, the “Investor Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Investor Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Investor Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Investor Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Investor Director to the extent legally permitted and as required by the Company’s Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Investor Director), without regard to any rights such Investor Director may have against the Investor Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Investor Indemnitors from any and all claims against the Investor Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Investor Indemnitors on behalf of any such Investor Director with respect to any claim for which such Investor Director has sought indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Investor Director against the Company. The Investor Directors and the Investor Indemnitors are intended third-party beneficiaries of this Section 5.6 and shall have the right, power and authority to enforce the provisions of this Section 5.6 as though they were a party to this Agreement.

 

 

5.7            Right to Conduct Activities. The Company hereby agrees and acknowledges that Alexandria Venture Investments, LLC (together with its Affiliates), Matrix (together with its Affiliates), Baker Bros. (together with its Affiliates), Foresite Capital (together with its Affiliates), HBM Healthcare Investments (Cayman) Ltd. (“HBM”) (together with its Affiliates), Samsara (together with its Affiliates) and venBio (together with its Affiliates) (collectively, the “Professional Investors”) are professional investment organizations, and as such reviews the business plans and related proprietary information of many enterprises, some of which may compete directly or indirectly with the Company’s business (as currently conducted or as currently propose to be conducted). Nothing in this Agreement shall preclude or in any way restrict the Professional Investors from evaluating or purchasing securities, including publicly traded securities, of a particular enterprise, or investing or participating in any particular enterprise whether or not such enterprise has products or services that compete with those of the Company; and the Company hereby agrees that, to the extent permitted under applicable law, the Professional Investors shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by any Professional Investor in any entity competitive with the Company, or (ii) actions taken by any partner, officer, employee or other representative of any Professional Investor to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Professional Investors from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

 

5.8            Second Tranche Closing Option Pool Increase. Contemporaneously with and conditional upon the Second Tranche Closing (as defined in the Purchase Agreement) occurring, the Company and each Investor agree to take all actions necessary, including with respect to each Investor, executing any related stockholder consent, to amend the Stock Plan (as defined in the Purchase Agreement) to increase the number of shares of Class A Common Stock reserved to be issued thereunder by up to 3,779,118.

 

5.9            Termination of Covenants. The covenants set forth in this Section 5, except the last sentence of Section 5.3 and Sections 5.5 and 5.6, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, whichever event occurs first.

 

 

6.             Miscellaneous.

 

6.1            Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 100,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall, as a condition to the applicable transfer, establish a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

6.2            Governing Law. This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

 

6.3            Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

6.4            Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5            Notices.

 

(a)            All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to such email address, facsimile number or address as maintained in the Company’s records, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5. If notice is given to the Company, a copy shall also be sent to Cooley LLP, 3 Embarcadero Center, 20th Floor, San Francisco, CA 94111- 4004, Attention: David Peinsipp and Lauren Creel. If notice is given to the Investors, a copy shall also be sent to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts 02111, Attention: Edwin C. Pease, e-mail: [***]. If notice is given to Foresite Capital, a copy (which shall not constitute notice) shall also be sent to Goodwin Procter LLP, Three Embarcadero Center, 28th Floor, San Francisco, CA 94111, Attention: Mitchell S. Bloom ([***]) and Shoaib A. Ghias ([***]) If notice is given to Samsara BioCapital, LP, a copy (which shall not constitute notice) shall also be given to Fenwick & West LLP, Attn: William H. Bromfield, 401 Union Street, 5th Floor, Seattle, WA 98101. Notwithstanding any of the foregoing, with respect to HBM, only a nationally recognized courier service (such as FedEx or DHL) shall be used to effectuate the delivery of any notices pursuant to this Section 6.5, and such notice or other communication for purpose of this Agreement shall not be treated as effective or having been given if some other delivery method is utilized; provided, however, that if such notice is being sent internationally, it shall not be deemed defective if such courier does not deliver such notice on the next business day following deposit (provided that such notice shall be deemed delivered on the date of delivery by such courier service); and provided further, that HBM may agree to receive notice in some other manner set forth in this Section 6.5 by written election; and a copy (which shall not constitute notice) shall also be sent to Sidley Austin LLP, 1999 Avenue of the Stars, 17th Floor, Los Angeles, California 90067, Attention: Mehdi Khodadad.

 

 

 (b)            Each Investor consents to the delivery of any stockholder notice pursuant to the Delaware General Corporation Law (the “DGCL”), as amended or superseded from time to time, by electronic transmission pursuant to Section 232 of the DGCL (or any successor thereto) at the electronic mail address or the facsimile number as on the books of the Company. To the extent that any notice given by means of electronic transmission is returned or undeliverable for any reason, the foregoing consent shall be deemed to have been revoked until a new or corrected electronic mail address has been provided, and such attempted Electronic Notice shall be ineffective and deemed to not have been given. Each Investor agrees to promptly notify the Company of any change in such stockholder’s electronic mail address, and that failure to do so shall not affect the foregoing.

 

6.6            Amendments and Waivers. Any term of this Agreement may be amended, modified or terminated and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, (a) this Agreement may not be amended, modified or terminated and the observance of any term hereof may not be waived with respect to the express rights or obligations of any Investor without the written consent of such Investor, unless such amendment, modification, termination, or waiver applies to the express rights or obligations of all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction); (b) Sections 3.1 and 3.2, Section 4 and any other section of this Agreement applicable to the Major Investors (including this clause (b) of this Section 6.6) may not be amended, modified, terminated or waived without the written consent of the holders of a majority of the Registrable Securities then outstanding and held by the Major Investors; (c) Subsection 1.22(ii), the second proviso of the first sentence of Section 3.1, the last sentence of Section 4.1, the first sentence of Section 5.7 and this Subsection6.6(c) may not be amended, modified, terminated, or waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of Matrix for so long as it and its Affiliates own any Registrable Securities; (d) Subsection 1.22(iii), the second proviso of the first sentence of Section 3.1, the last sentence of Section 4.1, the first sentence of Section 5.7 and this Subsection 6.6(d) may not be amended, modified, terminated, or waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of Baker Bros. for so long as it and its Affiliates own any Registrable Securities; (e) Subsection 1.22(iv), the second proviso of the first sentence of Section 3.1, the last sentence of Section 4.1, the first sentence of Section 5.7 and this Subsection 6.6(e) may not be amended, modified, terminated, or waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of Foresite Capital for so long as it and its Affiliates own any Registrable Securities; (f) Subsection 1.22(v), the second proviso of the first sentence of Section 3.1, the last sentence of Section 4.1, the first sentence of Section 5.7 and this Subsection 6.6(f) may not be amended, modified, terminated, or waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of Samsara for so long as it and its Affiliates own any Registrable Securities; and (g) Subsection 1.22(vi), the second proviso of the first sentence of Section 3.1, the last sentence of Section 4.1, the first sentence of Section 5.7 and this Subsection 6.6(g) may not be amended, modified, terminated, or waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of venBio for so long as it and its Affiliates own any Registrable Securities. Notwithstanding the foregoing, Schedule A hereto may be amended by the Company from time to time to add transferees of any Registrable Securities in compliance with the terms of this Agreement without the consent of the other parties; and Schedule A hereto may also be amended by the Company after the date of this Agreement without the consent of the other parties to add information regarding any additional Investor who becomes a party to this Agreement in accordance with Section 6.9. The Company shall give prompt notice of any amendment, modification or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination, or waiver. Any amendment, modification, termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision. Notwithstanding any waiver of the provisions of Section 4, in the event any Major Investor actually purchases any such New Securities in any offering by the Company, then each other Major Investor shall be permitted to participate in such offering on a pro rata basis (based on the level of participation of the Major Investor purchasing the largest portion of such Major Investor’s pro rata share), in accordance with the other provisions (including notice and election periods) set forth in Section 4.

 

 

6.7            Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

6.8            Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

6.9            Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Preferred Stock after the date hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares of Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

6.10          Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

 

 

6.11          Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

6.12            Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

6.13            Special Mandatory Conversion. In the event that a Special Mandatory Conversion is applicable to an Investor or its Affiliates, such Investor and its Affiliates shall lose all of their rights under this Agreement with respect to the shares of Common Stock issued to such Investor and/or its Affiliates pursuant to the Special Mandatory Conversion, including, for the avoidance of doubt, the ability to consent to matters as an Investor hereunder (and the shares of Common Stock issued to such Investor and its Affiliates will be disregarded for purposes of determining whether such consent is achieved). For the avoidance of doubt, each Investor and such Investor’s shares of Common Stock issued pursuant to the Special Mandatory Conversion shall remain subject to all of the obligations of such Investor hereunder following the Special Mandatory Conversion.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	ALUMIS INC.
	By:	/s/ Martin Babler
	Name: Martin Babler
	Title: Chief Executive Officer

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	SAMSARA BIOCAPITAL, L.P.
	By: Samsara BioCapital GP, LLC
	Its: General Partner
	By:	/s/ Srinivas Akkaraju
	Name: Srinivas Akkaraju, MD, PhD
	Title: Managing Director

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	VENBIO GLOBAL STRATEGIC FUND IV, L.P.
	By: venBio Global Strategic GP IV, LLC
	Its: General Partner
	By:	/s/ Richard Gaster
	Name: Richard Gaster
	Title: Managing Partner

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

	INVESTOR:
	FORESITE CAPITAL FUND V, L.P.
	By: Foresite Capital Management V, LLC
	Its: General Partner
	By:	/s/ Dennis D. Ryan
	Name: Dennis D. Ryan
	Title: Chief Financial Officer
	FORESITE CAPITAL OPPORTUNITY FUND V, L.P.
	By: Foresite Capital Opportunity Management V, LLC
	Its: General Partner
	By:	/s/ Dennis D. Ryan
	Name: Dennis D. Ryan
	Title: Chief Financial Officer
	FORESITE LABS FUND I, L.P.
	By: Foresite Capital Opportunity Management V, LLC
	Its: General Partner
	By:	/s/ Dennis D. Ryan
	Name: Dennis D. Ryan
	Title: Chief Financial Officer
	FORESITE CAPITAL FUND VI, L.P.
	By: Foresite Capital Management VI, LLC
	Its: General Partner
	By:	/s/ Dennis D. Ryan
	Name: Dennis D. Ryan
	Title: Chief Financial Officer

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

	LABS CO-INVEST V, LLC
	By:	/s/ Dennis D. Ryan
	Name: Dennis D. Ryan
	Title: Chief Financial Officer

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	AYURMAYA CAPITAL MANAGEMENT FUND, LP
	By: AyurMaya General Partner, LLC,
	Its: General Partner
	By:	/s/ David Goel
	Name: David Goel
	Title: Managing Member

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	BAKER BROTHERS LIFE SCIENCES, L.P.
	By:	BAKER BROS. ADVISORS LP,
		management company and investment adviser to BAKER BROTHERS LIFE SCIENCES, L.P., pursuant to authority granted to it by Baker Brothers Life Sciences Capital, L.P., general partner to BAKER BROTHERS LIFE SCIENCES, L.P., and not as the general partner
	By:	/s/ Scott L. Lessing
		Scott L. Lessing
		President
	667, L.P.
	By:	BAKER BROS. ADVISORS LP,
		management company and investment adviser to 667, L.P., pursuant to authority granted to it by Baker Biotech Capital, L.P., general partner to 667, L.P., and not as the general partner
	By:	/s/ Scott L. Lessing
		Scott L. Lessing
		President

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	HBM HEALTHCARE INVESTMENTS (CAYMAN) LTD.
	By:	/s/ Jean-Marc LeSieur
	Name: Jean-Marc LeSieur
	Title: Managing Director

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	ALEXANDRIA VENTURE INVESTMENTS, LLC, a Delaware limited liability company
	By: Alexandria Real Estate Equities, Inc.,
	a Maryland corporation
	Its: Managing Member
	By:	/s/ Hilary Levin
	Name: Hilary Levin
	Title: VP-Venture Counsel

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	ABG V-ALUMIS LIMITED
	By:	/s/ LAM Wing Cheong
	Name: LAM Wing Cheong
	Title: Director

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	OMEGA FUND VII, L.P.
	By: Omega Fund VII GP, L.P.
	Its: General Partner
	By: Omega Fund VII GP Manager, Ltd
	Its: General Partner
	By:	/s/ Deirdre Cunnane
	Name: Deirdre Cunnane
	Title: Authorized Representative

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	CORMORANT PRIVATE HEALTHCARE FUND IV, LP
	By: Cormorant Private Healthcare GP IV, LLC
	By:	/s/ Bihua Chen
	Name: Bihua Chen
	Title: Managing Member
	CORMORANT PRIVATE HEALTHCARE FUND V, LP
	By: Cormorant Private Healthcare GP V, LLC
	By:	/s/ Bihua Chen
	Name: Bihua Chen
	Title: Managing Member
	CORMORANT GLOBAL HEALTHCARE MASTER FUND, LP
	By: Cormorant Global Healthcare GP, LLC
	By:	/s/ Bihua Chen
	Name: Bihua Chen
	Title: Managing Member

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	Lav fund vi, l.p.
	By: LAV GP VI, L.P.
	Its: General Partner
	By: LAV Corporate VI GP, Ltd.
	Its: General Partner
	By:	/s/ Yu Luo
	Name: Yu Luo
	Title: Authorized Signatory
	LAV FUND VI OPPORTUNITIES, L.P.
	By: LAV GP VI Opportunities, L.P.
	Its: General Partner
	By: LAV Corporate VI GP Opportunities, Ltd.
	Its: General Partner
	By:	/s/ Yu Luo
	Name: Yu Luo
	Title: Authorized Signatory

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	NEXTECH VII ONCOLOGY SCSP
	By: Nextech VII GP S.a.r.l.
	Its: General Partner
	By:	/s/ Ian Charoub
	Name: Ian Charoub
	Title: Manager
	By:	/s/ Costas Constantinides
	Name: Costas Constantinides
	Title: Manager

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	GC&H INVESTMENTS, L.P.
	By: GC&H Investment Management, LLC
	Its General Partner
	By:	/s/ Elzbieta Gibbons
	Name: Melissa Roque or Elzbieta Gibbons
	Title: Authorized Signatory

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	G&H PARTNERS
	By:	/s/ Stefan J. Palmer
	Name: Stefan J. Palmer
	Title: General Partner

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

	INVESTOR:
	SR ONE CAPITAL FUND II AGGREGATOR, LP
	By: SR One Capital Partners II, LP
	Its: General Partner
	By: SR One Capital Management, LLC
	Its: General Partner
	By:	/s/ Simeon George
	Name: Simeon George
	Title: Managing Member
	SR ONE CAPITAL OPPORTUNITIES FUND I, LP
	By: SR One Capital Opportunities Partners I, LP
	Its: General Partner
	By: SR One Capital Management, LLC
	Its: General Partner
	By:	/s/ Simeon George
	Name: Simeon George
	Title: Managing Member

 

Signature Page To Amended And Restated Investors’ Rights Agreement Of

Alumis Inc.

(Series C)

 

 

Schedule A

 

Investors

 

Name and Address

Samsara BioCapital, LP   628 Middlefield Road Palo Alto, CA 94301 Email: [***]

venBio Global Strategic Fund IV, L.P.   1700 Owens Street, Suite 595 San Francisco, CA 94158 Attn: Richard Gaster Email: [***]

AyurMaya Capital Management Fund, LP   1000 Winter Street, Suite 4500 Waltham, MA 02451

Baker Brothers Life Sciences, L.P.   860 Washington St., 3rd Floor New York, NY 10014 Email: [***]   With a copy to (which shall not constitute notice): Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, Massachusetts 02111 Attention: Edwin C. Pease Email: [***]

667, L.P.   860 Washington St., 3rd Floor New York, NY 10014 Email: [***]With a copy to (which shall not constitute notice): Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, Massachusetts 02111 Attention: Edwin C. Pease Email: [***]

 

 

Name and Address

Foresite Capital Fund V, L.P.   900 Larkspur Landing Circle, Suite 150 Larkspur, CA 94939 Email: [***]   With a copy to (which shall not constitute notice): Goodwin Procter LLP Three Embarcadero Center 28th Floor San Francisco, CA 94111 Attention: Mitchell S. Bloom and Shoaib Ghias Email: [***]; [***]

Labs Co-Invest V, LLC   900 Larkspur Landing Circle, Suite 150 Larkspur, CA 94939 Email: [***]   With a copy to (which shall not constitute notice): Goodwin Procter LLP Three Embarcadero Center 28th Floor San Francisco, CA 94111 Attention: Mitchell S. Bloom and Shoaib Ghias Email: [***]; [***]

Foresite Capital Opportunity Fund V, L.P.   900 Larkspur Landing Circle, Suite 150 Larkspur, CA 94939 Email: [***]   With a copy to (which shall not constitute notice): Goodwin Procter LLP Three Embarcadero Center 28th Floor San Francisco, CA 94111 Attention: Mitchell S. Bloom and Shoaib Ghias Email: [***]; [***]

Foresite Labs Fund I, L.P.   900 Larkspur Landing Circle, Suite 150 Larkspur, CA 94939 Email: [***]   With a copy to (which shall not constitute notice): Goodwin Procter LLP Three Embarcadero Center 28th Floor San Francisco, CA 94111 Attention: Mitchell S. Bloom and Shoaib Ghias Email: [***]; [***]

 

 

Name and Address

Foresite Capital Fund VI, L.P.   900 Larkspur Landing Circle, Suite 150 Larkspur, CA 94939 Email: [***]   With a copy to (which shall not constitute notice): Goodwin Procter LLP Three Embarcadero Center 28th Floor San Francisco, CA 94111 Attention: Mitchell S. Bloom and Shoaib Ghias Email: [***]; [***]

June Lee

G&H Partners   550 Allerton Street Redwood City, CA 94063 Email: [***]

GC&H Investments, L.P.   3 Embarcadero Center, 20th Floor San Francisco, CA 94111 Email: [***]

Alexandria Venture Investments, LLC   26 N. Euclid Ave. Pasadena, CA 91101 Email: [***]

 

 

Name and Address

HBM Healthcare Investments (Cayman) Ltd.   Governors Square, Suite #4-212-2 23 Lime Tree Bay Avenue PO Box 30852 West Bay, Grand Cayman, Cayman Islands Attention: Jean-Marc LeSieur Email: [***]   With a copy to (which shall not constitute notice):   Sidley Austin LLP 1999 Avenue of the Stars 17th Floor Los Angeles, California 90067 Attention: Mehdi Khodadad Email: [***]

ABG V-Alumis Limited   c/o Rooms 2128 & 2153, 21/F, New World Tower, 16-18 Queen’s Road Central, Hong Kong Attention: Charles Wong Email: [***]

Omega Fund VII, L.P.   888 Boylston St., Suite 1111 Boston, MA 02199 Attention: Deirdre Cunnane Email: [***]

Cormorant Private Healthcare Fund IV, LP   200 Clarendon Street 52nd Floor Boston, MA 02116 Attention: Neb Obradovic Email: [***]

Cormorant Private Healthcare Fund V, LP   200 Clarendon Street 52nd Floor Boston, MA 02116 Attention: Neb Obradovic Email: [***]

 

 

Name and Address

Cormorant Global Healthcare Master Fund, LP   200 Clarendon Street 52nd Floor Boston, MA 02116 Attention: Neb Obradovic Email: [***]

LAV Fund VI, L.P.   Room 607, St. George’s Building, 2 Ice House Street, Central, Hong Kong Email: [***]

LAV Fund VI Opportunities, L.P.   Room 607, St. George’s Building, 2 Ice House Street, Central, Hong Kong Email: [***]

SR One Capital Fund II Aggregator, LP   985 Old Eagle School Road, Suite 511 Wayne, PA 19087 Email: [***]

SR One Capital Opportunities Fund I, LP   985 Old Eagle School Road, Suite 511 Wayne, PA 19087 Email: [***]

Nextech VII Oncology SCSp   8 rue Lou Hemmer, L-1748, Senningerberg, Grand Duchy of Luxembourg Email: [***]

Piper Heartland Healthcare Crossover Fund I, L.P.   800 Nicollet Mall Minneapolis, MN 55402 Email: [***]

 

 

 

Exhibit 10.1

 

ALUMIS INC.

 

2021 STOCK PLAN,

 

Adopted February 2, 2021

 

 

Table of Contents

 

Page

 

Section 1.	ESTABLISHMENT AND PURPOSE	1
Section 2.	ADMINISTRATION	1
(a)	Committees of the Board of Directors	1
(b)	Authority of the Board of Directors	1
Section 3.	ELIGIBILITY	1
(a)	General Rule	1
(b)	Ten-Percent Stockholders	1
Section 4.	STOCK SUBJECT TO PLAN	2
(a)	Basic Limitation	2
(b)	Additional Shares	2
Section 5.	TERMS AND CONDITIONS OF AWARDS OR SALES	2
(a)	Stock Grant or Purchase Agreement	2
(b)	Duration of Offers and Nontransferability of Rights	2
(c)	Purchase Price	3
Section 6.	TERMS AND CONDITIONS OF OPTIONS	3
(a)	Stock Option Agreement	3
(b)	Number of Shares	3
(c)	Exercise Price	3
(d)	Vesting and Exercisability	3
(e)	Basic Term	4
(f)	Termination of Service (Except by Death)	4
(g)	Leaves of Absence	4
(h)	Death of Optionee	4
(i)	Restrictions on Transfer of Options	5
(j)	No Rights as a Stockholder	5
(k)	Modification, Extension and Assumption of Options	5
(l)	Company’s Right to Cancel Certain Options	5
Section 7.	TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS	6
(a)	Restricted Stock Unit Agreement	6
(b)	Payment for Restricted Stock Units	6

 

 

Table of Contents

(continued)

 

Page

 

(c)

Vesting Conditions

6

 

(d)

Forfeiture

6

 

(e)

Voting and Dividend Rights

6

 

(f)

Form and Time of Settlement of Restricted Stock Units

6

 

(g)

Death of Recipient

6

 

(h)

Creditors’ Rights

6

 

(i)

Modification, Extension and Assumption of Restricted Stock Units

7

 

(j)

Restrictions on Transfer of Restricted Stock Units

7

 

Section 8.

PAYMENT FOR SHARES

7

 

(a)

General Rule

7

 

(b)

Services Rendered

7

 

(c)

Promissory Note

7

 

(d)

Surrender of Stock

7

 

(e)

Cashless Exercise

7

 

(f)

Net Exercise

7

 

(g)

Other Forms of Payment

8

 

Section 9.

ADJUSTMENT OF SHARES

8

 

(a)

General

8

 

(b)

Corporate Transactions

8

 

(c)

Dissolution or Liquidation

10

 

(d)

Reservation of Rights

10

 

Section 10.

MISCELLANEOUS PROVISIONS.

10

 

(a)

Securities Law Requirements

10

 

(b)

No Retention Rights

10

 

(c)

Treatment as Compensation

10

 

(d)

Governing Law

10

 

(e)

Conditions and Restrictions on Shares

10

 

(f)

Tax Matters

11

 

 

Table of Contents

(continued)

 

Page

 

Section 11.

DURATION AND AMENDMENTS; STOCKHOLDER APPROVAL

12

 

(a)

Term of the Plan

12

 

(b)

Right to Amend or Terminate the Plan

12

 

(c)

Effect of Amendment or Termination

12

 

(d)

Stockholder Approval

12

 

Section 12.

DEFINITIONS

12

 

 

ALUMIS INC. 2021 STOCK PLAN

 

Section 1.      ESTABLISHMENT AND PURPOSE.

 

The purpose of this Plan is to attract, incentivize and retain Employees, Outside Directors and Consultants through the grant of Awards. The Plan provides for the direct award or sale of Shares, the grant of Options to purchase Shares and the grant of Restricted Stock Units to acquire Shares. Options granted under the Plan may be ISOs intended to qualify under Code Section 422 or NSOs which are not intended to so qualify.

 

Capitalized terms are defined in Section 12.

 

Section 2.      ADMINISTRATION.

 

(a)            Committees of the Board of Directors. The Plan may be administered by one or more Committees. Each Committee shall consist, as required by applicable law, of one or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan or an Award Agreement shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

 

(b)            Authority of the Board of Directors. Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. Notwithstanding anything to the contrary in the Plan, with respect to the terms and conditions of awards granted to Participants outside the United States, the Board of Directors may vary from the provisions of the Plan to the extent it determines it necessary and appropriate to do so; provided that it may not vary from those Plan terms requiring stockholder approval pursuant to Section 11(d) below. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Participants and all persons deriving their rights from a Participant.

 

Section 3.      ELIGIBILITY.

 

(a)            General Rule. Employees, Outside Directors and Consultants shall be eligible for the grant of Awards under the Plan.¹ However, only Employees shall be eligible for the grant of ISOs.

 

(b)            Ten-Percent Stockholders. A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for the grant of an ISO unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the Date of Grant and (ii) such ISO by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Code Section 424(d) shall be applied.

 

¹ Note that special considerations apply if the Company proposes to grant awards to an Employee or Consultant of a Parent company.

 

 

Section 4.      STOCK SUBJECT TO PLAN.

 

(a)            Basic Limitation. Not more than 500,000 Shares may be issued under the Plan, subject to Subsection (b) below and Section 9(a).² All of these Shares may be issued upon the exercise of ISOs. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

 

(b)            Additional Shares. In the event that Shares previously issued under the Plan are forfeited to or repurchased by the Company due to failure to vest, such Shares shall be added to the number of Shares then available for issuance under the Plan. In the event that Shares that otherwise would have been issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding taxes, such Shares shall remain available for issuance under the Plan. In the event that an outstanding Option, Restricted Stock Unit or other right for any reason expires or is canceled, the Shares allocable to the unexercised or unsettled portion of such Option, Restricted Stock Unit or other right shall remain available for issuance under the Plan. To the extent an Award is settled in cash, the cash settlement shall not reduce the number of Shares remaining available for issuance under the Plan. Notwithstanding the foregoing, in the case of ISOs, this Subsection (b) shall be subject to any limitations imposed under Section 422 of the Code and the treasury regulations thereunder.

 

Section 5.      TERMS AND CONDITIONS OF AWARDS OR SALES.

 

(a)            Stock Grant or Purchase Agreement. Each award of Shares under the Plan shall be evidenced by a Stock Grant Agreement between the Grantee and the Company. Each sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Grant Agreement or Stock Purchase Agreement. The provisions of the various Stock Grant Agreements and Stock Purchase Agreements entered into under the Plan need not be identical.

 

(b)            Duration of Offers and Nontransferability of Rights. Any right to purchase Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days (or such other period as may be specified in the Award Agreement) after the grant of such right was communicated to the Purchaser by the Company. Such right is not transferable and may be exercised only by the Purchaser to whom such right was granted.

 

² Please refer to Exhibit A for a schedule of the initial share reserve and any subsequent increases in the reserve.

 

 

(c)            Purchase Price. The Board of Directors shall determine the Purchase Price of Shares to be offered under the Plan at its sole discretion. The Purchase Price shall be payable in a form described in Section 8.

 

Section 6.      TERMS AND CONDITIONS OF OPTIONS.

 

(a)            Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. The Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

(b)            Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9. The Stock Option Agreement shall also specify whether the Option is an ISO or an NSO.

 

(c)            Exercise Price.

 

(i)            General. Each Stock Option Agreement shall specify the Exercise Price, which shall be payable in a form described in Section 8. Subject to the remaining provisions of this Subsection (c), the Exercise Price shall be determined by the Board of Directors in its sole discretion.

 

(ii)            ISOs. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant, and a higher percentage may be required by Section 3(b). This Subsection (c)(ii) shall not apply to an ISO granted pursuant to an assumption of, or substitution for, another incentive stock option in a manner that complies with Code Section 424(a).

 

(iii)            NSOs. Except as specifically set forth in this Subsection (c)(iii), the Exercise Price of an NSO shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant. This Subsection (c)(iii) shall not apply to an NSO granted to a person who is not a U.S. taxpayer on the Date of Grant or to an NSO that is intended either to be exempt from Code Section 409A as a “short-term deferral” or to comply with the requirements of Code Section 409A. In addition, this Subsection (c)(iii) shall not apply to an NSO granted pursuant to an assumption of, or substitution for, another stock option in a manner that complies with Code Section 409A.

 

(d)            Vesting and Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become vested and exercisable. No Option shall be exercisable unless the Optionee (i) has delivered an executed copy of the Stock Option Agreement to the Company or (ii) otherwise agrees to be bound by the terms of the Stock Option Agreement. The Board of Directors shall determine the vesting and exercisability provisions of the Stock Option Agreement at its sole discretion.

 

 

(e)            Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the Date of Grant, and in the case of an ISO, a shorter term may be required by Section 3(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

 

(f)            Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following dates:

 

(i)            The expiration date determined pursuant to Subsection (e) above;

 

(ii)            The date three months after the termination of the Optionee’s Service for any reason other than Disability, or such earlier or later date as the Board of Directors may determine (but in no event earlier than 30 days after the termination of the Optionee’s Service); or

 

(iii)            The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

 

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). In no event will an Option, or the Shares underlying an Option, become vested and/or exercisable after termination of the Optionee’s Service unless the Board of Directors takes affirmative action or unless expressly provided in a written agreement between the Company and the Optionee.

 

(g)            Leaves of Absence. For purposes of Subsection (f) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence approved by the Company in writing.

 

(h)            Death of Optionee. If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

 

(i)            The expiration date determined pursuant to Subsection (e) above; or

 

(ii)            The date 12 months after the Optionee’s death, or such earlier or later date as the Board of Directors may determine (but in no event earlier than six months after the Optionee’s death).

 

 

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). In no event will an Option, or the Shares underlying an Option, become vested and/or exercisable after the Optionee’s death unless the Board of Directors takes affirmative action or unless expressly provided in a written agreement between the Company and the Optionee.

 

(i)            Restrictions on Transfer of Options. An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. If the Board of Directors so provides, in a Stock Option Agreement or otherwise, an NSO may be transferable to the extent permitted by Rule 701 under the Securities Act. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.

 

(j)            No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee’s Option until such person submits a notice of exercise, pays the Exercise Price and satisfies all applicable withholding taxes pursuant to the terms of such Option.

 

(k)            Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Board of Directors may modify, reprice, extend or assume outstanding Options or may accept the cancellation of outstanding options (whether granted by the Company or another issuer) in return for the grant of new Options or a different type of award for the same or a different number of Shares and at the same or a different Exercise Price (if applicable). The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option; provided, however, that a modification of an Option that is otherwise favorable to the Optionee (for example, providing the Optionee with additional time to exercise the Option after termination of employment or providing for additional forms of payment) but causes the Option to lose its tax-favored status (for example, as an ISO) shall not require the consent of the Optionee.

 

(l)            Company’s Right to Cancel Certain Options. Any other provision of the Plan or a Stock Option Agreement notwithstanding, the Company shall have the right at any time to cancel an Option that was not granted in compliance with Rule 701 under the Securities Act. Prior to canceling such Option, the Company shall give the Optionee not less than 30 days’ notice in writing. If the Company elects to cancel such Option, it shall deliver to the Optionee consideration with an aggregate value equal to the excess of (i) the Fair Market Value of the Shares subject to such Option as of the time of the cancellation over (ii) the Exercise Price of such Option. The consideration may be delivered in the form of cash or cash equivalents, in the form of Shares, or a combination of both. If the consideration would be a negative amount, such Option may be cancelled without the delivery of any consideration.

 

 

Section 7.      TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

 

(a)            Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Company. Such Restricted Stock Units shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Restricted Stock Unit Agreement. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical.

 

(b)            Payment for Restricted Stock Units. No cash consideration shall be required of the recipient in connection with the grant of Restricted Stock Units.

 

(c)            Vesting Conditions. Each Restricted Stock Unit Agreement shall specify the vesting requirements applicable to the Restricted Stock Units subject thereto, which the Board of Directors shall determine in its sole discretion.

 

(d)            Forfeiture. Unless a Restricted Stock Unit Agreement provides otherwise, upon termination of the recipient’s Service and upon such other times specified in the Restricted Stock Unit Agreement, any unvested Restricted Stock Units shall be forfeited to the Company.

 

(e)            Voting and Dividend Rights. The holders of Restricted Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Restricted Stock Unit granted under the Plan may, at the discretion of the Board of Directors, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. Dividend equivalents may be converted into additional Restricted Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents that are not paid shall be subject to the same conditions and restrictions as the Restricted Stock Units to which they attach.

 

(f)            Form and Time of Settlement of Restricted Stock Units. Settlement of vested Restricted Stock Units may be made in the form of (i) cash, (ii) Shares or (iii) any combination of both, as determined by the Board of Directors. The actual number of Restricted Stock Units eligible for settlement may be larger or smaller than the number included in the original award, based on predetermined performance factors. Vested Restricted Stock Units shall be settled in such manner and at such time(s) as specified in the Restricted Stock Unit Agreement. Until Restricted Stock Units are settled, the number of Shares represented by such Restricted Stock Units shall be subject to adjustment pursuant to Section 9.

 

(g)            Death of Recipient. Any Restricted Stock Units that become distributable after the Participant’s death shall be distributed to the Participant’s estate or to any person who has acquired such Restricted Stock Units directly from the recipient by beneficiary designation, bequest or inheritance.

 

(h)            Creditors’ Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.

 

 

(i)            Modification, Extension and Assumption of Restricted Stock Units. Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding restricted stock units (whether granted by the Company or a different issuer). The foregoing notwithstanding, no modification of a Restricted Stock Unit shall, without the consent of the Participant, impair the Participant’s rights or increase the Participant’s obligations under such Restricted Stock Unit.

 

(j)            Restrictions on Transfer of Restricted Stock Units. A Restricted Stock Unit shall be transferable by the Participant only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. In addition, if the Board of Directors so provides, in a Restricted Stock Unit Agreement or otherwise, a Restricted Stock Unit shall also be transferable to the extent permitted by Rule 701 under the Securities Act.

 

Section 8.      PAYMENT FOR SHARES.

 

(a)            General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 8. In addition, the Board of Directors in its sole discretion may also permit payment through any of the methods described in (b) through (g) below.

 

(b)            Services Rendered. Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

 

(c)            Promissory Note. All or a portion of the Purchase Price or Exercise Price (as the case may be) of Shares issued under the Plan may be paid with a promissory note. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors in its sole discretion shall specify the term, interest rate, recourse, amortization requirements (if any) and other provisions of such note.

 

(d)            Surrender of Stock. All or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when the Option is exercised.

 

(e)            Cashless Exercise. All or part of the Exercise Price and any withholding taxes may be paid pursuant to a cashless exercise arrangement (whether through a securities broker or otherwise) established by the Company whereby Shares subject to an Option are sold and all or part of the sale proceeds are delivered to the Company.

 

(f)            Net Exercise. An Option may permit exercise through a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise by the largest whole number of Shares having an aggregate Fair Market Value (determined by the Board of Directors as of the exercise date) that does not exceed the aggregate Exercise Price or the sum of the aggregate Exercise Price and any withholding taxes (with the Company accepting from the Optionee payment of cash or cash equivalents to satisfy any remaining balance of the aggregate Exercise Price and, if applicable, any additional withholding taxes not satisfied through such reduction in Shares); provided that to the extent Shares subject to an Option are withheld in this manner, the number of Shares subject to the Option following the net exercise will be reduced by the sum of the number of Shares withheld and the number of Shares delivered to the Optionee as a result of the exercise.

 

 

(g)            Other Forms of Payment. To the extent that an Award Agreement so provides, the Purchase Price or Exercise Price of Shares issued under the Plan may be paid in any other form permitted by the Delaware General Corporation Law, as amended.

 

Section 9.      ADJUSTMENT OF SHARES.

 

(a)            General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a reclassification, or any other increase or decrease in the number of issued shares of Stock effected without receipt of consideration by the Company, proportionate adjustments shall automatically be made, as applicable, in each of (i) the number and kind of Shares available under Section 4, (ii) the number and kind of Shares covered by each outstanding Option, Award of Restricted Stock Units and any outstanding and unexercised right to purchase Shares that has not yet expired pursuant to Section 5(b), (iii) the Exercise Price under each outstanding Option and the Purchase Price applicable to any unexercised stock purchase right described in clause (ii) above, and (iv) any repurchase price that applies to Shares granted under the Plan pursuant to the terms of a Company repurchase right under the applicable Award Agreement. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a recapitalization, a spin-off, or a similar occurrence, the Board of Directors at its sole discretion may make appropriate adjustments in one or more of the items listed in clauses (i) through (iv) above; provided, however, that the Board of Directors shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporations Code to the extent the Company is relying on the exemption afforded thereunder with respect to an Award. No fractional Shares shall be issued under the Plan as a result of an adjustment under this Section 9(a), although the Board of Directors in its sole discretion may make a cash payment in lieu of fractional Shares.

 

(b)            Corporate Transactions. In the event that the Company is a party to a merger or consolidation, or in the event of a sale of all or substantially all of the Company’s stock or assets, all Shares acquired under the Plan and all Awards outstanding on the effective date of the transaction shall be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Board of Directors in its capacity as administrator of the Plan, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Awards (or all portions of an Award) in an identical manner. The treatment specified in the transaction agreement or as determined by the Board of Directors may include (without limitation) one or more of the following with respect to each outstanding Award:

 

(i)            The Company, the surviving corporation or a parent thereof may continue or assume the Award or substitute a comparable award for the Award (including, but not limited to, an award to acquire the same consideration paid to the holders of Shares in the transaction). For avoidance of doubt, a comparable award need not be the same type of award as the Award for which it is substituted, and, in the case of an Option, need not have the same tax-status (e.g., an NSO may be substituted for an ISO).

 

 

(ii)            The cancellation of the Award and a payment to the Participant with respect to each Share subject to the portion of the Award that is vested as of the transaction date equal to the excess of (A) the value, as determined by the Board of Directors in its absolute discretion, of the property (including cash) received by the holder of a share of Stock as a result of the transaction, over (if applicable) (B) the per-Share Exercise Price of the Award (such excess, the “Spread”). Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent having a value equal to the Spread. In addition, any escrow, indemnification, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Stock. Receipt of the payment described in this Subsection (b)(ii) may be conditioned upon the Participant acknowledging such escrow, indemnification, holdback, earn-out or other provisions on a form prescribed by the Company. If the Spread applicable to an Award is zero or a negative number, then the Award may be cancelled without making a payment to the Participant.

 

(iii)            Even if the Spread applicable to an Option is a positive number, the Option may be cancelled without the payment of any consideration; provided that the Optionee shall be notified of such treatment and given an opportunity to exercise the Option (to the extent the Option is vested or becomes vested as of the effective date of the transaction) during a period of not less than five (5) business days preceding the effective date of the transaction, unless (A) a shorter period is required to permit a timely closing of the transaction and (B) such shorter period still offers the Optionee a reasonable opportunity to exercise the Option.

 

(iv)            In the case of an Option: (A) suspension of the Optionee’s right to exercise the Option during a limited period of time preceding the closing of the transaction if such suspension is administratively necessary to facilitate the closing of the transaction and/or (B) termination of any right the Optionee has to exercise the Option prior to vesting in the Shares subject to the Option (i.e., “early exercise”), such that following the closing of the transaction the Option may only be exercised to the extent it is vested.

 

For the avoidance of doubt, the Board of Directors has discretion to accelerate, in whole or part, the vesting and exercisability of an Award in connection with a corporate transaction covered by this Section 9(b).

 

 

(c)            Dissolution or Liquidation. To the extent not previously exercised or settled, Options, Restricted Stock Units and other rights to purchase Shares shall terminate immediately prior to the liquidation or dissolution of the Company.

 

(d)            Reservation of Rights. Except as provided in Section 7(e) or this Section 9, a Participant shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

Section 10.      MISCELLANEOUS PROVISIONS.

 

(a)            Securities Law Requirements. Shares shall not be issued under the Plan unless, in the opinion of counsel acceptable to the Board of Directors, the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be liable for a failure to issue Shares as a result of such requirements. Without limiting the foregoing, the Company may suspend the exercise of some or all outstanding Options for a period of up to 60 days in order to facilitate compliance with Securities Act Rule 701(e).

 

(b)            No Retention Rights. Nothing in the Plan or in any right or Award granted under the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

(c)            Treatment as Compensation. Any compensation that an individual earns or is deemed to earn under this Plan shall not be considered a part of his or her compensation for purposes of calculating contributions, accruals or benefits under any other plan or program that is maintained or funded by the Company, a Parent or a Subsidiary.

 

(d)            Governing Law. The Plan and all awards, sales and grants under the Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions), as such laws are applied to contracts entered into and performed in such State.

 

(e)            Conditions and Restrictions on Shares. Shares issued under the Plan shall be subject to such forfeiture conditions, rights of repurchase, rights of first refusal, other transfer restrictions and such other terms and conditions as the Board of Directors may determine. Such conditions and restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. In addition, Shares issued under the Plan shall be subject to conditions and restrictions imposed either by applicable law or by Company policy, as adopted from time to time, designed to ensure compliance with applicable law or laws with which the Company determines in its sole discretion to comply including in order to maintain any statutory, regulatory or tax advantage, which (for avoidance of doubt) need not be set forth in the applicable Award Agreement.

 

 

(f)            Tax Matters.

 

(i)            As a condition to the award, grant, issuance, vesting, purchase, exercise, settlement or transfer of any Award, or Shares issued pursuant to any Award, granted under this Plan, the Participant shall make such arrangements as the Board of Directors may require or permit for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such event.

 

(ii)            Unless otherwise expressly set forth in an Award Agreement, it is intended that Awards shall be exempt from Code Section 409A, and any ambiguity in the terms of an Award Agreement and the Plan shall be interpreted consistently with this intent. To the extent an Award is not exempt from Code Section 409A (any such award, a “409A Award”), any ambiguity in the terms of such Award and the Plan shall be interpreted in a manner that to the maximum extent permissible supports the Award’s compliance with the requirements of that statute. Notwithstanding anything to the contrary permitted under the Plan, in no event shall a modification of an Award not already subject to Code Section 409A, or any subsequent action taken with respect to such Award, be given effect if such modification or action would cause the Award to become subject to Code Section 409A unless the parties explicitly acknowledge and consent to the modification or action as one having that effect. A 409A Award shall be subject to such additional rules and requirements as specified by the Board of Directors from time to time in order for it to comply with the requirements of Code Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” to an individual who is considered a “specified employee” (as each term is defined under Code Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to Section 409A(a)(1). In addition, if a transaction subject to Section 9(b) constitutes a payment event with respect to any 409A Award, then the transaction with respect to such award must also constitute a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.

 

(iii)            Neither the Company nor any member of the Board of Directors shall have any liability to a Participant in the event an Award held by the Participant fails to achieve its intended characterization under applicable tax law.

 

 

Section 11.      DURATION AND AMENDMENTS; STOCKHOLDER APPROVAL.

 

(a)            Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to approval of the Company’s stockholders under Subsection (d) below. The Plan shall terminate automatically 10 years after the later of (i) the date when the Board of Directors adopted the Plan or (ii) the date when the Board of Directors approved the most recent increase in the number of Shares reserved under Section 4 that was also approved by the Company’s stockholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

 

(b)            Right to Amend or Terminate the Plan. Subject to Subsection (d) below, the Board of Directors may amend, suspend or terminate the Plan at any time and for any reason.

 

(c)            Effect of Amendment or Termination. No Shares shall be issued or sold and no Award granted under the Plan after the termination thereof, except upon exercise or settlement of an Award granted under the Plan prior to such termination. Except as expressly provided in Section 6(k) above, the termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Award previously granted under the Plan.

 

(d)            Stockholder Approval. To the extent required by applicable law, the Plan will be subject to approval of the Company’s stockholders within 12 months of its adoption date. An amendment of the Plan will be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

 

Section 12.      DEFINITIONS.

 

(a)            “Award” means any award granted under the Plan, including as an Option, an award of Restricted Stock Units or the grant or sale of Shares pursuant to Section 5 of the Plan.

 

(b)            “Award Agreement” means a Restricted Stock Unit Agreement, Stock Grant Agreement, Stock Option Agreement or Stock Purchase Agreement or such other agreement evidencing an Award under the Plan.

 

(c)            “Board of Directors” means the Board of Directors of the Company, as constituted from time to time.

 

(d)            “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)            “Committee” means a committee of the Board of Directors, as described in Section 2(a).

 

(f)            “Company” means Alumis Inc., f/k/a Esker Therapeutics, Inc., a Delaware corporation.

 

 

(g)            “Consultant” means a person, excluding Employees and Outside Directors, who performs bona fide services for the Company, a Parent³ or a Subsidiary as a consultant or advisor and who qualifies as a consultant or advisor under Rule 701(c)(1) of the Securities Act or under Instruction A.1.(a)(1) of Form S-8 under the Securities Act.

 

(h)            “Date of Grant” means the date of grant specified in the Award Agreement, which date shall be the later of (i) the date on which the Board of Directors resolved to grant the Award or (ii) the first day of the Participant’s Service.

 

(i)            “Disability” means that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

(j)            “Employee” means any individual who is a common-law employee of the Company, a Parent⁴4 or a Subsidiary.

 

(k)            “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(l)            “Exercise Price” means the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

 

(m)            “Fair Market Value” means the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

 

(n)            “Grantee” means a person to whom the Board of Directors has awarded Shares under the Plan.

 

(o)            “ISO” means an Option that qualifies as an incentive stock option as described in Code Section 422(b). Notwithstanding its designation as an ISO, an Option that does not qualify as an ISO under applicable law shall be treated for all purposes as an NSO.

 

(p)            “NSO” means an Option that does not qualify as an incentive stock option as described in Code Section 422(b) or 423(b).

 

(q)            “Option” means an ISO or NSO granted under the Plan and entitling the holder to purchase Shares.

 

(r)            “Optionee” means a person who holds an Option.

 

(s)            “Outside Director” means a member of the Board of Directors who is not an Employee.

 

³ Note that special considerations apply if the Company proposes to grant awards to consultant or advisor of a Parent company.

 

⁴ Note that special considerations apply if the Company proposes to grant awards to an Employee of a Parent company.

 

 

(t)            “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(u)            “Participant” means the holder of an outstanding Award.

 

(v)            “Plan” means this Alumis Inc. 2021 Stock Plan.

 

(w)            “Purchase Price” means the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

 

(x)            “Purchaser” means a person to whom the Board of Directors has offered the right to purchase Shares under the Plan (other than upon exercise of an Option).

 

(y)            “Restricted Stock Unit” means a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan.

 

(z)            “Restricted Stock Unit Agreement” means the agreement between the Company and the recipient of a Restricted Stock Unit that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.

 

(aa)      “Securities Act” means the Securities Act of 1933, as amended.

 

(bb)      “Service” means service as an Employee, Outside Director or Consultant. In case of any dispute as to whether and when Service has terminated, the Board of Directors shall have sole discretion to determine whether such termination has occurred and the effective date of such termination.

 

(cc)      “Share” means one share of Stock, as adjusted in accordance with Section 9 (if applicable).

 

(dd)      “Stock” means the Common Stock of the Company.

 

(ee)      “Stock Grant Agreement” means the agreement between the Company and a Grantee who is awarded Shares under the Plan that contains the terms, conditions and restrictions pertaining to the award of such Shares.

 

(ff)      “Stock Option Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

 

(gg)      “Stock Purchase Agreement” means the agreement between the Company and a Purchaser who purchases Shares under the Plan that contains the terms, conditions and restrictions pertaining to the purchase of such Shares.

 

(hh)      “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

 

EXHIBIT A

 

SCHEDULE OF SHARES RESERVED FOR ISSUANCE UNDER THE PLAN

 

Date of Board Approval		Date of Stockholder Approval		Number of Shares Added		Cumulative Number of Shares
February 2, 2021		February 2, 2021		Not Applicable		500,000
March 2, 2021		March 2, 2021		3,030,000		3,530,000
September 15, 2021		September 15, 2021		6,011,000		9,541,000
December 17, 2021		December 17, 2021		23,495,929		24,450,029
May 8, 2023		May 8, 2023		4,000,000		28,450,029

 

 

 

Exhibit 10.2

 

ESKER THERAPEUTICS, INC. 2021 STOCK PLAN 

NOTICE OF STOCK OPTION GRANT (INSTALLMENT EXERCISE)

 

The Optionee has been granted the following option to purchase shares of the Common Stock of Esker Therapeutics, Inc. (the “Company”):

 

	Name of Optionee:	«Name»
	Total Number of Shares:	«TotalShares»
	Type of Option:	«ISO» Incentive Stock Option (ISO)
		«NSO» Nonstatutory Stock Option (NSO)
	Exercise Price per Share:	$«PricePerShare»
	Date of Grant:	«DateGrant»
	Vesting Schedule/Date Exercisable:	This option shall vest and become exercisable with respect to the first «Percent»% of the Shares subject to this option when the Optionee completes «CliffPeriod» months of continuous Service beginning with the Vesting Commencement Date set forth below. This option shall vest and become exercisable with respect to an additional «Fraction»% of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
	Vesting Commencement Date:	«VestComDate»
	Expiration Date: «ExpDate».	This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Stock Option Agreement, or if the Company engages in certain corporate transactions, as provided in Section 9 of the Plan.

 

By signing below or otherwise accepting this option in a manner acceptable to the Company, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, this Notice of Stock Option Grant, the 2021 Stock Plan and the Stock Option Agreement. Both of the latter documents are attached to, and made a part of, this Notice of Stock Option Grant. Capitalized terms not otherwise defined herein or in the Stock Option Agreement shall have the meanings set forth in the Plan. Section 14 of the Stock Option Agreement includes important acknowledgements of the Optionee.

 

OPTIONEE:			ESKER THERAPEUTICS, INC.
			By:
Name:			Name:

 

 

THE OPTION GRANTED PURSUANT TO THE NOTICE OF STOCK OPTION GRANT AND THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

ESKER THERAPEUTICS, INC. 2021 STOCK PLAN:
STOCK OPTION AGREEMENT (INSTALLMENT EXERCISE)

 

SECTION 1. GRANT OF OPTION.

 

(a)           Option. On the terms and conditions set forth in the Notice of Stock Option Grant, this Agreement and the Plan, the Company has granted to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

 

(b)           $100,000 Limitation. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

 

(c)           Stock Plan and Defined Terms. This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Except as otherwise defined in this Agreement (including without limitation Section 15 hereof), capitalized terms shall have the meaning ascribed to such terms in the Plan.

 

SECTION 2. RIGHT TO EXERCISE.

 

(a)           Exercisability. Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant.

 

(b)           Stockholder Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

 

SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

 

Except as otherwise provided in or pursuant to this Agreement or the Plan, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

 

SECTION 4. EXERCISE PROCEDURES.

 

(a)           Notice of Exercise. The Optionee or the Optionee’s representative may exercise this option by: (i) signing and delivering written notice (on a form prescribed by the Company) to the Company pursuant to Section 13(c) specifying the election to exercise this option, the number of Shares for which it is being exercised and the form of payment, (ii) if requested by the Company, executing and delivering such stockholders agreements as apply to the holders of the Company’s preferred stock (including, without limitation, any right of first refusal and co-sale agreement and/or voting agreement of the Company) and (iii) delivering payment, in a form permissible under Section 5, for the full amount of the Purchase Price (together with any applicable withholding taxes under Subsection (b)). In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option.

 

 

(b)           Withholding Taxes. In the event that the Company determines that it is required to withhold any tax (including without limitation any income tax, social insurance contributions, payroll tax, payment on account or other tax-related items arising in connection with the Optionee’s participation in the Plan and legally applicable to the Optionee (the “Tax-Related Items”)) as a result of the grant, vesting or exercise of this option, or as a result of the transfer of shares acquired upon exercise of this option, the Optionee, as a condition of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all Tax-Related Items. The Optionee acknowledges that the responsibility for all Tax-Related Items is the Optionee’s and may exceed the amount actually withheld by the Company (or its affiliate or agent).

 

(c)           Issuance of Shares. After satisfying all requirements for exercise of this option, the Company shall cause to be issued one or more certificates evidencing, or electronic notation representing, the Shares for which this option has been exercised. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. Until the issuance of the Shares has been entered into the books and records of the Company or a duly authorized transfer agent of the Company, no right to vote, receive dividends or any other right as a stockholder will exist with respect to such Shares. The Company shall cause any certificates evidencing such Shares to be delivered to or upon the order of the person exercising this option.

 

SECTION 5. PAYMENT FOR STOCK.

 

(a)           Cash. All or part of the Purchase Price may be paid in cash or cash equivalents or pursuant to a form of electronic funds transfer acceptable to the Company.

 

(b)           Surrender of Stock. At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

 

(c)           Cashless Exercise. All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to the preceding sentence shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law. At the discretion of the Board of Directors, all or part of the Purchase Price and any withholding taxes may be paid pursuant to another cashless exercise arrangement established by the Company.

 

SECTION 6. TERM AND EXPIRATION.

 

(a)           Basic Term. This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

 

(b)            Termination of Service (Except by Death). If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

 

(i)            The expiration date determined pursuant to Subsection (a) above;

 

(ii)           The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

 

(iii)          The date six months after the termination of the Optionee’s Service by reason of Disability.

 

 

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become vested and exercisable before the Optionee’s Service terminated or becomes vested and exercisable as a result of such termination. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested and exercisable before the Optionee’s Service terminated or becomes vested and exercisable as a result of such termination. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(c)           Death of the Optionee. If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

 

(i)            The expiration date determined pursuant to Subsection (a) above; or

 

(ii)           The date 12 months after the Optionee’s death.

 

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested and exercisable before the Optionee’s death or becomes vested and exercisable as a result of the Optionee’s death. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(d)           Additional Vesting After Termination of Service. The period of time beginning on the date that the Optionee’s Service terminates or the date that the Optionee dies while in Service and ending on the earliest of the occasions determined pursuant to Subsections (b) or (c) above, as applicable, is referred to as the “post-termination exercise period”. To the extent this option is not fully vested and exercisable on the date the Optionee’s Service terminates or the date that the Optionee dies while in Service, the Board of Directors may, during the post-termination exercise period, take action to cause this option to become vested and exercisable (in whole or in part). In no event will this option become vested or exercisable after termination of the Optionee’s Service or death unless the Board of Directors takes affirmative action pursuant to the preceding sentence or unless expressly provided in a written agreement between the Company and the Optionee. In this regard, any provision of this Agreement or another agreement that provides for vesting upon an event (including, without limitation, a change in control) will be deemed to require Service through the occurrence of such event unless the agreement clearly provides otherwise.

 

(e)           Extension of Post-Termination Exercise Periods. Following the date on which the Company’s Stock is first listed for trading on an established securities market, if during any part of the exercise period described in Subsections (b)(ii) or (iii) or Subsection (c)(ii) above the exercise of this option would be prohibited solely because the issuance of Shares upon such exercise would violate the registration requirements under the Securities Act or a similar provision of other applicable law, then instead of terminating at the end of such prescribed period, the then-vested portion of this option will instead remain outstanding and not expire until the earlier of (i) the expiration date determined pursuant to Section 6(a) above or (ii) the date on which the then-vested portion of this option has been exercisable without violation of applicable law for the aggregate period (which need not be consecutive) after termination of the Optionee’s Service specified in the applicable Subsection above.

 

(f)            Part-Time Employment and Leaves of Absence. If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant. If the Optionee goes on a leave of absence, then, to the extent permitted by applicable law, the Company may adjust or suspend the vesting schedule set forth in the Notice of Stock Option Grant. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence approved by the Company in writing. Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work when such leave ends.

 

 

(g)           Notice Concerning ISO Treatment. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

 

(i)            More than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

 

(ii)           More than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

 

(iii)          More than three months after the date when the Optionee has been on a leave of absence for three months, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

 

SECTION 7. RIGHT OF FIRST REFUSAL.

 

(a)           Right of First Refusal. In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares. If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws. The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

 

(b)           Transfer of Shares. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions no less favorable to the Optionee than those described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed transfer on terms and conditions less favorable than those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

 

(c)           Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company, a sale of all or substantially all of the Company’s stock or assets, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 7 shall immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 7.

 

(d)           Termination of Right of First Refusal. Any other provision of this Section 7 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

 

 

(e)           Permitted Transfers. This Section 7 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust or other entity established by the Optionee solely for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

 

(f)            Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 7, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not any certificate(s) therefor have been delivered as required by this Agreement.

 

(g)           Assignment of Right of First Refusal. The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall be entitled to and assume all of the Company’s rights and obligations under this Section 7.

 

SECTION 8. LEGALITY OF INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

 

(a)           It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

 

(b)           Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

 

(c)           Any other applicable provision of federal, State or foreign law has been satisfied.

 

SECTION 9. NO REGISTRATION RIGHTS.

 

The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

 

SECTION 10. RESTRICTIONS ON TRANSFER OF SHARES.

 

(a)           General Restrictions. Unless the Stock is readily tradeable on an established securities market, the transfer of any of the Shares acquired pursuant to this Agreement (or any interest therein) shall, at the Company’s request, be conditioned upon (i) effecting such transfer pursuant to a form of stock transfer agreement prescribed by the Company and (ii) payment of a transfer fee not to exceed $5,000.

 

(b)           Securities Law Restrictions. Regardless of whether the offer and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or other relevant jurisdiction, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on the stock certificates (or electronic equivalent) or the imposition of stop-transfer instructions) and may refuse (or may be required to refuse) to transfer Shares acquired hereunder (or Shares proposed to be transferred in a subsequent transfer) if, in the judgment of the Company, such restrictions, legends or refusal are necessary or appropriate to achieve compliance with the Securities Act or other relevant securities or other laws, including without limitation under Regulation S of the Securities Act or pursuant to another available exemption from registration.

 

 

(c)           Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

 

(d)           Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

 

(e)           Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel, including (if applicable because the Company is relying on Regulation S under the Securities Act) that as of the date of exercise the Optionee is (i) not a U.S. Person; (ii) not acquiring the Shares on behalf, or for the account or benefit, of a U.S. Person; and (iii) is not exercising the option in the United States.

 

(f)            Legends. Any certificates (or electronic equivalent) evidencing Shares purchased under this Agreement shall bear the following legend:

 

“THE SHARES REPRESENTED HEREBY (AND ANY INTEREST THEREIN) MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF THE STOCK OPTION AGREEMENT PURSUANT TO WHICH SUCH SHARES WERE ACQUIRED. SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. IN ADDITION, THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN SUCH STOCK OPTION AGREEMENT. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH STOCK OPTION AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

 

Any certificates (or electronic equivalent) evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY SECURITIES LAWS OF ANY U.S. STATE, AND MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY (CONFIRMED BY OPINION OF COUNSEL) OF AN ALTERNATIVE EXEMPTION FROM REGISTRATION UNDER THE ACT (INCLUDING WITHOUT LIMITATION IN ACCORDANCE WITH REGULATION S UNDER THE ACT), THESE SHARES MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF. HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

 

(g)           Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

 

(h)           Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall be conclusive and binding on the Optionee and all other persons.

 

SECTION 11. DRAG ALONG RIGHT.

 

(a)           Required Actions. If the Requisite Parties approve a Sale of the Company, then Optionee hereby agrees with respect to all Shares which the Optionee own(s) or over which the Optionee otherwise exercises voting or dispositive authority:

 

(i)            if such Sale of the Company requires stockholder approval under the Certificate, the Bylaws of the Company or any law, rule or regulation applicable to the Company, to vote (in person, by proxy or by action by written consent, as applicable) such Shares in favor of such Sale of the Company (it being understood that, within five (5) days after the delivery of a proxy or consent solicitation statement (or similar document requesting the consent or approval of stockholders) in respect of any Sale of the Company, the Stockholder shall duly execute and deliver a proxy or consent, as the case may be, in favor of such Sale of the Company);

 

(ii)           if such transaction is a Stock Sale, to sell the same proportion of shares of capital stock of the Company beneficially held by the Optionee as is being sold by the Selling Holders to the person to whom the Selling Holders propose to sell their Shares;

 

(iii)          to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;

 

(iv)          if the consideration for such Shares pursuant to the Sale of the Company includes any securities, accept in lieu thereof an amount of cash equal to the fair value (as determined in good faith by the Company) of such securities to the extent reasonably necessary (as determined in good faith by the Company) to comply with applicable federal and state securities laws;

 

 

(v)           if the Selling Holders appoint a stockholder representative (the “Stockholder Representative”) for matters affecting the stockholders of the Company under the applicable definitive transaction agreements, to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any applicable escrow, expense or similar fund in connection with any indemnification or similar obligations, and (iii) the payment of such Stockholder’s pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative’s services and duties in connection with such Sale of the Company and its related service as the representative of the Stockholders;

 

(vi)          to agree to make representations and warranties and to agree to indemnity and other liability obligations in connection with the Sale of the Company on terms and conditions that, taken as a whole, are no less favorable to Optionee than to other holders of Common Stock of the Company; and

 

(vii)         to execute and deliver all related documentation and take such other action in support of the Sale of the Company, as reasonably requested by the Company, including a written consent, release and/or joinder, and to not take any action inconsistent with the Sale of the Company.

 

(b)           Exceptions. Notwithstanding the foregoing, an Optionee will not be required to comply with Subsection (a) above in connection with any Sale of the Company unless (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock and (ii) each holder of Common Stock will receive the same amount of consideration per share of Common Stock as is received by other holders in respect of their shares of Common Stock, subject, in each case, to any “rollover” or similar arrangements provided in the definitive documents relating to such Sale of the Company. If the consideration to be paid in exchange for the Shares pursuant to such Sale of the Company includes any securities and due receipt thereof by the Optionee would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Optionee of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Optionee in lieu thereof, against surrender of the Shares which would have otherwise been sold by such Optionee, an amount in cash equal to the fair value (as determined in good faith by the Company’s Board of Directors or the Requisite Parties, as applicable) of the securities which such Optionee would otherwise receive as of the date of the issuance of such securities in exchange for the Shares.

 

SECTION 12. ADJUSTMENT OF SHARES.

 

In the event of any transaction described in Section 9(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 9(a) of the Plan. In the event that the Company is a party to a merger or consolidation or in the event of a sale of all or substantially all of the Company’s stock or assets, this option shall be subject to the treatment provided by the Board of Directors in its sole discretion, as provided in Section 9(b) of the Plan.

 

SECTION 13. MISCELLANEOUS PROVISIONS.

 

(a)           Rights as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

 

(b)           No Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

 

(c)           Notice. Any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid, (iii) deposit with Federal Express Corporation, with shipping charges prepaid or (iv) deposit with any internationally recognized express mail courier service, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c). In addition, to the extent required or permitted pursuant to rules established by the Company from time to time, notices may be delivered electronically.

 

(d)           Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee); provided, however, that a modification that is otherwise favorable to the Optionee (for example, providing the Optionee with additional time to exercise this option after termination of employment or providing for additional forms of payment) but causes this option to lose its tax-favored status (for example, as an ISO) shall not require the consent of the Optionee. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(e)           Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

 

(f)            Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

(g)           Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

(h)           Binding Effect on Transferees, Heirs, Successors and Assigns. This Agreement shall be binding upon Optionee’s permitted transferees, heirs, successors and assigns; provided that for any such transfer to be deemed effective, the transferee shall agree on a form prescribed by the Company to be bound by the terms and conditions of this Agreement, including the restrictions on transfer in Section 10 and the drag along right in Section 11. The Company shall not record any transfer of Shares on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Subsection (h).

 

SECTION 14. ACKNOWLEDGEMENTS OF THE OPTIONEE.

 

In addition to the other terms, conditions and restrictions imposed on this option and the Shares issuable under this option pursuant to this Agreement and the Plan, the Optionee expressly acknowledges being subject to Sections 7 (Right of First Refusal), 8 (Legality of Initial Issuance), 10 (Restrictions on Transfer of Shares, including without limitation the Market Stand-Off) and 11 (Drag Along Right), as well as the following provisions:

 

(a)           Tax Consequences. The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, any Optionee subject to U.S. taxation acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. In addition, if this option is designated as an ISO, the Optionee acknowledges that there is no guarantee that the option in fact qualifies for incentive stock option treatment or that it will continue to qualify for incentive stock option treatment at the time of exercise. In this regard, the Optionee acknowledges that the Company may take actions that will cause the option to cease to be eligible for incentive stock option treatment and that such actions do not require the Optionee’s consent.

 

 

(b)           Electronic Delivery of Documents. The Optionee acknowledges and agrees that the Company may, in its sole discretion, deliver all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission) by email or other means of electronic transmission (including by posting them on a website maintained by the Company or a third party under contract with the Company). The Optionee acknowledges that he or she may incur costs in connection with any such delivery by means of electronic transmission, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents.

 

(c)           No Notice of Expiration Date. The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

 

(d)           Waiver of Statutory Information Rights. The Optionee acknowledges and agrees that, upon exercise of this option and until the first sale of the Company’s Stock to the general public pursuant to a registration statement filed under the Securities Act, he or she shall waive, and shall be deemed to have waived, any rights the Optionee would otherwise have under Section 220 of the Delaware General Corporation Law (or under similar rights pursuant to any other applicable law) to inspect for any purpose and to make copies and extracts from the Company’s stock ledger, a list of its stockholders and its other books and records or the books and records of any subsidiary of the Company (the “Inspection Rights”). The Optionee acknowledges and understands that, but for the waiver made herein, the Optionee would be entitled, upon compliance with the procedures set forth in Section 220 of the Delaware General Corporation Law, to Inspection Rights pursuant thereto, and further acknowledges and agrees that the waiver set forth herein is a knowing and voluntary waiver of such rights, that the Optionee has received sufficient consideration for such waiver and that the Company would not be willing to provide the benefits to the Optionee hereunder without the benefit of such waiver from the Optionee. This waiver applies only in the Optionee’s capacity as a stockholder and does not affect any other inspection rights the Optionee may have pursuant to any written agreement with the Company.

 

(e)           Plan Discretionary. The Optionee understands and acknowledges that (i) the Plan is entirely discretionary, (ii) the Company and the Optionee’s employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of an option does not in any way create any contractual or other right to receive additional grants of options (or benefits in lieu of options) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when options will be granted, the number of Shares offered, the Exercise Price and the vesting schedule, will be at the sole discretion of the Company.

 

(f)            Termination of Service. The Optionee understands and acknowledges that participation in the Plan ceases upon termination of his or her Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.

 

(g)           Extraordinary Compensation. The value of this option shall be an extraordinary item of compensation outside the scope of the Optionee’s employment contract, if any, and shall not be considered a part of his or her normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

(h)           Authorization to Disclose. The Optionee hereby authorizes and directs the Optionee’s employer to disclose to the Company or any Subsidiary any information regarding the Optionee’s employment, the nature and amount of the Optionee’s compensation and the fact and conditions of the Optionee’s participation in the Plan, as the Optionee’s employer deems necessary or appropriate to facilitate the administration of the Plan.

 

 

(i)            Personal Data Authorization. The Optionee consents to the collection, use and transfer of personal data as described in this Subsection (i). The Optionee understands and acknowledges that the Company, the Optionee’s employer and the Company’s other Subsidiaries hold certain personal information regarding the Optionee for the purpose of managing and administering the Plan, including (without limitation) the Optionee’s name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all options or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor (the “Data”). The Optionee further understands and acknowledges that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Optionee’s participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. The Optionee understands and acknowledges that the recipients of Data may be located in the United States or elsewhere. The Optionee authorizes such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering the Optionee’s participation in the Plan, including a transfer to any broker or other third party with whom the Optionee elects to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Optionee’s behalf. The Optionee may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this Subsection (i) by contacting the Company in writing.

 

SECTION 15. DEFINITIONS.

 

(a)           “Agreement” shall mean this Stock Option Agreement.

 

(b)           “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

 

(c)           “Certificate” shall mean the Company’s amended and restated certificate of incorporation as in effect from time to time.

 

(d)           “Company” shall mean Esker Therapeutics, Inc. f/k/a FL2021-001, Inc., a Delaware corporation.

 

(e)           “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

 

(f)            “Optionee” shall mean the person named in the Notice of Stock Option Grant.

 

(g)            “Plan” shall mean the Esker Therapeutics, Inc. 2021 Stock Plan, as in effect on the Date of Grant.

 

(h)            “Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

 

(i)            “Requisite Parties” shall mean both the Board of Directors and the Selling Holders.

 

(j)            “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 7.

 

(k)            “Sale of the Company” shall mean: (i) a transaction or series of related transactions in which a person, or a group of related persons, acquires from stockholders of the Company shares representing more than fifty percent (50%) of the outstanding voting power of the Company (a “Stock Sale”), (ii) a sale of all or substantially all of the assets of the Company or (iii) any other transaction that qualifies as a “Liquidation Event” as defined in the Certificate.

 

 

(l)            “Selling Holders” shall mean the holders of a majority of the then-outstanding shares of Common Stock (voting together as a single class and on an as-converted basis).

 

(m)           “Service” shall mean service as an Employee, Outside Director or Consultant.

 

(n)           “Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

 

(o)           “Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 7.

 

(p)           “U.S. Person” shall mean a person described in Rule 902(k) of Regulation S of the Securities Act (or any successor rule or provision), which generally defines a U.S. person as any natural person resident in the United States, any estate of which any executor or administrator is a U.S. Person, or any trust of which of any trustee is a U.S. Person.

 

 

ESKER THERAPEUTICS, INC. 2021 STOCK PLAN 

NOTICE OF STOCK OPTION GRANT (EARLY EXERCISE)

 

The Optionee has been granted the following option to purchase shares of the Common Stock of Esker Therapeutics, Inc. (the “Company”):

 

	Name of Optionee:	«Name»
	Total Number of Shares:	«TotalShares»
	Type of Option:	«ISO»	Incentive Stock Option (ISO)
		«NSO»	Nonstatutory Stock Option (NSO)
	Exercise Price per Share:	$«PricePerShare»
	Date of Grant:	«DateGrant»
	Date Exercisable:	This option may be exercised at any time after the Date of Grant for all or any part of the Shares subject to this option.
	Vesting Commencement Date:	«VestComDate»
	Vesting Schedule:	This option shall vest, and the Right of Repurchase shall lapse, with respect to the first «Percent»% of the Shares subject to this option when the Optionee completes
		«CliffPeriod» months of continuous Service beginning with the Vesting Commencement Date set forth above. This option shall vest, and the Right of Repurchase shall lapse, with respect to an additional «Fraction»% of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
	Expiration Date:	«ExpDate». This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Stock Option Agreement, or if the Company engages in certain corporate transactions, as provided in Section 9 of the Plan.

 

By signing below or otherwise accepting this option in a manner acceptable to the Company, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, this Notice of Stock Option Grant, the 2021 Stock Plan and the Stock Option Agreement. Both of the latter documents are attached to, and made a part of, this Notice of Stock Option Grant. Capitalized terms not otherwise defined herein or in the Stock Option Agreement shall have the meanings set forth in the Plan. Section 15 of the Stock Option Agreement includes important acknowledgements of the Optionee.

 

OPTIONEE:			ESKER THERAPEUTICS, INC.
			By:
Name:			Title:

 

 

THE OPTION GRANTED PURSUANT TO THE NOTICE OF STOCK OPTION GRANT AND THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

ESKER THERAPEUTICS, INC. 2021 STOCK PLAN: 

STOCK OPTION AGREEMENT (EARLY EXERCISE)

 

SECTION 1.         GRANT OF OPTION.

 

(a)           Option. On the terms and conditions set forth in the Notice of Stock Option Grant, this Agreement and the Plan, the Company has granted to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

 

(b)           $100,000 Limitation. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

 

(c)           Stock Plan and Defined Terms. This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Except as otherwise defined in this Agreement (including without limitation Section 16 hereof), capitalized terms shall have the meaning ascribed to such terms in the Plan.

 

SECTION 2.         RIGHT TO EXERCISE.

 

(a)           Exercisability. Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. Shares purchased by exercising this option may be subject to the Right of Repurchase under Section 7.

 

(b)           Stockholder Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

 

SECTION 3.          NO TRANSFER OR ASSIGNMENT OF OPTION.

 

Except as otherwise provided in or pursuant to this Agreement or the Plan, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

 

 

SECTION 4.         EXERCISE PROCEDURES.

 

(a)           Notice of Exercise. The Optionee or the Optionee’s representative may exercise this option by: (i) signing and delivering written notice (on a form prescribed by the Company) to the Company pursuant to Section 14(c) specifying the election to exercise this option, the number of Shares for which it is being exercised and the form of payment, (ii) if requested by the Company, executing and delivering such stockholders agreements as apply to the holders of the Company’s preferred stock (including, without limitation, any right of first refusal and co-sale agreement and/or voting agreement of the Company) and (iii) delivering payment, in a form permissible under Section 5, for the full amount of the Purchase Price (together with any applicable withholding taxes under Subsection (b)). In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. In the event of a partial exercise of this option, Shares shall be deemed to have been purchased in the order in which they vest in accordance with the Notice of Stock Option Grant.

 

(b)           Withholding Taxes. In the event that the Company determines that it is required to withhold any tax (including without limitation any income tax, social insurance contributions, payroll tax, payment on account or other tax-related items arising in connection with the Optionee’s participation in the Plan and legally applicable to the Optionee (the “Tax-Related Items”)) as a result of the grant, vesting or exercise of this option, or as a result of the vesting or transfer of shares acquired upon exercise of this option, the Optionee, as a condition of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all Tax-Related Items. The Optionee acknowledges that the responsibility for all Tax-Related Items is the Optionee’s and may exceed the amount actually withheld by the Company (or its affiliate or agent).

 

(c)           Issuance of Shares. After satisfying all requirements for exercise of this option, the Company shall cause to be issued one or more certificates evidencing, or electronic notation representing, the Shares for which this option has been exercised. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. Until the issuance of the Shares has been entered into the books and records of the Company or a duly authorized transfer agent of the Company, no right to vote, receive dividends or any other right as a stockholder will exist with respect to such Shares. In the case of Restricted Shares, the Company shall cause any certificates evidencing such Shares to be deposited in escrow under Section 7(c). In the case of other Shares, the Company shall cause any certificates evidencing such Shares to be delivered to or upon the order of the person exercising this option.

 

SECTION 5.         PAYMENT FOR STOCK.

 

(a)           Cash. All or part of the Purchase Price may be paid in cash or cash equivalents or pursuant to a form of electronic funds transfer acceptable to the Company.

 

(b)           Surrender of Stock. At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

 

(c)           Cashless Exercise. All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to the preceding sentence shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law. At the discretion of the Board of Directors, all or part of the Purchase Price and any withholding taxes may be paid pursuant to another cashless exercise arrangement established by the Company.

 

 

SECTION 6.          TERM AND EXPIRATION.

 

(a)           Basic Term. This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

 

(b)           Termination of Service (Except by Death). If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

 

(i)            The expiration date determined pursuant to Subsection (a) above;

 

(ii)           The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

 

(iii)           The date six months after the termination of the Optionee’s Service by reason of Disability. The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become vested before the Optionee’s Service terminated or becomes vested as a result of such termination. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested before the Optionee’s Service terminated or becomes vested as a result of such termination. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(c)           Death of the Optionee. If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

 

(i)            The expiration date determined pursuant to Subsection (a) above; or

 

(ii)           The date 12 months after the Optionee’s death.

 

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become vested before the Optionee’s death or becomes vested as a result of the Optionee’s death. Once this option (or portion thereof) has terminated, the Optionee shall have no further rights with respect to the option (or portion thereof) or to the underlying Shares.

 

(d)           Additional Vesting After Termination of Service. The period of time beginning on the date that the Optionee’s Service terminates or the date that the Optionee dies while in Service and ending on the earliest of the occasions determined pursuant to Subsections (b) or (c) above, as applicable, is referred to as the “post-termination exercise period”. To the extent this option is not fully vested on the date the Optionee’s Service terminates or the date that the Optionee dies while in Service, the Board of Directors may, during the post-termination exercise period, take action to cause this option to become vested (in whole or in part). In no event will this option become vested after termination of the Optionee’s Service or death unless the Board of Directors takes affirmative action pursuant to the preceding sentence or unless expressly provided in a written agreement between the Company and the Optionee. In this regard, any provision of this Agreement or another agreement that provides for vesting upon an event (including, without limitation, a change in control) will be deemed to require Service through the occurrence of such event unless the agreement clearly provides otherwise.

 

 

(e)           Extension of Post-Termination Exercise Periods. Following the date on which the Company’s Stock is first listed for trading on an established securities market, if during any part of the exercise period described in Subsections (b)(ii) or (iii) or Subsection (c)(ii) above the exercise of this option would be prohibited solely because the issuance of Shares upon such exercise would violate the registration requirements under the Securities Act or a similar provision of other applicable law, then instead of terminating at the end of such prescribed period, the then-vested portion of this option will instead remain outstanding and not expire until the earlier of (i) the expiration date determined pursuant to Section 6(a) above or (ii) the date on which the then-vested portion of this option has been exercisable without violation of applicable law for the aggregate period (which need not be consecutive) after termination of the Optionee’s Service specified in the applicable Subsection above.

 

(f)            Part-Time Employment and Leaves of Absence. If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant. If the Optionee goes on a leave of absence, then, to the extent permitted by applicable law, the Company may adjust or suspend the vesting schedule set forth in the Notice of Stock Option Grant. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence approved by the Company in writing. Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work when such leave ends.

 

(g)           Notice Concerning ISO Treatment. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

 

(i)            More than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

 

(ii)            More than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

 

(iii)          More than three months after the date when the Optionee has been on a leave of absence for three months, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

 

SECTION 7.         RIGHT OF REPURCHASE.

 

(a)           Scope of Repurchase Right. Until they vest in accordance with the Notice of Stock Option Grant and Subsection (b) below, the Shares acquired under this Agreement shall be Restricted Shares and shall be subject to the Company’s Right of Repurchase. The Company, however, may decline to exercise its Right of Repurchase or may exercise its Right of Repurchase only with respect to a portion of the Restricted Shares. The Company may exercise its Right of Repurchase only during the Repurchase Period following the termination of the Optionee’s Service, but the Right of Repurchase may be exercised automatically under Subsection (d) below. If the Right of Repurchase is exercised, the Company shall pay the Optionee an amount equal to the lower of (i) the Exercise Price of each Restricted Share being repurchased or (ii) the Fair Market Value of such Restricted Share at the time the Right of Repurchase is exercised.

 

 

(b)           Lapse of Repurchase Right. The Right of Repurchase shall lapse with respect to the Restricted Shares in accordance with the vesting schedule set forth in the Notice of Stock Option Grant.

 

(c)           Escrow. Upon issuance, any certificate(s) for Restricted Shares shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any additional or exchanged securities or other property described in Subsection (f) below shall immediately be delivered to the Company to be held in escrow. All ordinary cash dividends on Restricted Shares (or on other securities held in escrow) shall be paid directly to the Optionee and shall not be held in escrow. Restricted Shares, together with any other assets held in escrow under this Agreement, shall be (i) surrendered to the Company for repurchase upon exercise of the Right of Repurchase or the Right of First Refusal or (ii) if held in escrow, released to the Optionee upon his or her request to the extent that the Shares have ceased to be Restricted Shares (but not more frequently than once every six months). In any event, all Shares that have ceased to be Restricted Shares, together with any other vested assets held in escrow under this Agreement, shall be released within 90 days after the earlier of (i) the termination of the Optionee’s Service or (ii) the lapse of the Right of First Refusal.

 

(d)           Exercise of Repurchase Right. The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 14(c) that it will not exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Optionee in the purchase of the Restricted Shares. If the Restricted Shares being repurchased are represented by certificate(s), any such certificate(s) shall be delivered to the Company. If the Restricted Shares being repurchased are not represented by certificate, the repurchase shall be effected by an appropriate book entry on the stock ledger for the Shares.

 

(e)           Termination of Rights as Stockholder. If the Right of Repurchase is exercised in accordance with this Section 7 and the Company makes available the consideration for the Restricted Shares being repurchased, then the person from whom the Restricted Shares are repurchased shall no longer have any rights as a holder of the Restricted Shares (other than the right to receive payment of such consideration). Such Restricted Shares shall be deemed to have been repurchased pursuant to this Section 7, whether or not any certificate(s) for such Restricted Shares have been delivered to the Company or the consideration for such Restricted Shares has been accepted.

 

(f)            Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company, a sale of all or substantially all of the Company’s stock or assets, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Restricted Shares shall immediately be subject to the Right of Repurchase. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Restricted Shares. Appropriate adjustments shall also be made to the price per share to be paid upon the exercise of the Right of Repurchase, provided that the aggregate purchase price payable for the Restricted Shares shall remain the same. In the event of any transaction described in Section 9(b) of the Plan or any other corporate reorganization, the Right of Repurchase may be exercised by the Company’s successor.

 

 

(g)           Transfer of Restricted Shares. The Optionee shall not transfer, assign, encumber or otherwise dispose of any Restricted Shares without the Company’s written consent, except as provided in the following sentence. The Optionee may transfer Restricted Shares to one or more members of the Optionee’s Immediate Family or to a trust or other entity established by the Optionee solely for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Restricted Shares, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

 

(h)           Assignment of Repurchase Right. The Board of Directors may freely assign the Company’s Right of Repurchase, in whole or in part. Any person who accepts an assignment of the Right of Repurchase from the Company shall be entitled to and assume all of the Company’s rights and obligations under this Section 7.

 

SECTION 8.         RIGHT OF FIRST REFUSAL.

 

(a)           Right of First Refusal. In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares. If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws. The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

 

(b)           Transfer of Shares. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions no less favorable to the Optionee than those described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed transfer on terms and conditions less favorable than those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

 

(c)           Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company, a sale of all or substantially all of the Company’s stock or assets, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 8 shall immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 8.

 

 

(d)           Termination of Right of First Refusal. Any other provision of this Section 8 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

 

(e)           Permitted Transfers. This Section 8 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust or other entity established by the Optionee solely for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

 

(f)            Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 8, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not any certificate(s) therefor have been delivered as required by this Agreement.

 

(g)           Assignment of Right of First Refusal. The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall be entitled to and assume all of the Company’s rights and obligations under this Section 8.

 

SECTION 9.         LEGALITY OF INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

 

(a)           It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

 

(b)           Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

 

(c)           Any other applicable provision of federal, State or foreign law has been satisfied.

 

SECTION 10.      NO REGISTRATION RIGHTS.

 

The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

 

 

SECTION 11.       RESTRICTIONS ON TRANSFER OF SHARES.

 

(a)           General Restrictions. Unless the Stock is readily tradeable on an established securities market, the transfer of any of the Shares acquired pursuant to this Agreement (or any interest therein) shall, at the Company’s request, be conditioned upon (i) effecting such transfer pursuant to a form of stock transfer agreement prescribed by the Company and (ii) payment of a transfer fee not to exceed $5,000.

 

(b)           Securities Law Restrictions. Regardless of whether the offer and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or other relevant jurisdiction, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on the stock certificates (or electronic equivalent) or the imposition of stop-transfer instructions) and may refuse (or may be required to refuse) to transfer Shares acquired hereunder (or Shares proposed to be transferred in a subsequent transfer) if, in the judgment of the Company, such restrictions, legends or refusal are necessary or appropriate to achieve compliance with the Securities Act or other relevant securities or other laws, including without limitation under Regulation S of the Securities Act or pursuant to another available exemption from registration.

 

(c)           Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

 

(d)           Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

 

(e)           Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel, including (if applicable because the Company is relying on Regulation S under the Securities Act) that as of the date of exercise the Optionee is (i) not a U.S. Person; (ii) not acquiring the Shares on behalf, or for the account or benefit, of a U.S. Person; and (iii) is not exercising the option in the United States.

 

 

(f)            Legends. Any certificates (or electronic equivalent) evidencing Shares purchased under this Agreement shall bear the following legend:

 

“THE SHARES REPRESENTED HEREBY (AND ANY INTEREST THEREIN) MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF THE STOCK OPTION AGREEMENT PURSUANT TO WHICH SUCH SHARES WERE ACQUIRED. SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. IN ADDITION, THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN SUCH STOCK OPTION AGREEMENT. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH STOCK OPTION AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

Any certificates (or electronic equivalent) evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY SECURITIES LAWS OF ANY U.S. STATE, AND MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY (CONFIRMED BY OPINION OF COUNSEL) OF AN ALTERNATIVE EXEMPTION FROM REGISTRATION UNDER THE ACT (INCLUDING WITHOUT LIMITATION IN ACCORDANCE WITH REGULATION S UNDER THE ACT), THESE SHARES MAY NOT BE SOLD, REOFFERED, PLEDGED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF. HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

 

(g)           Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

 

(h)           Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 11 shall be conclusive and binding on the Optionee and all other persons.

 

 

SECTION 12.       DRAG ALONG RIGHT.

 

(a)           Required Actions. If the Requisite Parties approve a Sale of the Company, then Optionee hereby agrees with respect to all Shares which the Optionee own(s) or over which the Optionee otherwise exercises voting or dispositive authority:

 

(i)            if such Sale of the Company requires stockholder approval under the Certificate, the Bylaws of the Company or any law, rule or regulation applicable to the Company, to vote (in person, by proxy or by action by written consent, as applicable) such Shares in favor of such Sale of the Company (it being understood that, within five (5) days after the delivery of a proxy or consent

 

(ii)           solicitation statement (or similar document requesting the consent or approval of stockholders) in respect of any Sale of the Company, the Stockholder shall duly execute and deliver a proxy or consent, as the case may be, in favor of such Sale of the Company);

 

(iii)          if such transaction is a Stock Sale, to sell the same proportion of shares of capital stock of the Company beneficially held by the Optionee as is being sold by the Selling Holders to the person to whom the Selling Holders propose to sell their Shares;

 

(iv)          to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;

 

(v)           if the consideration for such Shares pursuant to the Sale of the Company includes any securities, accept in lieu thereof an amount of cash equal to the fair value (as determined in good faith by the Company) of such securities to the extent reasonably necessary (as determined in good faith by the Company) to comply with applicable federal and state securities laws;

 

(vi)          if the Selling Holders appoint a stockholder representative (the “Stockholder Representative”) for matters affecting the stockholders of the Company under the applicable definitive transaction agreements, to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any applicable escrow, expense or similar fund in connection with any indemnification or similar obligations, and (iii) the payment of such Stockholder’s pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative’s services and duties in connection with such Sale of the Company and its related service as the representative of the Stockholders;

 

(vii)         to agree to make representations and warranties and to agree to indemnity and other liability obligations in connection with the Sale of the Company on terms and conditions that, taken as a whole, are no less favorable to Optionee than to other holders of Common Stock of the Company; and

 

(viii)        to execute and deliver all related documentation and take such other action in support of the Sale of the Company, as reasonably requested by the Company, including a written consent, release and/or joinder, and to not take any action inconsistent with the Sale of the Company.

 

 

(b)            Exceptions. Notwithstanding the foregoing, an Optionee will not be required to comply with Subsection (a) above in connection with any Sale of the Company unless (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock and (ii) each holder of Common Stock will receive the same amount of consideration per share of Common Stock as is received by other holders in respect of their shares of Common Stock, subject, in each case, to any “rollover” or similar arrangements provided in the definitive documents relating to such Sale of the Company. If the consideration to be paid in exchange for the Shares pursuant to such Sale of the Company includes any securities and due receipt thereof by the Optionee would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Optionee of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Optionee in lieu thereof, against surrender of the Shares which would have otherwise been sold by such Optionee, an amount in cash equal to the fair value (as determined in good faith by the Company’s Board of Directors or the Requisite Parties, as applicable) of the securities which such Optionee would otherwise receive as of the date of the issuance of such securities in exchange for the Shares.

 

SECTION 13.       ADJUSTMENT OF SHARES.

 

In the event of any transaction described in Section 9(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 9(a) of the Plan. In the event that the Company is a party to a merger or consolidation or in the event of a sale of all or substantially all of the Company’s stock or assets, this option shall be subject to the treatment provided by the Board of Directors in its sole discretion, as provided in Section 9(b) of the Plan.

 

SECTION 14.       MISCELLANEOUS PROVISIONS.

 

(a)           Rights as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

 

(b)           No Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

(c)           Notice. Any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid, (iii) deposit with Federal Express Corporation, with shipping charges prepaid or (iv) deposit with any internationally recognized express mail courier service, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c). In addition, to the extent required or permitted pursuant to rules established by the Company from time to time, notices may be delivered electronically.

 

(d)           Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee); provided, however, that a modification that is otherwise favorable to the Optionee (for example, providing the Optionee with additional time to exercise this option after termination of employment or providing for additional forms of payment) but causes this option to lose its tax-favored status (for example, as an ISO) shall not require the consent of the Optionee. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

 

(e)           Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

 

(f)            Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

 

(g)           Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

(h)           Binding Effect on Transferees, Heirs, Successors and Assigns. This Agreement shall be binding upon Optionee’s permitted transferees, heirs, successors and assigns; provided that for any such transfer to be deemed effective, the transferee shall agree on a form prescribed by the Company to be bound by the terms and conditions of this Agreement, including the restrictions on transfer in Section 11 and the drag along right in Section 12. The Company shall not record any transfer of Shares on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Subsection (h).

 

SECTION 15.       ACKNOWLEDGEMENTS OF THE OPTIONEE.

 

In addition to the other terms, conditions and restrictions imposed on this option and the Shares issuable under this option pursuant to this Agreement and the Plan, the Optionee expressly acknowledges being subject to Sections 7 (Right of Repurchase), 8 (Right of First Refusal), 9 (Legality of Initial Issuance), 11 (Restrictions on Transfer of Shares, including without limitation the Market Stand-Off) and 12 (Drag Along Right), as well as the following provisions:

 

(a)           Tax Consequences. The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, any Optionee subject to U.S. taxation acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. In addition, if this option is designated as an ISO, the Optionee acknowledges that there is no guarantee that the option in fact qualifies for incentive stock option treatment or that it will continue to qualify for incentive stock option treatment at the time of exercise. In this regard, the Optionee acknowledges that the Company may take actions that will cause the option to cease to be eligible for incentive stock option treatment and that such actions do not require the Optionee’s consent.

 

 

(b)           Electronic Delivery of Documents. The Optionee acknowledges and agrees that the Company may, in its sole discretion, deliver all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission) by email or other means of electronic transmission (including by posting them on a website maintained by the Company or a third party under contract with the Company). The Optionee acknowledges that he or she may incur costs in connection with any such delivery by means of electronic transmission, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents.

 

(c)           No Notice of Expiration Date. The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

 

(d)           Waiver of Statutory Information Rights. The Optionee acknowledges and agrees that, upon exercise of this option and until the first sale of the Company’s Stock to the general public pursuant to a registration statement filed under the Securities Act, he or she shall waive, and shall be deemed to have waived, any rights the Optionee would otherwise have under Section 220 of the Delaware General Corporation Law (or under similar rights pursuant to any other applicable law) to inspect for any purpose and to make copies and extracts from the Company’s stock ledger, a list of its stockholders and its other books and records or the books and records of any subsidiary of the Company (the “Inspection Rights”). The Optionee acknowledges and understands that, but for the waiver made herein, the Optionee would be entitled, upon compliance with the procedures set forth in Section 220 of the Delaware General Corporation Law, to Inspection Rights pursuant thereto, and further acknowledges and agrees that the waiver set forth herein is a knowing and voluntary waiver of such rights, that the Optionee has received sufficient consideration for such waiver and that the Company would not be willing to provide the benefits to the Optionee hereunder without the benefit of such waiver from the Optionee. This waiver applies only in the Optionee’s capacity as a stockholder and does not affect any other inspection rights the Optionee may have pursuant to any written agreement with the Company.

 

(e)           Plan Discretionary. The Optionee understands and acknowledges that (i) the Plan is entirely discretionary, (ii) the Company and the Optionee’s employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) the grant of an option does not in any way create any contractual or other right to receive additional grants of options (or benefits in lieu of options) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when options will be granted, the number of Shares offered, the Exercise Price and the vesting schedule, will be at the sole discretion of the Company.

 

(f)            Termination of Service. The Optionee understands and acknowledges that participation in the Plan ceases upon termination of his or her Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.

 

(g)           Extraordinary Compensation. The value of this option shall be an extraordinary item of compensation outside the scope of the Optionee’s employment contract, if any, and shall not be considered a part of his or her normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

 

(h)           Authorization to Disclose. The Optionee hereby authorizes and directs the Optionee’s employer to disclose to the Company or any Subsidiary any information regarding the Optionee’s employment, the nature and amount of the Optionee’s compensation and the fact and conditions of the Optionee’s participation in the Plan, as the Optionee’s employer deems necessary or appropriate to facilitate the administration of the Plan.

 

(i)            Personal Data Authorization. The Optionee consents to the collection, use and transfer of personal data as described in this Subsection (i). The Optionee understands and acknowledges that the Company, the Optionee’s employer and the Company’s other Subsidiaries hold certain personal information regarding the Optionee for the purpose of managing and administering the Plan, including (without limitation) the Optionee’s name, home address, telephone number, date of birth, social insurance number, salary, nationality, job title, any Shares or directorships held in the Company and details of all options or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor (the “Data”). The Optionee further understands and acknowledges that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Optionee’s participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. The Optionee understands and acknowledges that the recipients of Data may be located in the United States or elsewhere. The Optionee authorizes such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering the Optionee’s participation in the Plan, including a transfer to any broker or other third party with whom the Optionee elects to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Optionee’s behalf. The Optionee may, at any time, view the Data, require any necessary modifications of Data or withdraw the consents set forth in this Subsection (i) by contacting the Company in writing.

 

SECTION 16.       DEFINITIONS.

 

(a)           “Agreement” shall mean this Stock Option Agreement.

 

(b)           “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

 

(c)           “Certificate” shall mean the Company’s amended and restated certificate of incorporation as in effect from time to time.

 

(d)           “Company” shall mean Esker Therapeutics, Inc. f/k/a FL2021-001, Inc., a Delaware corporation.

 

(e)           “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

 

(f)            “Optionee” shall mean the person named in the Notice of Stock Option Grant.

 

(g)           “Plan” shall mean the Esker Therapeutics, Inc. 2021 Stock Plan, as in effect on the Date of Grant.

 

(h)           “Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

 

 

(i)            “Repurchase Period” shall mean a period of 90 consecutive days commencing on the date when the Optionee’s Service terminates for any reason, including (without limitation) death or disability.

 

(j)            “Requisite Parties” shall mean both the Board of Directors and the Selling Holders.

 

(k)            “Restricted Share” shall mean a Share that is subject to the Right of Repurchase.

 

(l)            “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 8.

 

(m)          “Right of Repurchase” shall mean the Company’s right of repurchase described in Section 7.

 

(n)            “Sale of the Company” shall mean: (i) a transaction or series of related transactions in which a person, or a group of related persons, acquires from stockholders of the Company shares representing more than fifty percent (50%) of the outstanding voting power of the Company (a “Stock Sale”), (ii) a sale of all or substantially all of the assets of the Company or (iii) any other transaction that qualifies as a “Liquidation Event” as defined in the Certificate.

 

(o)           “Selling Holders” shall mean the holders of a majority of the then-outstanding shares of Common Stock (voting together as a single class and on an as-converted basis).

 

(p)           “Service” shall mean service as an Employee, Outside Director or Consultant.

 

(q)           “Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

 

(r)            “Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 8.

 

(s)            “U.S. Person” shall mean a person described in Rule 902(k) of Regulation S of the Securities Act (or any successor rule or provision), which generally defines a U.S. person as any natural person resident in the United States, any estate of which any executor or administrator is a U.S. Person, or any trust of which of any trustee is a U.S. Person.

 

 

Exhibit 10.6

 

ALUMIS INC.

 

2024 PERFORMANCE OPTION PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS: May 6, 2024

APPROVED BY THE STOCKHOLDERS: May 13, 2024

TERMINATION DATE: May 5, 2034

 

1.             General.

 

(a)            Eligible Stock Award Recipients. Employees, Directors and Consultants are eligible to receive Stock Awards.

 

(b)            Available Stock Awards. The Plan provides for the grant of the following types of Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, and (iii) Restricted Stock Awards.

 

(c)            Purpose. The Plan, through the grant of Stock Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.

 

2.             Administration.

 

(a)            Administration by the Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)            Powers of the Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)            To determine (A) who will be granted Stock Awards; (B) when and how each Stock Award will be granted; (C) what type of Stock Award will be granted; (D) the provisions of each Stock Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Stock under the Stock Award; (E) the number of shares of Common Stock subject to, or the cash value of, a Stock Award; and (F) the Fair Market Value applicable to a Stock Award.

 

(ii)          To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Stock Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Stock Award fully effective.

 

(iii)         To settle all controversies regarding the Plan and Stock Awards granted under it.

 

(iv)          To accelerate, in whole or in part, the time at which a Stock Award may be exercised or vest (or the time at which cash or shares of Common Stock may be issued in settlement thereof).

 

 

(v)           To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or a Stock Award Agreement, suspension or termination of the Plan will not impair a Participant’s rights under the Participant’s then-outstanding Stock Award without the Participant’s written consent except as provided in subsection (viii) below.

 

(vi)          To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or bringing the Plan or Stock Awards granted under the Plan into compliance with the requirements for Incentive Stock Options or ensuring that they are exempt from, or compliant with, the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Stock Awards available for issuance under the Plan. Except as otherwise provided in the Plan or a Stock Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Stock Award without the Participant’s written consent.

 

(vii)         To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Stock Options.

 

(viii)       To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Stock Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Stock Awards without the affected Participant’s consent (A) to maintain the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment of the Stock Award solely because it impairs the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Stock Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws.

 

(ix)          Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Stock Awards.

 

(x)           To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Stock Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).

 

 

(xi)          To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1) Option, (2) Restricted Stock Award, (3) cash and/or (4) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.

 

(c)            Delegation to Committee. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

 

(d)            Delegation to Other Person or Body. The Board may delegate to one or more persons or bodies, in addition to the Board, the authority to do one or both of the following: (i) designate recipients of Options (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such recipients; provided, however, that the Board resolutions regarding such delegation will fix the terms of such delegation in accordance with applicable law, including without limitation Sections 152 and/or 157 of the Delaware General Corporation Law, and provided that no Board resolution may permit a person or body to grant a Stock Award to such person or body. Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may not delegate authority to determine the Fair Market Value pursuant to Section 13(t) below to any person or body, except that the Board may delegate such authority to a Committee or Committees of the Board in accordance with Section 2(c) above.

 

(e)            Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.             Shares Subject to the Plan.

 

(a)            Share Reserve.

 

(i)            Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 8,792,402 shares (the “Share Reserve”).

 

 

(ii)          For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a).

 

(b)            Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.

 

(c)            Incentive Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be a number of shares of Common Stock equal to three multiplied by the Share Reserve.

 

(d)            Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.

 

4.             Eligibility.

 

(a)            Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.

 

(b)            Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five years from the date of grant.

 

(c)            Consultants. A Consultant will not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or sale of the Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.

 

 

5.             Provisions Relating to Options.

 

Each Option will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of separate Options need not be identical; provided, however, that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)            Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option will be exercisable after the expiration of 10 years from the date of its grant or such shorter period specified in the Stock Award Agreement.

 

(b)            Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the date the Stock Award is granted. Notwithstanding the foregoing, an Option may be granted with an exercise or strike price lower than 100% of the Fair Market Value of the Common Stock subject to the Stock Award if such Stock Award is granted pursuant to an assumption of or substitution for another option pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code.

 

(c)            Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:

 

(i)            by cash, check, bank draft, electronic funds transfer or money order payable to the Company;

 

(ii)          subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”;

 

(iii)          subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company and/or the Board, at the time Participant exercises their Option, will include delivery to the Company of Participant’s attestation of ownership of such shares of Common Stock in a form approved by the Company. Participant may not exercise their option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock;

 

 

(iv)            subject to Company and/or Board consent at the time of exercise, and provided that the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of the Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price plus, to the extent permitted by the Company and/or Board at the time of exercise, the aggregate withholding obligations in respect of the Option exercise; provided, further that Participant must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment.  Shares of Common Stock will no longer be subject to the Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;

 

(v)            according to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or

 

(vi)            in any other form of legal consideration that may be acceptable to the Board.

 

(d)            Transferability of Options. The Board may, in its sole discretion, impose such limitations on the transferability of Options as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options will apply:

 

(i)            Restrictions on Transfer. An Option will not be transferable except by will or by the laws of descent and distribution (or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided in the Plan, an Option may not be transferred for consideration.

 

(ii)            Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(iii)            Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

 

(e)            Vesting Generally. The total number of shares of Common Stock subject to an Option may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 5(e) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

 

(f)            Termination of Continuous Service. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which period will not be less than 30 days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the expiration of the term of the Option as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option (as applicable) within the applicable time frame, the Option will terminate.

 

(g)            Extension of Termination Date. If the exercise of an Option following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements, and (ii) the expiration of the term of the Option as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s Stock Award Agreement, if the sale of any Common Stock received upon exercise of an Option following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option will terminate on the earlier of (i) the expiration of the period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option would not be in violation of the Company’s insider trading policy, and (ii) the expiration of the term of the Option as set forth in the applicable Stock Award Agreement.

 

(h)            Disability of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option (to the extent that the Participant was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six months if necessary to comply with applicable laws unless such termination is for Cause), and (ii) the expiration of the term of the Option as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option within the applicable time frame, the Option (as applicable) will terminate.

 

 

(i)            Death of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option may be exercised (to the extent the Participant was entitled to exercise such Option as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Participant’s death, but only within the period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six months if necessary to comply with applicable laws unless such termination is for Cause), and (ii) the expiration of the term of such Option as set forth in the Stock Award Agreement. If, after the Participant’s death, the Option is not exercised within the applicable time frame, the Option will terminate.

 

(j)            Termination for Cause. Except as explicitly provided otherwise in a Participant’s Stock Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option (whether vested or unvested) from and after the date of such termination of Continuous Service.

 

(k)           Non-Exempt Employees. If an Option is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option will not be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option (although the Stock Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(k) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.

 

(l)            Early Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 8(l), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in Section 8(l) is not violated, the Company will not be required to exercise its repurchase right until at least six months (or such longer or shorter period of time required to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement.

 

 

(m)           Right of Repurchase. Subject to the “Repurchase Limitation” in Section 8(l), the Option may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the exercise of the Option.

 

(n)            Right of First Refusal. The Option may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option. Such right of first refusal will be subject to the “Repurchase Limitation” in Section 8(l). Except as expressly provided in this Section 5(n) or in the Stock Award Agreement, such right of first refusal will otherwise comply with any applicable provisions of the bylaws of the Company.

 

6.             Provisions Relating to Restricted Stock Awards.

 

Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(a)            Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(b)            Vesting. Subject to the “Repurchase Limitation” in Section 8(l), shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(c)            Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.

 

(d)            Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

(e)            Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on shares subject to the Restricted Stock Award will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.

 

 

7.             Covenants of the Company.

 

(a)            Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.

 

(b)            Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of a Stock Award or the subsequent issuance of cash or Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities law.

 

(c)            No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.

 

8.             Miscellaneous.

 

(a)            Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute general funds of the Company.

 

(b)            Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Stock Award Agreement or related grant documents as a result of a clerical error in the papering of the Stock Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Stock Award Agreement or related grant documents.

 

(c)            Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Stock Award has been entered into the books and records of the Company.

 

(d)            No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

 

(e)            Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Stock Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares subject to any portion of such Stock Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Stock Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Stock Award that is so reduced or extended.

 

(f)             Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(g)            Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that the Participant is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

(h)           Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the maximum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement.

 

 

(i)            Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).

 

(j)            Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

(k)           Compliance with Section 409A of the Code. To the extent that the Board determines that any Stock Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements will be interpreted in accordance with Section 409A of the Code. Notwithstanding anything to the contrary in the Plan (and unless the Stock Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding a Stock Award that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant’s “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule.

 

(l)            Repurchase Limitation. The terms of any repurchase right will be specified in the Stock Award Agreement. The repurchase price for vested shares of Common Stock will be the Fair Market Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested shares of Common Stock will be the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company will not exercise its repurchase right until at least six months (or such longer or shorter period of time necessary to avoid classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board.

 

 

(m)           Further Information and Action.  Upon request from the Company at any time, any Participant (and any individuals affiliated with a Participant that are beneficial owners of the Company, if applicable) will promptly provide the Company with such information and take such other actions as the Company may request in connection with any obligations the Company may have under applicable law, rule, or regulation, or to comply with requests by applicable regulatory authorities.  All information provided by a Participant (or an individual affiliated with a Participant) pursuant to this paragraph shall be accurate and complete. Any Participant (and any individuals affiliated with a Participant that are beneficial owners of the Company, if applicable) will submit to the Company (or other recipient as directed by the Company) any updates to such information within 15 days after any change in, or correction to, any such information. For purposes of this paragraph, the term “beneficial owner” shall have the meaning ascribed to it in the Bank Secrecy Act as amended by the Corporate Transparency Act and any regulations promulgated thereunder (as amended from time to time).

 

9.             Adjustments upon Changes in Common Stock; Other Corporate Events.

 

(a)            Capitalization Adjustments. In the event of a Capitalization Adjustment, then: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards will be proportionately adjusted and such adjustment shall occur automatically. To the extent such adjustments cannot occur automatically, the Board shall have the power to make determinations as it deems necessary and its determinations and any adjustments under this section will be final, binding and conclusive.

 

(b)            Dissolution or Liquidation. To the extent not previously exercised or settled, Options, Restricted Stock Awards and other rights to purchase shares of Common Stock shall terminate immediately prior to the liquidation or dissolution of the Company.

 

(c)            Corporate Transaction. In the event that the Company is a party to a Corporate Transaction, all shares of Common Stock acquired under the Plan and all Stock Awards outstanding on the effective date of the transaction shall, unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Stock Award, be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Board in its capacity as administrator of the Plan, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Stock Awards (or all portions of a Stock Award) in an identical manner. The treatment specified in the transaction agreement or as determined by the Board may include (without limitation) one or more of the following with respect to each outstanding Stock Award:

 

(i)            The Company, the surviving corporation or a parent thereof may continue or assume the Stock Award or substitute a comparable award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the holders of shares of Common Stock in the transaction). A comparable award need not be the same type of award as the Stock Award for which it is substituted, and, in the case of an Option, need not have the same tax-status (e.g., a Nonstatutory Stock Option may be substituted for an Incentive Stock Option).

 

(ii)          The cancellation of the Stock Award and a payment to the Participant with respect to each share of Common Stock subject to the portion of the Stock Award that is vested as of the transaction date equal to the excess of (A) the value, as determined by the Board in its absolute discretion, of the property (including cash) received by the holder of a share of Common Stock as a result of the transaction, over (if applicable) (B) the per-share exercise price of the Stock Award (such excess, the “Spread”). Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent having a value equal to the Spread. In addition, any escrow, indemnification, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Stock. Receipt of the payment described in this Subsection (c)(ii) may be conditioned upon the Participant acknowledging such escrow, indemnification, holdback, earn-out or other provisions on a form prescribed by the Company. If the Spread applicable to a Stock Award is zero or a negative number, then the Stock Award may be cancelled without making a payment to the Participant.

 

 

(iii)         Even if the Spread applicable to an Option is a positive number, the Option may be cancelled without the payment of any consideration; provided that the Optionholder shall be notified of such treatment and given an opportunity to exercise the Option (to the extent the Option is vested or becomes vested as of the effective date of the transaction) during a period of not less than five (5) business days preceding the effective date of the transaction, unless (A) a shorter period is required to permit a timely closing of the transaction and (B) such shorter period still offers the Optionholder a reasonable opportunity to exercise the Option.

 

(iv)          In the case of an Option: (A) suspension of the Optionholder’s right to exercise the Option during a limited period of time preceding the closing of the transaction if such suspension is administratively necessary to facilitate the closing of the transaction and/or (B) termination of any right the holder has to exercise the Option prior to vesting in the shares of Common Stock subject to the Option (i.e., “early exercise”), such that following the closing of the transaction the Option may only be exercised to the extent it is vested.

 

The Board has discretion to accelerate, in whole or part, the vesting and exercisability of a Stock Award in connection with a Corporate Transaction covered by this Section 9(c). The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award.

 

(d)            Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

 

10.          Plan Term; Earlier Termination or Suspension of the Plan.

 

(a)            Plan Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the 10th anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)            No Impairment of Rights. Suspension or termination of the Plan will not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan.

 

 

11.          Effective Date of Plan.

 

This Plan will become effective on the Effective Date.

 

12.          Choice of Law.

 

The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.

 

13.          Definitions. As used in the Plan or any Stock Award Agreement, the following definitions will apply to the capitalized terms indicated below, unless otherwise defined in the applicable Stock Award Agreement:

 

(a)            “Affiliate” means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing definition.

 

(b)            “Board” means the Board of Directors of the Company.

 

(c)            “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(d)            “Cause” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) Participant’s willful or gross neglect and material failure to perform Participant’s duties and responsibilities of the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with Participant’s responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom Participant owes an obligation of nondisclosure as a result of Participant’s relationship with the Company; (iv) Participant is convicted of, or enters a no contest plea to, a felony; or (v) Participant’s breach of any of Participant’s material obligations under any Company policy, written agreement or covenant with the Company. A termination of Participant’s Continuous Service under subpart (i), (iii) and (v) shall not be deemed for “Cause” unless the Participant has first been given specific written notice of the subpart and facts relied upon and thirty days to cure. The determination as to whether a Participant is being terminated for “Cause,” and whether a Participant has cured any such actions or inactions during any thirty-day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board.

 

 

(e)            “Change in Control” means: (i) the date that any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

(f)            “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(g)            “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

(h)            “Common Stock” means the common stock of the Company.

 

(i)            “Company” means Alumis Inc., a Delaware corporation.

 

(j)            “Constructive Termination” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of a definition of such term in the applicable written agreement, such term means, with respect to a Participant, the Participant’s resignation from Continuous Service for any of the following, except as otherwise agreed to in writing by the Participant: (i) a material reduction in Participant’s job duties, position and responsibilities, taken as a whole; (ii) the Company requires Participant to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which Participant was working for the Company immediately before the required change of location; (iii) any reduction of Participant’s base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction); or (iv) the Company materially breaches the terms of Participant’s offer letter or employment agreement (as applicable). Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above, a Participant must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after Participant’s delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, Participant must terminate employment with the Company within ten (10) days of the end of the cure period.

 

(k)           “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services (whether directly or indirectly, including without limitation through an engagement with a professional employer organization, employer of record or similar arrangement, and is deemed pursuant to such arrangement to be a consultant or advisor of the Company or an Affiliate under applicable laws) and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan.

 

 

(l)            “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, Continuous Service shall be deemed to continue while the Participant is on a bona fide leave of absence approved by the Company in writing. The Board, in its sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Company, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors.

 

(m)          “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

 (i)           a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

 (ii)         a sale or other disposition of more than 50% of the outstanding securities of the Company;

 

 (iii)        a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

 (iv)         a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(n)           “Director” means a member of the Board.

 

(o)            “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

(p)            “Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s stockholders, and (ii) the date this Plan is adopted by the Board.

 

 

(q)            “Employee” means any person employed by the Company or an Affiliate (whether directly or indirectly, including without limitation through an engagement with a professional employer organization, employer of record or similar arrangement, and is deemed pursuant to such arrangement to be an employee of the Company or an Affiliate under applicable laws). However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(r)            “Entity” means a corporation, partnership, limited liability company or other entity.

 

(s)            “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(t)            “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.

 

(u)            “Fair Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.

 

(v)            “Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(w)            “Nonstatutory Stock Option” means an option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.

 

(x)            “Officer” means any person designated by the Company as an officer.

 

(y)            “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(z)            “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(aa)          “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(bb)          “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

 

(cc)          “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

 

(dd)          “Plan” means this 2024 Performance Option Plan.

 

(ee)          “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6.

 

(ff)           “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(gg)         “Rule 405” means Rule 405 promulgated under the Securities Act.

 

(hh)         “Rule 701” means Rule 701 promulgated under the Securities Act.

 

(ii)            “Securities Act” means the Securities Act of 1933, as amended.

 

(jj)           “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option or a Restricted Stock Award.

 

(kk)         “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(ll)           “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.

 

(mm)       “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate.

 

Exhibit 10.7

 

ALUMIS INC.

 

STOCK OPTION GRANT NOTICE
(2024 PERFORMANCE OPTION PLAN)

 

Alumis Inc. (the “Company”), pursuant to its 2024 Performance Option Plan (as amended and/or restated as of the Date of Grant set forth below, the “Plan”), has granted to Optionholder an option to purchase the number of shares of Common Stock set forth below (the “Option”). The Option is subject to all of the terms and conditions as set forth in this Stock Option Grant Notice (the “Grant Notice”) and in the Plan, the Option Agreement, and the Notice of Exercise, all of which are attached to this Grant Notice and incorporated into this Grant Notice in their entirety. Capitalized terms not explicitly defined in this Grant Notice but defined in the Plan or the Option Agreement shall have the meanings set forth in the Plan or the Option Agreement, as applicable. If the Company uses an electronic capitalization table system (such as Carta, Pulley or Shareworks) and the fields below are blank or the information is otherwise provided in a different format electronically, the blank fields and other information (such as exercise schedule and type of grant) shall be deemed to come from the electronic capitalization system which shall be considered part of this Grant Notice.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Shares Subject to Option:
Exercise Price (Per Share):
Total Exercise Price:
Expiration Date:1
Exercise Schedule:	Upon vesting and Early Exercise Permitted (as provided in the Performance Condition section below).
Type of Grant:	Nonstatutory Stock Option

 

	Vesting Schedule:	The Option will vest subject to the satisfaction of the performance-based condition (the “Performance Condition”) and the service-based condition (the “Service Condition”), as set forth below. Shares of Common Stock subject to the Option will vest on the first date upon which both the Service Condition and the Performance Condition are satisfied with respect to such shares.
	Performance Condition:	The Performance Condition shall be satisfied as to: (i) 1/3 of the shares subject to the Option if, on a date prior to the date that is four years following the Vesting Commencement Date, the Share Price (as defined below) equals or exceeds $10 (the “$10 Shares”); (ii) 1/3 of the shares subject to the Option, plus the $10 Shares to the extent such shares have not yet satisfied the Performance Condition, if, on a date prior to the date that is five years following the Vesting Commencement Date, the Share Price equals or exceeds $15 (the “$15 Shares”); and (iii) 1/3 of the shares subject to the Option, plus the $10 Shares and $15 Shares, to the extent such shares have not yet satisfied the Performance Condition, if, on a date prior to the date that is six years following the Vesting Commencement Date (the “Performance End Date”), the Share Price equals or exceeds $20 (the “$20 Shares”) (each of (i), (ii) and (iii), a “Performance Target”), subject to Optionholder’s Continuous Service with the Company through achievement of each Performance Target. Shares may be exercised upon satisfaction of the applicable Performance Target. Shares subject to the Option that have not satisfied the Performance Condition on or prior to the Performance End Date shall expire immediately following the Performance End Date. Each Performance Target shall be subject to adjustment in the case of a Capitalization Adjustment or as otherwise determined by the Board. “Share Price” shall mean on or after expiration of the Lock-Up Period (as defined below) following the date that the Common Stock becomes publicly traded (a “Public Offering”), the volume-weighted average price per share of Common Stock on the New York Stock Exchange, Nasdaq Stock Market or other exchange, market or system on which the shares of the Company’s Common Stock are listed or traded, as applicable, for a period of 30-consecutive trading days. If, prior to a Public Offering, a bona fide private financing following the Company’s Series C financing (a “Post-Series C Financing”) occurs and one or more of the Performance Targets are not met, such Performance Target(s) shall be adjusted to account for any dilution resulting from such Post-Series C Financing.

 

¹ NTD: To be 10 years from the Date of Grant.

 

 

Service Condition:	The Service Condition shall be satisfied as follows: 1/36 of each of the $10 Shares, the $15 Shares and the $20 Shares subject to the Option will satisfy the Service Condition each month for 36-months following the Vesting Commencement Date, in each case, subject to Optionholder’s Continuous Service with the Company through each applicable date.
Severance and Change in Control:	Notwithstanding anything to the contrary in the Option Agreement, if Optionholder’s Continuous Service is (i) voluntarily terminated, shares subject to the Option that have satisfied the Service Condition shall remain outstanding for 12 months following such termination and be eligible to vest upon satisfaction of the Performance Condition (or portion thereof) occurring within the 12-month period following such termination; or (ii) involuntarily terminated by the Company (or its Affiliate) without Cause or by Constructive Termination, shares subject to the Option that have satisfied the Service Condition shall remain outstanding for 24 months following such termination and be eligible to vest upon satisfaction of the Performance Condition (or portion thereof) that occurs within the 24-month period following such termination.
	Upon a Change in Control, with respect to any portion of the Performance Condition that has not yet been satisfied, a number of shares subject to the Option shall satisfy the Performance Condition with respect to the corresponding Performance Target as of immediately prior to such Change in Control if the CIC Share Price (as defined below) equals or exceeds the applicable Performance Target. The “CIC Share Price” shall mean the value, as determined by the Board in its sole discretion, of the property (including cash) expected to be received by the holder of a share of Company preferred stock as a result of a Change in Control.
	[ONLY INCLUDE THE BELOW FOR EXECUTIVES WITH ACCELERATION BENEFITS]

 

 

[If Optionholder’s Continuous Service with the Company is terminated by the Company (or its Affiliate) without Cause or by Constructive Termination outside of a Change in Control Period (as defined below), the Service Condition shall be deemed satisfied as to an additional 1/3 of each of the $10 Shares, the $15 Shares and the $20 Shares subject to the Option (to the extent such number of shares have not yet satisfied the Service Condition).

 

Upon a Change in Control, and subject to Optionholder’s Continuous Service with the Company through such date, the Service Condition shall be deemed satisfied with respect to 100% of the Option as of immediately prior to such Change in Control.

 

If Optionholder’s Continuous Service with the Company is terminated by the Company (or its Affiliate) without Cause or by Constructive Termination, and within 12 months following such termination, a Change in Control occurs (the “Change in Control Period”), the Service Condition shall be deemed satisfied, as of immediately prior to such Change in Control, as to 100% of the shares subject to the Option. Notwithstanding anything to the contrary in the Option Agreement, unvested shares subject to the Option shall remain outstanding following the termination of Optionholder’s Continuous Service for such period of time necessary to give effect to the foregoing.]

 

Optionholder Acknowledgements: By Optionholder’s signature below or by electronic acceptance or authentication in a form authorized by the Company, Optionholder understands and agrees that the Option is governed by this Stock Option Grant Notice, and the provisions of the Plan and the Option Agreement and the Notice of Exercise, all of which are made a part of this document.

 

By accepting this Option, Optionholder consents to receive this Grant Notice, the Option Agreement, the Plan, and any other Plan-related documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company. Optionholder represents that Optionholder has read and is familiar with the provisions of the Plan and the Option Agreement. Optionholder acknowledges and agrees that this Grant Notice and the Option Agreement may not be modified, amended or revised except in writing signed by Optionholder and a duly authorized officer of the Company.

 

Optionholder further acknowledges that in the event of any conflict between the provisions in this Grant Notice, the Option Agreement, the Notice of Exercise and the terms of the Plan, the terms of the Plan shall control. Optionholder further acknowledges that the Plan, the Option Agreement, the Notice of Exercise, and this Grant Notice set forth the entire understanding between Optionholder and the Company regarding the acquisition of Common Stock and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of other equity awards previously granted to Optionholder and any written employment agreement, offer letter, severance agreement, written severance plan or policy, or other written agreement between the Company and Optionholder in each case that specifies the terms that should govern this Option.

 

Optionholder further acknowledges that this Grant Notice and the attachments hereto have been prepared on behalf of the Company by Cooley LLP, counsel to the Company and that Cooley LLP does not represent, and is not acting on behalf of, Optionholder in any capacity. Optionholder has been provided with an opportunity to consult with Optionholder’s own counsel with respect to this Grant Notice and the attachments hereto.

 

 

This Grant Notice may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

Alumis Inc.			Optionholder:
By:			By:
	(Signature)			(Signature)
Title:			Email:
Date:			Date:

 

Attachments: Option Agreement, 2024 Performance Option Plan and Notice of Exercise

 

 

ATTACHMENT I

 

OPTION AGREEMENT

 

 

ALUMIS INC.

 

2024 Performance Option Plan

 

OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option Agreement, Alumis Inc. (the “Company”) has granted you an option under its 2024 Performance Option Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The option is granted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your option, in addition to those set forth in the Grant Notice and the Plan, are as follows:

 

1.            Vesting. Your option will vest as provided in your Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

2.            Number of Shares and Exercise Price. The number of shares of Common Stock subject to your option and your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.

 

3.            Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt Employee”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six months. Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).

 

4.            Exercise prior to Vesting (“Early Exercise”). If permitted in your Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option provided the applicable Performance Target has been satisfied; provided, however, that:

 

(a)           a partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;

 

 

(b)           any shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;

 

(c)           you will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and

 

(d)           if your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.

 

5.            Method of Payment. You must pay the full amount of the exercise price for the shares you wish to exercise. The permitted methods of payment are as follows:

 

(a)           by cash, check, bank draft, electronic funds transfer or money order payable to the Company;

 

(b)           subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”;

 

(c)           subject to Company and/or Board consent at the time of exercise and provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. You may not exercise your option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock;

 

(d)           subject to Company and/or Board consent at the time of exercise, and provided that the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of the Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price plus, to the extent permitted by the Company and/or Board at the time of exercise, the aggregate withholding obligations in respect of the Option exercise; provided, further that you must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment.  Shares of Common Stock will no longer be subject to the Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to you as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;

 

 

(e)           subject to the consent of the Company and/or Board at the time of exercise, according to a deferred payment or similar arrangement with you; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or

 

(f)            in any other form of legal consideration that may be acceptable to the Board.

 

6.            Whole Shares. You may exercise your option only for whole shares of Common Stock.

 

7.            Securities Law Compliance. In no event may you exercise your option unless the sale of shares of Common Stock upon exercise is then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).

 

8.            Term and Expiration. You may not exercise your option before the Date of Grant or after the Expiration Date set forth in your Grant Notice. Except as set forth in your Grant Notice, the term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

(a)           immediately upon the termination of your Continuous Service for Cause;

 

(b)           the day before the Expiration Date.

 

On the date that is 3 months after termination of your Continuous Service (other than for Cause) or, if sooner, on the Expiration Date set forth in your Grant Notice, any portion of your option that is not vested as of such date shall immediately expire. To the extent your option is not fully vested on the date your Continuous Service terminates, the Board may, prior to expiration of your option pursuant to the preceding sentence, take action to cause your option to become vested (in whole or in part). In no event will your option become vested after termination of your Continuous Service unless the Board takes affirmative action pursuant to the preceding sentence or unless expressly provided in a written agreement between the Company and you. In this regard, any provision of this Option Agreement, your Grant Notice or another agreement that provides for vesting upon an event (including, without limitation, a Change in Control) will be deemed to require your Continuous Service through the occurrence of such event unless such agreement clearly provides otherwise.

 

 

If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three months after the date your employment with the Company or an Affiliate terminates.

 

9.            Exercise.

 

(a)           You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours. If required by the Company, your exercise may be made contingent on your execution of any additional documents specified by the Company as more fully set forth in Section 15 below.

 

(b)           By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, (ii) the lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (iii) the disposition of shares of Common Stock acquired upon such exercise.

 

(c)           If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within 15 days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two years after the Date of Grant or within one year after such shares of Common Stock are transferred upon exercise of your option.

 

(d)           By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of 180 days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with applicable FINRA rules (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 9(d). The underwriters of the Company’s stock are intended third party beneficiaries of this Section 9(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto. You further agree that the obligations contained in this Section 9(d) shall also, if so determined by the Company’s Board of Directors, apply in (1) the Company’s initial listing of its Common Stock on a national securities exchange by means of a registration statement on Form S-1 under the Securities Act (or any successor registration form under the Securities Act subsequently adopted by the Securities and Exchange Commission) filed by the Company with the Securities and Exchange Commission that registers shares of existing capital stock of the Company for resale (a “Direct Listing”), and (2) the Company’s completion of a merger or consolidation with a special purpose acquisition company or its subsidiary in which the Common Stock (or similar securities) of the surviving or parent entity are publicly traded in a public offering pursuant to an effective registration statement under the Securities Act, provided, in each case, that all holders of at least 5% of the Company’s outstanding Common Stock (after giving effect to the conversion into Common Stock of any outstanding Preferred Stock of the Company) are subject to substantially similar obligations with respect to such Direct Listing, merger or consolidation, as applicable.

 

 

10.          Transferability. Except as otherwise provided in this Section 10, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.

 

(a)           Certain Trusts. Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust. You and the trustee must enter into transfer and other agreements required by the Company.

 

(b)           Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement. If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(c)           Beneficiary Designation. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.

 

 

11.          Right of First Refusal. Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be described in the Company’s bylaws in effect at such time the Company elects to exercise its right; provided, however, that if there is no right of first refusal described in the Company’s bylaws at such time, the right of first refusal described below will apply. The Company’s right of first refusal will expire on the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on a national securities exchange or quotation system (the “Listing Date”).

 

(a)           Prior to the Listing Date, you may not validly Transfer (as defined below) any shares of Common Stock acquired upon exercise of your option, or any interest in such shares, unless such Transfer is made in compliance with the following provisions:

 

(i)             Before there can be a valid Transfer of any shares of Common Stock or any interest therein, the record holder of the shares of Common Stock to be transferred (the “Offered Shares”) will give written notice (by registered or certified mail) to the Company. Such notice will specify the identity of the proposed transferee, the cash price offered for the Offered Shares by the proposed transferee (or, if the proposed Transfer is one in which the holder will not receive cash, such as an involuntary transfer, gift, donation or pledge, the holder will state that no purchase price is being proposed), and the other terms and conditions of the proposed Transfer. The date such notice is mailed will be hereinafter referred to as the “Notice Date” and the record holder of the Offered Shares will be hereinafter referred to as the “Offeror.” If, from time to time, there is any stock dividend, stock split or other change in the character or amount of any of the outstanding Common Stock which is subject to the provisions of your option, then in such event any and all new, substituted or additional securities to which you are entitled by reason of your ownership of the shares of Common Stock acquired upon exercise of your option will be immediately subject to the Company’s Right of First Refusal (as defined below) with the same force and effect as the shares subject to the Right of First Refusal immediately before such event.

 

(ii)            For a period of 30 calendar days after the Notice Date, or such longer period as may be required to avoid the classification of your option as a liability for financial accounting purposes, the Company will have the option to purchase all (but not less than all) of the Offered Shares at the purchase price and on the terms set forth in Section 11(a)(iii) (the Company’s “Right of First Refusal”). In the event that the proposed Transfer is one involving no payment of a purchase price, the purchase price will be deemed to be the Fair Market Value of the Offered Shares as determined in good faith by the Board in its discretion. The Company may exercise its Right of First Refusal by mailing (by registered or certified mail) written notice of exercise of its Right of First Refusal to the Offeror prior to the end of said 30 days (including any extension required to avoid classification of the option as a liability for financial accounting purposes).

 

(iii)           The price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal will be the cash price offered for the Offered Shares by the proposed transferee (as set forth in the notice required under Section 11(a)(i)), or the Fair Market Value as determined by the Board in the event no purchase price is involved. To the extent consideration other than cash is offered by the proposed transferee, the Company will not be required to pay any additional amounts to the Offeror other than the cash price offered (or the Fair Market Value, if applicable). The Company’s notice of exercise of its Right of First Refusal will be accompanied by full payment for the Offered Shares and, upon such payment by the Company, the Company will acquire full right, title and interest to all of the Offered Shares.

 

 

(iv)            If, and only if, the option given pursuant to Section 11(a)(ii) is not exercised, the Transfer proposed in the notice given pursuant to Section 11(a)(i) may take place; provided, however, that such Transfer must, in all respects, be exactly as proposed in said notice except that such Transfer may not take place either before the 10^th calendar day after the expiration of the 30 day option exercise period or after the ninetieth 90^th calendar day after the expiration of the 30 day option exercise period, and if such Transfer has not taken place prior to said 90^th day, such Transfer may not take place without once again complying with this Section 11(a). The option exercise periods in this Section 11(a)(iv) will be adjusted to include any extension required to avoid the classification of your option as a liability for financial accounting purposes.

 

(b)           As used in this Section 11, the term “Transfer” means any sale, encumbrance, pledge, gift or other form of disposition or transfer of shares of Common Stock or any legal or equitable interest therein; provided, however, that the term Transfer does not include a transfer of such shares or interests by will or intestacy to your Immediate Family (as defined below). In such case, the transferee or other recipient will receive and hold the shares of Common Stock so transferred subject to the provisions of this Section, and there will be no further transfer of such shares except in accordance with the terms of this Section 11. As used herein, the term “Immediate Family” will mean your spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of you or your spouse, or the spouse of any child, adopted child, grandchild or adopted grandchild of you or your spouse.

 

(c)           None of the shares of Common Stock purchased on exercise of your option will be transferred on the Company’s books nor will the Company recognize any such Transfer of any such shares or any interest therein unless and until all applicable provisions of this Section 11 have been complied with in all respects. The certificates of stock evidencing shares of Common Stock purchased on exercise of your option will bear an appropriate legend referring to the transfer restrictions imposed by this Section 11.

 

(d)           To ensure that the shares subject to the Company’s Right of First Refusal will be available for repurchase by the Company, the Company may require you to deposit the certificates evidencing the shares that you purchase upon exercise of your option with an escrow agent designated by the Company under the terms and conditions of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of your option, the Company reserves the right at any time to require you to so deposit the certificates in escrow. As soon as practicable after the expiration of the Company’s Right of First Refusal, the agent will deliver to you the shares and any other property no longer subject to such restriction. In the event the shares and any other property held in escrow are subject to the Company’s exercise of its Right of First Refusal, the notices required to be given to you will be given to the escrow agent, and any payment required to be given to you will be given to the escrow agent. Within 30 days after payment by the Company for the Offered Shares, the escrow agent will deliver the Offered Shares that the Company has repurchased to the Company and will deliver the payment received from the Company to you.

 

 

12.          Option not a Service Contract. Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option will obligate the Company or an Affiliate, their respective stockholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.

 

13.          Withholding Obligations.

 

(a)           At the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.

 

(b)           If this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the maximum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for financial accounting purposes). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence will not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock will be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure will be your sole responsibility.

 

(c)           You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein, if applicable, unless such obligations are satisfied.

 

 

14.          Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. Because the Common Stock is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service.

 

15.          Imposition of Other Requirements. You agree to execute further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of this option. You further agree to execute, to the extent requested by the Company, at any time and from time to time, any agreements entered into with holders of capital stock of the Company, including without limitation a right of first refusal and co-sale agreement, stockholders agreement and/or a voting agreement.

 

16.          Notices. Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.

 

17.          Governing Plan Document. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your option and those of the Plan, the provisions of the Plan will control.

 

 

ATTACHMENT II

 

2024 Performance Option Plan

 

 

ATTACHMENT III

 

NOTICE OF EXERCISE

 

 

ALUMIS INC.
NOTICE OF EXERCISE

 

This constitutes notice to Alumis Inc. (the “Company”) under my stock option that I elect to purchase the below number of shares of Common Stock of the Company (the “Shares”) for the price set forth below. Use of certain payment methods is subject to Company and/or Board consent and certain additional requirements set forth in the Option Agreement and the Plan. If the Company uses an electronic capitalization table system (such as Carta, Pulley or Shareworks) and the fields below are blank, the blank fields shall be deemed to come from the electronic capitalization system and is considered part of this Notice of Exercise.

 

Option Information
Type of option (check one):	Incentive ¨       Nonstatutory ¨
Stock option dated:
Number of Shares as to which option is exercised:
Certificates to be issued in name of:2
Exercise Information
Date of Exercise:
Total exercise price:
Cash:3
Regulation T Program (cashless exercise):4
Value of _________ Shares delivered with this notice:5
Value of _________ Shares pursuant to net exercise:6

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 2024 Performance Option Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, (iii) if this exercise relates to an incentive stock option, to notify you in writing within 15 days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two years after the date of grant of this option or within one year after such Shares are issued upon exercise of this option, and (iv) to execute, if and when requested by the Company, at any time or from time to time, any agreements entered into with holders of capital stock of the Company, including without limitation a right of first refusal and co-sale agreement, stockholders agreement and/or a voting agreement. I further agree that this Notice of Exercise may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

I hereby make the following certifications and representations with respect to the number of Shares listed above, which are being acquired by me for my own account upon exercise of the option as set forth above:

 

I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws.

 

² If left blank, will be issued in the name of the option holder. 

³ Cash may be in the form of cash, check, bank draft, electronic funds transfer or money order payment.

⁴ Subject to Company and/or Board consent and must meet the public trading and other requirements set forth in the Option Agreement.

⁵ Subject to Company and/or Board consent and must meet the public trading and other requirements set forth in the Option Agreement. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

⁶ Subject to Company and/or Board consent and must be a Nonstatutory Option.

 

I further acknowledge and agree that, except for such information as required to be delivered to me by the Company pursuant to the option or the Plan (if any), I will have no right to receive any information from the Company by virtue of the grant of the option or the purchase of shares of Common Stock through exercise of the option, ownership of such shares of Common Stock, or as a result of my being a holder of record of stock of the Company. Without limiting the foregoing, to the fullest extent permitted by law, I hereby waive all inspection rights under Section 220 of the Delaware General Corporation Law and all such similar information and/or inspection rights that may be provided under the law of any jurisdiction, or any federal, state or foreign regulation, that are, or may become, applicable to the Company or the Company’s capital stock (the “Inspection Rights”). I hereby covenant and agree never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights.

 

I further acknowledge that I will not be able to resell the Shares for at least 90 days after the stock of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of the option will have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s Certificate of Incorporation, Bylaws and/or applicable securities laws.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company for a period of 180 days following the effective date of a registration statement of the Company filed under the Securities Act (or such longer period as the underwriters or the Company will request to facilitate compliance with applicable FINRA rules) (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period. I further agree that the obligations contained in this paragraph shall also, if so determined by the Company’s Board of Directors, apply in (1) the Company’s initial listing of its Common Stock on a national securities exchange by means of a registration statement on Form S-1 under the Securities Act (or any successor registration form under the Securities Act subsequently adopted by the Securities and Exchange Commission) filed by the Company with the Securities and Exchange Commission that registers shares of existing capital stock of the Company for resale (a “Direct Listing”), and (2) the Company’s completion of a merger or consolidation with a special purpose acquisition company or its subsidiary in which the Common Stock (or similar securities) of the surviving or parent entity are publicly traded in a public offering pursuant to an effective registration statement under the Securities Act, provided, in each case, that all holders of at least 5% of the Company’s outstanding Common Stock (after giving effect to the conversion into Common Stock of any outstanding Preferred Stock of the Company) are subject to substantially similar obligations with respect to such Direct Listing, merger or consolidation, as applicable.

 

Very truly yours,

 

		(Signature)
		Name (Please Print)
Address of Record:
Email:

 

 

 

Exhibit 10.12

 

Certain information has been excluded from this agreement (indicated by [***]) because such information is both not material and the type that the registrant customarily and actually treats as private or confidential.

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

LEASE

 

This Lease (the “Lease”), dated as of the date set forth in Section 1 of the Summary of Basic Lease Information (the “Summary”), below, is made by and between PG VII 280 EAST GRAND, LLC, a Delaware limited liability company (“Landlord”), and ALUMIS INC., a Delaware corporation (“Tenant”).

 

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE		DESCRIPTION
1.	Date:	____________ August 11_____, 2022
2.	Premises (Article 1).
	2.1 Building:	The building containing approximately 54,856 rentable square feet of space (“RSF”) located at 280 E. Grand Avenue, South San Francisco, CA.
	2.2 Premises:	Approximately 54,586 RSF consisting of the entire Building, as further set forth in Exhibit A to the Lease.
3.	Lease Term (Article 2).
	3.1 Length of Term:	Approximately ten (10) years.
	3.2 Lease Commencement Date:	The earlier to occur of (i) the date upon which Tenant first commences to conduct business in the Premises and (ii) the Possession Date (as that term is defined in Section 1.1.1 of this Lease).
	3.3 Lease Expiration Date:	If the Lease Commencement Date shall be the first day of a calendar month, then the day immediately preceding the tenth (10th) anniversary of the Lease Commencement Date; or, if the Lease Commencement Date shall be other than the first day of a calendar month, then the last day of the month in which the tenth (10th) anniversary of the Lease Commencement Date occurs.

 

 

4.

Base Rent (Article 3):

 

Lease Year		Annua Base Rent				Monthly Installment of Base Rent				Monthly Base Rent per Rentable Square Foot
1*		$	4,509,163.20			$	375,763.60			$	6.85
2		$	4,667,016.83			$	388,918.07			$	7.0898
3		$	4,830,334.11			$	402,527.84			$	7.3379
4		$	4,999,378.36			$	416,614.86			$	7.5947
5		$	5,174,347.06			$	431,195.59			$	7.8605
6		$	5,355,503.51			$	446,291.96			$	8.1357
7		$	5,542,913.55			$	461,909.46			$	8.4204
8		$	5,736,906.31			$	478,075.53			$	8.7151
9		$	5,937,679.27			$	494,806.61			$	9.0201
10		$	6,145,495.74			$	512,124.64			$	9.3358

 

*Note: Provided Tenant is not then in default of the Lease, after expiration of any applicable notice and cure period, Tenant shall have no obligation to pay Base Rent for the first two (2) full months of the Lease Term (the “Base Rent Abatement Period”).

 

5.	Tenant Improvement Allowance (Exhibit B):	Tenant Improvement Allowance: An amount equal to $285.00 per RSF of the Premises (i.e., $15,633,960.00 based upon 54,856 RSF in the Premises).   Additional Tenant Improvement Allowance: Up to $45.00 per RSF in the Premises (i.e., $2,468,520.00 based upon 54,856 RSF in the Premises)
6.	Tenant’s Share (Article 4):	One hundred percent (100%).
7.	Permitted Use (Article 5):	The Premises shall be used only for general office, research and development, engineering, laboratory, storage, vivarium and/or warehouse uses, including, but not limited to, administrative offices and other lawful uses reasonably related to or incidental to such specified uses, all (i) consistent with first class life sciences projects in South San Francisco, California (“First Class Life Sciences Projects”), and (ii) in compliance with, and subject to, Applicable Laws (as that term is defined in Article 24) and the terms of this Lease.

 

 

8.	Letter of Credit (Article 21):	$1,024,249.29
9.	Parking (Article 28):	2.25 unreserved parking spaces for every 1,000 rentable square feet of the Premises, subject to the terms of Article 28 of the Lease.
10.	Address of Tenant (Section 29.18):	Alumis Inc. 611 Gateway Boulevard, Suite 611 South San Francisco, CA 94080 Attention: General Counsel (Prior to Lease Commencement Date)   and   Alumis Inc. 280 E. Grand Avenue South San Francisco, CA 94080 Attention: General Counsel (After Lease Commencement Date)   With a copy via email to: Connor McNellis, Esq McNellis Law Group, P.C. [***]
11.	Address of Landlord (Section 29.18):	See Section 29.18 of the Lease.
12.	Broker(s) (Section 29.24):	CBRE, Inc. (representing both Landlord and Tenant)

 

 

1.            PREMISES, BUILDING, PROJECT, AND COMMON AREAS.

 

1.1           Premises, Building, Project and Common Areas.

 

1.1.1           The Premises; Tender of Possession. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises set forth in Section 2.2 of the Summary (the “Premises”). The outline of the Premises is set forth in Exhibit A attached hereto. The outline of the “Building” and the “Project,” as those terms are defined in Section 1.1.2 below, are further depicted on the site plan attached hereto as Exhibit A-1 (the “Site Plan”). The parties hereto agree that the lease of the Premises is upon and subject to the terms, covenants and conditions herein set forth, and Tenant covenants as a material part of the consideration for this Lease to keep and perform each and all of such terms, covenants and conditions by it to be kept and performed and that this Lease is made upon the condition of such performance. The parties hereto hereby acknowledge that the purpose of Exhibit A is to show the approximate location of the Premises only, and such Exhibit is not meant to constitute an agreement, representation or warranty as to the construction of the Premises, the precise area thereof or the specific location of the “Common Areas,” as that term is defined in Section 1.1.3, below, or the elements thereof or of the accessways to the Premises or the “Project,” as that term is defined in Section 1.1.2, below. Except in each case as specifically set forth in this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the “Tenant Work Letter”), Landlord shall tender possession of the Premises to Tenant in its existing, “as is” condition, and Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Landlord shall be deemed to have tendered possession of the Premises to Tenant upon the date of delivery of the Substantial Completion Certificate to Tenant in connection with the Tenant Improvements, as those terms are defined in the Tenant Work Letter (the “Possession Date”), and no action by Tenant shall be required therefor. Landlord anticipates that the Possession Date will occur on or before August 21, 2023 (the “Anticipated Possession Date”). If Tenant elects to pursue value engineering during the “Value Engineering Period”, as defined in the Tenant Work Letter, then the Anticipated Possession Date shall be September 31, 2023. If for any reason, Landlord is delayed in tendering possession of the Premises to Tenant by any particular date, Landlord shall not be subject to any liability for such failure, and the validity of this Lease shall not be impaired. Notwithstanding the foregoing, (i) if Landlord has not caused the Possession Date to occur within ninety (90) days after the Anticipated Possession Date, then, as Tenant’s sole remedy for such delay (other than Tenant’s termination right as set forth in item (2) below), Tenant shall receive a one day credit against Base Rent next coming due under the Lease for each day after the Anticipated Possession Date that the Possession Date has not occurred, and (ii) if Landlord has not caused the Possession Date to occur within one hundred eighty (180) days after the Anticipated Possession Date, then Tenant shall have the right to terminate this Lease by written notice thereof to Landlord, whereupon any monies previously paid by Tenant to Landlord shall be reimbursed to Tenant (and if Tenant does not elect to terminate the Lease, Tenant shall be entitled to continue to receive its rent credit remedy set forth in item (i) above). The Anticipated Possession Date shall be extended to the extent of any delays in delivery of possession caused by (i) Tenant Delay, as provided in Section 1(j) of the Tenant Work Letter, or (ii) events of Force Majeure. Neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building or the Project or with respect to the suitability of any of the foregoing for the conduct of Tenant’s business, except as specifically set forth in this Lease and the Tenant Work Letter. Any process utilities shall be provided without warranty, in their currently existing, “as-is” condition. Except when and where Tenant’s right of access is specifically excluded as the result of (i) an emergency, (ii) the application of applicable laws or the direction of governmental authority, (iii) Landlord’s rules, regulations and security requirements, or (iv) a provision of this Lease, Tenant shall have the right of ingress and egress to the Premises and the Building twenty-four (24) hours per day, seven (7) days per week on each day during the Lease Term.

 

1.1.2            The Building and The Project. The Premises constitutes the entire building set forth in Section 2.1 of the Summary (the “Building”). The Building is part of an office/laboratory project currently known as “Britannia Pointe Grand Business Park.” The term “Project,” as used in this Lease, shall mean (i) the Building and the Common Areas, (ii) the land (which is improved with landscaping, parking facilities and other improvements) upon which the Building and the Common Areas are located, (iii) the office/laboratory buildings located at Britannia Pointe Grand Life Science Center, and the land upon which such adjacent office/laboratory building is located, (iv) if and when constructed, an amenity building (the “Amenity Building”) serving the tenants of the Project, and (v) at Landlord’s discretion, any additional real property, areas, land, buildings or other improvements added thereto as part of the Project, including areas that may currently be outside of the Project. Tenant acknowledges that Landlord or an affiliate of Landlord (or any successors thereto) is or may be intending to develop and construct additional buildings, parking structures, and other improvements as a part of the Project, which may be operated as part of the Project whether owned by Landlord, an affiliate of Landlord, or a third party.

 

 

1.1.3            Condition on Delivery. Landlord shall deliver the Premises to Tenant in good, vacant, broom clean condition, in compliance with Applicable Laws to the extent required to allow the legal occupancy and use of the entire Premises for the Permitted Use with the Tenant Improvements in the Premises Substantially Completed in accordance with the terms of the Tenant Work Letter, with the roof water-tight and shall cause the plumbing, electrical systems, fire sprinkler system, lighting, HVAC (hereinafter defined), and all other Building Systems serving the Premises to be in good operating condition and repair on or before the Lease Commencement Date. Notwithstanding anything in this Lease to the contrary, in connection with the foregoing Landlord shall, at Landlord’s sole cost and expense (which shall not be deemed an “Operating Expense,” as that term is defined in Section 4.2.4), repair or replace any failed, defective or inoperable portion of the Building Systems serving the Premises during the first two (2) Lease Years (the “Warranty Period”), provided that the need to repair or replace was not caused by the misuse, misconduct, damage, destruction, omissions, and/or negligence of Tenant, its subtenants and/or assignees, if any, or any company which is acquired, sold or merged with Tenant (collectively, “Tenant Damage”), or by any modifications, Alterations or improvements constructed by or on behalf of Tenant (other than the initial construction or installation of the Tenant Improvements). Landlord shall coordinate such work with Tenant and shall utilize commercially reasonable efforts to perform the same in a manner designed to minimize interference with Tenant’s use of or access to the Premises. To the extent repairs which Landlord is required to make pursuant to this Section 1.1.1 are necessitated in part by Tenant Damage, then Tenant shall reimburse Landlord for an equitable proportion of the cost of such repair. Landlord will be responsible for causing the exterior of the Building, the existing Building entrances, and all exterior Common Areas (including required striping and handicapped spaces in the parking areas) to be in compliance with ADA and parking requirements, to the extent required to allow the legal occupancy of the entire Premises and conduct of business therein for the Permitted Use and completion of the Tenant Improvements.

 

1.1.4            Additional Landlord Work. Landlord will, on or before the Lease Commencement Date, (i) apply a new topcoat sealant to the roof of the Building, and (ii) plan and install a new HVAC system in the Building (not including the two (2) boilers and one (1) air handling unit), and otherwise update the Building mechanical systems as necessary to support Tenant’s use of the Premises.

 

1.1.5            Common Areas. Tenant shall have the non-exclusive right to use in common with other tenants in the Project, and subject to the rules and regulations referred to in Article 5 of this Lease, those portions of the Project which are provided, from time to time, for use in common by Landlord or an affiliate of Landlord or any other owner of the Project (or any portion thereof), Tenant and any other tenants of the Project, including the parking facilities at the Project (such areas, together with such other portions of the Project designated by Landlord, in its discretion, are collectively referred to herein as the “Common Areas”). The manner in which the Common Areas are maintained and operated shall be at the sole discretion of Landlord, provided that such is reasonably consistent with First Class Life Sciences Projects, and the use thereof shall be subject to such reasonable and nondiscriminatory rules, regulations and restrictions as Landlord may make from time to time. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project and the Common Areas, provided that, in connection therewith, Landlord shall perform such closures, alterations, additions or changes in a commercially reasonable manner and, in connection therewith, shall use commercially reasonable efforts to minimize any material interference with Tenant’s use of and access to the Premises. Except as otherwise specifically expressed in this Lease, the Amenity Building will not be deemed a part of the Common Areas (but will at all times be deemed a part of the Project), provided that so long as the costs related to the Amenity Building are included in Operating Expenses and Real Estate Taxes, the services and amenities provided in the Amenity Building shall be available for use by Tenant.

 

 

1.2            Rentable Square Feet of Premises. The rentable square footage of the Premises is hereby deemed to be as set forth in Section 2.2 of the Summary, and shall not be subject to measurement or adjustment during the Lease Term.

 

1.3            Future Leasing. Landlord agrees that in the event Tenant and Landlord or an affiliate of Landlord enter into a new lease of space in excess of 75,000 RSF in the vicinity of the Project, then, at Tenant’s election, Landlord and Tenant shall enter into an agreement to terminate this Lease substantially concurrently with the commencement date of possession of such new premises, which termination shall be at no cost to Tenant (provided that, in any event, any obligation of Tenant to pay “Additional Allowance Monthly Rent” as defined in Section 2.1.2 of the Tenant Work Letter, shall not be terminated, and Tenant shall remain obligated for all of its obligations under this Lease with respect to the surrender of the Premises, and with respect to the period prior to any such termination). Notwithstanding the foregoing, neither Landlord nor Tenant shall have any obligation to enter into any such new lease of space, or to agree to any terms for any such new lease, other than as desired in each party’s sole and absolute discretion. To the extent Tenant exercises its right to terminate this Lease, pursuant to the terms of this Section 1.3, then this Lease shall terminate with the same force and effect as if the Lease were scheduled to expire in accordance with its terms as of such early termination date, subject to the provisions of this Lease which expressly survive the expiration or earlier termination of this Lease.

 

2.            LEASE TERM; OPTION TERM

 

2.1           Lease Term. The terms and provisions of this Lease shall be effective as of the date of this Lease. The term of this Lease (the “Lease Term”) shall be as set forth in Section 3.1 of the Summary, shall commence on the date set forth in Section 3.2 of the Summary (the “Lease Commencement Date”), and shall terminate on the date set forth in Section 3.3 of the Summary (the “Lease Expiration Date”) unless this Lease is sooner terminated as hereinafter provided. For purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month period during the Lease Term. At any time during the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth in Exhibit C, attached hereto (subject to modification to correct any factual errors), as a confirmation only of the information set forth therein, which Tenant shall execute and return to Landlord within ten (10) business days of receipt thereof; however, the failure of the parties to execute such letter shall not defer the Lease Commencement Date or otherwise invalidate this Lease.

 

2.1.1            Option Right. Landlord hereby grants to the Tenant originally named in this Lease (“Original Tenant”), and any assignee of Original Tenant’s entire interest in the Lease that has been approved in accordance with the terms of Article 14, below (a “Approved Assignee”), and any assignee that is a “Permitted Assignee”, as that term is defined in Section 14.8, below, one (1) option to extend the Lease Term for a period of three(3) years (the “Option Term”), which option shall be irrevocably exercised only by written notice delivered by Tenant to Landlord not more than twelve (12) months nor less than nine (9) months prior to the expiration of the initial Lease Term, provided that the following conditions (the “Option Conditions”) are satisfied: (i) as of the date of delivery of such notice, Tenant is not in default under this Lease, after the expiration of any applicable notice and cure period; (ii) Tenant has not previously been in default under this Lease, after the expiration of any applicable notice and cure period, more than twice in the twelve (12) month period prior to the date of Tenant’s attempted exercise; and (iii) the Lease then remains in full force and effect. Landlord may, at Landlord’s option, exercised in Landlord’s sole and absolute discretion, waive any of the Option Conditions in which case the option, if otherwise properly exercised by Tenant, shall remain in full force and effect. Upon the proper exercise of such option to extend, and provided that Tenant satisfies all of the Option Conditions (except those, if any, which are waived by Landlord), the Lease Term, as it applies to the Premises, shall be extended for a period of three (3) years. The rights contained in this Section 2.2 shall be personal to Original Tenant and any Permitted Assignees or Approved Assignees, and may be exercised by Original Tenant or such Permitted Assignees or Approved Assignees (and not any other assignee, sublessee or “Transferee,” as that term is defined in Section 14.1 below, of Tenant’s interest in this Lease).

 

 

2.1.2            Option Rent. The annual Base Rent payable by Tenant during any Option Term (the “Option Rent”) shall be equal to the “Fair Rental Value,” as that term is defined below, for the Premises as of the commencement date of the Option Term. The “Fair Rental Value,” as used in this Lease, shall be equal to the annual rent per rentable square foot (with consideration of the NNN nature of this Lease, and considering any “base year” or “expense stop” applicable to Comparable Transactions), including all escalations, at which tenants (pursuant to leases consummated within the twelve (12) month period preceding the first day of the Option Term), are leasing non- sublease, non-encumbered, non-equity space which is not significantly greater or smaller in size than the subject space, with a comparable level of improvements (excluding any property that Tenant would be allowed to remove from the Premises at the termination of the Lease), for a comparable lease term, in an arm’s length transaction, which comparable space is located in the “Comparable Buildings,” as that term is defined in this Section 2.2.2, below (transactions satisfying the foregoing criteria shall be known as the “Comparable Transactions”), taking into consideration the following concessions (the “Concessions”): (a) rental abatement concessions, if any, being granted such tenants in connection with such comparable space; (b) tenant improvements or allowances provided or to be provided for such comparable space, and taking into account the value, if any, of the existing improvements in the subject space, such value to be based upon the age, condition, design, quality of finishes and layout of the improvements and the extent to which the same can be utilized by a general office/lab user other than Tenant; and (c) other reasonable monetary concessions being granted such tenants in connection with such comparable space; provided, however, that in calculating the Fair Rental Value, no consideration shall be given to the fact that Landlord is or is not required to pay a real estate brokerage commission in connection with Tenant’s exercise of its right to extend the Lease Term, or the fact that landlords are or are not paying real estate brokerage commissions in connection with such comparable space. The Concessions shall be reflected in the effective rental rate (which effective rental rate shall take into consideration the total dollar value of such Concessions as amortized on a straight-line basis over the applicable term of the Comparable Transaction (in which case such Concessions evidenced in the effective rental rate shall not be granted to Tenant)) payable by Tenant. The term “Comparable Buildings” shall mean the Building and those other life sciences buildings which are comparable to the Building in terms of age (based upon the date of completion of construction or major renovation to the building), quality of construction, level of services and amenities, size and appearance, and are located in South San Francisco, California and the surrounding commercial area.

 

2.1.3           Determination of Option Rent. In the event Tenant timely and appropriately exercises the option to extend the Lease Term, Landlord shall notify Tenant of Landlord’s determination of the Option Rent within thirty (30) days thereafter. If Tenant, on or before the date which is thirty (30) days following the date upon which Tenant receives Landlord’s determination of the Option Rent, in good faith objects to Landlord’s determination of the Option Rent, then Landlord and Tenant shall attempt to agree upon the Option Rent using their good-faith efforts. If Landlord and Tenant fail to reach agreement within thirty (30) days following Tenant’s objection to the Option Rent (the “Outside Agreement Date”), then Tenant shall have the right to withdraw its exercise of the option by delivering written notice thereof to Landlord within five (5) business days thereafter, in which event Tenant’s right to extend the Lease pursuant to this Section 2.2 shall be of no further force or effect. If Tenant does not withdraw its exercise of the extension option, each party shall thereafter make a separate determination of the Option Rent within fifteen (15) business days of the Outside Agreement Date, and such determinations shall be submitted to arbitration in accordance with Sections 2.2.3.1 through 2.2.3.7, below. If Tenant fails to accept or reject Landlord’s determination of the Option Rent within the time period set forth herein, then Tenant shall be deemed to have objected to Landlord’s determination of Option Rent, and each party shall make their separate determinations of Option Rent and the matter shall be submitted to arbitration in accordance with the terms hereof.

 

 

2.1.3.1            Landlord and Tenant shall each appoint one arbitrator who shall by profession be an MAI appraiser and/or real estate broker who shall have been active over the five (5) year period ending on the date of such appointment in the appraisal of other first class life sciences buildings located in the South San Francisco market area. The determination of the arbitrators shall be limited solely to the issue of whether Landlord’s or Tenant’s submitted Option Rent is the closest to the actual Option Rent, taking into account the requirements of Section 2.2.2 of this Lease, as determined by the arbitrators. Each such arbitrator shall be appointed within twenty (20) business days after the Outside Agreement Date. Landlord and Tenant may consult with their selected arbitrators prior to appointment and may select an arbitrator who is favorable to their respective positions (including an arbitrator who has previously represented Landlord and/or Tenant, as applicable). The arbitrators so selected by Landlord and Tenant shall be deemed “Advocate Arbitrators.”

 

2.1.3.2            The two (2) Advocate Arbitrators so appointed shall be specifically required pursuant to an engagement letter within ten (10) business days of the date of the appointment of the last appointed Advocate Arbitrator to agree upon and appoint a third arbitrator (“Neutral Arbitrator”) who shall be qualified under the same criteria set forth hereinabove for qualification of the two Advocate Arbitrators, except that neither the Landlord or Tenant or either parties’ Advocate Arbitrator may, directly or indirectly, consult with the Neutral Arbitrator prior or subsequent to his or her appointment, and (ii) the Neutral Arbitrator cannot be someone who has represented Landlord and/or Tenant during the five (5) year period prior to such appointment. The Neutral Arbitrator shall be retained via an engagement letter jointly prepared by Landlord’s counsel and Tenant’s counsel.

 

2.1.3.3            The three arbitrators shall, within thirty (30) days of the appointment of the Neutral Arbitrator, reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted Option Rent, and shall notify Landlord and Tenant thereof.

 

2.1.3.4            The decision of the majority of the three arbitrators shall be binding upon Landlord and Tenant.

 

2.1.3.5            If either Landlord or Tenant fails to appoint an Advocate Arbitrator within twenty (20) days after the Outside Agreement Date, then either party may petition the presiding judge of the Superior Court of San Mateo County to appoint such Advocate Arbitrator subject to the criteria in Section 2.2.3.1 of this Lease, or if he or she refuses to act, either party may petition any judge having jurisdiction over the parties to appoint such Advocate Arbitrator.

 

2.1.3.6            If the two (2) Advocate Arbitrators fail to agree upon and appoint the Neutral Arbitrator within ten (10) business days after the appointment of the last appointed Advocate Arbitrator, then either party may petition the presiding judge of the Superior Court of San Mateo County to appoint the Neutral Arbitrator, subject to criteria in Section 2.2.3.2 of this Lease, or if he or she refuses to act, either party may petition any judge having jurisdiction over the parties to appoint such arbitrator.

 

 

2.1.3.7            The cost of the arbitration shall be paid by Landlord and Tenant equally.

 

2.1.3.8            In the event that the Option Rent shall not have been determined pursuant to the terms hereof prior to the commencement of the Option Term, Tenant shall be required to pay as Option Rent, an amount equal to 103.5% of the Base Rent payable by Tenant as of the expiration of the initial Lease Term, and upon the final determination of the Option Rent, the payments made by Tenant shall be reconciled with the actual amounts of Option Rent due, and the appropriate party shall make any corresponding payment to the other party.

 

3.            BASE RENT. Tenant shall pay, without prior notice or demand, to Landlord or Landlord’s agent at the management office of the Project, or, at Landlord’s option, at such other place as Landlord may from time to time designate in writing, by a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent (“Base Rent”) as set forth in Section 4 of the Summary, payable in equal monthly installments as set forth in Section 4 of the Summary in advance on or before the first day of each and every calendar month during the Lease Term for which Base Rent is payable, without any setoff or deduction whatsoever, except as expressly set forth in this Lease. The Base Rent for the first full month of the Lease Term for which Base Rent is payable following the Base Rent Abatement Period shall be paid at the time of Tenant’s execution of this Lease. If any Rent payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any payment of Rent is for a period which is shorter than one month, the Rent for any fractional month shall accrue on a daily basis for the period from the date such payment is due to the end of such calendar month or to the end of the Lease Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.

 

4.            ADDITIONAL RENT

 

4.1            General Terms.

 

4.1.1            Direct Expenses; Additional Rent. In addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,” as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease, respectively. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, are hereinafter collectively referred to as the “Additional Rent”, and the Base Rent and the Additional Rent are herein collectively referred to as “Rent.” All amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner as the Base Rent. Without limitation on other obligations of Tenant which survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

 

4.1.2            Triple Net Lease. Landlord and Tenant acknowledge that, except as otherwise provided to the contrary in this Lease, it is their intent and agreement that this Lease be a “TRIPLE NET” lease and that as such, the provisions contained in this Lease are intended to pass on to Tenant or reimburse Landlord for the costs and expenses reasonably associated with this Lease, the Building and the Project, and Tenant’s operation therefrom. To the extent such costs and expenses payable by Tenant cannot be charged directly to, and paid by, Tenant, such costs and expenses shall be paid by Landlord but reimbursed by Tenant as Additional Rent.

 

 

4.2           Definitions of Key Terms Relating to Additional Rent. As used in this Article 4, the following terms shall have the meanings hereinafter set forth:

 

4.2.1            Intentionally Deleted.

 

4.2.2            “Direct Expenses” shall mean “Operating Expenses” and “Tax Expenses.”

 

4.2.3            “Expense Year” shall mean each calendar year in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive month period, and, in the event of any such change, Tenant’s Share of Direct Expenses shall be equitably adjusted for any Expense Year involved in any such change.

 

4.2.4            “Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues during any Expense Year because of or in connection with the ownership, management, maintenance, security, repair, replacement, restoration or operation of the Project (including, without limitation, the Amenity Building if and when constructed), or any portion thereof. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following: (i) the cost of supplying all utilities (except to the extent Tenant and the other tenants of the Project pay for such utilities directly on a submetered or metered basis), the cost of operating, repairing, maintaining, and renovating the utility, telephone, mechanical, sanitary, storm drainage, and elevator systems, and the cost of maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections and the cost of contesting any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with a governmentally mandated transportation system management program or similar program; (iii) the cost of all insurance carried by Landlord in connection with the Project and Premises as reasonably determined by Landlord; (iv) the cost of landscaping, relamping, and all supplies, tools, equipment and materials used in the operation, repair and maintenance of the Project, or any portion thereof; (v) the cost of parking area operation, repair, restoration, and maintenance; (vi) fees and other costs, including management fees (subject to the exclusion (p) below) and/or incentive fees, consulting fees, legal fees and accounting fees, of all contractors and consultants in connection with the management, operation, maintenance and repair of the Project; (vii) payments under any equipment rental agreements and the fair rental value of any management office space; (viii) subject to item (f), below, wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons engaged in the operation, maintenance and security of the Project; (ix) rent or imputed rent for any office space occupied by Project management personnel, and rent or imputed rent for the Amenity Building after the same is completed and in operation (subject to the terms of item (m), below); (x) operation, repair, maintenance and replacement of all systems and equipment and components thereof of the Project; (xi) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in common areas, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (xii) amortization (including interest on the unamortized cost) over the useful life of such items as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices, consistently applied, of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, or any portion thereof; (xiii) the cost of capital repairs replacements or improvements or other costs incurred in connection with the Project (A) which are intended to effect economies in the operation or maintenance of the Project, or any portion thereof, or to reduce current or future Operating Expenses or to enhance the safety or security of the Project or its occupants, or (B) that are required under any governmental law or regulation; provided, however, that any capital expenditure shall be amortized (including reasonable interest on the amortized cost) over its useful life as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices, consistently applied; (xiv) costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute “Tax Expenses” as that term is defined in Section 4.2.5, below, (xv) cost of tenant relation programs reasonably established by Landlord, and (xvi) payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Building, including, without limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses, and any agreements with transit agencies affecting the Property (collectively, “Underlying Documents”). Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:

 

(a)            costs, including legal fees, space planners’ fees, advertising and promotional expenses (except as otherwise set forth above), and brokerage fees incurred in connection with the original construction or development, or original or future leasing of the Project, and costs, including permit, license and inspection costs, incurred with respect to the installation of tenant improvements made for new tenants initially occupying space in the Project after the Lease Commencement Date or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Project (excluding, however, such costs relating to any Common Areas of the Project or parking facilities), and any costs or expenses incurred in connection with the relocation of any tenants and costs for the repair or replacement of the Base Building (or any component thereof) made necessary as a result of defects in the original design, workmanship or materials;

 

 

(b)           except as set forth in items (xii), (xiii), and (xiv) above, depreciation, interest and principal payments on mortgages and other debt costs, if any, penalties and interest, costs of capital repairs and alterations, and costs of capital improvements and equipment;

 

(c)           costs for which the Landlord is reimbursed by any tenant or occupant of the Project or by insurance by its carrier (or would have been reimbursed if Landlord had carried the insurance Landlord is required to carry pursuant to this Lease) or any tenant’s carrier or by anyone else, and electric power costs for which any tenant directly contracts with the local public service company;

 

(d)           any bad debt loss, rent loss, or reserves for bad debts or rent loss;

 

(e)            costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Project (which shall specifically include, but not be limited to, accounting costs associated with the operation of the Project). Costs associated with the operation of the business of the partnership or entity which constitutes the Landlord include costs of partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Project, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Project management, or between Landlord and other tenants or occupants;

 

(f)            the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Project unless such wages and benefits are prorated to reflect time spent on operating and managing the Project vis-a-vis time spent on matters unrelated to operating and managing the Project; provided, that in no event shall Operating Expenses for purposes of this Lease include wages and/or benefits attributable to personnel above the level of Project manager;

 

 

(g)           amount paid as ground rental for the Project by the Landlord;

 

(h)           except for a Project management fee to the extent allowed pursuant to item (vi) above and exclusion (p) below, overhead and profit increment paid to the Landlord or to subsidiaries or affiliates of the Landlord for services in the Project to the extent the same exceeds the costs of such services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

 

(i)            any compensation paid to clerks, attendants or other persons in commercial concessions operated by the Landlord;

 

(j)            rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment which if purchased the cost of which would be excluded from Operating Expenses as a capital cost, except equipment not affixed to the Project which is used in providing engineering, janitorial or similar services and, further excepting from this exclusion such equipment rented or leased to remedy or ameliorate an emergency condition in the Project ;

 

(k)           all costs, items and services for which Tenant or any other tenant or other occupant in the Project reimburses Landlord or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;

 

(l)            any costs expressly excluded from Operating Expenses elsewhere in this Lease;

 

(m)           rent or imputed rent for any office space occupied by Project management personnel to the extent the size or rental rate of such office space exceeds the size or fair market rental value of office space occupied by management personnel of the comparable buildings in the vicinity of the Building, with adjustment where appropriate for the size of the applicable project, or rent or imputed rent for the Amenity Building at a rate that exceeds the Base Rent per RSF payable by Tenant for the Premises in any Expense Year;

 

(n)           costs, to the extent arising from the gross negligence or willful misconduct of Landlord or any Landlord Parties;

 

(o)           costs incurred to comply with laws relating to the removal of hazardous material (as defined under Applicable Law) which was in existence in the Building or on the Project prior to the Lease Commencement Date, and was of such a nature that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions that it then existed in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto; and costs incurred to remove, remedy, contain, or treat hazardous material, which hazardous material is brought into the Building or onto the Project after the date hereof by Landlord or any other tenant of the Project and is of such a nature, at that time, that a federal, State or municipal governmental authority, if it had then had knowledge of the presence of such hazardous material, in the state, and under the conditions, that it then exists in the Building or on the Project, would have then required the removal of such hazardous material or other remedial or containment action with respect thereto;

 

(p)           fees payable by Landlord for management of the Project in excess of four percent (4%) of Landlord’s gross revenues for the Project (the “Management Fee Cap”); and

 

 

(q)           any operating deficits relating to the operation of a café, restaurant or similar food and beverage concession.

 

4.2.5            Taxes.

 

4.2.5.1            “Tax Expenses” shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including, without limitation, real estate taxes, general and special assessments, transit taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used by Landlord in connection with the Project, or any portion thereof), which shall be paid or accrued during any Expense Year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Project, or any portion thereof.

 

4.2.5.2            Tax Expenses shall include, without limitation: (i) Any tax on the rent, right to rent or other income from the Project, or any portion thereof, or as against the business of leasing the Project, or any portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax; (iii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the Rent payable hereunder, including, without limitation, any business or gross income tax or excise tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises or the improvements thereon.

 

4.2.5.3            Any costs and expenses (including, without limitation, reasonable attorneys’ and consultants’ fees) incurred in attempting to protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such expenses are incurred. Tax refunds shall be credited against Tax Expenses and refunded to Tenant regardless of when received, based on the Expense Year to which the refund is applicable, provided that in no event shall the amount to be refunded to Tenant for any such Expense Year exceed the total amount paid by Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax Expenses for any period during the Lease Term or any extension thereof are increased after payment thereof for any reason, including, without limitation, error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord upon demand Tenant’s Share of any such increased Tax Expenses included by Landlord as Tax Expenses pursuant to the terms of this Lease. Notwithstanding anything to the contrary contained in this Section 4.2.5 (except as set forth in Section 4.2.5.1 above), there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts or income attributable to operations at the Project), (ii) any items included (or expressly excluded, other than Tax Expenses) as Operating Expenses, and (iii) any items paid by Tenant under Section 4.5 of this Lease.

 

4.2.6            “Tenant’s Share” shall mean the percentage set forth in Section 6 of the Summary.

 

 

4.3           Allocation of Direct Expenses. The parties acknowledge that the Building is a part of a multi- building project and that the costs and expenses incurred in connection with the Project (i.e., the Direct Expenses) should be shared between the Building and the other buildings in the Project. Accordingly, as set forth in Section 4.2 above, Direct Expenses (which consist of Operating Expenses and Tax Expenses) are determined annually for the Project as a whole, and a portion of the Direct Expenses, which portion shall be determined by Landlord on an equitable basis, shall be allocated to the Building (as opposed to other buildings in the Project). Such portion of Direct Expenses allocated to the Building shall include all Direct Expenses attributable solely to the Building and an equitable portion of the Direct Expenses attributable to the Project as a whole, and shall not include Direct Expenses attributable solely to other buildings in the Project. Notwithstanding the foregoing, costs and expenses relating to the Amenity Building in any Expense Year shall be allocated to the Building based on the rentable square footage of the Building as a share of the total then entitled buildable square footage for the Project. Accordingly, if the total entitled square footage of the Project is increased, then the allocation of the Amenity Building to the Direct Expenses for the Building shall be appropriately reduced.

 

4.4           Calculation and Payment of Additional Rent. Tenant shall pay to Landlord, in the manner set forth in Section 4.4.1, below, and as Additional Rent, Tenant’s Share of Direct Expenses for each Expense Year.

 

4.4.1            Statement of Actual Direct Expenses and Payment by Tenant. Landlord shall give to Tenant within five (5) months following the end of each Expense Year, a statement (the “Statement”) which shall state the Direct Expenses incurred or accrued for such preceding Expense Year, and which shall indicate the amount of Tenant’s Share of Direct Expenses. Upon receipt of the Statement for each Expense Year commencing or ending during the Lease Term, Tenant shall pay, within thirty (30) days following the receipt of the Statement, the full amount of Tenant’s Share of Direct Expenses for such Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated Direct Expenses,” as that term is defined in Section 4.4.2, below, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant’s Share of Direct Expenses, Tenant shall receive a credit in the amount of Tenant’s overpayment against Rent next due under this Lease or a refund if the Lease Term has ended as provided below). The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord or Tenant from enforcing its rights under this Article 4. Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of Direct Expenses for the Expense Year in which this Lease terminates, if Tenant’s Share of Direct Expenses is greater than the amount of Estimated Direct Expenses previously paid by Tenant to Landlord, Tenant shall, within thirty (30) days after receipt of the Statement, pay to Landlord such amount, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant’s Share of Direct Expenses, Landlord shall, within thirty (30) days after delivering the Statement to Tenant, deliver a check payable to Tenant in the amount of the overpayment . Notwithstanding the immediately preceding sentence, Tenant shall not be responsible for Tenant’s Share of any Direct Expenses attributable to any Expense Year which are first billed to Tenant more than eighteen (18) months after the earlier of the expiration of the applicable Expense Year in which such Direct Expense was incurred, provided that in any event Tenant shall be responsible for Tenant’s Share of Direct Expenses levied by any governmental authority or by any public utility companies at any time which are attributable to any Expense Year (provided that Landlord delivers Tenant a bill for such amounts within six (6) months following Landlord’s receipt of the bill therefor). The provisions of this Section 4.4.1 shall survive the expiration or earlier termination of the Lease Term.

 

4.4.2            Statement of Estimated Direct Expenses. In addition, Landlord shall give Tenant a yearly expense estimate statement (the “Estimate Statement”) (and shall use commercially reasonable efforts to deliver the Estimate Statement within five (5) months of each year) which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what the total amount of Direct Expenses for the then-current Expense Year shall be and the estimated Tenant’s Share of Direct Expenses (the “Estimated Direct Expenses”). The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Direct Expenses under this Article 4, nor shall Landlord be prohibited from revising any Estimate Statement or Estimated Direct Expenses theretofore delivered to the extent necessary. Thereafter, Tenant shall pay, within thirty (30) days following the receipt of the Statement, a fraction of the Estimated Direct Expenses for the then-current Expense Year (reduced by any amounts paid pursuant to the third-to-last sentence of this Section 4.4.2). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year, including the month of such payment, and twelve (12) as its denominator. Until a new Estimate Statement is furnished (which Landlord shall have the right to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Direct Expenses set forth in the previous Estimate Statement delivered by Landlord to Tenant. Any amounts paid based on such an Estimate shall be subject to adjustment as provided in Section 4.4.1 above when actual Direct Expenses are available for each Expense Year. Throughout the Lease Term Landlord shall maintain records with respect to Direct Expenses in accordance with sound real estate management and accounting practices, consistently applied.

 

 

4.5           Taxes and Other Charges for Which Tenant Is Directly Responsible. Tenant shall be liable for and shall pay ten (10) days before delinquency, taxes levied against Tenant’s equipment, furniture, fixtures and any other personal property located in or about the Premises. If any such taxes on Tenant’s equipment, furniture, fixtures and any other personal property are levied against Landlord or Landlord’s property or if the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon such equipment, furniture, fixtures or any other personal property and if Landlord pays the taxes based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof but only under proper protest if requested by Tenant, Tenant shall upon demand repay to Landlord the taxes so levied against Landlord or the proportion of such taxes resulting from such increase in the assessment, as the case may be.

 

4.6           Landlord’s Books and Records. Within one hundred twenty (120) days after receipt by Tenant of a Statement, if Tenant disputes the amount of Additional Rent set forth in the Statement, a member of Tenant’s finance department, or an independent certified public accountant (which accountant is a member of a nationally recognized accounting firm and is not working on a contingency fee basis) (“Tenant’s Accountant”), designated and paid for by Tenant, may, after reasonable notice to Landlord and at reasonable times, inspect Landlord’s records with respect to the Statement at Landlord’s offices, provided that there is no existing Event of Default and Tenant has paid all amounts required to be paid under the applicable Estimate Statement and Statement, as the case may be. In connection with such inspection, Tenant and Tenant’s agents must agree in advance to follow Landlord’s reasonable rules and procedures regarding inspections of Landlord’s records, and shall execute a commercially reasonable confidentiality agreement regarding such inspection. Tenant’s failure to dispute the amount of Additional Rent set forth in any Statement within one hundred twenty (120) days of Tenant’s receipt of such Statement shall be deemed to be Tenant’s approval of such Statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such Statement. If after such inspection, Tenant still disputes such Additional Rent, a determination as to the proper amount shall be made, at Tenant’s expense, by an independent certified public accountant (the “Accountant”) selected by Landlord and subject to Tenant’s reasonable approval; provided that if such Accountant determines that Direct Expenses were overstated by more than five percent (5%), then the cost of the Accountant and the cost of such determination shall be paid for by Landlord, and Landlord shall reimburse Tenant for the cost of the Tenant’s Accountant (provided that such cost shall be a reasonable market cost for such services). Tenant hereby acknowledges that Tenant’s sole right to inspect Landlord’s books and records and to contest the amount of Direct Expenses payable by Tenant shall be as set forth in this Section 4.6, and Tenant hereby waives any and all other rights pursuant to applicable law to inspect such books and records and/or to contest the amount of Direct Expenses payable by Tenant.

 

4.7           Miscellaneous. Landlord shall (i) not make a profit by charging items to Operating Expenses that are otherwise also charged separately to others and (ii) Landlord shall not collect Operating Expenses from Tenant and all other tenants/occupants in the Building in an amount in excess of what Landlord incurred for the items included in Operating Expenses.

 

 

5.            USE OF PREMISES

 

5.1           Permitted Use. Tenant shall use the Premises solely for the Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or permit the Premises or the Project to be used for any other purpose or purposes whatsoever without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion.

 

5.2           Prohibited Uses. Tenant further covenants and agrees that Tenant shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose in violation of, the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Project) including, without limitation, any such laws, ordinances, regulations or requirements relating to hazardous materials or substances, as those terms are defined by applicable laws now or hereafter in effect, or any Underlying Documents. Landlord shall have the right to impose reasonable and customary rules and regulations regarding the use of the Project, as reasonably deemed necessary by Landlord with respect to the orderly operation of the Project, and Tenant shall comply with such reasonable rules and regulations. Tenant shall not do or permit anything to be done in or about the Premises which will in any way damage the reputation of the Project or obstruct or interfere with the rights of other tenants or occupants of the Building, or injure or annoy them or use or allow the Premises to be used for any improper, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall comply with, and Tenant’s rights and obligations under the Lease and Tenant’s use of the Premises shall be subject and subordinate to, all recorded easements, covenants, conditions, and restrictions now or hereafter affecting the Project.

 

5.3           Hazardous Materials.

 

5.3.1           Tenant’s Obligations.

 

5.3.1.1            Prohibitions. As a material inducement to Landlord to enter into this Lease with Tenant, Tenant has fully and accurately completed Landlord’s Pre-Leasing Environmental Exposure Questionnaire (the “Environmental Questionnaire”), which is attached as Exhibit E. Tenant agrees that except for those chemicals or materials, and their respective quantities, specifically listed on the Environmental Questionnaire (as updated from time to time), neither Tenant nor Tenant’s employees, contractors and subcontractors of any tier, entities with a contractual relationship with Tenant (other than Landlord), or any entity acting as an agent or sub-agent of Tenant (collectively, “Tenant’s Agents”) will produce, use, store or generate any “Hazardous Materials,” as that term is defined below, on, under or about the Premises, nor cause or permit any Hazardous Material to be brought upon, placed, stored, manufactured, generated, blended, handled, recycled, used or “Released,” as that term is defined below, on, in, under or about the Premises. If any information provided to Landlord by Tenant on the Environmental Questionnaire, or otherwise relating to information concerning Hazardous Materials is intentionally or knowingly false, incomplete, or misleading in any material respect, the same shall be deemed an Event of Default by Tenant. Tenant shall deliver to Landlord an updated Environmental Questionnaire at least once a year, and Tenant may update the Environmental Questionnaire when Tenant anticipates a change in the types and amounts of Hazardous Materials Tenant will use in the Premises. Landlord’s prior written consent shall be required to any Hazardous Materials use for the Premises not described on the Environmental Questionnaire as updated from time to time by Tenant, such consent to be withheld only in Landlord’s commercially reasonable discretion. Tenant shall not install or permit any underground storage tank on the Premises. For purposes of this Lease, “Hazardous Materials” means all flammable explosives, petroleum and petroleum products, waste oil, radon, radioactive materials, toxic pollutants, asbestos, polychlorinated biphenyls (“PCBs”), medical waste, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, including without limitation any chemical, element, compound, mixture, solution, substance, object, waste or any combination thereof, which is or may be hazardous to human health, safety or to the environment due to its radioactivity, ignitability, corrosiveness, reactivity, explosiveness, toxicity, carcinogenicity, infectiousness or other harmful or potentially harmful properties or effects, or defined as, regulated as or included in, the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” or “toxic substances” under any Environmental Laws, except for de minimis quantities of typical cleaning and office supplies, all of which shall be stored, used and disposed of in accordance with applicable laws. The term “Hazardous Materials” for purposes of this Lease shall also include any mold, fungus or spores, whether or not the same is defined, listed, or otherwise classified as a “hazardous material” under any Environmental Laws, if such mold, fungus or spores may pose a risk to human health. For purposes of this Lease, “Release” or “Released” or “Releases” shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing, or other movement of Hazardous Materials into the environment. For the avoidance of doubt and notwithstanding anything to the contrary in this Lease, nothing in this Article 5 shall be construed to require any action by Tenant that is inconsistent with the allocation of responsibility between Landlord and Tenant for the making of repairs or Alterations as provided in Articles 7 and/or 8.

 

 

5.3.1.2            Notices to Landlord. Tenant shall notify Landlord in writing as soon as possible but in no event later than five (5) days after (i) the occurrence of any actual, alleged or threatened Release of any Hazardous Material in, on, under, from, about or in the vicinity of the Premises (whether past or present), regardless of the source or quantity of any such Release, or (ii) Tenant becomes aware of any regulatory actions, inquiries, inspections, investigations, directives, or any cleanup, compliance, enforcement or abatement proceedings (including any threatened or contemplated investigations or proceedings) relating to or potentially affecting the Premises, or (iii) Tenant becomes aware of any claims by any person or entity relating to any Hazardous Materials in, on, under, from, about or in the vicinity of the Premises, whether relating to damage, contribution, cost recovery, compensation, loss or injury. Collectively, the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referred to as “Hazardous Materials Claims”. Tenant shall promptly forward to Landlord copies of all orders, notices, permits, applications and other communications and reports in connection with any Hazardous Materials Claims. Additionally, Tenant shall promptly advise Landlord in writing of Tenant’s discovery of any occurrence or condition on, in, under or about the Premises that could subject Tenant or Landlord to any liability, or restrictions on ownership, occupancy, transferability or use of the Premises under any “Environmental Laws,” as that term is defined below. Tenant shall not enter into any legal proceeding or other action, settlement, consent decree or other compromise with respect to any Hazardous Materials Claims without first notifying Landlord of Tenant’s intention to do so and affording Landlord the opportunity to join and participate, as a party if Landlord so elects, in such proceedings and in no event shall Tenant enter into any agreements which are binding on Landlord or the Premises without Landlord’s prior written consent. Landlord shall have the right to appear at and participate in, any and all legal or other administrative proceedings concerning any Hazardous Materials Claim. For purposes of this Lease, “Environmental Laws” means all applicable present and future laws relating to the protection of human health, safety, wildlife or the environment, including, without limitation, (i) all requirements pertaining to reporting, licensing, permitting, investigation and/or remediation of emissions, discharges, Releases, or threatened Releases of Hazardous Materials, whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials; and (ii) all requirements pertaining to the health and safety of employees or the public. Environmental Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC § 9601, et seq., the Hazardous Materials Transportation Authorization Act of 1994, 49 USC § 5101, et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, and Hazardous and Solid Waste Amendments of 1984, 42 USC § 6901, et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC § 1251, et seq., the Clean Air Act of 1966, 42 USC § 7401, et seq., the Toxic Substances Control Act of 1976, 15 USC § 2601, et seq., the Safe Drinking Water Act of 1974, 42 USC §§ 300f through 300j, the Occupational Safety and Health Act of 1970, as amended, 29 USC § 651 et seq., the Oil Pollution Act of 1990, 33 USC § 2701 et seq., the Emergency Planning and Community Right-To-Know Act of 1986, 42 USC § 11001 et seq., the National Environmental Policy Act of 1969, 42 USC § 4321 et seq., the Federal Insecticide, Fungicide and Rodenticide Act of 1947, 7 USC § 136 et seq., California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., Hazardous Materials Release Response Plans and Inventory Act, California Health & Safety Code, §§ 25500 et seq., Underground Storage of Hazardous Substances provisions, California Health & Safety Code, §§ 25280 et seq., California Hazardous Waste Control Law, California Health & Safety Code, §§ 25100 et seq., and any other state or local law counterparts, as amended, as such Applicable Laws, are in effect as of the Lease Commencement Date, or thereafter adopted, published, or promulgated.

 

 

5.3.1.3            Releases of Hazardous Materials. If, due to the acts or omissions of Tenant or any Tenant’s Agent, any Release of any Hazardous Material in, on, under, from or about the Premises shall occur at any time during the Lease and/or if, due to the acts or omissions of Tenant or any Tenant’s Agent, any other Hazardous Material condition exists at the Premises that requires response actions of any kind, in addition to notifying Landlord as specified above, Tenant, at its own sole cost and expense, shall (i) immediately comply with any and all reporting requirements imposed pursuant to any and all Environmental Laws, (ii) provide a written certification to Landlord indicating that Tenant has complied with all applicable reporting requirements, (iii) take any and all necessary investigation, corrective and remedial action in accordance with any and all applicable Environmental Laws, utilizing an environmental consultant approved by Landlord, all in accordance with the provisions and requirements of this Section 5.3, including, without limitation, Section 5.3.4, and (iv) take any such additional investigative, remedial and corrective actions such that the Premises are remediated to the condition required by Environmental Laws.

 

5.3.1.4            Indemnification.

 

5.3.1.4.1            In General. Without limiting in any way Tenant’s obligations under any other provision of this Lease, Tenant shall be solely responsible for and shall protect, defend, indemnify and hold the Landlord Parties harmless from and against any and all claims, judgments, losses, damages, costs, expenses, penalties, enforcement actions, taxes, fines, remedial actions, liabilities (including, without limitation, actual attorneys’ fees, litigation, arbitration and administrative proceeding costs, expert and consultant fees and laboratory costs) including, without limitation, consequential damages and sums paid in settlement of claims, which arise during or after the Lease Term, whether foreseeable or unforeseeable, directly or indirectly arising out of or attributable to the presence, use, generation, manufacture, treatment, handling, refining, production, processing, storage, Release or presence of Hazardous Materials in, on, under or about the Premises by Tenant or Tenant’s Agents. Landlord shall provide copies of the most recent closure reports for the Premises following receipt thereof from the existing tenant of the Premises.

 

5.3.1.4.2            Limitations. Notwithstanding anything in this Section 5.3.1.4 to the contrary, neither Tenant’s indemnity of Landlord as set forth in Section 5.3.1.4, above, nor Tenant’s investigation, corrective or remedial obligations as set forth in Section 5.3.1.3, above shall be applicable to claims based upon Hazardous Materials not Released by Tenant or Tenant’s Agents.

 

5.3.1.4.3            Landlord Indemnity. Under no circumstance shall Tenant be liable for, and Landlord shall indemnify, defend, protect and hold harmless Tenant and Tenant’s Agents from and against, all losses, costs, claims, liabilities and damages (including attorneys’ and consultants’ fees) arising out of any Hazardous Materials that exist in, on or about the Project prior to the Possession Date, or Hazardous Materials brought onto the Project or Released by Landlord or any Landlord Parties, and Landlord shall remediate the same in compliance with Environmental Laws. Landlord will provide Tenant with any Hazardous Material reports relating to the Building that Landlord has in its immediate possession. The provision of such reports shall be for informational purposes only, and Landlord does not make any representation or warranty as to the correctness or completeness of any such reports. Landlord’s indemnification obligation under this Section 5.3.1.4.3 shall survive the expiration or earlier termination of this Lease.

 

 

5.3.1.5            Compliance with Environmental Laws. Without limiting the generality of Tenant’s obligation to comply with applicable laws as otherwise provided in this Lease, Tenant shall, at its sole cost and expense, comply with all Environmental Laws applicable to its use or use by any Tenant’s Agents of any Hazardous Materials. Tenant shall obtain and maintain any and all necessary permits, licenses, certifications and approvals appropriate or required for the use, handling, storage, and disposal of any Hazardous Materials used, stored, generated, transported, handled, blended, or recycled by Tenant on the Premises. Landlord shall have a continuing right, without obligation, to require Tenant to obtain, and to review and inspect any and all such permits, licenses, certifications and approvals, together with copies of any and all Hazardous Materials management plans and programs, any and all Hazardous Materials risk management and pollution prevention programs, and any and all Hazardous Materials emergency response and employee training programs respecting Tenant’s use of Hazardous Materials. If Landlord has reasonable grounds to be concerned that Tenant has failed to comply with the provisions of this Article 5, upon request of Landlord, Tenant shall deliver to Landlord a narrative description explaining the nature and scope of Tenant’s activities involving Hazardous Materials and showing to Landlord’s satisfaction compliance with all Environmental Laws and the terms of this Lease.

 

5.3.2            Assurance of Performance.

 

5.3.2.1            Environmental Assessments In General. Landlord may, but shall not be required to, engage from time to time such contractors as Landlord determines to be appropriate to perform environmental assessments of a scope reasonably determined by Landlord (an “Environmental Assessment”) to ensure Tenant’s compliance with the requirements of this Lease with respect to Hazardous Materials. The environmental assessment conducted by Landlord’s consultant shall not unreasonably interfere with Tenant’s operations at the Premises. Landlord shall require its consultant to provide insurance against claims, damages, or costs arising from bodily injury or property damage caused to Tenant or the Premises by Landlord’s consultant. The Environmental Assessment shall not include access to areas of Tenant’s operations that are protected as confidential business information or contain operations or processes that are protected under intellectual property rights, such as, but not limited to, trade secrets.

 

5.3.2.2            Costs of Environmental Assessments. All costs and expenses incurred by Landlord in connection with any such Environmental Assessment initially shall be paid by Landlord; provided that if any such Environmental Assessment shows that Tenant has failed to comply with the provisions of this Section 5.3, then all of the reasonable costs and expenses of such Environmental Assessment shall be reimbursed by Tenant as Additional Rent within ten (10) days after receipt of written demand therefor.

 

5.3.3            Tenant’s Obligations upon Surrender. At the expiration or earlier termination of the Lease Term, Tenant, at Tenant’s sole cost and expense, shall: (i) cause an Environmental Assessment of the Premises to be conducted in accordance with Section 15.3; (ii) cause all Hazardous Materials brought onto the Premises by Tenant or Tenant’s Agents to be removed from the Premises and disposed of in accordance with all Environmental Laws and as necessary to allow the Premises to be used for purposes consistent with First Class Life Sciences Projects; and (iii) cause to be removed all containers installed or used by Tenant or Tenant’s Agents to store any Hazardous Materials on the Premises, and cause to be repaired any damage to the Premises caused by such removal.

 

 

5.3.4            Clean-up.

 

5.3.4.1            Environmental Reports; Clean-Up. If any written report, including any report containing results of any Environmental Assessment (an “Environmental Report”) shall indicate (i) the presence of any Hazardous Materials as to which Tenant has a removal or remediation obligation under this Section 5.3, and (ii) that as a result of same, the investigation, characterization, monitoring, assessment, repair, closure, remediation, removal, or other clean-up (the “Clean-up”) of any Hazardous Materials is required, Tenant shall immediately prepare and submit to Landlord within thirty (30) days after receipt of the Environmental Report a comprehensive plan, subject to Landlord’s written approval (not to be unreasonably withheld, conditioned or delayed), specifying the actions to be taken by Tenant to perform the Clean-up so that the Premises are restored to the condition required by Environmental Laws (the “Clean-Up Plan”). Upon Landlord’s approval of the Clean-up Plan, Tenant shall, at Tenant’s sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease, immediately implement such plan with a consultant reasonably acceptable to Landlord and proceed to Clean-up Hazardous Materials in accordance with all applicable laws and as required by such plan and this Lease. If, within thirty (30) days after receiving a copy of such Environmental Report, Tenant fails either (a) to complete such Clean-up, or (b) with respect to any Clean-up that cannot be completed within such thirty-day period, fails to proceed with diligence to prepare the Clean-up Plan and complete the Clean-up as promptly as practicable, then Landlord shall have the right, but not the obligation, and without waiving any other rights under this Lease, to carry out any Clean-up recommended by the Environmental Report or required by any governmental authority having jurisdiction over the Premises, and recover all of the costs and expenses thereof from Tenant as Additional Rent, payable within thirty (30) days after receipt of written demand therefor.

 

5.3.4.2            No Rent Abatement. Tenant shall continue to pay all Rent due or accruing under this Lease during any Clean-up, and shall not be entitled to any reduction, offset or deferral of any Base Rent or Additional Rent due or accruing under this Lease during any such Clean-up.

 

5.3.4.3            Surrender of Premises. Tenant shall complete any Clean-up prior to surrender of the Premises upon the expiration or earlier termination of this Lease. Tenant shall obtain and deliver to Landlord a letter or other written determination from the overseeing governmental authority confirming that the Clean-up has been completed in accordance with all requirements of such governmental authority and that no further response action of any kind is required for the use of the Premises for a use consistent with the Permitted Use and consistent with First Class Life Sciences Projects (“Closure Letter”). Upon the expiration or earlier termination of this Lease, Tenant shall also be obligated to close all permits obtained in connection with Hazardous Materials in accordance with applicable laws.

 

5.3.4.4            Failure to Timely Clean-Up. Should any Clean-up for which Tenant is responsible not be completed, or should Tenant not receive the Closure Letter and any governmental approvals required under Environmental Laws in conjunction with such Clean-up prior to the expiration or earlier termination of this Lease, then commencing on the later of the termination of this Lease and three (3) business days after Landlord’s delivery of notice of such failure and that it elects to treat such failure as a holdover, Tenant shall be liable to Landlord as a holdover tenant (as more particularly provided in Article 16) until Tenant has fully complied with its obligations under this Section 5.3.

 

 

5.3.5            Confidentiality. Unless required to do so by Applicable Law, Tenant agrees that Tenant shall not disclose, discuss, disseminate or copy any information, data, findings, communications, conclusions and reports regarding the environmental condition of the Premises to any person or entity (other than Tenant’s consultants, attorneys, property managers and employees that have a need to know such information), including any governmental authority, without the prior written consent of Landlord. In the event Tenant reasonably believes that disclosure is required by applicable law, it shall provide Landlord ten (10) days’ advance notice of disclosure of confidential information so that Landlord may attempt to obtain a protective order. Tenant may additionally release such information to bona fide prospective purchasers, lenders, assignees or subtenants, subject to any such parties’ written agreement to be bound by the terms of this Section 5.3.5.

 

5.3.6            Copies of Environmental Reports. Within thirty (30) days of Tenant’s actual receipt thereof, Tenant shall provide Landlord with a copy of any and all environmental assessments, audits, studies and reports regarding Tenant’s activities with respect to the Premises, or ground water beneath the Project, or the environmental condition or Clean-up thereof. Tenant shall be obligated to provide Landlord with a copy of such materials without regard to whether such materials are generated by Tenant or prepared for Tenant, or how Tenant comes into possession of such materials; provided that nothing herein shall be construed as obligating Tenant to provide to Landlord documents or communications protected by the attorney-client privilege, attorney-work product doctrine or any other legally recognized privilege.

 

5.3.7            Intentionally Omitted.

 

5.3.8            Signs, Response Plans, Etc. Tenant shall be responsible for posting on the Premises any signs required under applicable Environmental Laws. Tenant shall also complete and file any business response plans or inventories required by any Applicable Laws. Tenant shall concurrently file a copy of any such business response plan or inventory with Landlord.

 

5.3.9            Survival. Each covenant, agreement, representation, warranty and indemnification made by Tenant set forth in this Section 5.3 shall survive the expiration or earlier termination of this Lease and shall remain effective until all of Tenant’s obligations under this Section 5.3 have been completely performed and satisfied.

 

6.            SERVICES AND UTILITIES

 

6.1           In General. Tenant will be responsible, at its sole cost and expense, for the furnishing of all services and utilities to the Premises, including, but not limited to heating, ventilation and air-conditioning (“HVAC”), electricity, water, telephone, janitorial and interior Building security services.

 

6.1.1            All utilities (including without limitation, electricity, gas, sewer and water) to the Building are separately metered at the Premises and shall be paid directly by Tenant to the applicable utility provider. Tenant may, at its election, consume utilities on a 24/7 basis.

 

6.1.2            Landlord shall not provide janitorial services for the Premises. Tenant shall be solely responsible for performing all janitorial services and other cleaning of the Premises, all in compliance with Applicable Laws. The janitorial and cleaning of the Premises shall be adequate to maintain the Premises in a manner consistent with First Class Life Sciences Projects.

 

Tenant shall cooperate fully with Landlord at all times and abide by all reasonable regulations and requirements that Landlord may reasonably prescribe for the proper functioning and protection of the HVAC, electrical, mechanical and plumbing systems. Provided that Landlord agrees to provide and maintain and keep in continuous service utility connections to the Building and Project, including electricity, water and sewage connections, Landlord shall have no obligation to provide any services or utilities to the Building, including, but not limited to HVAC, electricity, water, telephone, janitorial and interior Building security services.

 

 

6.2           Interruption of Use. Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by breakage, repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after reasonable effort to do so, by any riot or other dangerous condition, emergency, accident or Casualty (as defined in Section 11.1 below) whatsoever, by act or default of Tenant or other parties, or by any other cause; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease (provided that the foregoing shall not limit Landlord’s liability, if any, pursuant to applicable law for bodily injury and property damage to the extent caused by the gross negligence or willful misconduct of Landlord, its agents, employees or contractors). Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6.

 

6.3           Energy Performance Disclosure Information. Tenant hereby acknowledges that Landlord may be required to disclose certain information concerning the energy performance of the Building pursuant to California Public Resources Code Section 25402.10 and the regulations adopted pursuant thereto (collectively the “Energy Disclosure Requirements”). Tenant hereby acknowledges prior receipt of the Data Verification Checklist, as defined in the Energy Disclosure Requirements (the “Energy Disclosure Information”), and agrees that Landlord has timely complied in full with Landlord’s obligations under the Energy Disclosure Requirements. Tenant acknowledges and agrees that (i) Landlord makes no representation or warranty regarding the energy performance of the Building or the accuracy or completeness of the Energy Disclosure Information, (ii) the Energy Disclosure Information is for the current occupancy and use of the Building and that the energy performance of the Building may vary depending on future occupancy and/or use of the Building, and (iii) Landlord shall have no liability to Tenant for any errors or omissions in the Energy Disclosure Information. If and to the extent not prohibited by Applicable Laws, Tenant hereby waives any right Tenant may have to receive the Energy Disclosure Information, including, without limitation, any right Tenant may have to terminate this Lease as a result of Landlord’s failure to disclose such information. Further, Tenant hereby releases Landlord from any and all losses, costs, damages, expenses and/or liabilities relating to, arising out of and/or resulting from the Energy Disclosure Requirements, including, without limitation, any liabilities arising as a result of Landlord’s failure to disclose the Energy Disclosure Information to Tenant prior to the execution of this Lease. Tenant’s acknowledgment of the AS-IS condition of the Premises pursuant to the terms of this Lease shall be deemed to include the energy performance of the Building. Tenant further acknowledges that pursuant to the Energy Disclosure Requirements, Landlord may be required in the future to disclose information concerning Tenant’s energy usage to certain third parties, including, without limitation, prospective purchasers, lenders and tenants of the Building (the “Tenant Energy Use Disclosure”). Tenant hereby (A) consents to all such Tenant Energy Use Disclosures, and (B) acknowledges that Landlord shall not be required to notify Tenant of any Tenant Energy Use Disclosure. Further, Tenant hereby releases Landlord from any and all losses, costs, damages, expenses and liabilities relating to, arising out of and/or resulting from any Tenant Energy Use Disclosure. The terms of this Section 6.3 shall survive the expiration or earlier termination of this Lease.

 

 

6.4           Building Generator. Commencing on the Lease Commencement Date, Tenant shall have the right to connect to the existing Building back-up generator (the “Generator”), to provide back-up generator services to the Premises. During the Lease Term and any renewal terms, Landlord shall maintain the Generator in good working order, condition and repair. The costs of operation, maintenance, and repair of the Generator shall be included in Operating Expenses to the extent provided in Section 4.2.4, and Tenant shall be fully responsible for Tenant’s Share of any costs with respect thereto. Landlord shall not be liable for any damages whatsoever resulting from any failure in operation of the Generator, or the failure of the Generator to provide suitable or adequate back-up power to the Premises, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring, or loss to inventory, scientific research, scientific experiments, laboratory animals, products, specimens, samples, and/or scientific, business, accounting and other records of every kind and description kept at the Premises and any and all income derived or derivable therefrom. Landlord shall, upon written request from Tenant (not more frequently than once per calendar year), make available for Tenant’s inspection the maintenance contract and maintenance records for the emergency generators for the 12-month period immediately preceding Landlord’s receipt of Tenant’s written request. Prior to the expiration of the first (1st) Lease Year, Landlord will be responsible to replace the Generator with a new generator providing 600KW of back-up electricity, at Landlord’s sole cost and expense (the “New Generator”). Landlord shall, at Landlord’s sole cost and expense (which shall not be deemed an Operating Expense), make any required material repairs to or replacement of the New Generator during the initial Lease Term (the “Generator Warranty”), provided that the need to repair or replace was not caused by Tenant Damage. The Generator Warranty shall not apply to routine maintenance and repair costs, which costs shall be included in Operating Expenses.

 

6.5           Tenant’s Security System. Tenant may, at its own expense (but subject to reimbursement from the Tenant Improvement Allowance or Additional Tenant Improvement Allowance), install its own security system (“Tenant’s Security System”) in the Premises, subject to Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed. Any installation of Tenant’s Security System shall comply with and be governed by the terms of Article 8 of this Lease. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the monitoring, operation and removal of Tenant’s Security System, provided that, notwithstanding the foregoing, Tenant may install any security system it desires that does not require linkage with the Building security system and which does not affect the Building security system and which does not (i) create (a) an adverse effect on the Building structure; (b) a non-compliance with Applicable Laws; (c) an adverse effect on the Building Systems; (d) an effect on the exterior appearance of the Building; or (e) unreasonable interference with the normal and customary office operations of any other tenant in the Building, or (ii) affect Landlord’s ability to operate the Building. Tenant shall provide Landlord with any information reasonably required regarding Tenant’s Security System in the event access to the Premises is necessary in an emergency. At Landlord’s election prior to the expiration or earlier termination of this Lease, Tenant shall leave the Tenant’s Security System in the Premises upon the expiration or earlier termination of this Lease, in which event the Tenant’s Security System shall be surrendered with the Premises upon the expiration or earlier termination of this Lease, and Tenant shall thereafter have no further rights with respect thereto. In the event that Landlord fails to elect to have the Tenant’s Security System left in the Premises upon the expiration or earlier termination of this Lease, then Tenant shall remove the Tenant’s Security System prior to the expiration or earlier termination of this Lease, and repair all damage to the Building resulting from such removal, at Tenant’s sole cost and expense.

 

 

7.            REPAIRS.

 

7.1           Tenant Repair Obligations. Subject to Section 7.3 below and Landlord’s obligations under Section 1.1.3 above during the Warranty Period, Tenant shall, throughout the Term, at its sole cost and expense, maintain, repair, replace and improve as required, the Premises and Building and every part thereof in a good standard of maintenance, repair and replacement as required, and in good and sanitary condition, all in accordance with the standards of First Class Life Sciences Projects, except for Landlord Repair Obligations, whether or not such maintenance, repair, replacement or improvement is required in order to comply with Applicable Laws (“Tenant’s Repair Obligations”), including, without limitation, the following: (1) glass, windows, window frames, window casements (including the repairing, resealing, cleaning and replacing of both interior and exterior windows) and skylights; (2) interior and exterior doors, door frames and door closers; (3) interior lighting (including, without limitation, light bulbs and ballasts); (4) the plumbing, sewer, drainage, electrical, fire protection, elevator, escalator, life safety and security systems and equipment, existing heating, ventilation and air-conditioning systems, and all other mechanical, electrical and communications systems and equipment (collectively, the “Building Systems”), including without limitation (i) any specialty or supplemental Building Systems installed by or for Tenant and (ii) all electrical facilities and equipment, including lighting fixtures, lamps, fans and any exhaust equipment and systems, electrical motors and all other appliances and equipment of every kind and nature located in, upon or about the Premises; (5) all communications systems serving the Premises; (6) all of Tenant’s security systems in or about or serving the Premises; (7) Tenant’s signage; (8) interior demising walls and partitions (including painting and wall coverings), equipment, floors, and any roll-up doors, ramps and dock equipment; and (9) the non-structural portions of the roof of the Building, excluding the roof membrane and coverings. Tenant’s Repair Obligations exclude the routine maintenance of the load bearing and exterior walls of the Building, including, without limitation, any painting, sealing, patching and waterproofing of such walls. Tenant shall additionally be responsible, at Tenant’s sole cost and expense, to furnish all expendables, including light bulbs, paper goods and soaps, used in the Premises, and, to the extent that Landlord notifies Tenant in writing of its intention to no longer arrange for such monitoring, cause the fire alarm systems serving the Premises to be monitored by a monitoring or protective services firm approved by Landlord in writing.

 

7.2           Service Contracts. All Building Systems, including HVAC, elevators, main electrical, plumbing and fire/life-safety systems, shall be maintained, repaired and replaced by Tenant (i) in a commercially reasonable first-class condition, (ii) in accordance with any applicable manufacturer specifications relating to any particular component of such Building Systems, (iii) in accordance with Applicable Laws. Tenant shall contract with a qualified, experienced professional third party service companies (a “Service Contract”). Tenant shall regularly, in accordance with commercially reasonable standards, generate and maintain preventive maintenance records relating to each Building’s mechanical and main electrical systems, including life safety, elevators and the central plant (“Preventative Maintenance Records”). In addition, upon Landlord’s request, Tenant shall deliver a copy of all current Service Contracts to Landlord and/or a copy of the Preventative Maintenance Records.

 

7.3           Landlord’s Right to Perform Tenant’s Repair Obligations. Tenant shall notify Landlord in writing at least thirty (30) days prior to performing any material Tenant’s Repair Obligations, including without limitation, any Tenant’s Repair Obligation which affect the Building Systems or which is reasonably anticipated to cost more than $100,000.00. Upon receipt of such notice from Tenant, Landlord shall have the right to either (i) perform such material Tenant’s Repair Obligation by delivering notice of such election to Tenant within thirty (30) days following receipt of Tenant’s notice, and Tenant shall pay Landlord the cost thereof (including Landlord’s reasonable supervision fee) within thirty (30) days after receipt of an invoice therefor, or (ii) require Tenant to perform such Tenant’s Repair Obligation at Tenant’s sole cost and expense. If Tenant fails to perform any Tenant’s Repair Obligation within a reasonable time period, as reasonably determined by Landlord, then Landlord may, but need not, following delivery of notice to Tenant of such election, make such Tenant Repair Obligation, and Tenant shall pay Landlord the cost thereof, (including Landlord’s reasonable supervision fee) within thirty (30) days after receipt of an invoice therefor.

 

 

7.4           Landlord Repair Obligations. Landlord shall be responsible for repairs to and routine maintenance of (i) the exterior walls, foundation and roof and roof membrane of the Building, the structural portions of the floors of the Building including, without limitation, any painting, sealing, patching and waterproofing of exterior walls, and (ii) repairs to the elevator in the Building and underground utilities, except to the extent that such repairs are required due to the negligence or willful misconduct of Tenant (the “Landlord Repair Obligations”); provided, however, that if such repairs are due to the negligence or willful misconduct of Tenant, Landlord shall nevertheless make such repairs at Tenant’s expense, or, if covered by Landlord’s insurance, Tenant shall only be obligated to pay any deductible in connection therewith. Costs expended by Landlord in connection with the Landlord Repair Obligations shall be included in Operating Expenses to the extent allowed pursuant to the terms of Article 4, above. Landlord shall cooperate with Tenant to enforce any warranties that Landlord holds that could reduce Tenant’s maintenance obligations under this Lease. This Section 7.3 shall be subject to and shall not limit Landlord’s obligations under Section 1.1.3 above during the Warranty Period (including with respect to cost responsibility of any work or repairs).

 

8.            ADDITIONS AND ALTERATIONS.

 

8.1           Landlord’s Consent to Alterations. Tenant may not make any improvements, alterations, additions or changes to the Premises or any mechanical, plumbing or HVAC facilities or systems pertaining to the Premises (collectively, the “Alterations”) without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than twenty (20) days prior to the commencement thereof, and which consent shall not be unreasonably withheld, conditioned or delayed by Landlord, provided it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which adversely affects the structural portions or the systems or equipment of the Building or is visible from the exterior of the Building. Notwithstanding the foregoing, Tenant shall be permitted to make Alterations following ten (10) business days’ notice to Landlord, but without Landlord’s prior consent, to the extent that such Alterations (i) do not affect the Building Systems or equipment, (ii) are not visible from the exterior of the Building, and (iii) cost less than $150,000.00 for a particular job of work (“Permitted Alterations”). The construction of and ultimate surrender obligations relating to the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter and not the terms of this Article 8.

 

8.2           Manner of Construction. Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its reasonable discretion may deem desirable, including, but not limited to, the requirement that upon Landlord’s request, Tenant shall, at Tenant’s expense, remove such Alterations upon the expiration or any early termination of the Lease Term. Tenant shall construct such Alterations and perform such repairs in a good and workmanlike manner, in conformance with any and all applicable federal, state, county or municipal laws, rules and regulations and pursuant to a valid building permit, issued by the city in which the Building is located (or other applicable governmental authority). Tenant shall not use (and upon notice from Landlord shall cease using) contractors, services, workmen, labor, materials or equipment that, in Landlord’s reasonable judgment, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Building or the Common Areas. Upon completion of any Alterations (or repairs), Tenant shall deliver to Landlord final lien waivers from all contractors, subcontractors and materialmen who performed such work. In addition to Tenant’s obligations under Article 9 of this Lease, upon completion of any Alterations, Tenant shall deliver to the Project construction manager a reproducible copy of the “as built” drawings of the Alterations as well as all permits, approvals and other documents issued by any governmental agency in connection with the Alterations.

 

8.3           Payment for Improvements. If Tenant orders any work directly from Landlord, Tenant shall pay to Landlord an amount equal to four percent (4%) of the hard costs of such work to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord’s involvement with such work. If Tenant does not order any work directly from Landlord, Tenant shall reimburse Landlord for Landlord’s reasonable, actual, out-of-pocket costs and expenses actually incurred in connection with Landlord’s review of such work, not to exceed two percent (2%) of the hard costs of such work. Notwithstanding the foregoing, this Section 8.3 shall not apply to Permitted Alterations.

 

 

8.4           Construction Insurance. In addition to the requirements of Article 10 of this Lease, in the event that Tenant makes any Alterations, prior to the commencement of such Alterations, Tenant shall provide Landlord with evidence that Tenant carries “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof. In addition, Tenant’s contractors and subcontractors shall be required to carry (i) Commercial General Liability Insurance in an amount approved by Landlord, with Landlord, and, at Landlord’s option, Landlord’s property manager and project manager, as additional insureds in an amount approved by Landlord, and otherwise in accordance with the requirements of Article 10 of this Lease, and (ii) workers compensation insurance with a waiver of subrogation in favor of Landlord. Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of such Alterations and naming Landlord as a co-obligee, but only if the aggregate cost of such work is expected to exceed $150,000.00.

 

8.5           Landlord’s Property. All Alterations, improvements, fixtures, equipment and/or appurtenances (excluding Tenant’s Property (defined below) or other personal property, facilities, fixtures or equipment paid for by Tenant and placed in the Premises, or alterations paid for by Tenant which Landlord has elected to require Tenant to remove at the expiration or earlier termination of the Term) which may be installed or placed in or about the Premises, from time to time, shall be at the sole cost of Tenant and shall be and become the property of Landlord and remain in place at the Premises following the expiration or earlier termination of this Lease. Notwithstanding the foregoing, Landlord may, by written notice to Tenant at the time Landlord provides consent (if any) to particular Alterations, require Tenant, at Tenant’s expense, to remove any Alterations and/or improvements and/or systems and equipment within the Premises and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to the condition existing prior to such Alterations, normal wear and tear excepted. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Alterations and/or improvements and/or systems and equipment in the Premises and return the affected portion of the Premises to the condition existing prior to such Alterations, Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds Landlord harmless from any liability, cost, obligation, expense or claim of lien in any manner relating to the installation, placement, removal or financing of any such Alterations, improvements, fixtures and/or equipment in, on or about the Premises, which obligations of Tenant shall survive the expiration or earlier termination of this Lease. Without limiting the foregoing, the items set forth in Exhibit G attached hereto (the “Tenant’s Property”) shall at all times be and remain Tenant’s property. Exhibit G may be updated from time to time by agreement of the parties to reflect items which are Tenant’s property pursuant to the terms hereof, provided that Tenant’s failure to so update Exhibit G shall not affect whether an item constitutes Tenant’s property hereunder. Tenant may remove the Tenant’s Property from the Premises at any time, provided that Tenant repairs all damage caused by such removal.

 

8.6           Labor Harmony. Tenant shall not use (and upon notice from Landlord shall cease using) contractors, subcontractors, services, workmen, labor, materials or equipment that, in Landlord’s reasonable judgment, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Project, Building or the Common Areas and/or that otherwise results in picketing or other labor disturbances at the Project and/or on property adjacent thereto.

 

 

9.            COVENANT AGAINST LIENS. Tenant shall keep the Project and Premises free from any liens or encumbrances arising out of the work performed, materials furnished or obligations incurred by or on behalf of Tenant, and shall protect, defend, indemnify and hold Landlord harmless from and against any claims, liabilities, judgments or costs (including, without limitation, reasonable attorneys’ fees and costs) arising out of same or in connection therewith. Tenant shall give Landlord notice at least twenty (20) days prior to the commencement of any such work on the Premises (or such additional time as may be necessary under Applicable Laws) to afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility (to the extent applicable pursuant to then Applicable Laws). Tenant shall remove any such lien or encumbrance by bond or otherwise within ten (10) business days after notice by Landlord, and if Tenant shall fail to do so, Landlord may pay the amount necessary to remove such lien or encumbrance, without being responsible for investigating the validity thereof.

 

10.           INSURANCE

 

10.1            Indemnification and Waiver. Tenant hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises from any cause whatsoever and agrees that Landlord, its partners, subpartners and their respective officers, agents, servants, employees, lenders, any property manager and independent contractors (collectively, “Landlord Parties”) shall not be liable for, and are hereby released from any responsibility for, any damage either to person or property or resulting from the loss of use thereof, which damage is sustained by Tenant or by other persons claiming through Tenant. Except to the extent arising from the gross negligence or willful misconduct of Landlord, Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all claims, loss, cost, damage, injury, expense and liability (including without limitation court costs and reasonable attorneys’ fees) incurred in connection with or arising from any cause in, on or about the Premises, any acts, omissions or negligence of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, servants, employees, invitees, guests or licensees of Tenant or any such person, in, on or about the Project or any breach of the terms of this Lease, either prior to, during, or after the expiration of the Lease Term. Should Landlord be named as a defendant in any suit brought against Tenant in connection with or arising out of Tenant’s occupancy of the Premises, Tenant shall pay to Landlord its costs and expenses incurred in such suit, including without limitation, its actual professional fees such as reasonable appraisers’, accountants’ and attorneys’ fees. Subject to Tenant’s indemnification obligations set forth above and the waiver of subrogation provided below, Landlord shall indemnify, defend, protect, and hold harmless Tenant from any and all claims, loss, cost, damage, injury, expense, and liability (including, without limitation, court costs and reasonable attorneys’ fees) to the extent arising from the gross negligence or willful misconduct of Landlord or the Landlord Parties in, on or about the Project either prior to or during the Lease Term, provided that the terms of the foregoing indemnity shall not apply to the negligence or willful misconduct of Tenant. Notwithstanding anything to the contrary set forth in this Lease, either party’s agreement to defend and indemnify the other party as set forth in this Section 10.1 shall be ineffective to the extent the matters for which such party agreed to defend and indemnify the other party are covered by insurance required to be carried by the non-indemnifying party pursuant to this Lease. Further, Tenant’s agreement to indemnify Landlord and Landlord’s agreement to indemnify Tenant, each pursuant to this Section 10.1 is not intended and shall not relieve any insurance carrier of its obligations under policies required to be carried pursuant to the provisions of this Lease, to the extent such policies cover the matters subject to the parties’ respective indemnification obligations; nor shall they supersede any inconsistent agreement of the parties set forth in any other provision of this Lease. The provisions of this Section 10.1 shall survive the expiration or sooner termination of this Lease with respect to any claims or liability arising in connection with any event occurring prior to such expiration or termination.

 

10.2            Landlord’s Property Insurance. Landlord shall insure the Building during the Lease Term against loss or damage under a “special risk” property insurance policy. Such coverage shall be in such coverage and deductible amounts, from such companies, and on such other terms and conditions, as Landlord may from time to time reasonably determine based on insurance typical of landlords of First Class Life Sciences Projects. Additionally, at the option of Landlord (but subject to the immediately preceding sentence), such insurance coverage may include the risks of earthquakes and/or flood damage and additional hazards, where commercially reasonably obtainable, a rental loss endorsement and one or more loss payee endorsements in favor of the holders of any mortgages or deeds of trust encumbering the interest of Landlord in the Building or the ground or underlying lessors of the Building, or any portion thereof. Tenant shall, at Tenant’s expense, comply with all insurance company requirements pertaining to the use of the Premises. If Tenant’s conduct or use of the Premises causes any increase in the premium for such insurance policies then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body. Tenant shall also provide Landlord with such information regarding the use of the Premises. In the event of a claim, Tenant will cooperate with Landlord regarding Landlord’s insurance.

 

 

10.3         Tenant’s Insurance. Tenant shall maintain the following coverages in the following amounts commencing on the Possession Date (or the date of any early access pursuant to Section 6 of the Tenant Work Letter, if applicable).

 

10.3.1            Commercial General Liability Insurance on an occurrence form covering the insured against claims of bodily injury, personal injury and property damage arising out of Tenant’s operations, including contractual coverage and personal injury. Tenant shall carry products and completed operations coverage whether included in the Commercial General Liability or on a standalone policy (which the parties agree shall not be required to be purchased until Tenant has a completed product or operation), for limits of liability of not less than:

 

Bodily Injury and Property Damage Liability including Personal Injury	$3,000,000 each occurrence $5,000,000 annual aggregate
Personal Injury Liability	$3,000,000 each occurrence $5,000,000 annual aggregate

 

Any combination of primary and excess/umbrella policies may be utilized in order to meet the limit requirements above.

 

10.3.2            Property Insurance covering (i) all office furniture, business and trade fixtures, office equipment, free-standing cabinet work, movable partitions, merchandise and all other items of Tenant’s property on the Premises, (ii) the “Tenant Improvements,” as that term is defined in the Tenant Work Letter, and any other improvements which exist in the Premises as of the Lease Commencement Date (excluding the Base Building) (the “Original Improvements”), and (iii) all other improvements, alterations and additions to the Premises. Such insurance shall be written on a “special risks” of physical loss, for the replacement cost value of the covered items and shall include all perils included within the “special risk” coverage.

 

10.3.3            Worker’s Compensation and Employer’s Liability or other similar insurance pursuant to all applicable state and local statutes and regulations. The policy shall include a waiver of subrogation in favor of Landlord, its employees, Lenders and any property manager or partners.

 

10.4          Form of Policies. The minimum limits of policies of insurance required of Tenant under this Lease shall in no event limit the liability of Tenant under this Lease. Property, Commercial General Liability, and Umbrella insurance policies shall (i) name Landlord, its subsidiaries and affiliates, its property manager (if any) and any other party the Landlord so specifies, as an additional insured or loss payee, as applicable, including Landlord’s managing agent, if any; (ii) be issued by an insurance company having a rating of not less than A:VIII in Best’s Insurance Guide or which is otherwise acceptable to Landlord and authorized to do business in the State of California; (iv) be primary insurance such that any insurance carried by Landlord is excess and is non-contributing with the Property, Commercial General Liability, and Umbrella insurance required of Tenant; and (v) provide that said insurance shall not be canceled unless thirty (30) days’ prior written notice has been given to Tenant (who shall then promptly provide notice thereof to Landlord and any mortgagee of Landlord) (unless such cancellation is the result of non-payment of premiums). Tenant shall deliver said certificates of insurance to Landlord on or before the Lease Commencement Date and at least five (5) days before the expiration dates thereof. In the event Tenant shall fail to procure such insurance, or to deliver such policies or certificate, Landlord may, at its option, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord within five (5) days after delivery to Tenant of bills therefor.

 

 

10.5         Subrogation. Landlord and Tenant hereby agree to look solely to, and seek recovery only from, their respective insurance carriers in the event of a property or business interruption loss to the extent that such coverage is agreed to be provided hereunder. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right to the insured to recover thereunder. The parties agree that their respective insurance policies do now, or shall, contain the waiver of subrogation.

 

10.6         Additional Insurance Obligations. From and after the first five (5) years of the Lease Term, Tenant shall carry and maintain during the entire Lease Term, at Tenant’s sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 10 (provided that Tenant shall not be required to carry any other types of insurance coverage), as may be reasonably requested by Landlord or Landlord’s lender, but in no event in excess of the amounts of insurance then being required by landlords of buildings comparable to and in the vicinity of the Building.

 

11.            DAMAGE AND DESTRUCTION

 

11.1         Repair of Damage. Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty (“Casualty”). If the Premises or any Common Areas or other portions of the Project serving or providing access to the Premises shall be damaged by Casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control, and subject to all other terms of this Article 11, restore the Base Building and such Common Areas and portions of the Project. Such restoration shall be to substantially the same condition of the Base Building and the Common Areas and Project prior to the Casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage on the Building or Project or any other modifications to the Common Areas deemed desirable by Landlord, which are consistent with the character of the Project, provided that access to the Premises shall not be materially impaired. Subject to the terms of Section 11.2, below, Tenant shall, at its sole cost and expense, repair any injury or damage to the Tenant Improvements and the Original Improvements installed in the Premises and shall return such Tenant Improvements and Original Improvements to their original condition. Whether or not Landlord delivers a “Landlord Repair Notice,” as that term is defined in Section 11.2 below, prior to the commencement of construction, Tenant shall submit to Landlord, for Landlord’s review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the contractors to perform such improvement work. Tenant shall in addition cooperate with requests for information regarding any repairs from Landlord’s insurer(s) by providing the requested information within ten (10) days after Tenant receives the request. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s business resulting in any way from such damage or the repair thereof; provided however, that if such Casualty shall have damaged the Premises or Common Areas or portions of the Project necessary to Tenant’s occupancy, and the Premises are not occupied by Tenant as a result thereof, then during the time and to the extent the Premises are unfit for occupancy, the Rent shall be abated in proportion to the ratio that the amount of rentable square feet of the Premises which is unfit for occupancy for the purposes permitted under this Lease bears to the total rentable square feet of the Premises. In the event that Landlord shall not deliver the Landlord Repair Notice, Tenant’s right to rent abatement pursuant to the preceding sentence shall terminate as of the date which is reasonably determined by Landlord to be the date Tenant should have completed repairs to the Premises assuming Tenant used reasonable due diligence in connection therewith. Notwithstanding any contrary provision of this Article 11, the parties hereby agree as follows: (i) the closure of the Project, the Building, the Common Areas, or any part thereof to protect public health shall not constitute a Casualty for purposes of this Lease, (ii) Casualty covered by this Article 11 shall require that the physical or structural integrity of the Premises, the Project, the Building, or the Common Areas is degraded as a direct result of such occurrence, and (iii) a Casualty under this Article 11 shall not be deemed to occur merely because Tenant is unable to productively use the Premises in the event that the physical and structural integrity of the Premises is undamaged.

 

 

11.2         Landlord’s Option to Repair. Upon the occurrence of any damage to the Premises, Landlord may, at Landlord’s option, deliver a notice (the “Landlord Repair Notice”) to Tenant, and upon receipt of a Landlord Repair Notice Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance required under Section 10.3 of this Lease, and Landlord shall repair any injury or damage to the Tenant Improvements and the Original Improvements installed in the Premises and shall return such Tenant Improvements and Original Improvements to their original condition; provided that if the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier (including by taking into account any deductible or self-insured retention), as assigned by Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s commencement of repair of the damage. Notwithstanding the terms of Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the Premises, Building and/or Project, and instead terminate this Lease, by notifying Tenant in writing of such termination within sixty (60) days after the date of discovery of the damage, such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect only if the Building or Project shall be damaged by Casualty, whether or not the Premises are affected, and one or more of the following conditions is present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be completed within one hundred eighty (180) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums); (ii) the holder of any mortgage on the Building or Project or ground lessor with respect to the Building or Project shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt, or shall terminate the ground lease, as the case may be; (iii) the damage is not fully covered by Landlord’s insurance policies (unless such shortfall is a result of Landlord’s failure to maintain the insurance that Landlord is required to maintain pursuant to Section 10.2 above); (iv) material damage occurs during the last twelve (12) months of the Lease Term; or (v) any owner of any other portion of the Project, other than Landlord or an affiliate of Landlord, does not intend to repair the damage to such portion of the Project; provided, however, that if Landlord does not elect to terminate this Lease pursuant to Landlord’s termination right as provided above, and the repairs cannot, in the reasonable opinion of Landlord, be completed within one hundred eighty (180) days after being commenced (or are not in fact completed within two hundred seventy (270) days after the date of discovery of the damage), Tenant may elect, no earlier than sixty (60) days after the date of the damage and not later than ninety (90) days after the date of such damage, or within thirty (30) days after such repairs are not timely completed, to terminate this Lease by written notice to Landlord effective as of the date specified in the notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after the date such notice is given by Tenant. Notwithstanding the provisions of this Section 11.2, Tenant shall have the right to terminate this Lease under this Section 11.2 only if each of the following conditions is satisfied: (a) the damage to the Project by Casualty was not caused by the gross negligence or intentional misconduct of Tenant; (b) no Event of Default has occurred and is continuing; (c) as a result of the damage, Tenant cannot reasonably conduct business from the Premises; and, (d) as a result of the damage to the Project, Tenant does not occupy or use the damaged portion of the Premises for the Permitted Use.

 

 

11.3         Waiver of Statutory Provisions. The provisions of this Lease, including this Article 11, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or the Project, and any statute or regulation of the State of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or the Project.

 

12.          NONWAIVER. No provision of this Lease shall be deemed waived by either party hereto unless expressly waived in a writing signed thereby. The waiver by either party hereto of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of same or any other term, covenant or condition herein contained. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be deemed a waiver of Landlord’s right to receive the full amount due, nor shall any endorsement or statement on any check or payment or any letter accompanying such check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the full amount due. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant’s right of possession hereunder, or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit, or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

 

13.          CONDEMNATION. If the whole or any part of the Premises, Building or Project shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the use, reconstruction or remodeling of any part of the Premises, Building or Project, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease effective as of the date possession is required to be surrendered to the authority. If more than twenty-five percent (25%) of the rentable square feet of the Premises is taken, or if access to the Premises is substantially impaired, in each case for a period in excess of one hundred twenty (120) days, Tenant shall have the option to terminate this Lease effective on not less than ninety (90) days prior written notice or, if sooner as of the date possession is required to be surrendered to the authority. Tenant shall not because of such taking assert any claim against Landlord or the authority for any compensation because of such taking and Landlord shall be entitled to the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claims do not diminish the award available to Landlord, its ground lessor with respect to the Building or Project or its mortgagee, and such claim is payable separately to Tenant. All Rent shall be apportioned as of the date of such termination. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Rent shall be proportionately abated. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of The California Code of Civil Procedure. Notwithstanding anything to the contrary contained in this Article 13, in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and the Additional Rent shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking. Notwithstanding any contrary provision of this Lease, the following governmental actions shall not constitute a taking or condemnation, either permanent or temporary: (i) an action that requires Tenant’s business or the Building or Project to close during the Lease Term, and (ii) an action taken for the purpose of protecting public safety (e.g., to protect against acts of war, the spread of communicable diseases, or an infestation), and no such governmental actions shall entitle Tenant to any compensation from Landlord or any authority, or Rent abatement or any other remedy under this Lease.

 

 

14.           ASSIGNMENT AND SUBLETTING

 

14.1         Transfers. Except in connection with a Permitted Transfer (defined below), Tenant shall not, without the prior written consent of Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment, or other transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or enter into any license or concession agreements or otherwise permit the occupancy or use of the Premises or any part thereof by any persons other than Tenant and its employees and contractors (all of the foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”). If Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”) shall include (i) the proposed effective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the “Subject Space”), (iii) all of the terms of the proposed Transfer and the consideration therefor, including calculation of the “Transfer Premium”, as that term is defined in Section 14.3 below, in connection with such Transfer, the name and address of the proposed Transferee, and a copy of all existing executed and/or proposed documentation pertaining to the proposed Transfer, and (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, business credit and personal references and history of the proposed Transferee and any other information reasonably required by Landlord which will enable Landlord to determine the financial responsibility, character, and reputation of the proposed Transferee, nature of such Transferee’s business and proposed use of the Subject Space. Any Transfer made without Landlord’s prior written consent shall, at Landlord’s option, be null, void and of no effect, and shall, at Landlord’s option, constitute an Event of Default by Tenant under this Lease. Whether or not Landlord consents to any proposed Transfer, Tenant shall pay Landlord’s reasonable review and processing fees, as well as any reasonable professional fees (including, without limitation, attorneys’, accountants’, architects’, engineers’ and consultants’ fees) incurred by Landlord, within thirty (30) days after written request by Landlord, provided that such fees shall not exceed Two Thousand Five Hundred and 00/100 Dollars ($2,500.00) for any such Transfer in the ordinary course of business. For purposes of this Lease, “in the ordinary course of business” shall include, without limitation, the review of documents on no more than three (3) occasions in connection with any particular Transfer. Notwithstanding anything contained in this Lease to the contrary, Tenant shall not: (a) make a Transfer to an entity in which, under the Internal Revenue Code of 1986, as amended (the “Code”), any entity that directly or indirectly owns Landlord and is qualified as a real estate investment trust (a “REIT Owner”) owns, directly, indirectly or by applying constructive ownership rules set forth in Section 856(d)(5) of the Code, a ten percent (10%) or greater interest; or (ii) make any Transfer or other action under Section 14.8, below, in a manner that would cause any portion of the amounts received by Landlord pursuant hereto to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code.

 

 

14.2         Landlord’s Consent. Landlord shall not unreasonably withhold, condition or delay its consent to any proposed Transfer of the Subject Space by assignment or sublease to the Transferee on the terms specified in the Transfer Notice. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply:

 

14.2.1          The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building or the Project (as reasonably determined by Landlord);

 

14.2.2          The Transferee is either a governmental agency or instrumentality thereof;

 

14.2.3          In connection with an assignment of Tenant’s entire interest under this Lease, the Transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the assignment of this Lease on the date consent is requested; or

 

14.2.4          Such Transfer would cause a REIT Owner to be in violation of applicable Code requirements for it to maintain status as a “real estate investment trust” under Sections 856 through 860 of the Code or would violate any provision of this Section 14.1; or

 

14.2.5          The proposed Transfer would cause a violation of another lease for space in the Project, or would give an occupant of the Project a right to cancel its lease.

 

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within six (6) months after Landlord’s consent, but not later than the expiration of said six-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any changes in the terms and conditions from those specified in the Transfer Notice such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord’s right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any proposed Transferee claims that Landlord has unreasonably withheld or delayed its consent under Section 14.2 or otherwise has breached or acted unreasonably under this Article 14, their sole remedies shall be a suit for contract damages (other than damages for injury to, or interference with, Tenant’s business including, without limitation, loss of profits, however occurring) or declaratory judgment and an injunction for the relief sought, and Tenant hereby waives all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all Applicable Laws, on behalf of the proposed Transferee.

 

14.3         Transfer Premium. If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined in this Section 14.3, received by Tenant from such Transferee. “Transfer Premium” shall mean all rent, additional rent or other consideration payable by such Transferee in connection with the Transfer in excess of the Rent and Additional Rent payable by Tenant under this Lease during the term of the Transfer on a per rentable square foot basis if less than all of the Premises is transferred, and after deducting the expenses incurred by Tenant for (i) any changes, alterations, or improvements to the Premises in connection with the Transfer, (ii) any free base rent or other economic concessions reasonably provided to the Transferee, (iii) any reasonable legal fees and brokerage commissions incurred by Tenant in connection with the Transfer, and (iv) any amounts payable to Landlord under Section 14.1 above (collectively, the “Transfer Costs”). The “Transfer Premium” shall also include, but not be limited to, key money, bonus money or other cash consideration paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer. The determination of the amount of Landlord’s applicable share of the Transfer Premium shall be made on a monthly basis as rent or other consideration is received by Tenant under the Transfer. No Transfer Premium shall be payable in connection with any Permitted Transfer.

 

 

14.4          Landlord’s Option as to Subject Space. Notwithstanding anything to the contrary contained in this Article 14 (except that Landlord shall have no recapture rights for any Permitted Transfer), in the event Tenant contemplates a Transfer which, together with all prior Transfers then remaining in effect, would cause fifty percent (50%) or more of the Premises to be Transferred for more than fifty percent (50%) of the then remaining Lease Term (taking into account any extension of the Lease Term which has irrevocably exercised by Tenant), Tenant shall give Landlord notice (the “Intention to Transfer Notice”) of such contemplated Transfer (whether or not the contemplated Transferee or the terms of such contemplated Transfer have been determined). The Intention to Transfer Notice shall specify the portion of and amount of rentable square feet of the Premises which Tenant intends to Transfer (the “Contemplated Transfer Space”), the contemplated date of commencement of the Contemplated Transfer (the “Contemplated Effective Date”), and the contemplated length of the term of such contemplated Transfer, and shall specify that such Intention to Transfer Notice is delivered to Landlord pursuant to this Section 14.4 in order to allow Landlord to elect to recapture the Contemplated Transfer Space. Thereafter, Landlord shall have the option, by giving written notice to Tenant within twenty (20) days after receipt of any Intention to Transfer Notice, to recapture the Contemplated Transfer Space (except that Tenant may, within five (5) days of Tenant’s receipt of Landlord’s election to recapture, rescind the Intention to Transfer Notice by written notice to Landlord, in which case the Intention to Transfer Notice shall be deemed void ab initio and the Lease shall continue in full force and effect). Such recapture shall cancel and terminate this Lease with respect to such Contemplated Transfer Space as of the Contemplated Effective Date. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of the same. If Landlord declines, or fails to elect in a timely manner, to recapture such Contemplated Transfer Space under this Section 14.4, then, subject to the other terms of this Article 14, for a period of nine (9) months (the “Nine Month Period”) commencing on the last day of such twenty (20) day period, Landlord shall not have any right to recapture the Contemplated Transfer Space with respect to any Transfer made during the Nine Month Period, provided that any such Transfer is substantially on the terms set forth in the Intention to Transfer Notice, and provided further that any such Transfer shall be subject to the remaining terms of this Article 14. If such a Transfer is not so consummated within the Nine Month Period for reasons other than delays in Landlord’s consent to same (or if a Transfer is so consummated, then upon the expiration of the term of any Transfer of such Contemplated Transfer Space consummated within such Nine Month Period), Tenant shall again be required to submit a new Intention to Transfer Notice to Landlord with respect any contemplated Transfer (other than a Permitted Transfer), as provided above in this Section 14.4.

 

14.5          Effect of Transfer. If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord’s request a complete statement, certified by an independent certified public accountant, or Tenant’s chief financial officer, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such Transfer, and (v) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of the Lease from any liability under this Lease, including, without limitation, in connection with the Subject Space. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any Transfer (no more than once in any twelve (12) month period), and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency, and if understated by more than two percent (2%), Tenant shall pay Landlord’s costs of such audit.

 

 

14.6         Additional Transfers. For purposes of this Lease, subject to Section 14.8 below, the term “Transfer” shall also include (i) if Tenant is a partnership, the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners, or transfer of fifty percent (50%) or more of partnership interests, within a twelve (12)-month period, or the dissolution of the partnership without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant or (B) the sale or other transfer of an aggregate of fifty percent (50%) or more of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of an aggregate of fifty percent (50%) or more of the value of the unencumbered assets of Tenant within a twelve (12)-month period.

 

14.7          Occurrence of Default. Any Transfer hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease shall be terminated during the term of any Transfer, Landlord shall have the right to: (i) treat such Transfer as cancelled and repossess the Subject Space by any lawful means, or (ii) require that such Transferee attorn to and recognize Landlord as its landlord under any such Transfer. If an Event of Default by Tenant has occurred and is continuing, Landlord is hereby irrevocably authorized, as Tenant’s agent, to direct any Transferee to make all payments under or in connection with the Transfer directly to Landlord (which Landlord shall apply towards Tenant’s obligations under this Lease) until such Event of Default is cured. Such Transferee shall rely on any representation by Landlord that Tenant is in default hereunder, without any need for confirmation thereof by Tenant. Upon any assignment, the assignee shall assume in writing all obligations and covenants of Tenant thereafter to be performed or observed under this Lease. No collection or acceptance of rent by Landlord from any Transferee shall be deemed a waiver of any provision of this Article 14 or the approval of any Transferee or a release of Tenant from any obligation under this Lease, whether theretofore or thereafter accruing. In no event shall Landlord’s enforcement of any provision of this Lease against any Transferee be deemed a waiver of Landlord’s right to enforce any term of this Lease against Tenant or any other person. If Tenant’s obligations hereunder have been guaranteed, Landlord’s consent to any Transfer shall not be effective unless the guarantor also consents to such Transfer.

 

14.8          Non-Transfers. Notwithstanding anything to the contrary contained in this Article 14, (i) an assignment or subletting of all or a portion of the Premises to an affiliate of Tenant (an entity which is controlled by, controls, or is under common control with, Tenant), (ii) an assignment of the Premises to an entity which acquires all or substantially all of the assets or interests (partnership, stock, membership or other) of Tenant, (iii) an assignment of the Premises to an entity which is the resulting entity of a merger or consolidation of Tenant, or (iv) a sale of interests (partnership, stock, membership or other) in Tenant in connection with either a bona-fide financing for the benefit of the Tenant or an initial public offering of Tenant’s stock on a nationally-recognized stock exchange (collectively, a “Permitted Transferee” and such transfer shall be a “Permitted Transfer”), shall not be deemed a Transfer under this Article 14, provided that (A) following execution Tenant notifies Landlord of any such assignment or sublease and promptly supplies Landlord with any documents or information reasonably requested by Landlord regarding such assignment or sublease or such affiliate, (B) such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under this Lease, (C) such Permitted Transferee shall be of a character and reputation consistent with the quality of the Building, and (D) such Permitted Transferee shall have a tangible net worth (not including goodwill as an asset) computed in accordance with generally accepted accounting principles (“Net Worth”) at least equal to the Net Worth of Tenant on the day immediately preceding the effective date of such assignment or sublease. An assignee of Tenant’s entire interest that is also a Permitted Transferee may also be known as a “Permitted Assignee”. “Control,” as used in this Section 14.8, shall mean the ownership, directly or indirectly, of at least fifty- one percent (51%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of at least fifty-one percent (51%) of the voting interest in, any person or entity. No such permitted assignment or subletting shall serve to release Tenant from any of its obligations under this Lease.

 

 

15.            SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

 

15.1         Surrender of Premises. No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in writing by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises or terminate any or all such sublessees or subtenancies.

 

15.2         Removal of Tenant Personal Property by Tenant. Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15, quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, reasonable wear and tear and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, free-standing cabinet work, movable partitions and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, and such similar articles of any other persons claiming under Tenant, as Landlord may, in its sole discretion, require to be removed, and Tenant shall repair at its own expense all damage to the Premises and Building resulting from such removal.

 

15.3         Environmental Assessment. In connection with its surrender of the Premises, Tenant shall submit to Landlord, at least one hundred twenty (120) days prior to the expiration date of this Lease (or in the event of an earlier termination of this Lease, as soon as reasonably possible following such termination), an environmental Assessment of the Premises by a competent and experienced environmental engineer or engineering firm reasonably satisfactory to Landlord (pursuant to a contract approved by Landlord and providing that Landlord can rely on the Environmental Assessment), which (i) evidences that the Premises are in a clean and safe condition and free and clear of any Hazardous Materials for which Tenant has responsibility under this Lease; and (ii) includes a review of the Premises by an environmental consultant for asbestos, mold, fungus, spores, and other moisture conditions, on-site chemical use, and lead-based paint. If such Environmental Assessment reveals that remediation or Clean-up is required under any Environmental Laws in connection with any Hazardous Materials for which Tenant has responsibility under this Lease, Tenant shall submit a remediation plan prepared by a recognized environmental consultant and shall be responsible for all costs of remediation and Clean-up, as more particularly provided in Section 5.3, above.

 

 

15.4         Condition of the Building and Premises Upon Surrender. In addition to the above requirements of this Article 15, upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, surrender the Premises and Building such that the same are in compliance with all applicable laws and with Tenant having complied with all of Tenant’s obligations under this Lease, including those relating to improvement, repair, maintenance, compliance with law, testing and other related obligations of Tenant set forth in Article 7 of this Lease. In the event that the Building and Premises shall be surrendered in a condition which does not comply with the terms of this Section 15.4, because Tenant failed to comply with its obligations set forth in Lease, then following thirty (30) days’ notice to Tenant, during which thirty (30) day period Tenant shall have the right to cure such noncompliance, Landlord shall be entitled to expend all reasonable costs in order to cause the same to comply with the required condition upon surrender and Tenant shall immediately reimburse Landlord for all such costs upon notice and Tenant shall be deemed during the period that Tenant or Landlord, as the case may be, perform obligations relating to any Alterations or improvements which are subject to removal pursuant to the terms of this Lease, to be in holdover under Article 16 of this Lease.

 

16.           HOLDING OVER. If Tenant holds over after the expiration of the Lease Term or earlier termination thereof, with the express or implied consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term. If Tenant holds over after the expiration of the Lease Term of earlier termination thereof, without the express or implied consent of Landlord, such tenancy shall be deemed to be a tenancy by sufferance only, and shall not constitute a renewal hereof or an extension for any further term. In either case, Rent shall be payable at a monthly rate equal to (i) one hundred twenty-five percent (125%) of the Rent applicable during the last rental period of the Lease Term under this Lease for the first two (2) months following the expiration or earlier termination of this Lease, and (ii) one hundred fifty percent (150%) of the Rent applicable during the last rental period of the Lease Term under this Lease thereafter. Such month-to-month tenancy or tenancy by sufferance, as the case may be, shall be subject to every other applicable term, covenant and agreement contained herein. Nothing contained in this Article 16 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises within thirty (30) days following the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender and any lost profits to Landlord resulting therefrom.

 

17.           ESTOPPEL CERTIFICATES. Within ten (10) business days following a request in writing by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel certificate, which, as submitted by Landlord, shall be substantially in the form of Exhibit D, attached hereto (or such other form as may be required by any prospective mortgagee or purchaser of the Project, or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by Landlord or Landlord’s mortgagee or prospective mortgagee. Any such certificate may be relied upon by any prospective mortgagee or purchaser of all or any portion of the Project. Tenant shall execute and deliver whatever other instruments may be reasonably required for such purposes. At any time during the Lease Term (but not more than once in any calendar year unless in connection with the sale or proposed sale, or the financing/refinancing, of the Project or any portion thereof), Landlord may require Tenant to provide Landlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. Failure of Tenant to timely execute, acknowledge and deliver such estoppel certificate or other instruments shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception.

 

 

18.           SUBORDINATION. Landlord hereby represents and warrants to Tenant that the Project is not currently subject to any ground lease, or to the lien of any mortgage or deed of trust as of the date of this Lease. This Lease shall be subject and subordinate to all present and future ground or underlying leases of the Building or Project and to the lien of any mortgage, trust deed or other encumbrances now or hereafter in force against the Building or Project or any part thereof, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages, trust deeds or other encumbrances, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto. The subordination of this Lease to any future ground or underlying leases of the Building or Project or to the lien of any mortgage, trust deed or other encumbrances, shall be subject to Tenant’s receipt of a commercially reasonable subordination, non-disturbance, and attornment agreement in favor of Tenant. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed in lieu thereof (or if any ground lease is terminated), to attorn, without any deductions or set-offs whatsoever, to the lienholder or purchaser or any successors thereto upon any such foreclosure sale or deed in lieu thereof (or to the ground lessor), if so requested to do so by such purchaser or lienholder or ground lessor, and to recognize such purchaser or lienholder or ground lessor as the lessor under this Lease, provided such lienholder or purchaser or ground lessor shall agree to accept this Lease and not disturb Tenant’s occupancy, so long as Tenant timely pays the rent and observes and performs the terms, covenants and conditions of this Lease to be observed and performed by Tenant. Landlord’s interest herein may be assigned as security at any time to any lienholder. Tenant shall, within ten (10) days of request by Landlord, execute such commercially reasonable instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale.

 

19.           DEFAULTS; REMEDIES

 

19.1         Events of Default. The occurrence of any of the following beyond the notice and cure periods provided in this Lease shall constitute a default of this Lease by Tenant (each, an “Event of Default”):

 

19.1.1            Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due unless such failure is cured within five (5) business days after notice (provided that, with respect to the first late payment of Rent during any twelve (12) month period, Tenant shall be entitled to a period of five (5) business days after written notice by Landlord to Tenant that such amount is past due before such late payment of Rent shall constitute a default of this Lease by Tenant); or

 

19.1.2            Except where a specific time period is otherwise set forth for Tenant’s performance in this Lease, in which event the failure to perform by Tenant within such time period shall be a default by Tenant under this Section 19.1.2, any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for thirty (30) days after written notice thereof from Landlord to Tenant; provided that if the nature of such default is such that the same cannot reasonably be cured within a thirty (30) day period, no Event of Default Tenant shall be deemed to have occurred if Tenant diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure such default; or

 

 

19.1.3            Abandonment (as defined by applicable laws) of all or a substantial portion of the Premises by Tenant; or

 

19.1.4            The failure by Tenant to observe or perform according to the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure continues for more than four (4) business days after notice from Landlord.

 

Any notices to be provided by Landlord under this Section 19.1 shall be in lieu of, and not in addition to, any notice required under Section 1161 et seq. of the Code of Civil Procedure, and may be served on Tenant in the manner allowed for service of notices under this Lease.

 

19.2         Remedies Upon Default. Upon the occurrence of any Event of Default by Tenant, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity (all of which remedies shall be distinct, separate and cumulative), the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever.

 

19.2.1          Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:

 

(i)            The worth at the time of award of the unpaid rent which has been earned at the time of such termination; plus

 

(ii)            The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

 

(iii)           The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

 

(iv)           Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use, and any special concessions made to obtain a new tenant; and

 

(v)            At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law.

 

The term “rent” as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 19.2.1(i) and (ii), above, the “worth at the time of award” shall be computed by allowing interest at the rate set forth in Article 25 of this Lease, but in no case greater than the maximum amount of such interest permitted by law. As used in Section 19.2.1(iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

 

 

19.2.2          Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any Event of Default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.

 

19.2.3          Landlord shall at all times have the rights and remedies (which shall be cumulative with each other and cumulative and in addition to those rights and remedies available under Sections 19.2.1 and 19.2.2, above, or any law or other provision of this Lease), without prior demand or notice except as required by Applicable Law, to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof.

 

19.3         Subleases of Tenant. If Landlord elects to terminate this Lease on account of any Event of Default by Tenant, as set forth in this Article 19, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.

 

19.4         Efforts to Relet. No re-entry or repossession, repairs, maintenance, changes, alterations and additions, reletting, appointment of a receiver to protect Landlord’s interests hereunder, or any other action or omission by Landlord shall be construed as an election by Landlord to terminate this Lease or Tenant’s right to possession, or to accept a surrender of the Premises, nor shall same operate to release Tenant in whole or in part from any of Tenant’s obligations hereunder, unless express written notice of such intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any right otherwise available under any law to redeem or reinstate this Lease.

 

19.5         Landlord Default.

 

19.5.1          General. Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease unless Landlord fails to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform; provided, however, if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be in default under this Lease if it shall commence such performance within such thirty (30) day period and thereafter diligently pursue the same to completion. Upon any such default by Landlord under this Lease, Tenant may, except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity.

 

 

19.5.2          Abatement of Rent. In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, as a result of (i) any repair, maintenance, remediation or alteration performed by Landlord, or which Landlord failed to perform, after the Lease Commencement Date and required by this Lease, which substantially interferes with Tenant’s use of the Premises, or (ii) any failure to provide services, utilities or access to the Premises to the extent required by this Lease, each as a direct result of Landlord’s negligence or willful misconduct (and except to the extent such failure is caused in whole or in part by the action or inaction of Tenant) (either such set of circumstances as set forth in items (i) or (ii), above, to be known as an “Abatement Event”), then Tenant shall give Landlord notice of such Abatement Event, and if such Abatement Event continues for seven (7) consecutive business days after Landlord’s receipt of any such notice (the “Eligibility Period”) and Landlord does not diligently commence and pursue to completion the remedy of such Abatement Event, then the Base Rent, Tenant’s Share of Direct Expenses, and Tenant’s obligation, if any, to pay for parking (to the extent not utilized by Tenant) shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use for the normal conduct of Tenant’s business, the Premises or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, a portion of the Premises for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not effectively conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the Base Rent and Tenant’s Share of Direct Expenses for the entire Premises and Tenant’s obligation to pay for parking shall be abated for such time as Tenant continues to be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. To the extent an Abatement Event is caused by an event covered by Articles 5, 11 or 13 of this Lease, then Tenant’s right to abate rent shall be governed by the terms of such Article 5, 11 or 13, as applicable, and the Eligibility Period shall not be applicable thereto. Such right to abate Base Rent and Tenant’s Share of Direct Expenses shall be Tenant’s sole and exclusive remedy for rent abatement at law or in equity for an Abatement Event. Except as provided in this Section 19.5.2, nothing contained herein shall be interpreted to mean that Tenant is excused from paying Rent due hereunder.

 

20.            COVENANT OF QUIET ENJOYMENT. Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed, shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other covenant express or implied.

 

 

21.            LETTER OF CREDIT.

 

21.1         Delivery of Letter of Credit. Tenant shall deliver to Landlord, concurrently with Tenant’s execution of this Lease, an unconditional, clean, irrevocable letter of credit (the “L-C”) in the amount set forth in Section 8 of the Lease Summary (the “L-C Amount”), which L-C shall be issued by a money-center, solvent and nationally recognized bank (a bank which accepts deposits, maintains accounts, has a local San Francisco Bay Area office which will negotiate a letter of credit or will accept draw requests by facsimile, and whose deposits are insured by the FDIC) reasonably acceptable to Landlord (such approved, issuing bank being referred to herein as the “Bank”), which Bank must have a rating from Standard and Poors Corporation of A- or better (or any equivalent rating thereto from any successor or substitute rating service selected by Lessor) and a letter of credit issuer rating from Moody’s Investor Service of A3 or better (or any equivalent rating thereto from any successor rating agency thereto)) (collectively, the “Bank’s Credit Rating Threshold”), and which L-C shall be in the form of Exhibit H, attached hereto. Landlord agrees that Silicon Valley Bank is acceptable as the Bank as of the date of this Lease. Tenant shall pay all expenses, points and/or fees incurred by Tenant in obtaining the L-C. The L-C shall (i) be “callable” at sight, irrevocable and unconditional, (ii) be maintained in effect, whether through renewal or extension, for the period commencing on the date of this Lease and continuing until the date (the “L-C Expiration Date”) that is no less than sixty (60) days after the expiration of the Lease Term as the same may be extended, and Tenant shall deliver a new L-C or certificate of renewal or extension to Landlord at least thirty (30) days prior to the expiration of the L-C then held by Landlord, without any action whatsoever on the part of Landlord, (iii) be fully assignable by Landlord, its successors and assigns, (iv) permit partial draws and multiple presentations and drawings, and (v) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the L-C if any of the following shall have occurred or be applicable: (A) such amount is due to Landlord under the terms and conditions of this Lease, and has not been paid within applicable notice and cure periods (or, if Landlord is prevented by law from providing notice, within the period for payment set forth in the Lease), or (B) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), or (C) an involuntary petition has been filed against Tenant under the Bankruptcy Code that is not dismissed within thirty (30) days, or (D) the Lease has been rejected, or is deemed rejected, under Section 365 of the U.S. Bankruptcy Code, following the filing of a voluntary petition by Tenant under the Bankruptcy Code, or the filing of an involuntary petition against Tenant under the Bankruptcy Code, or (E) the Bank has notified Landlord that the L-C will not be renewed or extended through the L-C Expiration Date, and Tenant has not provided a replacement L-C that satisfies the requirements of this Lease at least thirty (30) days prior to such expiration, or (F) Tenant is placed into receivership or conservatorship, or becomes subject to similar proceedings under Federal or State law, or (G) Tenant executes an assignment for the benefit of creditors, or (H) if (1) any of the Bank’s (other than Silicon Valley Bank) Fitch Ratings (or other comparable ratings to the extent the Fitch Ratings are no longer available) have been reduced below the Bank’s Credit Rating Threshold, or (2) there is otherwise a material adverse change in the financial condition of the Bank, and Tenant has failed to provide Landlord with a replacement letter of credit, conforming in all respects to the requirements of this Article 21 (including, but not limited to, the requirements placed on the issuing Bank more particularly set forth in this Section 21.1 above), in the amount of the applicable L-C Amount, within ten (10) business days following Landlord’s written demand therefor (with no other notice or cure or grace period being applicable thereto, notwithstanding anything in this Lease to the contrary) (each of the foregoing being an “L-C Draw Event”). The L-C shall be honored by the Bank regardless of whether Tenant disputes Landlord’s right to draw upon the L-C. In addition, in the event the Bank is placed into receivership or conservatorship by the Federal Deposit Insurance Corporation or any successor or similar entity, then, effective as of the date such receivership or conservatorship occurs, said L-C shall be deemed to fail to meet the requirements of this Article 21, and, within ten (10) business days following Landlord’s notice to Tenant of such receivership or conservatorship (the “L-C FDIC Replacement Notice”), Tenant shall replace such L-C with a substitute letter of credit from a different issuer (which issuer shall meet or exceed the Bank’s Credit Rating Threshold and shall otherwise be acceptable to Landlord in its reasonable discretion) and that complies in all respects with the requirements of this Article 21. If Tenant fails to replace such L-C with such conforming, substitute letter of credit pursuant to the terms and conditions of this Section 21.1, then, notwithstanding anything in this Lease to the contrary, Landlord shall have the right to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto (other than the aforesaid ten (10) business day period). Tenant shall be responsible for the payment of any and all Tenant’s and Bank’s costs incurred with the review of any replacement L-C, which replacement is required pursuant to this Section or is otherwise requested by Tenant. In the event of an assignment by Tenant of its interest in the Lease (and irrespective of whether Landlord’s consent is required for such assignment), the acceptance of any replacement or substitute letter of credit by Landlord from the assignee shall be subject to Landlord’s prior written approval, in Landlord’s reasonable discretion, and the actual and reasonable attorney’s fees incurred by Landlord in connection with such determination shall be payable by Tenant to Landlord within ten (10) days of billing.

 

 

21.2         Application of L-C. Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the L-C upon the occurrence of any L-C Draw Event and apply the proceeds of the L-C in accordance with this Article 21, Landlord may, but without obligation to do so, and without notice to Tenant (except in connection with an L-C Draw Event under Section 21.1(H) above), draw upon the L-C, in part or in whole, in the amount necessary to cure any such L-C Draw Event and/or to compensate Landlord for any and all damages of any kind or nature sustained or which Landlord reasonably estimates that it will sustain resulting from Tenant’s breach or default of the Lease or other L-C Draw Event and/or to compensate Landlord for any and all damages arising out of, or incurred in connection with, the termination of this Lease, including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code. The use, application or retention of the L-C proceeds, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable law, it being intended that Landlord shall not first be required to proceed against the L-C, and such L-C shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. Tenant agrees and acknowledges that (i) the L-C constitutes a separate and independent contract between Landlord and the Bank, (ii) Tenant is not a third party beneficiary of such contract, (iii) Tenant has no property interest whatsoever in the L-C or the proceeds thereof, and (iv) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, Tenant is placed into receivership or conservatorship, and/or there is an event of a receivership, conservatorship or a bankruptcy filing by, or on behalf of, Tenant, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the L-C and/or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

 

21.3         Maintenance of L-C by Tenant. If, as a result of any proper drawing by Landlord of all or any portion of the L-C, the amount of the L-C shall be less than the L-C Amount, Tenant shall, within five (5) days thereafter, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency, and any such additional letter(s) of credit shall comply with all of the provisions of this Article 21. Tenant further covenants and warrants that it will neither assign nor encumber the L-C or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the L-C expires earlier than the L-C Expiration Date, Landlord will accept a renewal thereof (such renewal letter of credit to be in effect and delivered to Landlord, as applicable, not later than thirty (30) days prior to the expiration of the L-C), which shall be irrevocable and automatically renewable as above provided through the L-C Expiration Date upon the same terms as the expiring L-C or such other terms as may be acceptable to Landlord in its sole discretion. If Tenant exercises its option to extend the Lease Term pursuant to Section 2.2 of this Lease then, not later than thirty (30) days prior to the commencement of the Option Term, Tenant shall deliver to Landlord a new L C or certificate of renewal or extension evidencing the L-C Expiration Date as thirty (30) days after the expiration of the Option Term. However, if the L-C is not timely renewed, or if Tenant fails to maintain the L-C in the amount and in accordance with the terms set forth in this Article 21, Landlord shall have the right to present the L-C to the Bank in accordance with the terms of this Article 21, and the proceeds of the L-C may be applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any breach or default by Tenant under this Lease. In the event Landlord elects to exercise its rights as provided above, (I) any unused proceeds shall constitute the property of Landlord (and not Tenant’s property or, in the event of a receivership, conservatorship, or a bankruptcy filing by, or on behalf of, Tenant, property of such receivership, conservatorship or Tenant’s bankruptcy estate) and need not be segregated from Landlord’s other assets, and (II) Landlord agrees to pay to Tenant within thirty (30) days after the L-C Expiration Date the amount of any proceeds of the L-C received by Landlord and not applied against any Rent payable by Tenant under this Lease that was not paid when due or used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease; provided, however, that if prior to the L-C Expiration Date a voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such payment in the amount of the unused L-C proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed. If Landlord draws on the L-C due to Tenant’s failure to timely renew or provide a replacement L-C, such failure shall not be considered a default under this Lease and Landlord shall return such cash proceeds upon Tenant’s presentation of a replacement L-C that satisfies the requirements of this Lease, subject to reasonable satisfaction of any preference risk to Landlord.

 

  

21.4         Transfer and Encumbrance. The L-C shall also provide that Landlord may, at any time and without notice to Tenant and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the L-C to another party, person or entity, regardless of whether or not such transfer is from or as a part of the assignment by Landlord of its rights and interests in and to this Lease. In the event of a transfer of Landlord’s interest in under this Lease, Landlord shall transfer the L-C, in whole or in part, to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole of said L-C to a new landlord. In connection with any such transfer of the L-C by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer and, Tenant shall be responsible for paying the Bank’s transfer and processing fees in connection therewith; provided that, Landlord shall have the right (in its sole discretion), but not the obligation, to pay such fees on behalf of Tenant, in which case Tenant shall reimburse Landlord within ten (10) business days after Tenant’s receipt of an invoice from Landlord therefor.

 

21.5         L-C Not a Security Deposit. Landlord and Tenant (1) acknowledge and agree that in no event or circumstance shall the L-C or any renewal thereof or substitute therefor or any proceeds thereof be deemed to be or treated as a “security deposit” under any law applicable to security deposits in the commercial context, including, but not limited to, Section 1950.7 of the California Civil Code, as such Section now exists or as it may be hereafter amended or succeeded (the “Security Deposit Laws”), (2) acknowledge and agree that the L-C (including any renewal thereof or substitute therefor or any proceeds thereof) is not intended to serve as a security deposit, and the Security Deposit Laws shall have no applicability or relevancy thereto, and (3) waive any and all rights, duties and obligations that any such party may now, or in the future will, have relating to or arising from the Security Deposit Laws. Tenant hereby irrevocably waives and relinquishes the provisions of Section 1950.7 of the California Civil Code and any successor statute, and all other provisions of law, now or hereafter in effect, which (x) establish the time frame by which a landlord must refund a security deposit under a lease, and/or (y) provide that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant or to clean the premises, it being agreed that Landlord may, in addition, claim those sums specified in this Article 21 and/or those sums reasonably necessary to (a) compensate Landlord for any loss or damage caused by Tenant’s breach of this Lease, including any damages Landlord suffers following termination of this Lease, and/or (b) compensate Landlord for any and all damages arising out of, or incurred in connection with, the termination of this Lease, including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code. Tenant agrees not to interfere in any way with any payment to Landlord of the proceeds of the L-C, either prior to or following a “draw” by Landlord of all or any portion of the L-C, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw down all or any portion of the L-C. No condition or term of this Lease shall be deemed to render the L-C conditional and thereby afford the Bank a justification for failing to honor a drawing upon such L-C in a timely manner. Tenant shall not request or instruct the Bank of any L-C to refrain from paying sight draft(s) drawn under such L-C.

 

 

 

21.5            Remedy for Improper Drafts. Tenant’s sole remedy in connection with Landlord’s improper draw against the L-C or Landlord’s improper application of any proceeds of sight drafts drawn under the L-C shall be the right to obtain from Landlord a refund of the amount of any sight draft(s) that were improperly presented or the proceeds of which were misapplied, and reasonable actual out-of-pocket attorneys’ fees, provided that at the time of such refund, Tenant increases the amount of such L-C to the amount (if any) then required under the applicable provisions of this Lease. Tenant acknowledges that Landlord’s draw against the L-C, application or retention of any proceeds thereof, the presentment of sight drafts drawn under any L-C, or the Bank’s payment of sight drafts drawn under such L-C, could not under any circumstances cause Tenant injury that could not be remedied by an award of money damages, and that the recovery of money damages would be an adequate remedy therefor. In the event Tenant shall be entitled to a refund as aforesaid and Landlord shall fail to make such payment within ten (10) business days after demand, Tenant shall have the right to deduct the amount thereof from the next installment(s) of Base Rent.

 

22.          COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain, replace, remove or use any communications or computer wires and cables serving the Premises (collectively, the “Lines”), provided that Tenant shall obtain Landlord’s prior written consent (not to be unreasonably withheld, conditioned or delayed), use an experienced and qualified contractor approved in writing by Landlord, and comply with all of the other provisions of Articles 7 and 8 of this Lease. Tenant shall pay all costs in connection therewith. Landlord reserves the right, upon notice to Tenant prior to the expiration or earlier termination of this Lease, to require that Tenant, at Tenant’s sole cost and expense, remove any Lines located in or serving the Premises prior to the expiration or earlier termination of this Lease.

 

23.          SIGNS.

 

23.1            Exterior Signage. Subject to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed, and provided all signs are in keeping with the quality, design and style of the Building and Project, Tenant, at its sole cost and expense, may install (i) identification signage on the existing monument sign at the Building, (ii) at the entrance to the Building, and (iii) on the top of the exterior façade of the Building (collectively, “Tenant Signage”); provided, however, in no event shall Tenant’s Signage include an “Objectionable Name,” as that term is defined in Section 23.3, of this Lease. All such signage shall be subject to Tenant’s obtaining all required governmental approvals. All permitted signs shall be maintained by Tenant at its expense in a first-class and safe condition and appearance. Except for maintenance, cleaning or other costs related to upkeep required by Landlord under this Lease (to the extent not included as Operating Expenses in Article 4, above), Landlord shall not charge any fee for the right to use the Tenant’s Signage. Upon the expiration or earlier termination of this Lease, Tenant shall remove all of its signs at Tenant’s sole cost and expense. The graphics, materials, color, design, lettering, lighting, size, illumination, specifications and exact location of Tenant’s Signage (collectively, the “Sign Specifications”) shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and shall be consistent and compatible with the quality and nature of the Project. Tenant hereby acknowledges that, notwithstanding Landlord’s approval of Tenant’s Signage, Landlord has made no representation or warranty to Tenant with respect to the probability of obtaining all necessary governmental approvals and permits for Tenant’s Signage. In the event Tenant does not receive the necessary governmental approvals and permits for Tenant’s Signage, Tenant’s and Landlord’s rights and obligations under the remaining terms and conditions of this Lease shall be unaffected.

 

23.2            Objectionable Name. Tenant’s Signage shall not include a name or logo which relates to an entity which is of a character or reputation, or is associated with a political faction or orientation, which is inconsistent with the quality of the Project, or which would otherwise reasonably offend a landlord of the Comparable Buildings (an “Objectionable Name”). The parties hereby agree that the following names, or any reasonable derivation thereof, shall be deemed not to constitute an Objectionable Name: “Alumis Inc.” or “Alumis”.

 

 

23.3            Prohibited Signage and Other Items. Any signs, notices, logos, pictures, names or advertisements which are installed and that have not been separately approved by Landlord may be removed without notice by Landlord at the sole expense of Tenant. Any signs, window coverings, or blinds (even if the same are located behind the Landlord-approved window coverings for the Building), or other items visible from the exterior of the Premises or Building, shall be subject to the prior approval of Landlord, in its sole discretion.

 

23.4            Termination of Right to Tenant’s Signage. The rights contained in this Article 23 shall be personal to Original Tenant and its Approved Assignee or Permitted Assignee, and may only be exercised and maintained by such parties (and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) to the extent (x) there is not an Event of Default that is continuing and (y) if they occupy the entire Premises (occupying by a subtenant as a result of a Permitted Transfer shall be deemed occupancy of the entire Premises).

 

24.          COMPLIANCE WITH LAW. Landlord shall comply with all applicable laws relating to the Base Building and Common Areas, provided that compliance with such applicable laws is not the responsibility of Tenant under this Lease, and provided further that, as between Landlord and Tenant, Landlord shall not be deemed to be in default of the Lease as a result of the failure to comply with any applicable laws unless Landlord’s failure to comply therewith would prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Premises, would materially affect the safety of Tenant’s employees or create a material health hazard for Tenant’s employees, would prevent or unreasonably interfere with Tenant’s access to the Premises or use of the Premises for the conduct of Tenant’s business, or would otherwise result in any material cost or liability to Tenant. Tenant shall not do anything or suffer anything to be done in or about the Premises or the Project which will in any way conflict with any law, statute, ordinance or other rule, directive, order, regulation, guideline or requirement of any governmental entity or governmental agency (the “Applicable Laws”) now in force or which may hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall promptly comply with all such governmental measures (except to the extent such are Landlord’s responsibility under this Lease) (including the making of any alterations to the Premises required by such governmental measures) which relate to (i) Tenant’s use of the Premises, (ii) the Alterations or the Tenant Improvements in the Premises, or (iii) the “Base Building” (which shall include the Building Structure, and the public restrooms, elevators, exit stairwells and the Building Systems located in the internal core of the Buildings on the floor or floors on which the Premises is located), but, as to the Base Building, only to the extent such obligations are triggered by Tenant’s Alterations, the Tenant Improvements, or Tenant’s specific use of the Premises (as opposed to general occupancy for the Permitted Use). Should any standard or regulation now or hereafter be imposed on Landlord or Tenant by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly with such standards or regulations. Tenant shall be responsible, at its sole cost and expense, to make all alterations to the Building and Premises as are required to comply with the governmental rules, regulations, requirements or standards described in this Article 24 as being Tenant’s express responsibility. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive of that fact as between Landlord and Tenant. For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Project, Building and Premises have not undergone inspection by a Certified Access Specialist (CASp). As required by Section 1938(e) of the California Civil Code, Landlord hereby states as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” In furtherance of the foregoing, Landlord and Tenant hereby agree as follows: (a) any CASp inspection requested by Tenant shall be conducted, at Tenant’s sole cost and expense, by a CASp approved in advance by Landlord; and (b) pursuant to Article 24 below, Tenant, at its cost, is responsible for making any repairs within the Premises to correct violations of construction-related accessibility standards; and, if anything done by or for Tenant in its use or occupancy of the Premises shall require repairs to the Building (outside the Premises) to correct violations of construction-related accessibility standards, then Tenant shall, at Landlord’s option, either perform such repairs at Tenant’s sole cost and expense or reimburse Landlord upon demand, as Additional Rent, for the cost to Landlord of performing such repairs.

 

 

25.           LATE CHARGES. If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee within five (5) business days after Tenant’s receipt of written notice from Landlord that said amount is due, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of the overdue amount plus any reasonable attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due hereunder. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid within ten (10) days after the date they are due shall bear interest from the date when due until paid at a rate per annum equal to the lesser of (i) the annual “Bank Prime Loan” rate cited in the Federal Reserve Statistical Release Publication G.13(415), published on the first Tuesday of each calendar month (or such other comparable index as Landlord and Tenant shall reasonably agree upon if such rate ceases to be published) plus four (4) percentage points, and (ii) the highest rate permitted by Applicable Law.

 

26.          LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT.

 

26.1            Landlord’s Cure. All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any reduction of Rent, except to the extent, if any, otherwise expressly provided herein. If Tenant shall fail to perform any obligation under this Lease, and such failure shall continue in excess of the time allowed under Section 19.1.2, above, unless a specific time period is otherwise stated in this Lease, Landlord may, but shall not be obligated to, make any such payment or perform any such act on Tenant’s part without waiving its rights based upon any default of Tenant and without releasing Tenant from any obligations hereunder.

 

26.2            Tenant’s Reimbursement. Except as may be specifically provided to the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with the remedying by Landlord of Tenant’s Events of Default pursuant to the provisions of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and expenses referred to in Article 10 of this Lease; and (iii) sums equal to all reasonable expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all reasonable legal fees and other amounts so expended. Tenant’s obligations under this Section 26.2 shall survive the expiration or sooner termination of the Lease Term.

 

 

27.          ENTRY BY LANDLORD. Landlord reserves the right at all reasonable times and upon reasonable notice to Tenant (except in the case of an emergency) to enter the Premises to (i) inspect them; (ii) show the Premises to prospective purchasers, or to current or prospective mortgagees, ground or underlying lessors or insurers or, during the last twelve (12) months of the Lease Term, to prospective tenants; (iii) post notices of nonresponsibility (to the extent applicable pursuant to then Applicable Law); or (iv) alter, improve or repair the Premises or the Building, or for structural alterations, repairs or improvements to the Building or the Building’s systems and equipment. Landlord may make any such entries without the abatement of Rent, except as otherwise provided in this Lease, and may take such reasonable steps as required to accomplish the stated purposes. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. Landlord shall use commercially reasonable efforts to minimize any interference with Tenant’s use of or access to the Premises in connection with any such entry, and shall comply with Tenant’s reasonable security measures. Landlord shall hold confidential any information regarding Tenant’s business that it may learn as a result of such entry.

 

28.          TENANT PARKING. Tenant shall have the right to use the amount of parking set forth in Section 9 of the Summary, in the on-site and/or off-site, as the case may be, parking facility (or facilities) which serve the Project at no cost throughout the Lease Term, as may be extended. Tenant shall abide by all reasonable rules and regulations which are prescribed from time to time for the orderly operation and use of the parking facility where the parking passes are located (including any sticker or other identification system established by Landlord and the prohibition of vehicle repair and maintenance activities in the parking facilities), and shall cooperate in seeing that Tenant’s employees and visitors also comply with such rules and regulations. Tenant’s use of the Project parking facility shall be at Tenant’s sole risk and Tenant acknowledges and agrees that Landlord shall have no liability whatsoever for damage to the vehicles of Tenant, its employees and/or visitors, or for other personal injury or property damage or theft relating to or connected with the parking rights granted herein or any of Tenant’s, its employees’ and/or visitors’ use of the parking facilities.

 

29.          MISCELLANEOUS PROVISIONS.

 

29.1            Terms; Captions. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.

 

29.2            Binding Effect. Subject to all other provisions of this Lease, each of the covenants, conditions and provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective heirs, personal representatives, successors or assigns, provided this clause shall not permit any assignment by Tenant in violation of the provisions of Article 14 of this Lease.

 

29.3            No Air Rights. No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the light or view therefrom is obstructed by reason of any repairs, improvements, maintenance or cleaning in or about the Project, the same shall be without liability to Landlord and without any reduction or diminution of Tenant’s obligations under this Lease.

 

 

29.4            Modification of Lease. Should any current or prospective mortgagee or ground lessor for the Building or Project require a modification of this Lease, which modification will not cause an increased cost or expense to Tenant or in any other way materially and adversely change the rights and obligations of Tenant hereunder, then and in such event, Tenant agrees that this Lease may be so modified and agrees to execute whatever documents are reasonably required therefor and to deliver the same to Landlord within ten (10) business days following a request therefor. At the request of Landlord or any mortgagee or ground lessor, Tenant agrees to execute a short form of Lease and deliver the same to Landlord within ten (10) business days following the request therefor.

 

29.5            Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Project or Building and in this Lease, and Tenant agrees that in the event of any such transfer, Landlord shall automatically be released from all liability accruing under this Lease after the date of such transfer and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations accruing hereunder after the date of transfer provided that the transferee shall have fully assumed in writing and agreed to be liable for all obligations of this Lease to be performed by Landlord, including the return of any security deposit following the date of the transfer, and Tenant shall attorn to such transferee.

 

29.6            Prohibition Against Recording. Except as provided in Section 29.4 of this Lease, neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant.

 

29.7            Landlord’s Title. Landlord’s title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord.

 

29.8            Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant.

 

29.9            Application of Payments. Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.

 

29.10          Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

 

29.11          Partial Invalidity. If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.

 

29.12          No Warranty. In executing and delivering this Lease, Tenant has not relied on any representations, including, but not limited to, any representation as to the amount of any item comprising Additional Rent or the amount of the Additional Rent in the aggregate or that Landlord is furnishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement of Landlord which is not set forth herein or in one or more of the exhibits attached hereto.

 

 

29.13          Landlord Exculpation. The liability of Landlord or the Landlord Parties to Tenant for any default by Landlord under this Lease or arising in connection herewith or with Landlord’s operation, management, leasing, repair, renovation, alteration or any other matter relating to the Project or the Premises shall be limited solely and exclusively to an amount which is equal to the lesser of (a) the interest of Landlord in the Building or (b) the equity interest Landlord would have in the Building if the Building were encumbered by third-party debt in an amount equal to eighty percent (80%) of the value of the Building (as such value is determined by Landlord), provided that in no event shall such liability extend to any sales or insurance proceeds received by Landlord or the Landlord Parties in connection with the Project, Building or Premises. No Landlord Parties (other than Landlord) shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Section 29.13 shall inure to the benefit of Landlord’s and the Landlord Parties’ present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord’s obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties shall be liable under any circumstances for injury or damage to, or interference with, Tenant’s business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring, or loss to inventory, scientific research, scientific experiments, laboratory animals, products, specimens, samples, and/or scientific, business, accounting and other records of every kind and description kept at the premises and any and all income derived or derivable therefrom. Similarly, notwithstanding any contrary provision herein, except and then only to the extent as set forth in Article 16 above, neither Tenant nor the Tenant Parties shall be liable under any circumstances for injury or damage to, or interference with, Landlord’s business, including but not limited to, loss of profits, loss of rents or other revenues (other than amounts due under this Lease), loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.

 

29.14          Entire Agreement. It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease constitutes the parties’ entire agreement with respect to the leasing of the Premises and supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. None of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto.

 

29.15          Right to Lease. Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Building or Project. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building or Project.

 

29.16          Force Majeure. Notwithstanding anything to the contrary contained in this Lease, any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, Casualty, actual or threatened public health emergency (including, without limitation, epidemic, pandemic, famine, disease, plague, quarantine, and other significant public health risk), governmental edicts, actions, declarations or quarantines by a governmental entity or health organization (including, without limitation, any shelter-in-place orders, stay at home orders or any restrictions on travel related thereto that preclude Tenant, its agents, contractors or its employees from accessing the Premises, national or regional emergency), breaches in cybersecurity, and other causes beyond the reasonable control of the party obligated to perform, regardless of whether such other causes are (i) foreseeable or unforeseeable or (ii) related to the specifically enumerated events in this paragraph (collectively, a “Force Majeure”), shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage. If this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure. Notwithstanding anything to the contrary in this Lease, no event of Force Majeure shall (i) excuse Tenant’s obligations to pay Rent and other charges due pursuant to this Lease, (ii) be grounds for Tenant to abate any portion of Rent due pursuant to this Lease, or entitle either party to terminate this Lease, except as allowed pursuant to Articles 11 and 13 of this Lease, (iii) excuse Tenant’s obligations under Articles 5 and 24 of this Lease.

 

 

29.17          Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and for all those claiming under Tenant, any and all rights now or hereafter existing to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.

 

29.18          Notices. All notices, demands, statements, designations, approvals or other communications (collectively, “Notices”) given or required to be given by either party to the other hereunder or by law shall be in writing, shall be (A) sent by United States certified or registered mail, postage prepaid, return receipt requested (“Mail”), (B) transmitted by telecopy, if such telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a nationally recognized overnight courier, or (D) delivered personally. Any Notice shall be sent, transmitted, or delivered, as the case may be, to Tenant at the appropriate address set forth in Section 10 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord, or to Landlord at the addresses set forth below, or to such other places as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given (i) upon receipt if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the date the overnight courier delivery is made (or refused), or (iv) the date personal delivery is made (or refused). As of the date of this Lease, any Notices to Landlord must be sent, transmitted, or delivered, as the case may be, to the following addresses:

 

PG VII 280 East Grand, LLC
c/o Healthpeak Properties, Inc.
5050 S Syracuse St. #800
Denver, CO 80237
Attn: Legal Department

 

with a copy to:

 

Healthpeak Properties, Inc.
1920 Main Street, Suite 1200
Irvine, CA 92614
Attention: Scott Bohn

 

and

 

Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.

 

 

29.19        Joint and Several. If there is more than one tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.

 

29.20        Authority. If Tenant is a corporation, trust or partnership, Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in the State of California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so. If requested by Landlord, Tenant shall, within ten (10) days after execution of this Lease, deliver to Landlord satisfactory evidence of such authority and, if a corporation, upon demand by Landlord, also deliver to Landlord satisfactory evidence of (i) good standing in Tenant’s state of incorporation and (ii) qualification to do business in the State of California.

 

29.21        Attorneys’ Fees. In the event that either Landlord or Tenant should bring suit for the possession of the Premises, for the recovery of any sum due under this Lease, or because of the breach of any provision of this Lease or for any other relief against the other, then all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party therein shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment.

 

29.22        Governing Law; WAIVER OF TRIAL BY JURY; JUDICIAL REFERENCE.

 

29.22.1            Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of California. In any action or proceeding arising herefrom, Landlord and Tenant hereby consent to (i) the jurisdiction of any competent court within the State of California, and (ii) service of process by any means authorized by California law.

 

29.22.2            WAIVER OF TRIAL BY JURY. IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.

 

 

29.22.3            Judicial Reference. If the jury waiver provisions of this Section 29.22 are not enforceable under California law, then the following provisions shall apply. it is the desire and intention of the parties to agree upon a mechanism and procedure under which controversies and disputes arising out of this Lease or related to the Premises will be resolved in a prompt and expeditious manner. Accordingly, except with respect to actions for unlawful or forcible detainer or with respect to the prejudgment remedy of attachment, any action, proceeding or counterclaim brought by either party hereto against the other (and/or against its officers, directors, employees, agents or subsidiaries or affiliated entities) on any matters whatsoever arising out of or in any way connected with this Lease, Tenant’s use or occupancy of the Premises and/or any claim of injury or damage, whether sounding in contract, tort, or otherwise, shall be heard and resolved by a referee under the provisions of the California Code of Civil Procedure, Sections 638 — 645.1, inclusive (as same may be amended, or any successor statute(s) thereto) (the “Referee Sections”). Any fee to initiate the judicial reference proceedings and all fees charged and costs incurred by the referee shall be paid by the party initiating such procedure (except that if a reporter is requested by either party, then a reporter shall be present at all proceedings where requested and the fees of such reporter – except for copies ordered by the other parties – shall be borne by the party requesting the reporter); provided however, that allocation of the costs and fees, including any initiation fee, of such proceeding shall be ultimately determined in accordance with Section 29.21 above. the venue of the proceedings shall be in the county in which the Premises are located. Within ten (10) days of receipt by any party of a written request to resolve any dispute or controversy pursuant to this Section 29.22, the parties shall agree upon a single referee who shall try all issues, whether of fact or law, and report a finding and judgment on such issues as required by the Referee Sections. If the parties are unable to agree upon a referee within such ten (10) day period, then any party may thereafter file a lawsuit in the county in which the Premises are located for the purpose of appointment of a referee under the referee sections. If the referee is appointed by the court, the referee shall be a neutral and impartial retired judge with substantial experience in the relevant matters to be determined, from JAMS, the American Arbitration Association or similar mediation/arbitration entity. the proposed referee may be challenged by any party for any of the grounds listed in the Referee Sections. The referee shall have the power to decide all issues of fact and law and report his or her decision on such issues, and to issue all recognized remedies available at law or in equity for any cause of action that is before the referee, including an award of attorneys’ fees and costs in accordance with this Lease. The referee shall not, however, have the power to award punitive damages, nor any other damages which are not permitted by the express provisions of this Lease, and the parties hereby waive any right to recover any such damages. The parties shall be entitled to conduct all discovery as provided in the California Code of Civil Procedure, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge, with rights to regulate discovery and to issue and enforce subpoenas, protective orders and other limitations on discovery available under California law. the reference proceeding shall be conducted in accordance with California law (including the rules of evidence), and in all regards, the referee shall follow California law applicable at the time of the reference proceeding. The parties shall promptly and diligently cooperate with one another and the referee, and shall perform such acts as may be necessary to obtain a prompt and expeditious resolution of the dispute or controversy in accordance with the terms of this Section 29.22. In this regard, the parties agree that the parties and the referee shall use best efforts to ensure that (a) discovery be conducted for a period no longer than six (6) months from the date the referee is appointed, excluding motions regarding discovery, and (b) a trial date be set within nine (9) months of the date the referee is appointed. In accordance with Section 644 of the California Code of Civil Procedure, the decision of the referee upon the whole issue must stand as the decision of the court, and upon the filing of the statement of decision with the clerk of the court, or with the judge if there is no clerk, judgment may be entered thereon in the same manner as if the action had been tried by the court. Any decision of the referee and/or judgment or other order entered thereon shall be appealable to the same extent and in the same manner that such decision, judgment, or order would be appealable if rendered by a judge of the Superior Court in which venue is proper hereunder. The referee shall in his/her statement of decision set forth his/her findings of fact and conclusions of law. the parties intend this general reference agreement to be specifically enforceable in accordance with the Code of Civil Procedure. Nothing in this Section 29.22 shall prejudice the right of any party to obtain provisional relief or other equitable remedies from a court of competent jurisdiction as shall otherwise be available under the code of civil procedure and/or applicable court rules.

 

29.23            Submission of Lease. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of, option for or option to lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

 

29.24            Brokers. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 12 of the Summary (the “Brokers”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Broker, occurring by, through, or under the indemnifying party. The terms of this Section 29.24 shall survive the expiration or earlier termination of the Lease Term. Landlord shall pay the Broker a commission pursuant to a separate written agreement.

 

 

29.25        Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord.

 

29.26        Project or Building Name, Address and Signage. Landlord shall have the right at any time to change the name and/or address of the Project or Building and to install, affix and maintain any and all signs on the exterior and on the interior of the Project or Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the name of the Project or Building or use pictures or illustrations of the Project or Building in advertising or other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without the prior written consent of Landlord.

 

29.27        Counterparts. This Lease may be executed in counterparts with the same effect as if both parties hereto had executed the same document. Both counterparts shall be construed together and shall constitute a single lease.

 

29.28        Confidentiality. Tenant acknowledges that the content of this Lease and any related documents are confidential information. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s consultants, attorneys, debt and equity investors, banks, and service contractors (i.e. architect and contractor), property managers and employees that have a need to know such information, including any governmental authority, without the prior written consent of Landlord. In the event Tenant reasonably believes that disclosure is required by applicable law, it shall provide Landlord ten (10) days’ advance notice of disclosure of confidential information so that Landlord may attempt to obtain a protective order. Tenant may additionally release such information to bona fide prospective purchasers, lenders, assignees, or subtenants, subject to any such parties’ written agreement to be bound to confidentiality obligations consistent with this Section 29.28.

 

29.29        Development of the Project.

 

29.29.1        Subdivision. Landlord reserves the right to subdivide all or a portion of the Project, buildings and Common Areas. Tenant agrees to execute and deliver, upon demand by Landlord and in the form reasonably requested by Landlord, any additional documents needed to conform this Lease to the circumstances resulting from a subdivision and any all maps in connection therewith. Notwithstanding anything to the contrary set forth in this Lease, the separate ownership of portions of the Project, or any buildings and/or Common Areas, by an entity other than Landlord shall not affect the calculation of Direct Expenses or Tenant’s payment of Tenant’s Share of Direct Expenses.

 

29.29.2        Construction of Property and Other Improvements. Tenant acknowledges that (i) portions of the Project may be under construction following Tenant’s occupancy of the Premises, including the demolition of existing buildings, and construction of additional Project buildings, parking areas and structures, and other improvements, and (ii) that such work may result in levels of noise, dust, obstruction of access, etc. which are substantially in excess of that present in a fully constructed project, including erecting scaffolding or other necessary structures in the Project, and limiting or eliminating access to portions of the Project, including portions of the Common Areas. Tenant hereby waives any and all rent offsets or claims of constructive eviction which may arise in connection with such work, and agrees that neither Landlord nor any affiliate of Landlord shall have any responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from such work; provided, however, in undertaking any such construction, Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s use and enjoyment of the Premises, Tenant’s access to the Premises, or any other rights Tenant has under this Lease.

 

 

29.30        No Violation. Each party hereby warrants and represents to the other party that neither its execution of nor performance under this Lease shall cause it to be in violation of any agreement, instrument, contract, law, rule or regulation by which it is bound, and it shall protect, defend, indemnify and hold the other party harmless against any claims, demands, losses, damages, liabilities, costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, arising from its breach of this warranty and representation.

 

29.31        Transportation Management. Tenant shall fully comply with all present or future programs intended to manage parking, transportation or traffic in and around the Project and/or the Building, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. Such programs may include, without limitation: (i) restrictions on the number of peak-hour vehicle trips generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of an in-house ridesharing program and an employee transportation coordinator; (iv) working with employees and any Project, Building or area-wide ridesharing program manager; (v) instituting employer-sponsored incentives (financial or in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work shifts for employees.

 

29.32        Payment under Protest. If Tenant in good faith disputes any amounts billed by Landlord, other than (i) Base Rent, (ii) Additional Allowance Monthly Rent, or (iii) Tenant’s Share of Direct Expenses (as to which Tenant may exercise its rights under Section 4.6, above), Tenant may make payment of such amounts under protest, and reserve all of its rights with respect to such amounts (the “Disputed Amounts”). Landlord and Tenant shall meet and confer to discuss any Disputed Amounts and attempt, in good faith, to resolve any particular dispute. If, despite such good faith efforts, Landlord and Tenant are unable to reach agreement regarding the Disputed Amounts, either party may submit the matter to binding arbitration under the JAMS Streamlined Arbitration Rules & Procedures. The non-prevailing party, as determined by JAMS, will be responsible to pay all fees and costs incurred in connection with the JAMS procedure, as well as all other costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party. This Section 29.32 shall not apply to claims relating to Landlord’s exercise of any unlawful detainer rights pursuant to California law or rights or remedies used by Landlord to gain possession of the Premises or terminate Tenant’s right of possession to the Premises.

 

29.33        Prohibited Persons; Foreign Corrupt Practices Act and Anti-Money Laundering. Neither Tenant nor any of its affiliates, nor any of their respective members, partners or other equity holders, and none of their respective officers, directors or managers is, nor prior to or during the Lease Term, will become a person or entity with whom U.S. persons or entities are restricted from doing business under (a) the Patriot Act (as defined below), (b) any other requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) (including any “blocked” person or entity listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and any modifications thereto or thereof or any other person or entity named on OFAC’s Specially Designated Blocked Persons List) or (c) any other U.S. statute, Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) or other governmental action (collectively, “Prohibited Persons”). Prior to and during the Lease Term, Tenant, and to Tenant’s knowledge, its employees and any person acting on its behalf have at all times fully complied with, and are currently in full compliance with, the Foreign Corrupt Practices Act of 1977 and any other applicable anti-bribery or anti-corruption laws. Tenant is not entering into this Lease, directly or indirectly, in violation of any laws relating to drug trafficking, money laundering or predicate crimes to money laundering. As used herein, “Patriot Act” shall mean the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and all other statutes, orders, rules and regulations of the U.S. government and its various executive departments, agencies and offices interpreting and implementing the Patriot Act.

 

 

29.34        No Discrimination. Tenant herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and the Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or groups of persons on account of sex, sexual orientation, marital status, race, color, creed, religion, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall Tenant itself, or any person claiming under it or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subleases, subtenants or vendees in the land here in leased.

 

29.35        Good Faith. Except (i) for matters for which there is a standard of consent or discretion specifically set forth in this Lease; (ii) matters which could have an adverse effect on the Building Structure or the Building Systems, or which could affect the exterior appearance of the Building, or (iii) matters covered by Article 4 (Additional Rent), or Article 19 (Defaults; Remedies) of this Lease (collectively, the “Excepted Matters”), any time the consent of Landlord or Tenant is required, such consent shall not be unreasonably withheld or delayed, and, except with regard to the Excepted Matters, whenever this Lease grants Landlord or Tenant the right to take action, exercise discretion, establish rules and regulations or make an allocation or other determination, Landlord and Tenant shall act reasonably and in good faith.

 

29.36        Tenant Financing. Tenant shall be permitted to finance its personal property, equipment, facilities, fixtures, and other alterations located in the Premises. Upon Tenant’s request, and at Tenant’s expense, Landlord shall enter into a Landlord’s waiver and consent with Tenant’s lender on Landlord’s standard form (subject to commercially reasonable revisions).

 

29.37        Signatures. The parties hereto consent and agree that this Lease may be signed and/or transmitted by facsimile, e-mail of a .pdf document or using electronic signature technology (e.g., via DocuSign or similar electronic signature technology), and that such signed electronic record shall be valid and as effective to bind the party so signing as a paper copy bearing such party’s handwritten signature. The parties further consent and agree that (1) to the extent a party signs this Lease using electronic signature technology, by clicking “SIGN”, such party is signing this Lease electronically, and (2) the electronic signatures appearing on this Lease shall be treated, for purposes of validity, enforceability and admissibility, the same as handwritten signatures.

 

[Signatures on next page.]

 

 

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written.

LANDLORD:			TENANT:
PG VII 280 EAST GRAND, LLC,			ALUMIS INC.,
a Delaware limited liability company			a Delaware corporation
By:	/s/ Scott Bohn		By:	/s/ Martin Babler
Scott Bohn			Martin Babler
Print Name			Print Name
Its:	Executive Vice President		Its:	President and CEO
			By:
			Print Name
			Its:
			Sara Klein
			John Schroer

 

 

EXHIBIT A

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

OUTLINE OF PREMISES

 

 

 

 

 

 

EXHIBIT A-1

 

BRITTANNIA POINTE GRAND LIFE SCIENCE CENTER

 

PROJECT SITE PLAN

 

 

 

 

EXHIBIT B

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

TENANT WORK LETTER

 

1.             Defined Terms. As used in this Tenant Work Letter, the following capitalized terms have the following meanings:

 

(a)        Approved TI Plans: Plans and specifications prepared by the applicable Architect for the Tenant Improvements and approved by Landlord and Tenant in accordance with Paragraph 2 of this Tenant Work Letter, subject to further modification from time to time to the extent provided in and in accordance with such Paragraph 2.

 

(b)        Architect: An independent architect selected by Landlord in its reasonable discretion, with respect to any Tenant Improvements which Landlord is to cause to be constructed pursuant to this Tenant Work Letter.

 

(c)        Tenant Change Request: See definition in Paragraph 2(d)(ii) hereof.

 

(d)        Final TI Working Drawings: See definition in Paragraph 2(a) hereof.

 

(e)        General Contractor: An independent general contractor reasonably selected by Landlord with respect to Landlord’s TI Work. Tenant shall have no right to direct or control such General Contractor.

 

(f)        Landlord Caused Delay. Actual delays to the extent resulting from the acts or omissions of Landlord including, but not limited to failure of Landlord to comply with the Time Deadlines, or to otherwise timely approve or disapprove any plans or specifications as required by this Tenant Work Letter, where such delay continues for more than three (3) business days after Landlord’s receipt of written notice from Tenant specifying the same.

 

(f)        Landlord’s TI Work: Any Tenant Improvements which Landlord is to construct or install pursuant to this Tenant Work Letter or by mutual agreement of Landlord and Tenant from time to time.

 

(g)        Project Manager. Project Management Advisors, Inc., or any other project manager designated by Landlord in its reasonable discretion from time to time to act in a supervisory, oversight, project management or other similar capacity on behalf of Landlord in connection with the design and/or construction of the Tenant Improvements.

 

(h)        Punch List Work: Minor corrections of construction or decoration details, and minor mechanical adjustments, that are required in order to cause any applicable portion of the Tenant Improvements as constructed to conform to the Approved Plans in all material respects and that do not materially interfere with Tenant’s use or occupancy of the Building and the Premises.

 

(i)        Substantial Completion Certificate: See definition in Paragraph 3(a) hereof. “Substantially Complete” shall mean that the Tenant Improvements have been substantially completed in accordance with this Tenant Work Letter and a Substantial Completion Certificate issued.

 

(j)        Tenant Delay: Any of the following types of delay in the completion of construction of Landlord’s TI Work (but in each instance, only to the extent that any of the following has actually and proximately caused substantial completion of Landlord’s TI Work to be delayed):

 

(i)        Any delay resulting from Tenant’s failure to furnish, in a timely manner, information reasonably requested by Landlord or by Landlord’s Project Manager in connection with the design or construction of Landlord’s TI Work, or from Tenant’s failure to approve in a timely manner any matters requiring approval by Tenant, where such failure continues for more than three (3) business days after Tenant’s receipt of written notice from Landlord specifying same;

 

 

(ii)        Any delay resulting from Tenant Change Requests initiated by Tenant, including any delay resulting from the need to revise any drawings or obtain further governmental approvals as a result of any such Tenant Change Request (unless Tenant timely abandons the Tenant Change Request upon learning of the potential delay); or

 

(iii)        Any delay caused by Tenant (or Tenant’s contractors, agents or employees) materially interfering with the performance of Landlord’s TI Work, provided that Landlord shall have given Tenant prompt notice of such material interference and Tenant shall thereafter fail to remedy same within three (3) business days.

 

(iv)        Any delay caused by Tenant’s failure to comply with the Time Deadlines (including any value engineering by Tenant outside of the Value Engineering Period).

 

(k)       Tenant Improvements: The improvements to or within the Building shown on the Approved Plans from time to time and to be constructed by Landlord pursuant to the Lease and this Tenant Work Letter. The term “Tenant Improvements” does not include the improvements existing in the Building and Premises at the date of execution of the Lease.

 

(l)        Time Deadlines: The applicable dates for approval of items, plans and drawings as described in this Tenant Work Letter are set forth and further elaborated upon in Schedule 1 attached hereto (the “Time Deadlines”), attached hereto. Tenant agrees to comply with the Time Deadlines. Applicable dates applicable to Tenant set forth in the Time Deadlines shall be extended to the extent Tenant’s performance is delayed by any “Landlord Caused Delay”.

 

(l)        Unavoidable Delays: Delays due to acts of God, acts of public agencies, labor disputes, strikes, fires, freight embargoes, inability (despite the exercise of due diligence) to obtain supplies, materials, fuels or permits, or other causes or contingencies (excluding financial inability) beyond the reasonable control of Landlord or Tenant, as applicable.

 

(m)      Capitalized terms not otherwise defined in this Tenant Work Letter shall have the definitions set forth in the Lease.

 

2.             Plans and Construction. Landlord and Tenant shall comply with the procedures set forth in this Paragraph 2 in preparing, delivering and approving matters relating to the Tenant Improvements.

 

(a)       Approved Plans and Working Drawings for Tenant Improvements. On or before the date set forth in Schedule 1 attached hereto, Tenant shall cause to be prepared and delivered to Landlord for approval (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord) proposed schematic plans and outline specifications for the Tenant Improvements. Following mutual approval of such proposed schematic plans and outline specifications by Landlord and by Tenant (as so approved, the “Approved Schematic Plans”), Tenant shall then cause to be prepared, promptly and diligently (assuming timely delivery by Landlord of any information and decisions required to be furnished or made by Landlord in order to permit preparation of final working drawings, all of which information and decisions Landlord will deliver promptly and with reasonable diligence), and delivered to Landlord for approval (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord) final detailed working drawings and specifications for the Tenant Improvements, including (without limitation) any applicable life safety, mechanical, electrical and plumbing working drawings and final architectural drawings (collectively, “Final TI Working Drawings”), which Final TI Working Drawings shall substantially conform to the Approved Schematic Plans, and shall, in any event, be delivered to Landlord on or before the applicable date set forth in Schedule 1 attached hereto. Upon receipt from Tenant of proposed schematic plans and outline specifications, proposed Final TI Working Drawings, any other plans and specifications, or any revisions or resubmittals of any of the foregoing, as applicable, Landlord shall promptly and diligently (and in all events within 10 days after receipt in the case of an initial submittal of schematic plans and outline specifications or proposed Final TI Working Drawings, and within 7 days after receipt in the case of any other plans and specifications or any revisions or resubmittals of any of the foregoing) either approve such proposed schematic plans and outline specifications or proposed Final TI Working Drawings, as applicable, or set forth in writing with particularity any changes necessary to bring the aspects of such proposed schematic plans and outline specifications or proposed Final TI Working Drawings into a form which will be reasonably acceptable to Landlord. Upon approval of the Final TI Working Drawings by Landlord and Tenant, the Final TI Working Drawings shall constitute the “Approved TI Plans,” superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved Schematic Plans.

 

 

(b)             Cost of Improvements. “Cost of Improvement” shall mean, with respect to any item or component for which a cost must be determined in order to allocate such cost, or an increase in such cost, to Tenant pursuant to this Tenant Work Letter, the sum of the following (unless otherwise agreed in writing by Landlord and Tenant with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees and charges (other than penalties) paid to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component (including, but not limited to, the TI Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer, if applicable); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; (vii) costs for builder’s risk insurance; and (viii) all other “hard” and “soft” costs incurred in the construction of such item or component in accordance with the Approved TI Plans (if applicable) and this Tenant Work Letter; provided that the Cost of Improvements shall not include any internal or third-party costs incurred by Landlord.

 

(c)             Construction of Landlord’s TI Work. All bids will be opened together with Landlord selecting the general contractor to construct the Tenant Improvements. Tenant shall have the right to value engineer the proposed Tenant Improvements before the final bid is selected during the thirty (30) day period after receipt of bids (the “Value Engineering Period”). Any delays resulting from value engineering that occurs outside of the Value Engineering Period shall be deemed a Tenant Delay. If Tenant desires to cause the bids to be value engineered pursuant to the foregoing, Tenant shall notify Landlord within twenty-four (24) hours of receipt of Landlord’s determination of the value engineered bids. Tenant shall also have the right to approve all subcontractors engaged by the General Contractor, which subcontractors shall be competitively bid and which approval shall not be unreasonably withheld, conditioned or delayed. Following completion of the Approved TI Plans, Landlord shall apply for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of all Tenant Improvements. Upon receipt of such permits and approvals, Landlord shall, at Tenant’s expense (subject to Landlord’s payment of the Tenant Improvement Allowance), construct and complete the Tenant Improvements substantially in accordance with the Approved TI Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a neat, good and workmanlike manner and shall materially conform to all applicable laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto in force at the time such work is completed.

 

(d)             Changes.

 

(i)             If Landlord determines at any time that changes in the Final TI Working Drawings or in any other aspect of the Approved TI Plans relating to any item of Landlord’s TI Work are required as a result of applicable law or governmental requirements, or are required at the insistence of any other third party whose approval may be required with respect to the Tenant Improvements, or are required as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) at Tenant’s sole cost and expense, subject to Landlord’s payment of the Tenant Improvement Allowance or Additional Tenant Improvement Allowance (as applicable), cause revised Final TI Working Drawings to be prepared by the Architect and submitted to Tenant, for Tenant’s information.

 

 

(ii)             If Tenant at any time desires any changes, alterations or additions to the Final TI Working Drawings, Tenant shall submit a detailed written request to Landlord specifying such changes, alterations or additions (a “Tenant Change Request”). Upon receipt of any such request, Landlord shall promptly notify Tenant of (A) whether the matters proposed in the Tenant Change Request are approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord), (B) Landlord’s estimate of the number of days of delay, if any, which shall be caused in the construction of the Tenant Improvements by such Tenant Change Request if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals), and (C) Landlord’s estimate of the increase, if any, which shall occur in the cost of construction of the Tenant Improvements affected by such Tenant Change Request if such Tenant Change Request is implemented (including, but not limited to, any costs of compliance with laws or governmental regulations that become applicable because of the implementation of the Tenant Change Request). If Landlord approves the Tenant Change Request and Tenant notifies Landlord in writing, within three (3) business days after receipt of such notice from Landlord, of Tenant’s approval of the Tenant Change Request (including the estimated delays and cost increases, if any, described in Landlord’s notice), then Landlord shall cause such Tenant Change Request to be implemented and Tenant shall be responsible for all actual costs or cost increases resulting from or attributable to the implementation of the Tenant Change Request, and any delays resulting therefrom shall be deemed to be a Tenant Delay (subject to Landlord’s payment of the Tenant Improvement Allowance or Additional Tenant Improvement Allowance (as applicable)). If Tenant fails to notify Landlord in writing of Tenant’s approval of such Tenant Change Request within said three (3) business day period, then such Tenant Change Request shall be deemed to be withdrawn and shall be of no further effect.

 

(e)             Project Management. Unless and until revoked by Landlord by written notice delivered to Tenant, Landlord hereby (i) delegates to Project Manager the authority to exercise all approval rights, supervisory rights and other rights or powers of Landlord under this Tenant Work Letter with respect to the design and construction of the Tenant Improvements, and (ii) requests that Tenant work with Project Manager with respect to any logistical or other coordination matters arising in the course of construction of the Tenant Improvements, including monitoring Tenant’s compliance with its obligations under this Tenant Work Letter and under the Lease with respect to the design and construction of the Tenant Improvements. Tenant acknowledges the foregoing delegation and request, and agrees to cooperate reasonably with Project Manager as Landlord’s representative pursuant to such delegation and request. Tenant shall pay the fees and charges of Project Manager for such services at Tenant’s sole expense, which may be deducted from the Tenant Improvement Allowance. Such fees shall be equal to 2.65% of the cost of any of Landlord’s TI Work funded by the Tenant Improvement Allowance or any Additional Tenant Improvement Allowance, and 2% of costs of Landlord’s TI Work in excess of the Tenant Improvement Allowance and Additional Tenant Improvement Allowance funded by Tenant.

 

3.             Completion.

 

(a)             When Landlord receives written certification from Architect that construction of the Tenant Improvements in the Building has been completed in accordance with the Approved TI Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the “Substantial Completion Certificate”) (i) certifying that the construction of the Tenant Improvements has been substantially completed in a good and workmanlike manner in accordance with the Approved TI Plans in all material respects, subject only to completion of Punch List Work, and specifying the date of that completion, and (ii) certifying that the Tenant Improvements comply in all material respects with all laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto at the time of such delivery. Upon receipt by Tenant of the Substantial Completion Certificate and tender of possession of the Premises by Landlord to Tenant, the Tenant Improvements will be deemed delivered to Tenant and “Ready for Occupancy” for all purposes of the Lease (subject to Landlord’s continuing obligations with respect to any Punch List Work, and to any other express obligations of Landlord under the Lease or this Tenant Work Letter with respect to such Tenant Improvements, and any express warranties or obligations of Landlord provided in the Lease).

 

(b)             Promptly following delivery of the Substantial Completion Certificate for the Tenant Improvements in the Building, Project Manager or other representatives of Landlord shall conduct one or more “walkthroughs” of the Building with Tenant and Tenant’s representatives, to identify any items of Punch List Work that may require correction and to prepare a joint punch list reflecting any such items, following which Landlord shall diligently complete the Punch List Work reflected in such joint punch list. At any time within thirty (30) days after delivery of such Substantial Completion Certificate, Tenant shall be entitled to submit one or more lists to Landlord supplementing such joint punch list by specifying any additional items of Punch List Work to be performed on the applicable Tenant Improvements constituting, and upon receipt of such list(s), Landlord shall diligently complete such additional Punch List Work. The foregoing sentence shall not limit any of Landlord’s express warranty or maintenance obligations in the Lease. Promptly after Landlord provides Tenant with the Substantial Completion Certificate and completes all applicable Punch List Work for the Building, Landlord shall cause the recordation of a Notice of Completion (as defined in the California Civil Code) with respect to the Tenant Improvements.

 

 

(c)             All construction, product and equipment warranties and guaranties obtained by Landlord with respect to the Tenant Improvements shall, to the extent reasonably obtainable, include a provision that such warranties and guaranties shall also run to the benefit of Tenant, and Landlord shall cooperate with Tenant in a commercially reasonable manner to assist in enforcing all such warranties and guaranties for the benefit of Tenant. Landlord shall obtain, for the benefit of Tenant, all typical, industry standard manufacturer’s warranties relating to the Tenant Improvements, and, if requested by and paid for by Tenant, any available extended warranties.

 

(d)             Notwithstanding any other provisions of this Tenant Work Letter or of the Lease, if Landlord is delayed in substantially completing any of the Tenant Improvements as a result of any Tenant Delay, then the Premises shall be deemed to have been Ready for Occupancy on the date the Premises would have been Ready for Occupancy absent such Tenant Delay.

 

4.             Payment of Costs.

 

(a)             Tenant Improvement Allowance. Subject to any restrictions, conditions or limitations expressly set forth in this Tenant Work Letter or in the Lease or as otherwise expressly provided by mutual written agreement of Landlord and Tenant, the cost of construction of the Tenant Improvements shall be paid or reimbursed by Landlord up to a maximum amount set forth in Section 5 of the Summary to the Lease (the “Tenant Improvement Allowance”), which amount is being made available by Landlord to be applied towards the Cost of Improvements for the construction of the Tenant Improvements in the Premises, less any reduction in or charge against such amount pursuant to any applicable provisions of the Lease or of this Tenant Work Letter. Tenant shall be responsible, at its sole cost and expense, for payment of the entire Cost of Improvements of the Tenant Improvements in excess of the Tenant Improvement Allowance, including (but not limited to) any costs or cost increases incurred as a result of Tenant Delays, governmental requirements or unanticipated conditions (unless caused by Landlord, and provided that Landlord shall use commercially reasonable efforts to mitigate the cost and timing impact of any of the foregoing), and for payment of any and all costs and expenses relating to any alterations, additions, improvements, furniture, furnishings, equipment, fixtures and personal property items which are not eligible for application of Tenant Improvement Allowance funds under the restrictions expressly set forth below in this paragraph, but Tenant shall be entitled to use or apply the entire Tenant Improvement Allowance toward the Cost of Improvements of the Tenant Improvements (subject to any applicable restrictions, conditions, limitations, reductions or charges set forth in the Lease or in this Tenant Work Letter) prior to being required to expend any of Tenant’s own funds for the Tenant Improvements. The funding of the Tenant Improvement Allowance shall be made on a monthly basis or at other convenient intervals mutually approved by Landlord and Tenant and in all other respects shall be based on such commercially reasonable disbursement conditions and procedures as Landlord, Project Manager and Landlord’s lender (if any) may reasonably prescribe. Notwithstanding the foregoing provisions, under no circumstances shall the Tenant Improvement Allowance or any portion thereof be used or useable by Tenant for any moving or relocation expenses of Tenant, or for any Cost of Improvement (or any other cost or expense) associated with any moveable furniture or trade fixtures, personal property or any other item or element which, under the applicable provisions of the Lease, will not become Landlord’s property and remain with the Building upon expiration or termination of the Lease.

 

(b)             Additional Tenant Improvement Allowance. In addition to the Tenant Improvement Allowance, Tenant shall have the right to use the “Additional Tenant Improvement Allowance”, as defined in Section 5 of the Summary of the Lease, towards the payment of the costs of the Tenant Improvement Allowance Items. If Tenant desires to use any portion of the Additional Tenant Improvement Allowance, Tenant shall deliver written notice thereof to Landlord. In the event Tenant exercises its right to use all or any portion of the Additional Tenant Improvement Allowance, Tenant shall repay the Additional Tenant Improvement Allowance in equal monthly installments concurrent with Tenant’s payment of the monthly Base Rent for the Premises in an amount equal to the “Additional Allowance Monthly Rent,” as that term is defined below, in order to repay the Additional Tenant Improvement Allowance to Landlord. The “Additional Allowance Monthly Rent” shall be repaid to Landlord as Additional Rent in equal monthly installments throughout the remainder of the initial Lease Term, commencing on the first day of the first full calendar month following the date the Additional Allowance is disbursed to Tenant, at an interest rate equal to eight percent (8%) per annum (the “Additional Allowance Monthly Payment”) until repaid in full. Following the final determination of the Additional Allowance Monthly Rent, Landlord and Tenant will enter into an amendment to the Lease documenting such amount and Tenant’s obligation to pay the same.

 

 

5.             No Agency. Nothing contained in this Tenant Work Letter shall make or constitute Tenant as the agent of Landlord.

 

6.             Tenant Access. Provided that Tenant and its agents do not interfere with Contractor’s work in the Building and the Premises, Contractor shall allow Tenant access to the Premises approximately thirty (30) days prior to the Substantial Completion of the Landlord’s TI Work for the purpose of Tenant installing equipment or fixtures (including Tenant’s data and telephone equipment) in the Premises and doing business. Prior to Tenant’s entry into the Premises as permitted by the terms of this Section 6, Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant’s entry. Tenant shall be responsible for the costs of any utilities associated with Tenant’s access to the Premises prior to the Lease Commencement Date. Tenant shall hold Landlord harmless from and indemnify, protect and defend Landlord against any loss or damage to the Building or Premises and against injury to any persons caused by Tenant’s actions pursuant to this Section 6.

 

7.             Miscellaneous. All references in this Tenant Work Letter to a number of days shall be construed to refer to calendar days, unless otherwise specified herein. In all instances where Landlord’s or Tenant’s approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period Landlord or Tenant shall be deemed to have given approval (unless the provision requiring Landlord’s or Tenant’s approval expressly states that non-response is deemed to be a disapproval or withdrawal of the pending action or request, in which event such express statement shall be controlling over the general statement set forth in this sentence) and the next succeeding time period shall commence. If any item requiring approval is disapproved by Landlord or Tenant (as applicable) in a timely manner, the procedure for preparation of that item and approval shall be repeated.

 

8.             Compliance with Time Deadlines. Tenant shall use commercially reasonable, good faith, efforts and all due diligence to cooperate with the Architect, General Contractor and Landlord to complete all phases of the construction drawings set forth in this Tenant Work Letter and the permitting process and to receive the permits as soon as possible after the execution of this Lease. Tenant and Landlord agree to utilize commercially reasonable efforts to comply with the Time Deadlines. Time is of the essence with respect to each of Tenant’s and Landlord’s obligations pursuant to this Work Letter.

 

 

SCHEDULE 1 TO EXHIBIT B
TIME DEADLINES

 

Tenant Improvement Milestone Schedule

 

08/15/2022	Start of SD
09/15/2022	Tenant Approval of SD Package (comments on SD due to DGA)
09/15/2022	Tenant Submission of Final Equipment List
09/15/2022	Tenant Submission of Draft HMIS List
10/21/2022	Distribution of DD Package to Tenant for Review/Approval and to GC for budget update
10/25/2022	Tenant Approval of DD Package (comments on DD due to DGA)
10/25/2022	Tenant Submission of Final HMIS List
11/1/2022 – 12/1/22	Value Engineering duration placeholder based on GC budget; if Tenant elects to value engineer during the Value Engineering Period as provided in Section 2(c) of the Tenant Work Letter, then all dates below will be extended by 30 days
12/06/2022	Submission of IFP Package to South San Francisco (Final Working Drawings)
12/062022	Tenant Review of IFF Package (develop comments for Page Turn)
Early Week of 12/19/2022	Page Turn (Ext OAC – date TBD) Pick-up final Alumis comments from IFP review
01/16/2023	Anticipated Start of Construction (32 weeks)
02/27/2023	Anticipated Receipt of Permit from South San Francisco
08/21/2023	Anticipated Substantial Completion (9/21/23 if Tenant elects to value engineer during the Value Engineering Period as provided in Section 2(c) of the Tenant Work Letter)

 

The dates in this document, including the “Anticipated Substantial Completion” are anticipated - based on the current understanding of the project scope – and could change subject to Tenant-requested Value Engineering, Tenant Change Requests, and/or other Tenant Delays. Permitting durations are estimated and subject to the responsiveness of the City of South San Francisco. We will continue to track progress toward these milestones and provide updates to Alumis.

 

 

EXHIBIT C

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

NOTICE OF LEASE TERM DATES

To:

 

Re:

Lease dated________,20__between________________________, a _______________ (“Landlord”), and ________________________, a____________________(“Tenant”) concerning Suite _____on floor(s) ______________of the building located at ______________________, California.

 

Gentlemen:

 

In accordance with the Lease (the “Lease”), we wish to advise you and/or confirm as follows:

 

1.

The Lease Term shall commence on or has commenced on ______________ for a term of _______________ ending on _______________.

 

2.

Rent commenced to accrue on _____________, in the amount of _____________.

 

3.

If the Lease Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Lease.

 

4.

Your rent checks should be made payable to ________________ at _____________.

 

	“Landlord”:
	a
	By:
		Its:

 

Agreed to and Accepted as
of _________, 200_.

 

“Tenant”:

 

a
By:
	Its:

 

 

EXHIBIT D

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

FORM OF TENANT’S ESTOPPEL CERTIFICATE

 

The undersigned as Tenant under that certain Lease (the “Lease”) made and entered into as of _____________, 20__ by and between ______________________________ as Landlord, and the undersigned as Tenant, for Premises consisting of the entire office building located at ____________________, California, certifies as follows:

 

1.             Attached hereto as Exhibit A is a true and correct copy of the Lease and all amendments and modifications thereto. The documents contained in Exhibit A represent the entire agreement between the parties as to the Premises.

 

2.             The undersigned currently occupies the Premises described in the Lease, the Lease Term commenced on _______________, and the Lease Term expires on ______________, and the undersigned has no option to terminate or cancel the Lease or to purchase all or any part of the Premises, the Building and/or the Project.

 

3.             Base Rent became payable on _______________.

 

4.             The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Exhibit A.

 

5.             Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows:

 

6.             All monthly installments of Base Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through _____________. The current monthly installment of Base Rent is $__________________.

 

7.             All conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder. In addition, the undersigned has not delivered any notice to Landlord regarding a default by Landlord thereunder. The Lease does not require Landlord to provide any rental concessions or to pay any leasing brokerage commissions, which have not already been provided or paid.

 

8.             No rental has been paid more than thirty (30) days in advance and no security has been deposited with Landlord except as provided in the Lease. Neither Landlord, nor its successors or assigns, shall in any event be liable or responsible for, or with respect to, the retention, application and/or return to Tenant of any security deposit paid to any prior landlord of the Premises, whether or not still held by any such prior landlord, unless and until the party from whom the security deposit is being sought, whether it be a lender, or any of its successors or assigns, has actually received for its own account, as landlord, such security deposit.

 

9.             As of the date hereof, there are no existing defenses or offsets, or, to the undersigned’s knowledge, claims or any basis for a claim, that the undersigned has against Landlord.

 

10.            Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.

 

 

11.            To the undersigned’s knowledge, there are no actions pending against the undersigned under the bankruptcy or similar laws of the United States or any state.

 

12.            To the undersigned’s knowledge, Tenant is in full compliance with all federal, state and local laws, ordinances, rules and regulations affecting its use of the Premises, including, but not limited to, those laws, ordinances, rules or regulations relating to hazardous or toxic materials. Tenant has never permitted or suffered, nor does Tenant have any knowledge of, the generation, manufacture, treatment, use, storage, disposal or discharge of any hazardous, toxic or dangerous waste, substance or material in, on, under or about the Project or the Premises or any adjacent premises or property in violation of any federal, state or local law, ordinance, rule or regulation.

 

13.            To the undersigned’s knowledge, all tenant improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by the undersigned and all reimbursements and allowances due to the undersigned under the Lease in connection with any tenant improvement work have been paid in full. All work (if any) in the common areas required by the Lease to be completed by Landlord has been completed and all parking spaces required by the Lease have been furnished and/or all parking ratios required by the Lease have been met.

 

The undersigned acknowledges that this Estoppel Certificate may be delivered to Landlord or to a prospective mortgagee or prospective purchaser, and acknowledges that said prospective mortgagee or prospective purchaser will be relying upon the statements contained herein in making the loan or acquiring the property of which the Premises are a part and that receipt by it of this certificate is a condition of making such loan or acquiring such property.

 

Executed at _________________ on the ____ day of ___________, 200_.

 

	“Tenant”:
	a
	By:
		Its:
	By:
		Its:

 

 

EXHIBIT E

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

ENVIRONMENTAL QUESTIONNAIRE

 

ENVIRONMENTAL QUESTIONNAIRE
FOR COMMERCIAL AND INDUSTRIAL PROPERTIES

 

Tenant Name:

 

Lease Address:

 

Lease Type (check correct box – right click to properties):

¨ Primary Lease/Lessee

¨ Sublease from:

 

Instructions: The following questionnaire is to be completed by the Lessee representative with knowledge of the planned operations for the specified building/location. Please print clearly and attach additional sheets as necessary.

 

1.0            PROCESS INFORMATION

 

Describe planned site use, including a brief description of manufacturing processes and/or pilot plants planned for this site, if any.

 

2.0            HAZARDOUS MATERIALS – OTHER THAN WASTE

 

Will (or are) non-waste hazardous materials be/being used or stored at this site? If so, continue with the next question. If not, go to Section 3.0.

 

2.1

Are any of the following materials handled on the Property? ¨ Yes ¨ No

 

[A material is handled if it is used, generated, processed, produced, packaged, treated, stored, emitted, discharged, or disposed.] If YES, check (right click to properties) the applicable correct Fire Code hazard categories below.

 

¨	Combustible dusts/fibers	¨	Explosives	¨	Flammable liquids
¨	Combustible liquids (e.g., oils)	¨	Compressed gas - inert	¨	Flammable solids/pyrophorics
¨	Cryogenic liquids – inert	¨	Compressed gas - flammable/pyrophoric	¨	Organic peroxides
¨	Cryogenic liquids - flammable	¨	Compressed gas - oxidizing	¨	Oxidizers - solid or liquid
¨	Cryogenic liquids - oxidizing	¨	Compressed gas - toxic	¨	Reactives - unstable or water reactive
¨	Corrosives - solid or liquid	¨	Compressed gas - corrosive	¨	Toxics - solid or liquid

 

 

2-2.

For all materials checked in Section 2.1 above, please list the specific material(s), use(s), and quantities of each used or stored on the site in the table below; or attach a separate inventory. NOTE: If proprietary, the constituents need not be named but the hazard information and volumes are required.

 

Material/ Chemical	Physical State (Solid, Liquid, or Gas)	Container Size		Number of Containers Used & Stored	Total Quantity	Units (pounds for solids, gallons or liters for liquids, & ________

 

2-3.

Describe the planned storage area location(s) for the materials in Section 2-2 above. Include site maps and drawings as appropriate.

 

	2-4.	Other hazardous materials. Check below (right click to properties) if applicable. NOTE: If either of the latter two are checked (BSL-3 and/or radioisotope/radiation), be advised that not all lease locations/cities or lease agreements allow these hazards; and if either of these hazards are planned, additional information will be required with copies of oversight agency authorizations/licenses as they become available.

 

 

¨

Risk Group 2/Biosafety Level-2 Biohazards

¨

Risk Group 3/Biosafety Level-3 Biohazards

¨

Radioisotopes/Radiation

 

3.0            HAZARDOUS WASTE (i.e., REGULATED CHEMICAL WASTE)

 

Are (or will) hazardous waste (be) generated? ¨ Yes ¨ No

 

If YES, continue with the next question. If not, skip this section and go to section 4.0.

 

3.1.

Are or will any of the following hazardous (CHEMICAL) wastes generated, handled, or disposed of (where applicable and allowed) on the property?

 

¨	Liquids	¨	Process sludges	¨	PCBs
¨	Solids	¨	Metals	¨	wastewater

 

3-2.

List and estimate the quantities of hazardous waste identified in Question 3-1 above.

 

HAZARDOUS (CHEMICAL) WASTE GENERATED	SOURCE	WASTE TYPE		APPROX. MONTHLY QUANTITY with units	DISPOSITION [e.g., off-site landfill, incineration, fuel blending scrap metal; wastewater neutralization (onsite or off-site)]
		RCRA listed (federal)	Non-RCRA (Calif-ornia ONLY or recycle)
		¨	¨
		¨	¨
		¨	¨
		¨	¨
		¨	¨

 

3-3.

Waste characterization by: Process knowledge ¨ EPA lab analysis ¨ Both ¨

 

3-4.

Please include name, location, and permit number (e.g. EPA ID No.) for transporter and disposal facility if applicable. Attach separate pages as necessary. If not yet known, write “TBD.”

 

Hazardous Waste Transportation/Disposal Facility Name	Facility Location	Transporter (T) or Disposal (D) Facility	Permit Number

 

3-5.

Are pollution controls or monitoring employed in the process to prevent or minimize the release of wastes into the environment? NOTE: This does NOT mean fume hoods; examples include air scrubbers, cyclones, carbon or HEPA filters at building exhaust fans, sedimentation tanks, pH neutralization systems for wastewater, etc.

 

¨   Yes    ¨ No
If YES, please list/describe:

 

 

4.0

OTHER REGULATED WASTE (i.e., REGULATED BIOLOGICAL WASTE, referred to as “Medical Waste” in California)

 

4-1.

Will (or do) you generate medical waste¨ Yes    ¨ No, skip to Section 5.0.

 

4-2.

Check the types of waste that will be generated, all of which fall under the California Medical Waste Act:

 

¨	Contaminated sharps (i.e., if contaminated with ≥ Risk Group 2 materials)	¨	Animal carcasses	¨	Pathology waste known or suspected to be contaminated with ≥ Risk Group 2 pathogens)
¨	Red bag biohazardous waste (i.e., with ≥ Risk Group 2 materials) for autoclaving	¨	Human or non-human primate blood, tissues, etc. (e.g., clinical specimens)	¨	Trace Chemotherapeutic Waste and/or Pharmaceutical waste NOT otherwise regulated as RCRA chemical waste

 

	4-3.	What vendor will be used for off-site autoclaving and/or incineration?

 

4-5.

Do you have a Medical Waste Permit for this site?

¨ Yes    ¨ No, not required. ¨ No, but an application will be submitted.

 

5.0

UNDERGROUND STORAGE TANKS (USTS) & ABOVEGROUND STORAGE TANKS (ASTS)

 

5-1.

Are underground storage tanks (USTs), aboveground storage tanks (ASTs), or associated pipelines used for the storage of petroleum products, chemicals, or liquid wastes present on site (lease renewals) or required for planned operations (new tenants)? ¨ Yes ¨ No

 

NOTE: If you will have your own diesel emergency power generator, then you will have at least one AST! [NOTE: If a backup generator services multiple tenants, then the landlord usually handles the permits.]

 

If NO, skip to section 6.0. If YES, please describe capacity, contents, age, type of the USTs or ASTs, as well any associated leak detection/spill prevention measures. Please attach additional pages if necessary.

 

UST or AST	Capacity (gallons)	Contents	Year Installed	Type (Steel, Fiberglass, etc.)	Associated Leak Detection / Spill Prevention Measures*

 

*NOTE: The following are examples of leak detection / spill prevention measures: integrity testing, inventory reconciliation, leak detection system, overfill spill protection, secondary containment, cathodic protection.

 

5-2.

Please provide copies of written tank integrity test results and/or monitoring documentation, if available.

 

5-3.

Is the UST/AST registered and permitted with the appropriate regulatory agencies? ¨Yes ¨No, not yet

 

If YES, please attach a copy of the required permit(s). See Section 7-1 for the oversight agencies that issue permits, with the exception of those for diesel emergency power generators which are permitted by the local Air Quality District (Bay Area Air Quality Management District = BAAQMD; or San Diego Air Pollution Control District = San Diego APCD).

 

 

5-4.

If this Questionnaire is being completed for a lease renewal, and if any of the USTs/ASTs have leaked, please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial responses to the incident.

 

 

5-5.

If this Questionnaire is being completed for a lease renewal, have USTs/ASTs been removed from the Property?

 

¨Yes    ¨No

 

If YES, please provide any official closure letters or reports and supporting documentation (e.g., analytical test results, remediation report results, etc.).

 

5-6.

For Lease renewals, are there any above or below ground pipelines on site used to transfer chemicals or wastes?

 

¨Yes   ¨No

 

For new tenants, are installations of this type required for the planned operations? ¨Yes ¨No

 

If YES to either question in this section 5-6, please describe.

 

 

 

6.0

ASBESTOS CONTAINING BUILDING MATERIALS

 

Please be advised that an asbestos survey may have been performed at the Property. If provided, please review the information that identifies the locations of known asbestos containing material or presumed asbestos containing material. All personnel and appropriate subcontractors should be notified of the presence of these materials, and informed not to disturb these materials. Any activity that involves the disturbance or removal of these materials must be done by an appropriately trained individual/contractor.

 

7.0

OTHER REGULATORY PERMITS/REQUIREMENTS

 

7-1.

Does the operation have or require an industrial wastewater permit to discharge into the local National Pollutant Discharge Elimination System (NPDES)? [Example: This applies when wastewater from equipment cleaning is routed through a pH neutralization system prior to discharge into the sanitary or lab sewer for certain pharmaceutical manufacturing wastewater; etc.] Permits are obtained from the regional sanitation district that is treating wastewater.

 

¨Yes   ¨No   ¨No, but one will be prepared and submitted to the Landlord property management company.

 

If so, please attach a copy of this permit or provide it later when it has been prepared.

 

7-2.

Has a Hazardous Materials Business Plan (HMBP) been developed for the site and submitted via the State of California Electronic Reporting System (CERS)? [NOTE: The trigger limits for having to do this are ≥ 200 cubic feet if any one type of compressed gas(except for carbon dioxide and inert simple asphyxiant gases, which have a higher trigger limit of ≥ 1,000 cubic feet); ≥ 55 gallons if any one type of hazardous chemical liquid; and ≥500 pounds of any one type of hazardous chemical solid. So a full-sixe gas cylinder and a 260-liter of liquid nitrogen are triggers! Don’t forget the diesel fuel in a backup emergency generator if the diesel tank size is ≥ 55 gallons and it is permitted under the tenant (rather than under the landlord).] NOTE: Each local Certified Unified Program Agency (CUPA) in California governs the HMBP process so start there. Examples: the CUPA for cities in San Mateo County is the County Environmental Health Department; the CUPA for the City of Hayward, CA is the Hayward Fire Department; the CUPA for Mountain View is the Mountain View Fire Department; and, the CUPA for San Diego is the County of San Diego Hazardous Materials Division (HMD),

 

 

¨Yes ¨No, not required. ¨No, but one will be prepared and submitted, and a copy will be provided to the landlord property management company.

 

If one has been completed, please attach a copy. Continue to provide updated versions as they are completed. This is a legal requirement in that State law requires that the owner/operator of a business located on leased or rented real property shall notify, in writing, the owner of the property that the business is subject to and is in compliance with the Hazardous Materials Business Plan requirements (Health and Safety Code Chapter 6.95 Section 25505.1).

 

7-3.

NOTE: Please be advised that if you are involved in any tenant improvements that require a construction permit, you will be asked to provide the local city with a Hazardous Materials Inventory Statement (HMIS) to ensure that your hazardous chemicals fall within the applicable Fire Code fire control area limits for the applicable construction occupancy of the particular building. The HMIS will include much of the information listed in Section 2-2. Neither the landlord nor the landlord’s property management company expressly warrants that the inventory provided in Section 2-2 will necessarily meet the applicable California Fire Code fire control area limits for building occupancy, especially in shared tenant occupancy situations. It is the responsibility of the tenant to ensure that a facility and site can legally handle the intended operations and hazardous materials desired/ needed for its operations, but the landlord is happy to assist in this determination when possible.

 

CERTIFICATION

 

I am familiar with the real property described in this questionnaire. By signing below, I represent and warrant that the answers to the above questions are complete and accurate to the best of my knowledge. I also understand that Lessor will rely on the completeness and accuracy of my answers in assessing any environmental liability risks associated with the property.

 

Signature:

 

Name:

 

Title:

 

Date:

 

Telephone:

 

 

EXHIBIT F

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

FORM OF LETTER OF CREDIT

 

(Letterhead of a money center bank
acceptable to the Landlord)

 

FAX NO. [(___) ___-____]	[Insert Bank Name And Address]
SWIFT: [Insert No., if any]

 

DATE OF ISSUE:

 

BENEFICIARY:	APPLICANT:
[Insert Beneficiary Name And Address]	[Insert Applicant Name And Address]

 

LETTER OF CREDIT NO.

 

EXPIRATION DATE:	AMOUNT AVAILABLE:
___________ AT OUR COUNTERS	USD[Insert Dollar Amount]
	(U.S. DOLLARS [Insert Dollar Amount]

 

LADIES AND GENTLEMEN:

 

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.___________ IN YOUR FAVOR FOR THE ACCOUNT OF [Insert Tenant’s Name], A [Insert Entity Type], UP TO THE AGGREGATE AMOUNT OF USD[Insert Dollar Amount] ([Insert Dollar Amount] U.S. DOLLARS) EFFECTIVE IMMEDIATELY AND EXPIRING ON    (Expiration Date)    AVAILABLE BY PAYMENT UPON PRESENTATION OF YOUR DRAFT AT SIGHT DRAWN ON [Insert Bank Name] WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENT(S):

 

1.            THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S), IF ANY.

 

2.            BENEFICIARY’S SIGNED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF [Insert Landlord’s Name], A [Insert Entity Type] (“LANDLORD”) STATING THE FOLLOWING:

 

“THE UNDERSIGNED HEREBY CERTIFIES THAT THE LANDLORD, EITHER (A) UNDER THE LEASE (DEFINED BELOW), OR (B) AS A RESULT OF THE TERMINATION OF SUCH LEASE, HAS THE RIGHT TO DRAW DOWN THE AMOUNT OF USD _________ IN ACCORDANCE WITH THE TERMS OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS AMENDED (COLLECTIVELY, THE “LEASE”), OR SUCH AMOUNT CONSTITUTES DAMAGES OWING BY THE TENANT TO BENEFICIARY RESULTING FROM THE BREACH OF SUCH LEASE BY THE TENANT THEREUNDER, OR THE TERMINATION OF SUCH LEASE, AND SUCH AMOUNT REMAINS UNPAID AT THE TIME OF THIS DRAWING.”

 

OR

 

“THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED A WRITTEN NOTICE OF [Insert Bank Name]’S ELECTION NOT TO EXTEND ITS STANDBY LETTER OF CREDIT NO. ________ AND HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT WITHIN AT LEAST SIXTY (60) DAYS PRIOR TO THE PRESENT EXPIRATION DATE.”

 

 

OR

 

“THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ___________ AS THE RESULT OF THE FILING OF A VOLUNTARY PETITION UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE BY THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS AMENDED (COLLECTIVELY, THE “LEASE”), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING.”

 

OR

 

“THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ___________ AS THE RESULT OF AN INVOLUNTARY PETITION HAVING BEEN FILED UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE AGAINST THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS AMENDED (COLLECTIVELY, THE “LEASE”), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING.”

 

OR

 

“THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO.__________________ AS THE RESULT OF THE REJECTION, OR DEEMED REJECTION, OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS AMENDED, UNDER SECTION 365 OF THE U.S. BANKRUPTCY CODE.”

 

SPECIAL CONDITIONS:

 

PARTIAL DRAWINGS AND MULTIPLE PRESENTATIONS MAY BE MADE UNDER THIS STANDBY LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS STANDBY LETTER OF CREDIT.

 

ALL INFORMATION REQUIRED WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE, MUST BE COMPLETED AT THE TIME OF DRAWING. [Please Provide The Required Forms For Review, And Attach As Schedules To The Letter Of Credit.]

 

ALL SIGNATURES MUST BE MANUALLY EXECUTED IN ORIGINALS.

 

ALL BANKING CHARGES ARE FOR THE APPLICANT’S ACCOUNT.

 

IT IS A CONDITION OF THIS STANDBY LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE WE SEND YOU NOTICE BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SAID NOTICE WILL BE SENT TO THE ADDRESS INDICATED ABOVE, UNLESS A CHANGE OF ADDRESS IS OTHERWISE NOTIFIED BY YOU TO US IN WRITING BY RECEIPTED MAIL OR COURIER. ANY NOTICE TO US WILL BE DEEMED EFFECTIVE ONLY UPON ACTUAL RECEIPT BY US AT OUR DESIGNATED OFFICE. IN NO EVENT, AND WITHOUT FURTHER NOTICE FROM OURSELVES, SHALL THE EXPIRATION DATE BE EXTENDED BEYOND A FINAL EXPIRATION DATE OF    (120 days from the Lease Expiration Date).

 

 

THIS LETTER OF CREDIT MAY BE TRANSFERRED SUCCESSIVELY IN WHOLE OR IN PART ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF A NOMINATED TRANSFEREE (“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE IS IN COMPLIANCE WITH ALL APPLICABLE U.S. LAWS AND REGULATIONS. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S) IF ANY, MUST BE SURRENDERED TO US TOGETHER WITH OUR TRANSFER FORM (AVAILABLE UPON REQUEST) AND PAYMENT OF OUR CUSTOMARY TRANSFER FEES, WHICH FEES SHALL BE PAYABLE BY APPLICANT (PROVIDED THAT BENEFICIARY MAY, BUT SHALL NOT BE OBLIGATED TO, PAY SUCH FEES TO US ON BEHALF OF APPLICANT, AND SEEK REIMBURSEMENT THEREOF FROM APPLICANT). IN CASE OF ANY TRANSFER UNDER THIS LETTER OF CREDIT, THE DRAFT AND ANY REQUIRED STATEMENT MUST BE EXECUTED BY THE TRANSFEREE AND WHERE THE BENEFICIARY’S NAME APPEARS WITHIN THIS STANDBY LETTER OF CREDIT, THE TRANSFEREE’S NAME IS AUTOMATICALLY SUBSTITUTED THEREFOR.

 

ALL DRAFTS REQUIRED UNDER THIS STANDBY LETTER OF CREDIT MUST BE MARKED: “DRAWN UNDER [Insert Bank Name] STANDBY LETTER OF CREDIT NO. ___________.”

 

WE HEREBY AGREE WITH YOU THAT IF DRAFTS ARE PRESENTED TO [Insert Bank Name] UNDER THIS LETTER OF CREDIT AT OR PRIOR TO [Insert Time – (e.g., 11:00 AM)], ON A BUSINESS DAY, AND PROVIDED THAT SUCH DRAFTS PRESENTED CONFORM TO THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE INITIATED BY US IN IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF BUSINESS ON THE SUCCEEDING BUSINESS DAY. IF DRAFTS ARE PRESENTED TO [Insert Bank Name] UNDER THIS LETTER OF CREDIT AFTER [Insert Time – (e.g., 11:00 AM)], ON A BUSINESS DAY, AND PROVIDED THAT SUCH DRAFTS CONFORM WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE INITIATED BY US IN IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF BUSINESS ON THE SECOND SUCCEEDING BUSINESS DAY. AS USED IN THIS LETTER OF CREDIT, “BUSINESS DAY” SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN THE STATE OF CALIFORNIA ARE AUTHORIZED OR REQUIRED BY LAW TO CLOSE. IF THE EXPIRATION DATE FOR THIS LETTER OF CREDIT SHALL EVER FALL ON A DAY WHICH IS NOT A BUSINESS DAY THEN SUCH EXPIRATION DATE SHALL AUTOMATICALLY BE EXTENDED TO THE DATE WHICH IS THE NEXT BUSINESS DAY.

 

PRESENTATION OF A DRAWING UNDER THIS LETTER OF CREDIT MAY BE MADE ON OR PRIOR TO THE THEN CURRENT EXPIRATION DATE HEREOF BY HAND DELIVERY, COURIER SERVICE, OVERNIGHT MAIL, OR FACSIMILE. PRESENTATION BY FACSIMILE TRANSMISSION SHALL BE BY TRANSMISSION OF THE ABOVE REQUIRED SIGHT DRAFT DRAWN ON US TOGETHER WITH THIS LETTER OF CREDIT TO OUR FACSIMILE NUMBER, [Insert Fax Number – (____) ____-______], ATTENTION: [Insert Appropriate Recipient], WITH TELEPHONIC CONFIRMATION OF OUR RECEIPT OF SUCH FACSIMILE TRANSMISSION AT OUR TELEPHONE NUMBER [Insert Telephone Number – (____) ____-_____] OR TO SUCH OTHER FACSIMILE OR TELEPHONE NUMBERS, AS TO WHICH YOU HAVE RECEIVED WRITTEN NOTICE FROM US AS BEING THE APPLICABLE SUCH NUMBER. WE AGREE TO NOTIFY YOU IN WRITING, BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OF ANY CHANGE IN SUCH DIRECTION. ANY FACSIMILE PRESENTATION PURSUANT TO THIS PARAGRAPH SHALL ALSO STATE THEREON THAT THE ORIGINAL OF SUCH SIGHT DRAFT AND LETTER OF CREDIT ARE BEING REMITTED, FOR DELIVERY ON THE NEXT BUSINESS DAY, TO [Insert Bank Name] AT THE APPLICABLE ADDRESS FOR PRESENTMENT PURSUANT TO THE PARAGRAPH FOLLOWING THIS ONE.

 

WE HEREBY ENGAGE WITH YOU THAT ALL DOCUMENT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS STANDBY LETTER OF CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT OUR OFFICE LOCATED AT [Insert Bank Name], [Insert Bank Address], ATTN: [Insert Appropriate Recipient], ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT,
   (Expiration Date)   .

 

IN THE EVENT THAT THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT IS LOST, STOLEN, MUTILATED, OR OTHERWISE DESTROYED, WE HEREBY AGREE TO ISSUE A DUPLICATE ORIGINAL HEREOF UPON RECEIPT OF A WRITTEN REQUEST FROM YOU AND A CERTIFICATION BY YOU (PURPORTEDLY SIGNED BY YOUR AUTHORIZED REPRESENTATIVE) OF THE LOSS, THEFT, MUTILATION, OR OTHER DESTRUCTION OF THE ORIGINAL HEREOF.

 

 

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE "INTERNATIONAL STANDBY PRACTICES" (ISP 98) INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 590).

 

	Very truly yours,
	(Name of Issuing Bank)
	By:

 

 

EXHIBIT G

 

TENANT’S PROPERTY¹

 

1.

All moveable furniture and equipment that is not "built-in".

 

2.

Moveable lab casework (other than "built-in" lab casework), including moveable lab benches and tables

 

3.

Servers, server racks and back-up batteries.

 

4.

Furniture.

 

5.

Portable fume hoods.

 

6.

Biosafety cabinets.

 

7.

Moveable laboratory equipment.

 

8.

Flammable/corrosive cabinets

 

¹ NTD: to be discussed.

 

 

LEASE

 

BRITANNIA POINTE GRAND LIFE SCIENCE CENTER

 

PG VII 280 EAST GRAND, LLC,
a Delaware limited liability company,

 

as Landlord,

 

and

 

ALUMIS INC.,

 

a Delaware corporation,

 

as Tenant.

 

 

TABLE OF CONTENTS

 

Page

 

1.	PREMISES, BUILDING, PROJECT, AND COMMON AREAS	4
2.	LEASE TERM; OPTION TERM	6
3.	BASE RENT	9
4.	ADDITIONAL RENT	9
5.	USE OF PREMISES	16
6.	SERVICES AND UTILITIES	21
7.	REPAIRS	24
8.	ADDITIONS AND ALTERATIONS	25
9.	COVENANT AGAINST LIENS	27
10.	INSURANCE	27
11.	DAMAGE AND DESTRUCTION	29
12.	NONWAIVER	31
13.	CONDEMNATION	31
14.	ASSIGNMENT AND SUBLETTING	32
15.	SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES	36
16.	HOLDING OVER	37
17.	ESTOPPEL CERTIFICATES	37
18.	SUBORDINATION	38
19.	DEFAULTS; REMEDIES	38
20.	COVENANT OF QUIET ENJOYMENT	41
21.	LETTER OF CREDIT	42
22.	COMMUNICATIONS AND COMPUTER LINES	45
23.	SIGNS	45
24.	COMPLIANCE WITH LAW	46
25.	LATE CHARGES	47
26.	LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT	47
27.	ENTRY BY LANDLORD	48
28.	TENANT PARKING	48
29.	MISCELLANEOUS PROVISIONS	48

 

EXHIBITS
A	OUTLINE OF PREMISES
B	TENANT WORK LETTER
C	FORM OF NOTICE OF LEASE TERM DATES
D	FORM OF TENANT’S ESTOPPEL CERTIFICATE
E	ENVIRONMENTAL QUESTIONNAIRE
F	FORM OF LETTER OF CREDIT

 

 

INDEX

 

Page(s)

 

Abatement Event	35
Accountant	13
Additional Rent	8
Advocate Arbitrators	7
Alterations	21
Amenity Building	4
Applicable Laws	39
Approved Schematic Plans	2
as built	22
Bank	35
Bank’s Credit Rating Threshold	36
Bankruptcy Code	36
Base Building	39
Base Rent	8
Base Rent Abatement Period	2
Brokers	46
Builder’s All Risk	22
Building	4
Building Systems	20
Casualty	25
Clean-up	17
Clean-Up Plan	17
Closure Letter	18
Code	28
Common Areas	5
Comparable Buildings	7
Comparable Transactions	6
Concessions	6
Contemplated Effective Date	29
Contemplated Transfer Space	29
Control	31
Direct Expenses	8, 9
Disputed Amounts	47
Eligibility Period	35
Energy Disclosure Information	19
Energy Disclosure Requirements	19
Environmental Assessment	17
Environmental Laws	15
Environmental Questionnaire	14
Environmental Report	17
Estimate	13
Estimate Statement	13
Estimated Direct Expenses	12, 13
Event of Default	33
Excepted Matters	48
Expense Year	9
Fair Rental Value	6
First Class Life Sciences Projects	2

 

 

Page(s)

 

Force Majeure	43
Generator	20
Generator Warranty Period	20
Hazardous Materials	14
Hazardous Materials Claims	15
HVAC	18
Intention to Transfer Notice	29
Landlord	1, 41
Landlord Parties	23
Landlord Repair Notice	26
Landlord Repair Obligations	21
L-C	35
L-C Amount	35
L-C Draw Event	36
L-C Expiration Date	36
L-C FDIC Replacement Notice	36
Lease	1
Lease Commencement Date	6
Lease Expiration Date	6
Lease Term	6
Lease Year	6
Lines	38
Mail	43
Management Fee Cap	11
Net Worth	31
Neutral Arbitrator	7
Nine Month Period	29
Notices	43
Objectionable Name	39
OFAC	47
Operating Expenses	9
Option Conditions	6
Option Rent	6
Option Term	6
Original Improvements	24
Original Tenant	6
Outside Agreement Date	7
Patriot Act	47
PCBs	14
Permitted Alterations	22
Permitted Assignee	31
Permitted Transfer	30
Permitted Transferee	30
Possession Date	4
Premises	4
Preventative Maintenance Records	21
Prohibited Persons	47
Project,	4
Referee Sections	45
REIT Owner	28
Release	15

 

 

Page(s)

 

Released	15
Releases	15
rent	34
Rent	8
RSF	1
Security Deposit Laws	38
Service Contract	21
Sign Specifications	39
Site Plan	4
special risks	24
Statement	12
Subject Space	28
Substantial Completion Certificate	4
Summary	1
Tax Expenses	9, 11
Tenant	1, 41
Tenant Damage	5
Tenant Energy Use Disclosure	19
Tenant Improvements,	24
Tenant Signage	39
Tenant Work Letter	4
Tenant’s Property	23
Tenant’s Accountant	13
Tenant’s Agents	14
Tenant’s Repair Obligations	20
Tenant’s Security System	20
Tenant’s Share	8, 12
Transfer	30
Transfer Costs	29
Transfer Notice	28
Transfer Premium	28, 29
Transfer Premium,	29
Transferee	27
Transfers	27
TRIPLE NET	8
Underlying Documents	9
Warranty Period	5
worth at the time of award	34

 

 

 

Exhibit 10.13

 

ESKER THERAPEUTICS, INC.

 

September 15, 2021

 

Martin Babler

 

Re: Offer of Employment

 

Dear Martin:

 

We are pleased to present this offer of employment for the position of President, Chief Executive Officer and Chairman of the Board of Esker Therapeutics, Inc. (the “Company”), a Foresite Labs, LLC (“Foresite Labs”) incubated company. This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	President, Chief Executive Officer and Chairman of the Board
Base Pay:	$500,000 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	Board of Directors
Start Date:	September 15, 2021
Location:	San Francisco / Remote

 

Scope of Work

 

You will report directly to the Board, and will principally work from the Company’s facility, located in the San Francisco area, although you will be initially be permitted to work remotely. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization (other than the Company or another incubated company of Foresite Labs), whether or not for compensation, without the prior written consent of the Board of Directors. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Board of Directors. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

 

As CEO of the Company, you shall have a designated seat on the Board of Directors of the Company (the “Board”).

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.	Base Salary. You will be paid a base salary of $500,000 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus. You will be eligible for a discretionary cash bonus targeted at 40% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3.

Equity. Subject to Board approval, you will be granted an option to purchase 3,000,000 shares of the Company’s Common Stock (the “Option”). The exercise price of the Option shall be $0.82 per share, a price equal to the Company’s current 409A valuation. Your Option shall vest based solely on continued service provided to the Company as follows: one-quarter vesting on the one- year anniversary of your start date with the Company (the “Cliff Date”), and the balance vesting in equal monthly installments over the three years thereafter (i.e., a customary 4-year vesting schedule with a one-year “cliff”). In addition, the Option will be eligible for the vesting acceleration described in Section 2 and in Section 7 of Attachment A. The Option will be “early- exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Option will be exercisable until the earlier of (x) the expiration of the Option’s 10-year term or (y) unless the Option is assumed by the acquiring company, upon the effective date of a Change of Control. The Option will be an ISO to the extent statutorily permissible. The Option will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4.	Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5.	Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder.

 

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Esker Therapeutics, Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below), along with the successful clearance of a background check. You will receive an email from our background check vendor in the next few days asking you to authorize the initiation of this background check, which you will need to respond promptly to.

 

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to Foresite Labs.

 

The below documents will be provided to you by Human Resources upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.	Background Check Release and Authorization (received via email through third party vendor)

 

2.	Signed Proprietary Information and Inventions Agreement

 

3.	Completed I-9 Form and documentation

 

4.	Signed Dispute Resolution/Arbitration Agreement

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,

 

/s/ Vikram Bajaj
Vikram Bajaj, Interim President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Martin Babler
Martin Babler
Date:	September 15, 2021

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)           Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)          Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to twelve (12) months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) within twelve months of your Start Date.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of _______________ __, 202_ by and between Esker Therapeutics, Inc. (f/k/a FL2021-001, Inc.), a Delaware corporation (the “Company”) and ____________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ ___, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of _____________, __ 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $______________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

5.            Company Shares. On or about __________, the Company issued You a stock option to purchase _________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in ______ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional ______ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above)) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

8.            No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.            Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.          Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.          Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.          Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.          Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.          Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

 

15.          Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.          Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

	If to the Company:
	Esker Therapeutics, Inc.
	Attn: Chair of the Board of Directors
	If to Executive: Last address on file with the Company.

 

17.          Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.          Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about _____________ __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated ____________ __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.          Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

20.          Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

 

21.          Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.          Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.          Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ESKER THERAPEUTICS, INC.:
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.14

 

ESKER THERAPEUTICS, INC.

 

September 15, 2021

 

David Goldstein

 

Re: Offer of Employment

 

Dear David:

 

We are pleased to present this offer of employment for the position of Chief Scientific Officer of Esker Therapeutics, Inc. (the “Company”), a Foresite Labs, LLC (“Foresite Labs”) incubated company. This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	Chief Scientific Officer
Base Pay:	$360,000 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	CEO
Start Date:	September 15, 2021
Location:	San Francisco / Remote

 

Scope of Work

 

You will report directly to the Company’s CEO, and will principally work from the Company’s facility, located in the San Francisco area, although you will be initially be permitted to work remotely. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization (other than the Company or another incubated company of Foresite Labs), whether or not for compensation, without the prior written consent of the Board of Directors. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Board of Directors. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.	Base Salary. You will be paid a base salary of $360,000 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus. You will be eligible for a discretionary cash bonus targeted at 35% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3.

Equity. Subject to Board approval, you will be granted an option to purchase 1,000,000 shares of the Company’s Common Stock (the “Option”). The exercise price of the Option shall be $0.82 per share, a price equal to the Company’s current 409A valuation. Your Option shall vest based solely on continued service provided to the Company as follows: one-quarter vesting on the one-year anniversary of your start date with the Company (the “Cliff Date”), and the balance vesting in equal monthly installments over the three years thereafter (i.e., a customary 4-year vesting schedule with a one-year “cliff”). In addition, the Option will be eligible for the vesting acceleration described in in Section 2 and in Section 7 of Attachment A. The Option will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Option will be exercisable until the earlier of (x) the expiration of the Option’s 10-year term or (y) unless the Option is assumed by the acquiring company, upon the effective date of a Change of Control. The Option will be an ISO to the extent statutorily permissible. The Option will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4.	Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5.	Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties to hereunder.

 

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Esker Therapeutics, Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below), along with the successful clearance of a background check. You will receive an email from our background check vendor in the next few days asking you to authorize the initiation of this background check, which you will need to respond promptly to.

 

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to Foresite Labs.

 

The below documents will be provided to you by Human Resources upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.             Background Check Release and Authorization (received via email through third party vendor)

 

2.             Signed Proprietary Information and Inventions Agreement

 

3.             Completed I-9 Form and documentation

 

4.             Signed Dispute Resolution/Arbitration Agreement

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,

 

/s/ Martin Babler
Martin Babler, President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ David Goldstein
David Goldstein
Date:	September 15, 2021

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)           Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)          Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) within twelve months of your Start Date.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of __________ __, 202_ by and between Esker Therapeutics, Inc. (f/k/a FL2021-001, Inc.), a Delaware corporation (the “Company”) and __________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ __, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of __________ __, 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $__________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

 

5.            Company Shares. On or about __________, the Company issued You a stock option to purchase __________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in __________ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional __________ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

8.            No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.            Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.            Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.           Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

 

12.          Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.          Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.          Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

15.          Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.          Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Esker Therapeutics, Inc.

Attn: Chair of the Board of Directors

 

 

If to Executive: Last address on file with the Company.

 

17.           Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.           Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about __________, __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated __________, __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.           Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

20.          Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

21.          Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.          Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.          Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ESKER THERAPEUTICS, INC.
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.15

 

ESKER THERAPEUTICS, INC.

 

September 15, 2021

 

Roy Hardiman

 

Re: Offer of Employment

 

Dear Roy:

 

We are pleased to present this offer of employment for the position of Chief Business Officer and General Counsel of Esker Therapeutics, Inc. (the “Company”), a Foresite Labs, LLC (“Foresite Labs”) incubated company. This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	Chief Business Officer and General Counsel
Base Pay:	$360,000 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	CEO
Start Date:	September 15, 2021
Location:	San Francisco / Remote

 

Scope of Work

 

You will report directly to the Company’s CEO, and will principally work from the Company’s facility, located in the San Francisco area, although you will be initially be permitted to work remotely. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization (other than the Company or another incubated company of Foresite Labs), whether or not for compensation, without the prior written consent of the Board of Directors. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Board of Directors. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.	Base Salary. You will be paid a base salary of $360,000 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus. You will be eligible for a discretionary cash bonus targeted at 35% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3.

Equity. Subject to Board approval, you will be granted an option to purchase 1,000,000 shares of the Company’s Common Stock (the “Option”). The exercise price of the Option shall be $0.82 per share, a price equal to the Company’s current 409A valuation. Your Option shall vest based solely on continued service provided to the Company as follows: one-quarter vesting on the one-year anniversary of your start date with the Company (the “Cliff Date”), and the balance vesting in equal monthly installments over the three years thereafter (i.e., a customary 4-year vesting schedule with a one-year “cliff”). In addition, the Option will be eligible for the vesting acceleration described in in Section 2 and in Section 7 of Attachment A. The Option will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Option will be exercisable until the earlier of (x) the expiration of the Option’s 10-year term or (y) unless the Option is assumed by the acquiring company, upon the effective date of a Change of Control. The Option will be an ISO to the extent statutorily permissible. The Option will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4.	Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5.	Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder.

 

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Esker Therapeutics, Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below), along with the successful clearance of a background check. You will receive an email from our background check vendor in the next few days asking you to authorize the initiation of this background check, which you will need to respond promptly to.

 

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to Foresite Labs.

 

The below documents will be provided to you by Human Resources upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.            Background Check Release and Authorization (received via email through third party vendor)

 

2.            Signed Proprietary Information and Inventions Agreement

 

3.            Completed I-9 Form and documentation

 

4.            Signed Dispute Resolution/Arbitration Agreement

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,
/s/ Martin Babler
Martin Babler, President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Roy Hardiman
Roy Hardiman
Date: September 15, 2021

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)            Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)            Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) within twelve months of your Start Date.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of _________ __, 202_ by and between Esker Therapeutics, Inc. (f/k/a FL2021-001, Inc.), a Delaware corporation (the “Company”) and ________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated _________ __, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of______ __, 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $______, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

5.            Company Shares. On or about _______, the Company issued You a stock option to purchase ___ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in _____ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional _____ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above)) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

8.            No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.            Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.            Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.            Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.            Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.            Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.            Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

15.            Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

 

16.            Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Esker Therapeutics, Inc.

Attn: Chair of the Board of Directors

 

If to Executive: Last address on file with the Company.

 

17.            Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.            Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about ______ __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated ______ __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.            Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

20.            Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

 

21.            Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.            Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.            Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

ESKER THERAPEUTICS, INC.:

 

Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

EXECUTIVE:

 

Date:

Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.16

 

Certain information has been excluded from this agreement (indicated by “[***]”) because such information is both not material and the type that the registrant customarily and actually treats as private or confidential.

 

Mark Bradley

via email: [***]

 

Re:	Offer of Employment

 

Dear Mark,

 

We are pleased to present this offer of employment for the position of Chief Development Officer of FL2021-001, Inc. (the “Company”). This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the Company’s business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	Chief Development Officer
Base Pay:	$360,000.00 per Year
Status:	Full-Time Employee, Exempt
Reports to:	June Lee
Start Date:	March 15, 2021

 

Scope of Work

 

As Chief Development Officer, you will join the Company to focus on the Company’s product development strategies and operations and its regulatory and quality efforts. You will provide key strategic guidance to the product development team. As a member of the senior leadership team, you will also contribute to the overall Company strategy and represent FL-2021 to external audiences and investors as well as perform other duties as requested by the Chief Executive Officer (“CEO”) of the Company. You will report directly to June Lee, CEO of the Company, and will principally work from the Company’s facility, which will be located in the San Francisco area. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization, whether or not for compensation, without the prior written consent of the Company. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company.

 

 

At-Will Employment Status

 

Your employment with the Company will be “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein

 

Compensation

 

1.

Base Salary. You will be paid a Base Salary of $360,000.00 per Year. Your base salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus: You will be eligible for a discretionary cash bonus targeted at 30% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Company’s Board of Directors and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company on the date of payment.

 

3.

Equity: Subject to Board approval, you will be granted the right to purchase 290,000 shares of the Company’s common stock. Your grant will be subject to vesting based on service time provided to the Company, with one-quarter vesting on the one year anniversary of your start date with the Company, and the balance vesting in equal monthly installments over the three years thereafter (i.e., a customary 4-year vesting schedule with a one-year “cliff”), as provided in the stock purchase agreement prepared in respect of this equity award. In addition, as further described below in Attachment A and in your stock purchase agreement, your common stock will be subject to “double trigger” vesting acceleration.

 

4.

Salary Review. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process.

 

Employee Benefits

 

The Company is in the process of determining its benefits programs. It is anticipated that the Company’s benefits programs will include competitive medical, dental, vision, commuter reimbursement, flexible time off and a holiday schedule. It is expected that these programs will be effective in the first half of 2021. You will be eligible to participate in these benefits programs on the same terms as the Company’s other executives. For the period between start date and commencement of the Company’s benefits programs, the Company will reimburse you for your actual COBRA costs for medical, dental and vision insurance for you and your family up to a maximum of $2,000/month upon submitted receipts, grossed up to account for taxes. Availability, terms and the associated eligibility requirements of our benefit programs are subject to change with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would restrict or prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

Details of the basic Company policies are under development and will be presented for your acknowledgment as soon as practicable following your Start Date. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board of Directors related to tax liabilities arising from your compensation.

 

Acceptance of Employee

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below), along with the successful clearance of a background check. You will receive an email from our background check vendor in the next few days asking you to authorize the initiation of this background check, which you will need to respond promptly to.

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to the Company’s CEO.

 

The below documents will be provided to you upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.

Background Check Release and Authorization (received via email through third party vendor)

 

2.

Signed Proprietary Information and Inventions Agreement

 

3.

Completed I-9 Form and documentation

 

4.

Signed Dispute Resolution/Arbitration Agreement

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,
/s/ June H Lee
June Lee, MD FACCP
Chief Executive Officer

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Mark Bradley
Mark Bradley

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.              Termination of Employment.

 

a.              At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.             Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below):

 

(A)          you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)           in the event you execute and do not revoke a separation agreement, including a general release of claims (“Release”), to be drafted by the Company, you will be offered the Separation Compensation (as defined in Section 2, below). You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)           Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)          Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.              Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following:

 

a.             Salary Continuance. You will be offered pay equal to six (6) months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”); provided, however, that should your Termination without Cause or your Constructive Termination occur within the period beginning two months prior to and ending twelve months following a Change of Control, you may be required by the successor entity (at its sole discretion) to continue your employment for up to three (3) months from the date of a Change of Control in order to be eligible to receive the Salary Continuance. Subject to the foregoing, the first salary continuance payment equal to three (3) months of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the fourth month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60- day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar following expiration of the applicable revocation period.

 

 

b.             Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then- existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity; provided, however, that should your termination without Cause or your Constructive Termination occur within the period beginning two months prior to and ending twelve months following a Change of Control, you may be required by the successor entity (at its sole discretion) to continue your employment for up to three (3) months from the date of a Change of Control in order to be eligible to receive such other benefits.

 

c.             Double Trigger Acceleration of Vesting. In the event that, within three (3) months following a change of Control of the Company, your service to the Company is terminated involuntarily without Cause or due to a Constructive Termination, subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made to you shall accelerate (or applicable repurchase rights with respect to such shares underlying such equity grants shall lapse) as to 100% of the unvested shares underlying such equity grant or grants at the time of termination, such acceleration effective immediately prior to such termination, provided that that all conditions to Separation Compensation are met including execution of the Release.

 

3.              Definitions.

 

a.             Cause. For the purposes of this letter agreement, “Cause” for termination of your employment will exist if you are terminated for any of the following reasons: (i) your material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (i) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written policy or agreement with the Company (including this letter agreement). The determination as to whether you are being terminated for Cause shall be made in good faith by the Board of Directors of the Company. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section l(a) above.

 

b.             Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-Labs affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

c.             Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means the termination of your employment by you following (except as otherwise agreed by you): (i) material breach by the Company of any agreement between you and the Company; (ii) material reduction of your duties, position or responsibilities, taken as a whole, other than by virtue of the Company being acquired and made part of a larger entity; (iii) material reduction your base salary and/or bonus potential other than as part of a similar reduction for substantially all employees or substantially all senior officers; or (iv) relocation of your business office to another location more than fifty (50) miles away and outside the greater San Francisco area, provided such relocation also materially increases your commuting distance, and provided that no relocation will constitute a Construction Termination if you are allowed to continue to provide services remotely (e.g., through telecommuting) at the time of the relocation. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

4.              Code Section 409A. For purposes of this letter agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section l.409A-2(b )(2) of the Treasury Regulations.

 

 

5.              Code Section 280G. In the event that the severance and other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.             delivered in full; or

 

b.             delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity- based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.              Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your equity grant in the Company, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative of the Company and by you.

 

 

 

Exhibit 10.17

 

AMENDMENT TO OFFER LETTER

 

This Amendment to Offer Letter is made and entered into effective as of July 17, 2023 (the “Amendment Effective Date”), by and between Alumis Inc., a company organized under the laws of Delaware (the “Company”), and its Chief Development Officer Mark Bradley.

 

WHEREAS, the parties entered into an Offer Letter for employment dated March 15, 2021 (the “Offer Letter”); and

 

WHEREAS, the parties now wish to amend the Offer Letter;

 

NOW, THEREFORE, the parties agree as follows:

 

1.     Attachment A of the Offer Letter shall be replaced by the attached Attachment A.

 

The parties agree to the foregoing terms effective as of the Amendment Effective Date.

 

MARK BRADLEY			ALUMIS INC.
Signature:	/s/ Mark Bradley		By:	/s/ Martin Babler
Date: 7/18/2023 | 11:50 AM PDT			Name: Martin Babler
			Title: President and Chief Executive Officer
			Date: 7/18/2023 | 11:45 AM PDT

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in 3.a, below) or in the event of your “Constructive Termination” (as defined in Section 3.c below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)            Voluntary Termination. If you voluntarily terminate your employment or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)            Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1.a above.

 

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) on or prior to September 15, 2023.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of _________, 202_ by and between Alumis Inc. (the “Company”) and     (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated ______ __, 202__ (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of ______ __, 202__ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $_______ __, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

 

5.            Company Shares. On or about _______, the Company issued You a stock option to purchase ______ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in _____ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional ______ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

8.            No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.            Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.           Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409(A)-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purpose of this Agreement, each of the salary continuation payments provided for in Section 3.a to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.           Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understand this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.          Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

 

13.          Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.          Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

15.          Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.          Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Alumis Inc.

Attn: Chair of the Board of Directors

 

If to Executive: Last address on file with the Company.

 

17.          Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.          Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about ______ __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated ______ __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.          Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

20.          Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

21.          Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.          Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.          Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ALUMIS INC.:
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

 

Exhibit 10.18

 

ESKER THERAPEUTICS, INC.

 

November 12, 2021

 

Derrick Richardson

 

Re:      Offer of Employment

 

Dear Derrick,

 

We are pleased to present this offer of employment for the position of Vice President, Program Management of Esker Therapeutics, Inc. (the “Company”). This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the Company’s business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

	Title:		Vice President, Program Management
	Base Pay:		$305,000.00 per year
	Status:		Full-Time Employee, Exempt
	Reports to:		Mark Bradley
	Start Date:		January 4, 2022

 

Scope of Work

 

You will report directly to Mark Bradley, and will principally work from the Company’s facility, located in the San Francisco area, although you will be initially be permitted to work remotely. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization whether or not for compensation, without the prior written consent of the Company. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company.

 

 

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.

Base Salary. You will be paid a base salary of $305,000 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus: You will be eligible for a discretionary cash bonus targeted at 25% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Company’s Board of Director’s (the “Board”) and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3.

Equity: Subject to Board approval, you will be granted an option to purchase 160,000 shares of the Company’s common stock (the “Option”). Your grant will be subject to vesting based on service time provided to the Company, with one-quarter vesting on the one year anniversary of your start date with the Company, and the balance vesting in equal monthly installments over the three years thereafter (i.e., a customary 4-year vesting schedule with a one-year “cliff”), as provided in the stock option agreement prepared in respect of this equity award. In addition, as further described below in Attachment A and in your stock option agreement, your Option will be subject to “double-trigger” vesting acceleration. The Option will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and will be an ISO qualifying option to the extent statutorily permissible. The Option will be exercisable until the earlier of (x) the expiration of the Option’s 10-year term or (y) unless the Option is assumed by the acquiring company, upon the effective date of a Change of Control. The Option will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4.

Salary Review. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process.

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would restrict of prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below).

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to the Company’s CEO.

 

The below documents will be provided to you upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.

Signed Proprietary Information and Inventions Agreement

 

2.

Completed I-9 Form and documentation

 

3.

Signed Dispute Resolution/Arbitration Agreement

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,

 

/s/ Martin Babler
Martin Babler, President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Derrick Richardson
Derrick Richardson
Date:	11/15/2021

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.              Termination of Employment.

 

 a.              At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

 b.              Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

 (i)             Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

 (A)           you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

 (B)           in the event you execute and do not revoke a general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to the Separation Compensation, or any other form of severance pay or benefits).

 

 (ii)            Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

 (iii)           Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.              Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following:

 

 a.             Salary Continuance. You will be offered pay equal to six (6) months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

 

 b.             Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

 c.             Double Trigger Acceleration of Vesting. In the event that, within six (6) months following a Change of Control of the Company, your service to the Company is terminated involuntarily without Cause or due to a Constructive Termination, subject to the terms of the stock option agreement governing the Option, the Option shall vest as to 100% of the unvested shares underlying the Option at the time of termination, such acceleration effective immediately prior to such termination, provided that that all conditions to Separation Compensation are met including execution of the Release.

 

3.              Definitions.

 

 a.             Cause. For the purposes of this letter agreement, “Cause” for termination of your employment will exist if you are terminated for any of the following reasons: (i) your failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written policy or agreement with the Company (including this letter agreement). The determination as to whether you are being terminated for Cause shall be made in good faith by the Board. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

 b.             Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

 c.             Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means the termination of your employment by you following (except as otherwise agreed by you): (i) material breach by the Company of any agreement between you and the Company; (ii) material reduction of your duties, position or responsibilities, taken as a whole, other than by virtue of the Company being acquired and made part of a larger entity; (iii) material reduction your base salary and/or bonus potential other than as part of a similar reduction for substantially all employees or substantially all senior officers; or (iv) relocation of your business office to another location more than fifty (50) miles away and outside the greater San Francisco area, provided such relocation also materially increases your commuting distance, and provided that no relocation will constitute a Construction Termination if you are allowed to continue to provide services remotely (e.g., through telecommuting) at the time of the relocation. . Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

4.              Code Section 409A. For purposes of this letter agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

5.              Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

 a.             delivered in full; or

 

 b.             delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.              Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative of the Company and by you.

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of __________ __, 202_ by and between Esker Therapeutics, Inc. (f/k/a FL2021-001, Inc.), a Delaware corporation (the “Company”) and _______________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ ___, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of _____________ __ 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

 1.             Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

 2.             Final Pay. On the Termination Date, the Company will pay You $_____________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

 3.             Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

 4.             Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

 5.             Company Shares. On or about __________, the Company issued You a stock option to purchase _________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in _______ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional ______ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

 6.             Release of All Claims.

 

 (a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above)) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

 (b)           Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

 A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

 7.              Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

 8.             No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

 9.             Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

 10.           Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

 11.           Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

 12.           Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

  

 13.           Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

 14.           Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

 15.           Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

 

 16.           Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Esker Therapeutics, Inc.

Attn: Chair of the Board of Directors

If to Executive: Last address on file with the Company.

 

 17.           Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

 18.           Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about ______ __ , 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated ________. __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

 19.           Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

 20.           Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

 

 21.           Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

 22.           Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

 23.           Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

 IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ESKER THERAPEUTICS, INC.:
Date:			By:
			Name:
			Title:

 

 I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.19

 

 

 

January 12, 2022

 

Sara Klein

 

Re: Offer of Employment

 

Dear Sara:

 

We are pleased to present this offer of employment for the position of General Counsel of Alumis Inc. (the “Company”),. This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	General Counsel
Base Pay:	$340,000 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	Roy Hardiman
Start Date:	January 18, 2022
Location:	South San Francisco / Remote

 

Scope of Work

 

You will report directly to Roy Hardiman, and will principally work from the Company’s facility, located in the San Francisco area. Subject to health and safety issues regarding the ongoing COVID pandemic, you will be expected to work in-office Tuesday to Thursday, and remotely on Monday and Friday. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote substantially all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization (other than the Company or another incubated company of Foresite Labs), whether or not for compensation, without the prior written consent of the Chief Executive Officer. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Chief Executive Officer. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

 

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may modify the terms of or terminate the employment relationship at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1)

Base Salary. You will be paid a base salary of $340,000 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2)

Bonus. You will be eligible for a discretionary cash bonus targeted at 35% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal year schedule in Q1 of each year and are prorated for partial year service, and you must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3)

Equity. Subject to Board approval, you will be granted options to purchase a total of 700,000 shares of the Company’s Common Stock, which shall consist of two separate option grants:

 

a)

An option to purchase 500,000 shares of the Company’s Common Stock that will vest over a 4-year period (your “4-Year Option”). Your 4-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 4-year period with one-quarter of your 4-Year Option vesting on the one-year anniversary of your start date with the Company (the “4-Year Option Cliff Date”), and the balance vesting in equal monthly installments over the three years thereafter (i.e., 1/48ths per month).

 

b)

A long-term incentive option to purchase 200,000 shares of the Company’s Common Stock that will vest over a 6-year period (your “6-Year Option”; your 4-Year Option and your 6-Year Option shall be collectively referred to as your “Options”). Your 6-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 6-year period with one-third of your 6-Year Options vesting on the 2nd annual anniversary of your start date with the Company (the “6-Year Option Cliff Date”), and the balance vesting in equal monthly installments over the four years thereafter (i.e., 1/72nds per month).

 

 

 

The exercise price of the Options is expected to be $1.98 per share, a price equal to the Company’s current 409A valuation. In addition, the Options will be eligible for the vesting acceleration described in Section 2 and in Section 7 of Attachment A. The Options will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Options will be exercisable until the earlier of (x) the expiration of the Options’ 10-year term or (y) unless the Options are assumed by the acquiring company, upon the effective date of a Change of Control. The Options will be an ISO to the extent statutorily permissible. The Options will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4)

Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5)

Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder.

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice. The Company will reimburse you for all work expenses according to its policies, including but not limited to professional fees and continuing education associated with your role (bar dues, etc.) in accordance with company policy.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would prohibit your performance of any duties or responsibilities with the Company. Consistent with the foregoing, the Company hereby acknowledges your continuing confidentiality to your former employer Principia Biopharma Inc. and its acquiror, Sanofi.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

 

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Alumis Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below).

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to the Company’s CEO.

 

The below documents will be provided to you by Human Resources upon acceptance of this letter agreement. In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.            Signed Proprietary Information and Inventions Agreement

 

2.            Completed I-9 Form and documentation

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

 

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,
/s/ Martin Babler
Martin Babler, President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Sara Klein
Sara Klein
Date:	1/12/2022

 

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below); provided, however, that the Release will not waive or release (i) any rights or claims you may have for indemnification, and/or contribution, advancement or payment of related expenses pursuant to any written agreement with the Company, the Company’s Bylaws or other organizing documents, and/or under applicable law; (ii) any rights that are not waivable as a matter of law; (iii) any rights to any vested benefits under any stock, compensation or other employee benefit plan or agreement with the Company; (iv) any rights you may have to any insurance coverage under any directors and officers liability insurance, other insurance policies of the Company, COBRA or any similar state law; (v) any rights you may have as a shareholder of the Company, if applicable; and (vi) any claims arising from events after the date you sign the Release. Subject to the terms of Section 7 below, you will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)            Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)            Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

 

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

 

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) on or prior to September 15, 2023.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This offer letter, including Attachment A (collectively, the “Offer Letter”) sets forth the terms of your employment with Company, including but not limited to the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of the Offer Letter and any other agreement you have entered into with the Company the Offer Letter shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of the Offer Letter and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in the Offer Letter may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

 

8.            Binding on Successors. The terms of this letter agreement will inure to the benefit of, be binding on, and enforceable by the parties and their respective, successors, heirs, agents, legal representatives and assigns. The Company will require any successors or assigns to expressly assume and agree to perform this letter agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place.

 

9.            Indemification. To the fullest extent allowed by applicable law, the Company will indemnify, defend and hold you harmless from and against any and all claims, liabilities and expenses of any kind and nature (including, without limitation, any reasonable attorneys’ fees, settlements, judgments, fines, excise taxes and other costs) which you actually incur in connection with any threatened, pending or completed action, suit or proceeding of any kind whether civil, criminal, administrative or investigative to which you are made or threatened to be made a party, witness or other participant by reason of your employment with the Company or any of its affiliates or by reason of your performance of any duties on behalf of the Company or services rendered at the request of the Company in any capacity. Upon your request, the Company will also promptly advance any expenses for which indemnification is available. In addition, the Company will maintain, at its sole expense, director and officer liability insurance covering you, to the same extent as the most favorably-insured persons under such policy or policies, both for the period of your service as an officer and/or director of the Company and for so long thereafter as you may reasonably be subject to any claim, covering any acts or omissions in his capacity as an officer and/or director of the Company or any of its affiliates. Your rights under this paragraph are in addition to, and exclusive of, any rights you may have to indemnification, insurance coverage, or exculpation under the Company’s Bylaws, Articles of Incorporation or other organizing documents or as otherwise provided by applicable law.

 

10.            Governing Law. This Agreement will in all respects be interpreted and governed under the laws of the State of California, without regard to its conflict of law rules. The prevailing party in any dispute arising from or related to this Agreement will be entitled to an award of reasonable attorneys’ fees and costs, in addition to any other relief awarded.

 

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of __________ __, 202_ by and between Alumis Inc., a Delaware corporation (the “Company”) and __________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ __, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of __________ __, 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.              Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.              Final Pay. On the Termination Date, the Company will pay You $__________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.              Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.              Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

5.              Company Shares. On or about __________, the Company issued You a stock option to purchase __________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in __________ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional __________ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

 

6.              Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.              Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

 

8.              No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.              Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.            Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.            Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.            Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.            Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.            Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

 

 

15.            Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.            Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company: 

Alumis Inc. 

Attn: Chair of the Board of Directors

 

If to Executive: Last address on file with the Company.

 

17.            Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.            Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about __________, __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated __________, __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.            Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

 

 

20.            Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

21.            Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.            Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.            Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ALUMIS INC.:
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.20

 

 

March 22, 2022

 

John Schroer

 

Re: Offer of Employment

 

Dear John:

 

We are pleased to present this offer of employment for the position of Chief Financial Officer of Alumis Inc. (the “Company”). This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our offer for your consideration:

 

Title:	Chief Financial Officer
Base Pay:	$400,000.00 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	Martin Babler, Chief Executive Officer
Start Date:	March 30, 2022
Location:	South San Francisco

 

Scope of Work

 

You will report directly to Martin Babler, the Company’s CEO, and will principally work from the Company’s facility, located in South San Francisco, California. Subject to health and safety issues regarding the ongoing COVID pandemic, you will be expected to work in the office Tuesday through Thursday, and remotely on Monday and Friday. Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit terms of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization, whether or not for compensation, without the prior written consent of the Board of Directors of the Company. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Board of Directors. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

 

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may terminate the employment relationship (and the Company may modify the terms of your employment) at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.

Base Salary. You will be paid a base salary of $400,000.00 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus. You will be eligible for a discretionary cash bonus targeted at 35% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal (calendar) year schedule in Q1 of each year for the prior year, and are prorated for partial year service for those employees whose employment begins between January 1 and September 30. Employees who begin employment during the fourth calendar quarter of the year will not be entitled to any prorated bonus for that year. You must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

3.

Equity. Subject to approval of the Board at its next regularly scheduled meeting following your hire date, you will be granted options to purchase a total of 1,100,000 shares of the Company’s Common Stock, which grant shall consist of two separate option grants:

 

(a)            An option to purchase 800,000 shares of the Company’s Common Stock that will vest over a 4-year period (your “4-Year Option”). Your 4-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 4-year period with one-quarter of your 4-Year Option vesting on the one-year anniversary of your start date with the Company, and the balance vesting in equal monthly installments over the three years thereafter (i.e., 1/48ths per month).

 

(b)            A long-term incentive option to purchase 300,000 shares of the Company’s Common Stock that will vest over a 6-year period (your “6-Year Option”; your 4-Year Option and your 6-Year Option shall be collectively referred to as your “Options”). Your 6-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 6-year period with one-third of your 6-Year Options vesting on the 2nd annual anniversary of your start date with the Company, and the balance vesting in equal monthly installments over the four years thereafter (i.e., 1/72ths per month).

 

The exercise price of the Options will be consistent with the Company’s then-current 409A valuation. In addition, the Options will be eligible for the vesting acceleration described in Section 2 and in Section 7 of Attachment A. The Options will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Options will be exercisable until the earlier of (x) the expiration of the Options’ 10-year term or (y) unless the Options are assumed by the acquiring company, upon the effective date of a Change of Control. The Options will be an ISO to the extent statutorily permissible. The Options will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

 

 

4.

Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5.

Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder.

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

Vaccination Policy

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon you providing proof that you have received all current CDC-recommended doses of an EUA or FDA-approved vaccine against COVID-19.

 

Non-Competition/Non-Solicitation

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, non-compete or non-solicitation agreement, confidentiality or similar agreement(s) with a current or former employer that in any way would prohibit your performance of any duties or responsibilities with the Company.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

 

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Alumis Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below).

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to the company’s CEO.

 

We must receive the following documents from you before your first day of work (the first two forms will be provided to you upon acceptance of this letter agreement). In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the 1-9 form listed below).

 

1.

Signed Proprietary Information and Inventions Agreement

 

2.

Completed 1-9 Form and documentation (to be uploaded to BambooHR with paperwork)

 

3.

Proof of COVID-19 vaccination (to be uploaded to BambooHR with paperwork)

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

We are delighted to be able to extend this offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,
/s/ Martin Babler
Martin Babler, President

 

 

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ John Schroer
John Schroer
Date:	23-Mar-2022 | 12:42 EDT

 

 

 

ATTACHMENT A

 

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)            Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)            Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

 

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) on or prior to September 15, 2023.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of __________ __, 202_ by and between Alumis Inc. (the “Company”) and __________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ __, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of __________ __, 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $__________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

5.            Company Shares. On or about __________, the Company issued You a stock option to purchase __________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in __________ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional __________ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

 

8.             No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.             Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.            Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.            Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.            Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.            Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.            Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

 

 

15.            Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.            Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Alumis Inc.

Attn: Chair of the Board of Directors

 

If to Executive: Last address on file with the Company.

 

17.            Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.            Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about __________, __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated __________ __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.            Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

 

 

20.            Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

21.            Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.            Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.            Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

 

			ALUMIS INC.:
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA 

 

Exhibit 10.21

 

Certain information has been excluded from this agreement (indicated by “[***]”) because such information is both not material and the type that the registrant customarily and actually treats as private or confidential.

 

 

June 24, 2022

 

Jörn Drappa (via email)

 

Re: Offer of Employment

 

Dear Jörn:

 

We are pleased to present this contingent offer of employment for the position of Chief Medical Officer of Alumis Inc. (the “Company”). Out of an abundance of caution and to safeguard both the integrity of your work for the Company and the rights of Ventyx Biosciences, Inc. (“Ventyx”), where you served as Chief Medical Officer from September 21, 2021 until May 17, 2022, this offer of employment is fully contingent on the following having occurred prior to your start date, which date will be subject to the further mutual agreement of you and the Company (the “Start Date”):

 

1.

The Company having satisfied itself, through discussions with you and/or by other means, that you do not currently possess any Ventyx confidential information in electronic or hard copy format; and

 

2.

Ventyx’s public release of its Phase 1 data for the TYK2 inhibitor program VTX958; and

 

3.

The Company’s final verification of your references and any information you provide to the Company prior to the Start Date.

 

This is a full-time, exempt position, carrying considerable responsibility and is integral to the development and success of the business. We are excited about your interest in joining the Company full-time. This letter agreement formally presents the specifics of our contingent offer for your consideration:

 

Title:	Chief Medical Officer
Base Pay:	$440,000.00 per year
Status:	Regular, Full-Time Employee, Exempt
Reports to:	Martin Babler, Chief Executive Officer
Start Date:	To be determined by mutual agreement
Location:	South San Francisco and remote

 

Scope and Location of Work

 

You will report directly to Martin Babler, the Company’s CEO. In this role you will work: (a) Tuesday through Thursday every other week; and (b) at such other times as required by business needs or as requested by the Chief Executive Officer at the Company’s facility located in South San Francisco, California, and at all other times remotely from your home in or around [***].

 

 

 

In order to facilitate your work schedule in South San Francisco, the Company will reimburse you for up to two round-trip flights per month (Economy Plus or equivalent fare) between San Diego and San Francisco, and for accommodations up to $250 per night while you are working at the Company’s facility.

 

Subject to your right to receive severance upon a Constructive Termination (as defined herein), the Company may change your position, duties, and work location or reporting structure from time to time at its discretion.

 

Professional Contribution

 

You agree that you will, at all times and to the best of your abilities, loyally and conscientiously perform all of the duties and obligations required of you pursuant to the express and implicit tern’s of this letter, and to the reasonable satisfaction of the Company. You further agree that during your term of employment, you will devote all of your business time and attention to the business of the Company and that the Company will be entitled to all of the benefits and profits arising from or incidental to all your work, services and advice. You agree that you will not provide commercial or professional services of any nature to any other person or organization, whether or not for compensation, without the prior written consent of the Board of Directors of the Company. You further agree that during your employment with the Company, you will not directly or indirectly engage or participate in any business that is competitive, in any manner, with the business of the Company. Notwithstanding the foregoing, you may serve on corporate boards or committees, civic, charitable or other non-profit boards, committees or organizations, deliver lectures or fulfill speaking engagements; provided, however, that (i) such activities do not individually or in the aggregate materially interfere with the performance of your duties under this letter agreement and (ii) you notify and receive prior written consent from the Board of Directors. The Company and its Board of Directors acknowledge and agree to your upcoming appointment to the Board of Directors of Alpine Immune Sciences Inc. You further agree to comply with the Company’s written policies and rules, as they may be in effect from time to time during your employment.

 

At-Will Employment Status

 

Your employment with the Company is “at-will” and will continue only so long as continued employment is mutually agreeable to you and the Company. While we are extending this offer with the hope you will stay and enhance your career with us, either you or the Company may terminate the employment relationship (and the Company may modify the terms of your employment) at any time, for any reason, with or without notice or cause, subject to the provisions of Attachment A which are incorporated herein.

 

Compensation

 

1.

Base Salary. You will be paid a base salary of $440,000.00 per year. Your Base Salary will be payable pursuant to the Company’s regular payroll policy.

 

2.

Bonus. You will be eligible for a discretionary cash bonus targeted at 35% of your base salary, payable in accordance with this paragraph. Payment of the discretionary bonus will be at the discretion of the Board and subject to many variables, especially the success of the Company and your contribution towards that success. Target bonuses are currently paid on a fiscal (calendar) year schedule in Q1 of each year for the prior year, and are prorated for partial year service for those employees whose employment begins between January 1 and September 30. Employees who begin employment during the fourth calendar quarter of the year will not be entitled to any prorated bonus for that year. You must be an employee of the Company through the payment date in order to be eligible to receive your bonus.

 

 

 

3.

Equity. Subject to approval of the Board at its next regularly scheduled meeting following your hire date, you will be granted options to purchase a total of 1,200,000 shares of the Company’s Common Stock, which grant shall consist of two separate option grants:

 

(a)            An option to purchase 800,000 shares of the Company’s Common Stock that will vest over a 4-year period (your “4-Year Option”). Your 4-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 4-year period with one-quarter of your 4-Year Option vesting on the one-year anniversary of your Start Date with the Company, and the balance vesting in equal monthly installments over the three years thereafter (i.e., 1/48ths per month).

 

(b)            A long-term incentive option to purchase 400,000 shares of the Company’s Common Stock that will vest over a 6-year period (your “6-Year Option”; your 4-Year Option and your 6-Year Option shall be collectively referred to as your “Options”). Your 6-Year Option shall vest based solely on continued service provided to the Company and shall vest over a 6-year period with one-third of your 6-Year Options vesting on the 2nd annual anniversary of your Start Date with the Company, and the balance vesting in equal monthly installments over the four years thereafter (i.e., 1/72ths per month).

 

The exercise price of the Options will be consistent with the Company’s then-current 409A valuation. In addition, the Options will be eligible for the vesting acceleration described in Section 2 and in Section 7 of Attachment A. The Options will be “early-exercisable”, such that you will be eligible to exercise shares subject to the Option prior to their vesting, and the Options will be exercisable until the earlier of (x) the expiration of the Options’ 10-year term or (y) unless the Options are assumed by the acquiring company, upon the effective date of a Change of Control. The Options will be an ISO to the extent statutorily permissible. The Options will be subject to the Company’s stock plan and the Company’s standard form of stock option agreement (with appropriate modifications to reflect the terms referenced above).

 

4.

Salary. Your Base Salary will be reviewed annually as part of the Company’s normal salary review process, for increase (but not decease other than as part of an across-the-board cost-cutting measure).

 

5.

Expenses. The Company will reimburse you for reasonable travel, entertainment or other expenses incurred by you in furtherance or in connection with the performance of your duties hereunder.

 

Employee Benefits

 

You will be eligible to participate in Company-sponsored benefits, as in place from time to time. Availability, terms and the associated eligibility requirements of the Company’s benefit programs are subject to change by the Company from time to time, with or without notice.

 

Proprietary Information and Inventions Agreement

 

Your acceptance of this offer and commencement of employment with the Company is additionally contingent upon the execution, and delivery to an officer of the Company, of the Company’s Proprietary Information and Inventions Agreement (the “PIIA”), prior to or on your Start Date.

 

 

 

Vaccination Policy

 

Your acceptance of this offer and commencement of employment with the Company is contingent upon you providing proof that you have received all current CDC-recommended doses of an EUA or FDA-approved vaccine against COVID-19.

 

Prior Employment Agreements/Confidentiality Obligations

 

Prior to accepting this offer, you must disclose in writing to the undersigned the existence of any employment agreement, confidentiality, non-solicitation or similar agreement(s) with a current or former employer that in any way could be binding on you during the time in which you are fulfilling your duties and responsibilities for the Company including but not limited to any such agreement with Ventyx. As a condition of your employment, while performing your duties for the Company, you shall adhere strictly to the terms of any continuing contractual or statutory obligations you have to Ventyx and to any other prior employer.

 

Employee Policies

 

You will be subject to the Company’s employee policies as established by Company management and the Board from time to time. The provisions of this offer letter and all other documents referenced herein constitute the full and complete terms of your employment and supersede any prior representations or agreements by anyone, either oral or written. These terms of employment are not subject to change or modification of any kind, unless specified in writing, and signed by you and the Company’s CEO or a member of the Board, as applicable.

 

Tax Matters

 

All forms of compensation referred to in this offer letter are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or its Board related to tax liabilities arising from your compensation.

 

Company Successors

 

This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets. Any such successor will within a reasonable period of becoming the successor assume in writing and be bound by all of the Company’s obligations under this Agreement. For all purposes under this Agreement, the term “Company” shall include Alumis Inc. as well as any successor entity and to any successor to the Company’s business or assets that becomes bound by this Agreement.

 

Acceptance of Employment

 

This offer of employment is additionally contingent upon your completion, execution, and our receipt of all employment documents listed in this letter on or before your Start Date (see below).

 

 

 

Once you have had an opportunity to consider this offer letter, please indicate your agreement with these terms and conditions of employment by providing a signed copy of your offer back to the Company’s CEO.

 

We must receive the following documents from you before your Start Date (the first two forms will be provided to you upon acceptance of this letter agreement). In addition, we must receive acceptable proof of identification and authorization to work in the United States (part of the I-9 form listed below).

 

1.            Signed Proprietary Information and Inventions Agreement

2.            Completed I-9 Form and documentation (to be uploaded to BambooHR with paperwork)

3.            Proof of COVID-19 vaccination (to be uploaded to BambooHR with paperwork)

 

This offer expires within ten (10) calendar days of the date of this letter unless the Company receives a signed copy within that period.

 

We are delighted to be able to extend this contingent offer of employment to you and sincerely feel the Company can provide you with the opportunity to achieve rewarding results for both you and the Company. Please contact me with any questions. We look forward to working with you.

 

Sincerely,
/s/ Martin Babler		/s/ SK
Martin Babler, President

 

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and attached and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

/s/ Jörn Drappa
Jörn Drappa
Date:	25-Jun-2022 | 9:58 AM PDT

 

 

 

ATTACHMENT A

Definitions, Terms and Conditions

 

1.            Termination of Employment.

 

a.            At-Will Employment. Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice. Neither you nor the Company can change the “at will” nature of your employment, unless the CEO or the Board of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

 

b.            Payment & Benefits Upon Termination. Your entitlement to payment and benefits upon termination is as follows:

 

(i)            Termination Without “Cause” or “Constructive Termination”. If your employment is terminated involuntarily without Cause (as defined in Section 3(a), below) or in the event of your “Constructive Termination” (as defined in Section 3(c) below) and you are subject to a “Separation” under Section 409A (as defined in Section 4 below):

 

(A)            you will receive payment for any earned and unpaid salary as of the date of your termination of employment; and,

 

(B)            in the event you execute and do not revoke the general release of claims (“Release”), in the form attached hereto as Attachment B, you will be offered the Separation Compensation (as defined in Section 2, below). Subject to the terms of Section 7 below, You will not be entitled to or offered any form of additional severance pay or benefits other than the Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

 

(ii)            Voluntary Termination. If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

(iii)            Termination for Cause. If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary as of your termination. You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

 

2.            Separation Compensation. If you are entitled to Separation Compensation under Section 1 above, your “Separation Compensation” will include each of the following, as well as the applicable vesting acceleration terms described in Section 7:

 

a.            Salary Continuance. You will be offered pay equal to nine months of your regular base salary subject to applicable payroll deductions and withholdings (“Salary Continuance”).

 

Your first salary continuance payment equal to one (1) month of your regular base salary shall commence on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first Salary Continuance payment shall be made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the second month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled. If the 60-day consideration and revocation period spans two calendar years, then the monthly installments will commence, if applicable, on the first payroll date in the second calendar year following expiration of the applicable revocation period.

 

 

 

b.            Acceleration of Vesting. Subject to the terms of your applicable equity grant agreements, the vesting applicable to any equity grants made by the Company to you shall accelerate as to that number of shares underlying such equity grant or grants that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to such termination.

 

c.            Other Benefits. The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s then-existing benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) your period of Salary Continuance as provided above, or (b) the date you commence employment with another entity.

 

3.            Definitions.

 

a.            Cause. For the purposes of this letter agreement, “Cause” means your “Separation” by the Company for any of the following reasons: (i) your willful or gross neglect and material failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct in connection with your responsibilities as an employee that is materially injurious to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your breach of any of your material obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement). A termination of employment under subparts (i), (iii) and (v) shall not be deemed cause unless you have first been given specific written notice of subpart and facts relied upon and thirty days to cure. The determination as to whether you are being terminated for Cause, and whether you have cured any such actions or inactions during any thirty day cure period with respect to subparts (i), (iii) and (v) and with respect to subpart (v) whether such breach is capable of being cured, shall be made in good faith by the Board of Directors. The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1(a) above.

 

b.            Change of Control. For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any non-affiliated “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.

 

 

 

c.            Constructive Termination. For the purposes of this letter agreement, “Constructive Termination” means your Separation as the result of resignation for any of the following, except as otherwise agreed in writing by you: (i) a material reduction in your job duties, position and responsibilities, taken as a whole, other than in connection with an Excluded Change of Control; (ii) the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location from the primary location at which you were working for the Company immediately before the required change of location; (iii) any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction), or (iv) the Company materially breaches the terms of this Agreement. Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above you must provide notice to the Company within sixty (60) days of the occurrence of a condition listed above and allow the Company thirty (30) days after your delivery of notice to the Company in which to cure such condition. Additionally, in the event the Company fails to cure the condition within the cure period provided, you must terminate employment with the Company within ten (10) days of the end of the cure period.

 

d.            Excluded Change of Control. For purposes of this letter agreement, an “Excluded Change of Control” shall mean (i) a Change of Control involving any transaction with Aclaris Therapeutics Inc. or (ii) a Change of Control with a Special Purpose Acquisition Company formed by, or affiliated with, Foresite Capital Management or its affiliated funds (a “Foresite SPAC”) on or prior to September 15, 2023.

 

4.            Code Section 409A. For purposes of this letter agreement, a “Separation” will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your Separation from the Company or (ii) the date of your death following such a Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule. To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A. To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b )(2) of the Treasury Regulations.

 

 

 

5.            Code Section 280G. In the event that the severance and any other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either:

 

a.            delivered in full; or

 

b.            delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company, whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. You and the Company shall furnish to the accountants such information and documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section.

 

6.            Other Agreements. This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral. In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply. Notwithstanding the foregoing, in the event of a conflict between the terms of this Attachment A and the documents reflecting your Option, the terms of the equity documentation shall govern. The definitions, terms and conditions contained in this Attachment A may not be modified or amended except by a written agreement, signed by an authorized representative at the direction of the Board of Directors of the Company and by you.

 

7.            Change of Control Vesting Acceleration and Severance. In the event of a Change of Control of the Company (other than an Excluded Change of Control), the Option shall vest with respect to 50% of any then unvested shares subject to the Option as of immediately prior to the closing of such Change of Control, provided you are still providing services to the Company at such time. In addition, if following a Change of Control you are subject to a Separation without Cause or a Constructive Termination within twelve months following such Change of Control, then the Option shall vest in full; for avoidance of doubt, a Change of Control under this sentence shall include an Excluded Change of Control. The additional vesting of the Option contemplated by the preceding sentence shall be effective on the effective date of the Release referenced in Section 1 required as a condition to Separation Compensation.

 

 

 

ATTACHMENT B

 

FORM OF
RELEASE AGREEMENT

 

This Release Agreement (this “Agreement”) is dated as of __________ __, 202_ by and between Alumis Inc. (the “Company”) and __________ (“Executive;” or “You” and together with the Company, the “Parties”).

 

WHEREAS, the Company and Executive entered into an offer letter, dated __________ __, 2021 (the “Offer Letter”);

 

WHEREAS, the Company and Executive now desire to terminate the Employee’s employment as of __________ __, 202_ (the “Termination Date”); and

 

WHEREAS, this Agreement confirms the agreement between You and the Company regarding the termination of Your employment with the Company.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the Parties hereby agree as follows:

 

1.            Resignation. You hereby resign as [INSERT TITLE] of the Company effective as of the Termination Date. You and the Company agree that Your termination is a Separation without Cause or a Constructive Termination (as such terms are defined in Attachment A to the Offer Letter).

 

2.            Final Pay. On the Termination Date, the Company will pay You $__________, less all applicable withholdings. This amount represents all of Your salary earned through the Termination Date and all of Your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, and other than as set forth in Attachment A to Your Offer Letter, You are not entitled to receive any additional money from the Company, and that the only payments that You are entitled to receive from the Company in the future are those specified in this Agreement and Attachment A.

 

3.            Separation Compensation. Pursuant to the terms of the Offer Letter, if You timely sign this Agreement and this Agreement becomes effective in accordance with Section 9 below, the Company will provide You with the Separation Compensation as defined and described in Attachment A to the Offer Letter within ten (10) days of the Effective Date (as defined below).

 

4.            Benefits. Except as provided in Attachment A to Your Offer Letter, Your participation in all employee benefits plans and programs will end on the Termination Date. Under separate cover, You will receive information about Your rights, if any, to continue Your group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) after the Termination Date, including as provided in Attachment A. In order to continue Your coverage, You must file the required election form.

 

5.            Company Shares. On or about __________, the Company issued You a stock option to purchase __________ shares of its common stock pursuant to the stock option agreement, dated [INSERT DATE] (the “Stock Option Agreement”). Currently, you are vested in __________ option shares subject to the Stock Option Agreement (the “Vested Option Shares”). Pursuant to Attachment A of Your Offer Letter and if this Agreement become effective in accordance with Section 9 below, you will vest in an additional __________ option shares subject to the Stock Option Agreement (the “Additional Vested Option Shares”). Except as otherwise provided in this Section 5, the Vested Option Shares and Additional Vested Option Shares remain subject to the Stock Option Agreement and stock option plan. You acknowledge and agree that other than the Vested Option Shares and Additional Vested Option Shares, You have no further rights to the Company’s capital stock, or any rights to receive or vest in any additional shares of the Company capital stock.

 

 

 

6.            Release of All Claims.

 

(a)            Executive Release. In consideration for the Separation Compensation set forth in Section 3 (above) and other benefits provided to You in this Agreement, to the fullest extent permitted by law, You waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective indirect and direct affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns with respect to any matter, including (without limitation) any matter related to Your employment with the Company, the termination of that employment, or Your ownership of the Company’s capital stock, right to purchase or the actual purchase or receipt of shares of the Company’s capital stock, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Fair Pay Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Workers Adjustment and Retraining Notification (“WARN”) Act, the Families First Coronavirus Response Act, the CARES Act, the California WARN Act, and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement and only those claims that may be waived by applicable law. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement and does not bar any claim by Executive for indemnification by the Company for claims, losses or costs arising from or related to his service as an officer and director of the Company.

 

(b)            Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:

 

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

 

7.            Exceptions. Nothing contained in this Agreement limits Your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit Your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Your right to receive an award for information provided to any Government Agencies. However, You understand and agree that You shall not be entitled to, and shall not seek nor permit anyone to seek on Your behalf, any personal, equitable or monetary relief for any claims or causes of action released by You in this Agreement, to the fullest extent permitted by law.

 

 

 

8.            No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by You or the Company of liability, any wrongdoing or any violation of law.

 

9.            Consideration and Revocation Period. You acknowledge that You have hereby been advised in writing to consult with an attorney of Your choice prior to signing this Agreement, and that You had at least twenty-one (21) days to consider this Agreement before signing it. You acknowledge that if this Agreement is signed before twenty-one (21) days have elapsed from the date of delivery, by signing this Agreement You have expressly waived the twenty-one (21)-day consideration period. You acknowledge that You may revoke this Agreement within seven (7) days following its execution, and the Agreement shall not become effective until the revocation period has expired. If You do not revoke this Agreement, the eighth day after the date You sign the Agreement will be the “Effective Date.”

 

10.            Section 409A. Any amount paid under this Agreement is intended to satisfy the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. For purposes of this Agreement, each of the salary continuation payments provided for in Section 3(a) to be made to You under this Agreement is designated as a separate payment under Section 409A.

 

11.            Opportunity to Seek Counsel. Executive acknowledges by signing this Agreement that he/she has read and understands this document, that he/she has conferred with or had the opportunity to confer with an attorney of his choice regarding the terms and meaning of this Agreement, that he/she has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to his/her as set forth herein, and that he/she has signed the same knowingly and voluntarily.

 

12.            Confidentiality. You agree that You will not disclose to others the existence or terms of this Agreement, except that You may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

 

13.            Company Property. You represent that You will return to the Company all property that belongs to the Company, including (without limitation) copies of documents that belong to the Company and files stored on your computer(s) that contain information belonging to the Company on or before the Termination Date.

 

14.            Mutual Non-Disparagement/Public Statements. You agree that You will never make any negative or disparaging statements (orally or in writing) about the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns, employee benefit plans, and each of their respective affiliates, stockholders, directors, officers, managers, members, employees, consultants, attorneys, agents and assigns, except as required by law. The Company shall direct its officers and directors to not make any negative or disparaging statements (orally or in writing) about You. You agree to cooperate with the Company and its public relations firm on all external and internal communications regarding your termination. You agree that You will not provide any interviews or statements relating to your termination or otherwise to the Company without obtaining Board approval prior to providing any such interviews or statements.

 

 

 

15.            Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

16.            Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the Parties or their successors at the following addresses, or at such other addresses as the Parties may later designate in writing:

 

If to the Company:

Alumis Inc.

Attn: Chair of the Board of Directors

 

If to Executive: Last address on file with the Company.

 

17.            Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

18.            Other Agreements. At all times in the future, You will remain bound by the Proprietary Information and Inventions Agreement (the “PIIA”) with the Company that You signed on or about __________, __, 2021, a copy of which is attached as Exhibit I. This Agreement, which incorporates the PIIA, represents the entire agreement and understanding between the Parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral, including, without limitation, the Offer Letter and the Dispute Resolution/Arbitration Agreement, dated __________, __, 2021. This Agreement may be modified only in a written document signed by Executive and a duly authorized officer of the Company.

 

19.            Governing Law/Jurisdiction. The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, Your employment with the Company or any other relationship between You and the Company (the “Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. Executive and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in San Francisco, California in connection with any Dispute or any claim related to any Dispute.

 

 

 

20.            Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

21.            Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

22.            Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

23.            Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

 

			ALUMIS INC.:
Date:			By:
			Name:
			Title:

 

I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

 

			EXECUTIVE:
Date:
			Name:

 

 

EXHIBIT I

 

PIIA

 

 

 

Exhibit 10.22

 

Certain information has been excluded from this agreement (indicated by [***]) because such information is both not material and the type that the registrant customarily and actually treats as private or confidential.

 

Execution Version
CONFIDENTIAL

 

 

STOCK PURCHASE AGREEMENT

 

dated as of March 5, 2021

 

by and among

 

FL2021-001, INC.,

 

AS PURCHASER,

 

FRONTHERA INTERNATIONAL GROUP LIMITED,

 

AS SELLER

 

AND

 

FRONTHERA U.S. HOLDINGS, INC.,

 

AS THE COMPANY

 

 

THIS STOCK PURCHASE AGREEMENT IS SUBJECT TO REVISION BY THE PARTIES AT ANY TIME AND MUST BE KEPT CONFIDENTIAL IN ACCORDANCE WITH THE TERMS OF THE CONFIDENTIALITY AGREEMENT ENTERED INTO AMONG THE PARTIES

 

 

TABLE OF CONTENTS

 

			Page
ARTICLE I DEFINITIONS			1
	Section 1.1	Certain Definitions	1
	Section 1.2	Certain Additional Definitions	10
ARTICLE II THE ACQUISITION			11
	Section 2.1	Purchase and Sale of Stock	11
	Section 2.2	Closing	11
ARTICLE III ACQUISITION CONSIDERATION; EXCHANGE OF COMPANY CERTIFICATE(S)			11
	Section 3.1	Initial Consideration	11
	Section 3.2	Post-Closing Adjustment of Initial Consideration	11
	Section 3.3	Contingent Consideration	13
	Section 3.4	Tax Consequences	13
	Section 3.5	Exchange of Company Certificate(s)	14
	Section 3.6	Escrow Account	14
	Section 3.7	No Further Ownership Rights in Shares	14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY			14
	Section 4.1	Corporate Status	15
	Section 4.2	Authority and Enforceability	15
	Section 4.3	No Conflict; Government Authorizations	15
	Section 4.4	Capitalization	16
	Section 4.5	Financial Statements; Undisclosed Liabilities	16
	Section 4.6	Absence of Certain Changes	17
	Section 4.7	Taxes	17
	Section 4.8	Legal Proceedings; Governmental Orders	20
	Section 4.9	Compliance with Laws; Permits; Filings	20
	Section 4.10	Environmental Matters	21
	Section 4.11	Employee Matters and Benefit Plans	21
	Section 4.12	Labor	23
	Section 4.13	Intellectual Property	24
	Section 4.14	Material Contracts	28
	Section 4.15	Real Property	31
	Section 4.16	Company Property	31
	Section 4.17	Insurance	31
	Section 4.18	Finder's Fee	31
	Section 4.19	Affiliate Transactions	32
	Section 4.20	Privacy and Information Security	32
	Section 4.21	Regulatory Matters	33
	Section 4.22	Anticorruption Matters; Export Controls and Sanctions Matters	35
	Section 4.23	Major Suppliers	36
	Section 4.24	Products Liability	36
	Section 4.25	No Additional Representations	36

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER			37
	Section 5.1	Power and Authority; Organization and Standing	37
	Section 5.2	Execution and Delivery	37
	Section 5.3	Ownership	37
	Section 5.4	Conflicts	37
	Section 5.5	Brokers and Finders	37
	Section 5.6	Proceedings	37
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER			38
	Section 6.1	Corporate Status	38
	Section 6.2	Authority	38
	Section 6.3	No Conflict; Government Authorization.	38
	Section 6.4	Legal Proceedings	38
	Section 6.5	Finder's Fee	39
	Section 6.6	Cash Resources	39
	Section 6.7	Independent Investigation; No Further Representations	39
ARTICLE VII ADDITIONAL AGREEMENTS			39
	Section 7.1	Further Action	39
	Section 7.2	Tax Covenants	39
	Section 7.3	Payoff Letters and Invoices	41
	Section 7.4	Termination of Employee Plans	41
	Section 7.5	Covenant Not to Compete	41
	Section 7.6	Release	42
	Section 7.7	Indemnification of Officers and Directors of the Company	42
ARTICLE VIII CONDITIONS TO CLOSING			43
	Section 8.1	Conditions to Obligations of Seller and the Company	43
	Section 8.2	Conditions to Obligations of Purchaser	44
ARTICLE IX INDEMNIFICATION			45
	Section 9.1	Survival of Representations	45
	Section 9.2	Right to Indemnification	46
	Section 9.3	Limitations on Liability	46
	Section 9.4	Claims and Procedures	47
	Section 9.5	Defense of Third-Party Claims	48
	Section 9.6	No Subrogation	48
	Section 9.7	Limitation on Damages	49
	Section 9.8	Characterization of Indemnification Payments	49
	Section 9.9	Right to Set Off	49
	Section 9.10	Exclusive Remedy	49

 

 

ARTICLE X GENERAL PROVISIONS			50
	Section 10.1	Expenses	50
	Section 10.2	Notices	50
	Section 10.3	Public Announcements	51
	Section 10.4	Interpretation	51
	Section 10.5	Severability	51
	Section 10.6	Entire Agreement	52
	Section 10.7	Assignment	52
	Section 10.8	No Third-Party Beneficiaries	52
	Section 10.9	Waivers and Amendments	52
	Section 10.10	Governing Law; Consent to Jurisdiction	52
	Section 10.11	Waiver of Jury Trial	53
	Section 10.12	Specific Performance	53
	Section 10.13	Company Disclosure Schedule	53
	Section 10.14	Counterparts	54
	Section 10.15	Waiver of Conflicts Regarding Representation	54

 

EXHIBITS
Exhibit A	Form of Stock Power
Exhibit B	Form of Escrow Agreement
Exhibit C	Form of Director and Officer Release
Exhibit D	Specified Indemnification Matters
Exhibit E	Milestone Payments
Exhibit F	Asset Transfer and Assumption Agreement
Exhibit G	Confirmatory Assignment Agreement
Exhibit H	Form of Employee Release

 

SCHEDULES
Schedule 1.1(p)	Encumbrances
Schedule 8.2(d)	Third Party Consents
Schedule 8.2(e)(i)	Director and Officer Release Persons
Schedule 8.2(e)(ii)	Employee Release Persons
Schedule 8.2(h)	Terminated Contracts

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of March 5, 2021 by and among (i) FL2021-001, Inc., a Delaware corporation (“Purchaser”); (ii) FronThera International Group Limited, an exempted company incorporated in the Cayman Islands with limited liability (“Seller”); and (iii) FronThera U.S. Holdings, Inc., a Delaware corporation (the “Company”). Purchaser, Seller and the Company will be individually referred to herein as a “Party” and collectively referred to herein as the “Parties”.

 

RECITALS

 

WHEREAS, Seller is the holder of all of the issued and outstanding shares of Company Capital Stock (the “Shares”).

 

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Seller desires to sell all of the Shares to Purchaser, and Purchaser desires to acquire all of the Shares, in exchange for the consideration set forth in this Agreement.

 

WHEREAS, immediately prior to the Closing, the Company and FronThera U.S. Pharmaceuticals LLC, a California limited liability company (“FronThera Pharmaceuticals”) on the one hand, and Sichuan Haisco Pharmaceutical, Co., Ltd., a company incorporated under the laws of the People’s Republic of China, and its Affiliates (“Haisco”) on the other hand, shall enter into an Asset Transfer and Assumption Agreement in the form attached hereto as Exhibit F and FronThera Pharmaceuticals, on the one hand, and Haisco, Haisco Pharmaceutical Co., Limited (“BVI Haisco”) and Haisco Pharmaceutical (Australia) Pty Ltd (“Australia Haisco”), on the other hand, have entered into a Confirmatory Assignment Agreement in the form attached hereto as Exhibit G.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants, promises and agreements hereinafter set forth, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and accepted, the Parties to this Agreement, intending to be legally bound, hereby agree as follows:

 

Article I

DEFINITIONS

 

Section 1.1          Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

“Action” means any claim, action, suit, litigation, proceeding, arbitral action, mediation, governmental audit, enforcement, inquiry, examination, criminal prosecution or investigation.

 

“Affiliate” means, when used with respect to a specified Person, another Person that either directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and affairs of a Person, whether through the ownership of voting securities, by Contract or otherwise, and “controlled” and “controlling” shall have correlative meanings.

 

 

“Ancillary Documents” means the Escrow Agreement, the Asset Transfer and Assumption Agreement and the other agreements, certificates or other documents executed at or prior to the Closing in connection herewith.

 

“Asset and Liability Transfer” means each of the transactions involved in the transfer of the assets and liabilities of the Company to Haisco other than all rights to the Company Intellectual Property and Company Products pursuant to the Asset Transfer and Assumption Agreement.

 

“Asset Transfer and Assumption Agreement” means the Asset Transfer and Assumption Agreement, in the form attached hereto as Exhibit F to be executed by FronThera Pharmaceuticals and the Company, on the one hand, and Haisco, on the other hand, pursuant to which certain assets will be transferred by FronThera Pharmaceuticals to Haisco and certain liabilities will be assumed by Haisco.

 

“Base Initial Consideration” means Sixty Million Dollars ($60,000,000).

 

“Business” means the business and operations of the Company related to the research, development, manufacture, use, sale, offer for sale, importation or other exploitation of the Company Products.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by Law to be closed in New York, New York or Los Angeles, California.

 

“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), signed into law on March 27, 2020.

 

“Cash” means cash and Cash Equivalents determined in accordance with GAAP, using, to the extent consistent therewith, the policies, conventions, methodologies and procedures used by the Company in preparing its most recent unaudited Company Financial Statements. For the avoidance of doubt, (i) Cash shall be increased by the amount of deposits or other payments received by the Company but not yet credited to the bank accounts of the Company, and (ii) Cash shall be reduced by the amount of any outstanding obligations, checks or other payments issued or payable by the Company but not yet deducted from the bank accounts of the Company.

 

“Cash Equivalents” means investment securities with original maturities of ninety (90) days or less.

 

“Closing Cash” means the aggregate amount of all Cash of the Company as of 12:01 a.m. Pacific Time on the Closing Date. For the avoidance of doubt, any calculations of Closing Cash shall be made prior to, and disregarding, the Closing and the transactions contemplated in connection therewith except as specifically set forth herein.

 

“Closing Debt” means the aggregate amount of all Debt of the Company as of 12:01 a.m. Pacific Time on the Closing Date. For the avoidance of doubt, any calculations of Closing Debt shall be made prior to, and disregarding, the Closing and the transactions contemplated in connection therewith except as specifically set forth herein.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

 

“Company Benefit Plan” means (i) each “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA, (ii) any compensation, employment, consulting, end of service or severance, termination protection, change in control, transaction bonus, retention or similar plan, agreement, arrangement, program or policy, or (iii) any other benefit or compensation plan, Contract, policy or arrangement providing for pension, retirement, profit-sharing, deferred compensation, stock option, equity or equity-linked compensation, stock purchase, employee stock ownership, tax gross-up, vacation, holiday pay or other paid time off, bonus or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and other employee benefit plans, welfare plans or fringe benefit plans, in each case whether or not written, and (A) that is sponsored, maintained, administered, contributed to or entered into by the Company or any of its ERISA Affiliates, (B) under which any current or former director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries is eligible to receive benefits or otherwise participate, or (C) for which the Company or any of its ERISA Affiliates has any direct or indirect Liability (whether actual or contingent).

 

“Company Capital Stock” means the Company Common Stock.

 

“Company Common Stock” means the common stock, with a par value of $1.00, of the Company.

 

“Company Controlled Intellectual Property” means all Company Intellectual Property that is owned or purported to be owned by or exclusively licensed to the Company.

 

“Company Fundamental Representations” means the representations and warranties of the Company contained in Section 4.1 (Corporate Status), Section 4.2 (Authority and Enforceability), Section 4.3 (No Conflict), Section 4.4 (Capitalization), Section 4.7 (Taxes), and Section 4.18 (Finder’s Fees).

 

“Company Intellectual Property” means any and all Intellectual Property (i) in which the Company has right (including option or license rights), title, or interest or (ii) that is used or intended to be used by the Company, in each case, in connection with the Business, including the research, development, manufacture, use, sale, offer for sale, importation or other exploitation of the Company Products. Company Intellectual Property includes, without limitation, the patent and patent applications included in the TYK2 Portfolio (defined in Exhibit E), which are listed on Section 4.13(a) of the Company Disclosure Schedule.

 

“Company Key Representations” means the representations and warranties of the Company contained in Section 4.13 (Intellectual Property), Section 4.19 (Affiliate Transactions) and Section 4.21 (Regulatory Matters).

 

“Company Products” means, the TYK2 Compounds and any TYK2 Product being developed by or on behalf of the Company (as each term is defined in Exhibit E) as of the Closing Date.

 

“Company Systems” has the meaning set forth in Section 4.20(b).

 

“Confidentiality Agreement” means that certain Amended and Restated Nondisclosure Agreement, dated as of February 23, 2021, by and between the Company and Purchaser.

 

“Confirmatory Assignment Agreement” means the Confirmatory Assignment Agreement, in the form attached hereto as Exhibit G executed by FronThera Pharmaceuticals, on the one hand, and Haisco, BVI Haisco and Australia Haisco, on the other hand, pursuant to which Haisco, BVI Haisco and Australia Haisco confirmed the assignment to FronThera Pharmaceuticals of all rights Haisco has to any Company Intellectual Property and Company Products.

 

“Consideration” means (i) the Initial Consideration, plus (ii) the Contingent Consideration.

 

 

“Contingent Consideration” means the aggregate total of Milestone Payments due in accordance with Exhibit E.

 

“Contract” means any contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sales contract, mortgage or other arrangement.

 

“Damages” means any liabilities, losses, damages, injury, Taxes, penalties, fines, deficiencies, assessments, judgments, costs or expenses (including reasonable attorneys’ fees and expenses and costs of investigation).

 

“Debt” means both the current and long-term portions of any amount owed, without duplication, in respect of (i) borrowed money, extensions of credit, purchase money financing, and capitalized lease obligations or for the deferred purchase price of property or services, (ii) all obligations for the reimbursement of any obligor for amounts drawn on any outstanding letters of credit, (iii) all obligations evidenced by a note, bond, debenture or similar instrument, (iv) deferred compensation owed to current or former employees of the Company, and (v) all accrued and unpaid interest, fees, expenses, prepayment penalties or premiums on, or any guarantees or other contingent liabilities with respect to, any of the obligations referred to in the foregoing clauses (i) through (iv); provided, however, that notwithstanding the foregoing, Debt shall not be deemed to include any accounts payable incurred in the ordinary course of business or any obligations under un-drawn letters of credit. For the avoidance of doubt, “Debt” shall not include any future payment obligations under the Company’s current research collaboration agreements.

 

“Deferred Payroll Taxes” means the “applicable employment taxes” (as defined in Section 2302(d) of the CARES Act) payable by the Company that (x) relate to the portion of the “payroll tax deferral period” (as defined in Section 2302(d) of the CARES Act) that occurs prior to the Closing and (y) are payable following the Closing as permitted by Section 2302(a) of the CARES Act.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Encumbrance” means any security interest, pledge, mortgage, lien, charge, restriction on transfer (such as a right of first refusal or other similar rights) or other similar encumbrance. For clarity, non-exclusive licenses granted in the ordinary course of business between the Company and a third-party service provider for use in performing services on behalf of the Company, which licenses are incidental to the primary purpose of the applicable agreement, are not Encumbrances.

 

“Environmental Law” means any applicable federal, state, or local Laws as in effect as of the date of this Agreement which regulate or relate to: pollution, the protection of the environment; the use, treatment, storage, transportation, handling, disposal or release of Hazardous Materials, or the protection of the health and safety of Persons from exposures to Hazardous Materials in the environment; or the preservation or protection of waterways, groundwater, drinking water, air, or soil.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any employer that would be considered a single employer with the company under Sections 414(b), (c), (m), or (o) of the Code.

 

“Escrow Account” has the meaning set forth in Section 3.6.

 

“Escrow Agent” has the meaning set forth in Section 3.6.

 

 

“Escrow Agreement” has the meaning set forth in Section 3.6.

 

“Escrow Cash” means $5,500,000.

 

“Estimated Initial Consideration” means a dollar amount equal to (i) the Base Initial Consideration, plus (ii) the Estimated Closing Cash, minus (iii) the Estimated Closing Debt, minus (iv) the Estimated Unpaid Company Transaction Expenses, minus (v) the Escrow Cash.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

 

“FDA” means the U.S. Food and Drug Administration.

 

“Fraud” means actual common law fraud as defined under the Laws of the State of Delaware.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Governmental Authority” means any government, any quasi-governmental authority of any nature, any governmental entity, commission, board, agency or instrumentality, and any court, tribunal or judicial body, whether federal, state, county, local or foreign.

 

“Governmental Order” means any order, temporary restraining order, judgment, injunction or decree, enforcement action or consent decree, issued, promulgated or entered by any Governmental Authority.

 

“Hazardous Material” means any pollutant, chemical, substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, or chemical compound, or hazardous substance, material or waste, whether solid, liquid or gas, that is prohibited or regulated under any Environmental Laws, including without limitation, asbestos, urea, formaldehyde, PCBs, radon gas, or petroleum products.

 

“Health Care Laws” means all applicable Laws, enforced or issued by a Governmental Authority (including multi-country organizations) related to (a) the safety, efficacy and quality of pharmaceuticals; (b) manufacturing, development, testing, labeling, marketing, packaging, holding, import, export, advertising or distribution of pharmaceuticals; (c) the hiring of employees or acquisition of services or supplies from those who have been excluded from government health care programs, and (d) privacy, security, or licensure, including, without limitation, as applicable: (i) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. §§ 301 et seq.) and the regulations promulgated thereunder;; (ii) all applicable federal, state, local and all applicable foreign health care related fraud and abuse, false claims, and anti-kickback Laws, including, without limitation, the U.S. Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the U.S. Civil False Claims Act (31 U.S.C. § 3729 et seq.), the criminal False Statements Law (42 U.S.C. § 1320a-7b(a)), all criminal Laws relating to health care fraud and abuse, including but not limited to 18 U.S.C. §§ 286 and 287, and the health care fraud criminal provisions under the U.S. Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.) as amended by the Health Information Technology for Economic and Clinical Health Act (42 U.S.C. § 17921 et seq.) (collectively, “HIPAA”), the exclusion Law (42 U.S.C. § 1320a-7), and the civil monetary penalties Law (42 U.S.C. § 1320a-7a); and (iii) HIPAA and analogous state Laws pertaining to privacy, data protection and information security, and the regulations promulgated pursuant to such statutes; in each case, as amended from time to time and including the implementing rules and regulations of Governmental Authorities promulgated pursuant to such Laws and all of their foreign equivalents.

 

 

“Initial Consideration” means a dollar amount equal to (i) the Base Initial Consideration, plus (ii) Closing Cash, minus (iii) Unpaid Company Transaction Expenses, minus (iv) Closing Debt, minus (v) the Escrow Cash.

 

“Intellectual Property” means all U.S. and foreign intellectual property and proprietary rights, including (i) patents provisional and non-provisional and applications therefor and all divisionals, reissues, renewals, registrations, confirmations, re-examinations, certificates of inventorship, extensions, supplementary protection certificates, continuations and continuations-in-part thereof (“Patents”), (ii) trademarks, trade dress, service marks, service names, trade names, domain names, brand names, logo or business symbols, whether registered or unregistered, and pending applications to register the same, including all extensions and renewals thereof and all goodwill associated therewith (“Trademarks”), (iii) copyrights and copyrightable works, including all writing, reports, analyses, evaluation protocols, designs, computer software, code, databases, software systems, mask works or other works, whether registered or unregistered, pending applications to register the same, and moral rights (“Copyrights”), (iv) confidential or proprietary know-how, trade secrets, methods, processes, practices, formulas and techniques (“Know-How”), (v) computer software, including all source code, object code, firmware, development tools, files, records and data, all media on which any of the foregoing is recorded, and all documentation related to any of the foregoing, and (vi) moral rights, rights of publicity, industrial designs, and industrial property rights.

 

“IRS” means the United States Internal Revenue Service.

 

“Knowledge of the Company” “Company’s Knowledge” or “known to the Company” and any other phrases of similar import means, with respect to any matter in question relating to the Company, the actual knowledge of [***], and the knowledge such individuals would reasonably be expected to have had he made reasonable inquiry regarding the relevant matters.

 

“Law” means any federal, state, county, local, foreign or other statute, constitution, controlling principle of common law, ordinance, edict, decree, Governmental Order, regulation, rule, ruling or code of any Governmental Authority having the force of law.

 

“Liability” means any and all liabilities and obligations of any kind or nature, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable.

 

“Loan Payoff Amount” means $19,417,220.75.

 

“Material Adverse Effect” means any change, event, circumstance, condition or effect that, individually or in the aggregate, is, or would reasonably be expected to be, materially adverse to (x) the Business, assets, liabilities, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (y) the ability of the Company to perform its obligations under this Agreement in accordance with Law or to consummate the transactions contemplated hereby; provided, however, that none of the following shall be deemed in themselves to constitute or be considered in determining a Material Adverse Effect: (i) conditions generally affecting the economy or industry in which the Company operates, (ii) any change in GAAP or applicable Laws (provided, that this clause (ii) shall not apply with respect to any representation or warranty the purpose of which is to address compliance with GAAP or applicable Law), (iii) any changes arising from or attributable or relating to the announcement or pendency of the transactions contemplated by this Agreement or the identity or involvement of the Purchaser and its Affiliates (including any impact on the customers, suppliers, vendors or employees of the Company), (iv) the taking of any action by the Company approved in writing by Purchaser or that are expressly permitted under the terms of this Agreement, (v) acts of war, hostilities or terrorism or any escalation or material worsening of any such acts of war, hostilities or terrorism, or the occurrence or escalation of any other natural disaster, calamity or crisis; and (vi) epidemics and pandemics (including in respect of COVID-19); provided, that with respect to (i), (ii), (v) and (vi) such changes do not materially and disproportionately adversely affect the Company in a manner that is materially disproportionate from similarly situated businesses engaged in the same industry as the Company.

 

 

“Organizational Documents” means, with respect to any entity, the certificate of incorporation, articles of incorporation, bylaws or equivalent governing documents of such entity.

 

“Permit” means any license, clearance, authorization, registration, approval, consent, certificate, variance, franchise, exemption or permit issued by any Governmental Authority to the Company, held by the Company, or required for the operation of the Company’s Business.

 

“Permitted Encumbrances” means all (i) liens for Taxes and other governmental charges that are not yet due and payable or are being contested in good faith by appropriate proceedings and for which adequate reserve has been made in the Company Financial Statements; (ii) cashiers’, landlords’, workmen’s, repairmen’s, warehousemen’s and carriers’ liens and other similar liens imposed by Law, incurred in the ordinary course of business for sums not yet due and payable; (iii) pledges or deposits in connection with workers compensation, unemployment insurance and other social security legislation for sums not yet due and payable; (iv) Encumbrances listed in Schedule 1.1(p); and (v) other Encumbrances of any type incurred in the ordinary course of business which do not materially detract from the value of, or materially interfere with, the present use and enjoyment of the asset or property subject thereto or affected thereby.

 

“Person” means any individual, general or limited partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.

 

“Personal Data” means all data or information that, individually or when aggregated or combined, is linked to any reasonably identifiable natural person and any other data protected under any applicable Laws relating to privacy, data security, or data protection with respect to data relating to individuals.

 

“Pre-Closing Taxes” means (A) all Taxes of the Company relating or attributable to any Pre-Closing Tax Period (including any Deferred Payroll Taxes), (B) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 (or any analogous provision under state, local or non-U.S. Law), (C) any and all Taxes of any Person imposed on the Company as a transferee or successor, by contract (other than a contract entered into in the ordinary course of business the primary purpose of which is unrelated to Tax) or pursuant to any Law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing, and (D) any Taxes resulting from the transactions contemplated by this Agreement (but excluding the Transfer Taxes allocated to Purchaser pursuant to Section 7.2(c)). In the case of any Straddle Tax Period, the amount of any Taxes based on or measured by income, sales, use, receipts, or other similar items of the Company for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (except that exceptions, allowances or deductions that are calculated on annual basis, such as depreciation, shall be apportioned on a pro rata basis), and the amount of any other Taxes of the Company for such a Tax period which relate to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the (and including) Closing Date and the denominator of which is the total number of days in such taxable period.

 

 

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and the portion of any Straddle Tax Period ending on (and including) the Closing Date.

 

“Public Official” means (i) any official, employee, agent or representative of, or any Person acting in an official capacity for or on behalf of, any Governmental Authority, (ii) any political party, political party official or candidate for political office, (iii) any official, employee, agent or representative of, or any Person acting in an official capacity for or on behalf of, a company, business, enterprise or other entity owned, in whole or in part, or controlled by any Governmental Authority or (iv) any official, employee, agent or representative of, or any Person acting in an official capacity for or on behalf of, a public international organization.

 

“Purchaser Indemnitees” means (i) Purchaser; (ii) Purchaser’s Affiliates (including the Company); (iii) the respective representatives of the Persons referred to in clauses (i) and (ii); and (iv) the respective successors and permitted assigns of the Persons referred to in clauses (i), (ii) and (iii) above.

 

“Representatives” mean the officers, directors, employees, agents, attorneys, accountants, advisors and representatives of the specified Person.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

“Service Provider” means any current or former officer, employee, director or independent contractor of the Company.

 

“Standard Business Agreements” means (i) non-negotiated, non-exclusive licenses to off-the-shelf generally commercially available software with annual license fees under $25,000; (ii) employee or consulting agreements on the Company’s standard forms therefor (which standard forms have been made available to Purchaser); (iii) nondisclosure agreements to the extent on customary forms therefor; (iv) material transfer agreements on the Company’s standard forms therefor (which standard forms have been made available to Purchaser); and (v) purchase orders for goods and associated terms and conditions for which the underlying goods have been delivered or received.

 

“Straddle Tax Period” means any Tax period beginning before or on the Closing Date and ending after the Closing Date.

 

An entity shall be deemed to be a “Subsidiary” of another entity if such other entity directly or indirectly owns, beneficially or of record, (i) an amount of voting securities or other interests in such first entity that is sufficient to enable such other entity to elect at least a majority of the members of such first entity’s board of directors or other governing body, or (ii) at least a majority of the outstanding equity interests of such first entity.

 

“Tax” or “Taxes” means (i) any and all taxes, fees, imposts, charges, excises, assessments, levies, tariffs, duties or other charges or impositions in the nature of a tax (together with any all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including income, gross income, estimated, capital gains, gross receipts, profits, business, license, occupation, franchise, branch, windfall, termination, exit, capital stock or other equity, wealth, real or personal (tangible or intangible) property, real or personal property (tangible or
intangible) gains, sales, use, transfer, conveyance, recording, documentary, filing, value added, ad valorem, employment or unemployment, social security (or similar including FICA), social, disability, alternative or add-on minimum, investment, financial transaction, escheat obligation customs, excise, stamp, environmental, commercial rent, premium or withholding taxes, and (ii) any liability for the payment of amounts described in clause “(i)” as a result of being or having been a member of any group of corporations that files, will file, or has filed Tax Returns on a combined, consolidated or unitary basis, as a result of any obligation under any agreement or arrangement (including any Tax allocation, Tax indemnity or Tax sharing agreement, but excluding customary gross up or indemnification provisions in credit agreements, derivatives, leases or other commercial agreements entered into in the ordinary course of business not primarily relating to Tax), as a result of being a transferee or successor, or otherwise by operation of Law.

 

 

“Tax Proceeding” means any inquiry, claim, assessment, audit, dispute, suit or other administrative or judicial proceeding involving Taxes.

 

“Tax Return” means any return, report, statement, declaration, schedule, designation, notice, certificate, questionnaire, form, election, estimated Tax filing, claim for refund, information return, or other document (including any attachments thereto and amendments thereof), in each case filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority with respect to any Tax.

 

“Transfer Taxes” means any and all transfer, documentary, conveyance, sales, use, gross receipts, stamp, registration, filing, value added, recording, escrow and other similar Taxes and fees (including any penalties and interest and additions to tax), including any real property or leasehold interest transfer or gains Tax and any similar Tax.

 

“Unpaid Company Transaction Expenses” means (i) the fees and disbursements payable by the Company to those Persons identified in Section 4.18 of the Company Disclosure Schedule; (ii) the fees and disbursements payable to legal counsel or accountants of the Company that are payable by the Company in connection with the negotiation, preparation or execution of this Agreement or any documents or agreements contemplated hereby or the performance or consummation of the transactions contemplated hereby; (iii) any bonus, transaction, change of control, severance, incentive compensation, termination, retention or similar transaction-related payments to be paid to any Service Provider of the Company or any Subsidiary, as well as the employer portion of any payroll Taxes to be paid in connection therewith, including any such amounts that are contingent upon both consummation of the transactions contemplated hereby and the termination of employment (or the occurrence of other double-trigger events) occurring after the Closing, to the extent such Taxes are payable at or substantially contemporaneous with the Closing; (iv) any employer-portion of payroll Taxes relating to or resulting from the payment of any portion of the employee options that are payable at or substantially contemporaneous with the Closing; (v) all unpaid Taxes of the Company attributable to any Pre-Closing Tax Period, calculated in accordance with Section 7.2 and determined on a jurisdiction by jurisdiction basis (with the amount for each jurisdiction never being less than zero dollars ($0)); and (vi) all other miscellaneous fees, expenses or costs, in each case, incurred by the Company in connection with the transactions contemplated by this Agreement; provided, that in the case of the foregoing clauses (i) through (vi), only to the extent such amounts have not been paid by the Company prior to the Closing and for which the Company is and remains liable to pay following the Closing; provided, further, that the foregoing clauses (ii) and (iii) shall not include any fees, expenses or disbursements incurred by Purchaser, or by the Company which are on behalf of Purchaser, including any advisory fee and the fees and expenses of Purchaser’s attorneys, accountants and other advisors; provided, further, for the avoidance of doubt, that any such amounts which are for the liability of the Seller, and not the Company, shall be excluded from Unpaid Company Transaction Expenses.

 

 

Section 1.2          Certain Additional Definitions. As used in this Agreement, the following terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each such term below:

 

Term		Section
Accounting Firm		Section 3.2(c)(iv)
Agreement		Preamble
Basket		Section 9.3(b)
Buying Party		Section 3.3(b)
Claim Certificate		Section 9.4(a)
Claim Dispute Notice		Section 9.4(b)
Closing		Section 2.2
Closing Date		Section 2.2
Closing Date Schedule		Section 3.2(b)
Company		Preamble
Seller Board Approval		Section 4.2(b)
Company Board of Directors		Section 4.2(a)
Company Certificates		Section 3.5
Company Disclosure Schedule		Article IV
Company Financial Statements		Section 4.5(a)
Company Material Contract(s)		Section 4.14(a)
Determination		Section 3.2(c)(iv)
Dispute Notice		Section 3.2(c)(ii)
Enforceability Exceptions		Section 4.2(a)
Estimated Closing Cash		Section 3.2(a)
Estimated Closing Debt		Section 3.2(a)
Estimated Unpaid Company Transaction Expenses		Section 3.2(a)
Excess Payment		Section 3.2(d)(ii)
Expiration Date		Section 9.1
FCPA		Section 4.22(a)
Indemnitee		Section 9.5
Indemnitor		Section 9.5
Invoice		Section 7.3
Lease		Section 4.15
Leased Real Property		Section 4.15
Liens		Section 4.11(e)
Major Suppliers		Section 4.23
Party and Parties		Preamble
Payoff Letter		Section 7.3
Proceeding		Section 4.11(a)
Purchaser		Preamble
Purchaser Prepared Returns		Section 7.2
Related Person		Section 4.19
Review Board		Section 4.21(g)
Review Period		Section 3.2(c)(ii)
Safety Notices		Section 4.21(h)
Shortfall Payment		Section 3.2(d)(i)
Third-Party Claim		Section 9.5
TYK2 Product Divestment		Section 3.3(b)

 

 

Article II

THE ACQUISITION

 

Section 2.1          Purchase and Sale of Stock. At the Closing (as defined in Section 2.2 below) and subject to and upon the terms and conditions of this Agreement, Purchaser shall purchase from Seller and Seller shall sell, convey, transfer, assign and deliver to Purchaser, free and clear of all Liens, encumbrances or other defects of title, good and valid title to all of the issued and outstanding Shares.

 

Section 2.2          Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at 9:00 a.m. (Pacific Time) and shall be conducted remotely via the electronic exchange of documents and signatures as soon as reasonably practicable, but no later than three (3) Business Days following/on this date of this Agreement subject to the satisfaction or waiver of all conditions set forth in Article VIII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to their satisfaction at the Closing), or at such other time, date and place as the Parties may mutually agree in writing (such date hereinafter, the “Closing Date”).

 

Article III

ACQUISITION CONSIDERATION; EXCHANGE OF COMPANY CERTIFICATE(S)

 

Section 3.1          Initial Consideration. At the Closing, Purchaser shall deposit by wire transfer of immediately available funds, (a) the Estimated Initial Consideration to a bank account designated in writing by Seller no later than one (1) Business Day prior to the Closing, and (b) the Loan Payoff Amount to a bank account set forth in the Payoff Letter delivered by Haisco Pharmaceutical Co., Ltd.

 

Section 3.2          Post-Closing Adjustment of Initial Consideration.

 

(a)         Pre-Closing Estimate. At least two (2) Business Days prior to the Closing Date, the Company and Seller shall deliver to Purchaser, the Company’s estimates, along with reasonable supporting detail thereof, of the Closing Debt (the “Estimated Closing Debt”), the Closing Cash (the “Estimated Closing Cash”) and Unpaid Company Transaction Expenses (the “Estimated Unpaid Company Transaction Expenses”), such estimates to be prepared in good faith and in accordance with the policies, conventions, methodologies and procedures used by the Company in preparing its most recent unaudited Company Financial Statements. Based on such estimates and prior to Closing, Seller shall in good faith calculate estimates of such amounts to be used for purposes of determining the Estimated Initial Consideration for purposes of Closing.

 

(b)         Calculation. As promptly as practicable, but in no event later than sixty (60) days following the Closing Date, Purchaser shall cause the Company to deliver to Seller a schedule (the “Closing Date Schedule”), along with reasonable supporting detail thereof, setting forth the Company’s calculation of the Initial Consideration and setting forth in reasonable detail the Company’s calculations of Closing Debt, Closing Cash and Unpaid Company Transaction Expenses, such calculations to be prepared in good faith and in accordance with the policies, conventions, methodologies and procedures used by the Company in preparing its most recent unaudited Company Financial Statements.

 

(c)         Review; Disputes.

 

(i)            From and after the delivery of the Closing Date Schedule, Purchaser shall cause the Company to provide Seller and any accountants or advisors retained by Seller with reasonable access (including electronic deliveries) to the books and records of the Company during normal business hours for the purposes of: (A) enabling Seller and its accountants and advisors to calculate, and to review the Company’s calculation of, Closing Debt, Closing Cash and Unpaid Company Transaction Expenses; and (B) identifying any dispute related to the calculation of any of Closing Debt, Closing Cash and Unpaid Company Transaction Expenses in the Closing Date Schedule.

 

 

(ii)            If Seller disputes the calculation of any of Closing Debt, Closing Cash, or Unpaid Company Transaction Expenses set forth in the Closing Date Schedule, then Seller shall deliver a written notice (a “Dispute Notice”) to Purchaser at any time during the thirty (30) day period commencing upon receipt by Seller of the Closing Date Schedule (as prepared by the Company in accordance with the requirements of Section 3.2(b), the “Review Period”). The Dispute Notice shall set forth the basis and amount for each dispute of any such calculation in reasonable detail together with relating supporting documentation and calculations, as well as the alternative calculation with respect to each of the components of the Closing Date Schedule.

 

(iii)           If Seller does not deliver a Dispute Notice to the Company prior to the expiration of the Review Period, Purchaser’s calculation of Closing Debt, Closing Cash and Unpaid Company Transaction Expenses set forth in the Closing Date Schedule shall be deemed final and binding on Purchaser, the Company and Seller for all purposes of this Agreement.

 

(iv)           If Seller delivers a Dispute Notice to Purchaser prior to the expiration of the Review Period, then Seller and Purchaser shall negotiate in good faith to reach agreement on Closing Debt, Closing Cash and Unpaid Company Transaction Expenses. Notwithstanding anything in this Agreement to the contrary (including in Section 10.10), if Seller and Purchaser are unable to reach agreement on Closing Debt, Closing Cash, and Unpaid Company Transaction Expenses within thirty (30) days after the end of the Review Period either Party shall have the right to refer such dispute to Ernst & Young LLP, or if Ernst & Young LLP declines to serve, such other nationally or regionally recognized independent accounting firm that is mutually agreed upon in writing by Purchaser and Seller, (such firm, or any successor thereto, being referred to herein as the “Accounting Firm”) for resolution after such 30-day period, provided, that the Parties may mutually agree in writing to extend such period before the dispute is referred to the Accounting Firm. In connection with the resolution of any such dispute by the Accounting Firm: (A) each of Purchaser and Seller shall have a reasonable opportunity to meet with the Accounting Firm; (B) the Accounting Firm shall determine Closing Debt, Closing Cash and Unpaid Company Transaction Expenses in accordance with the terms of this Agreement (and, for the avoidance of doubt, such determination shall be made strictly in accordance with the policies, conventions, methodologies and procedures used by the Company in preparing its most recent unaudited Company Financial Statements) within thirty (30) days of such referral and upon reaching such determination shall deliver a copy of its calculations (the “Determination”) to Seller and Purchaser; and (C) the Determination made by the Accounting Firm of Closing Debt, Closing Cash and Unpaid Company Transaction Expenses shall be final and binding on Purchaser, the Company and Seller, absent manifest error. In calculating Closing Debt, Closing Cash and Unpaid Company Transaction Expenses, (x) the Accounting Firm shall be limited to addressing any particular disputes referred to in the Dispute Notice and (y) each such amount shall be no greater than the higher corresponding amount calculated by Seller or Purchaser and no lower than the lower corresponding amount calculated by Seller or Purchaser. The Determination shall reflect in detail the differences, if any, between Closing Debt, Closing Cash and Unpaid Company Transaction Expenses reflected therein and Closing Debt, Closing Cash and Unpaid Company Transaction Expenses set forth in the Closing Date Schedule. The fees and expenses of the Accounting Firm shall be borne by Purchaser and Seller in proportion to how close each Party’s position was to the Determination of the Accounting Firm.

 

(d)          Payment Upon Final Determination of Adjustments.

 

(i)              If the Estimated Initial Consideration is more than the Initial Consideration, as finally determined in accordance with Section 3.2(c) (the amount of such deficit, the “Shortfall Payment”), then Purchaser shall be paid the amount of such discrepancy by wire transfer of immediately available funds not later than three (3) Business Days after such Determination from Seller.

 

 

(ii)            If the Initial Consideration, as finally determined in accordance with Section 3.2(c), is more than the Estimated Initial Consideration (the amount of such excess, the “Excess Payment”), then Purchaser shall, or shall cause the Company to, promptly, and not later than three (3) Business Days after such Determination, cause to be paid the amount of such discrepancy by wire transfer of immediately available funds to Seller.

 

Section 3.3          Contingent Consideration.

 

(a)         Purchaser’s obligations with respect to Milestone Payments are set forth in Exhibit E, which is incorporated by reference herein as if set forth herein.

 

(b)         Non-Assignment of Rights to Contingent Consideration. Seller may not assign, delegate or otherwise transfer any of its rights to the Contingent Consideration without the prior written consent of Purchaser or by operation of Law or by Laws of descent or distribution. Any attempted or purported transfer in violation of this sentence will be null and void. Purchaser may assign, delegate, sell, license or otherwise transfer, without the prior written consent of Seller, its right, title and interest in the assets or any line of business or group of assets that include, all or any part of, the TYK2 Products, TYK2 Compounds, and the Intellectual Property rights therein (each a “TYK2 Product Divestment”) provided that (i) (A) if the TYK2 Product Divestment is an assignment, delegation, sale or transfer of all the Purchaser’s rights, title and interests in the TYK2 Products, TYK2 Compounds, and the Intellectual Property rights therein to a third party (the “Buying Party”) and (B) if such Buying Party expressly assumes in writing the obligations of Purchaser under this Section 3.3, including the obligations of Purchaser set forth in Exhibit E, then Purchaser and its Affiliates shall only remain responsible for the obligations of Purchaser under Section 2 of Exhibit E following such assignment, delegation, sale or transfer to the Buying Party and shall not otherwise be subject to the obligations of Purchaser set forth in this Section 3.3 or Exhibit E; and (ii) if the TYK2 Product Divestment is a license, assignment, delegation, sale or transfer of Purchaser’s interests in the TYK2 Products, TYK2 Compounds, and the Intellectual Property rights therein, other than a TYK2 Product Divestment described in clause (i) of this Section 3.3(b), then the Purchaser shall remain responsible for the obligations of Purchaser under Section 3.3, including the obligations of Purchaser set forth in Exhibit E; provided for purposes of clarity, this Section 3.3(b)(ii) shall not expand Purchaser’s obligation to develop the TYK2 Products beyond the obligations of Purchaser set forth in Section 2 of Exhibit E. The Company hereby acknowledges and agrees, and by their adoption of this Agreement and acceptance of consideration under this Agreement, Seller acknowledges and agrees, that: (i) the Contingent Consideration does not represent any ownership or equity participation interest in the Company or Purchaser and does not entitle Seller to voting rights or other rights common to equity holders of Company or Purchaser, other than as expressly set forth herein, (ii) the Contingent Consideration is solely represented by this Agreement and is not represented by any certificate, instrument or other delivery, (iii) the Contingent Consideration is solely a contractual right and is not a security for purposes of any securities Laws, and confers upon Seller only the rights of a general unsecured creditor under applicable Law, (iv) the Contingent Consideration bears no interest and (v) the Contingent Consideration is not redeemable.

 

Section 3.4          Tax Consequences. The sale of the Shares shall constitute a taxable transaction for U.S. federal income Tax purposes. The parties hereto intend for the Milestone Payments to qualify for installment sale reporting under Section 453 of the Code and to be treated as an adjustment to the Consideration for U.S. federal income Tax purposes, and shall treat the Milestone Payments consistent with the foregoing unless otherwise required by applicable Law. Other than as expressly contemplated in the foregoing sentence, Purchaser makes no representations or warranties to the Company or to Seller regarding the Tax treatment of the sale of the Shares, or any of the Tax consequences to the Company or Seller of this Agreement, the sale of the Shares or any of the other transactions or agreements contemplated hereby. The Company acknowledges that the Company and Seller are relying solely on their own Tax advisors in connection with this Agreement, the sale of the Shares and the other transactions and agreements contemplated hereby.

 

 

Section 3.5          Exchange of Company Certificate(s).

 

(a)         Company Certificate(s) and Stock Powers. Prior to the Closing Date, Purchaser shall deliver to Seller (A) a stock power in the form attached as Exhibit A (a “Stock Power”), and
(B) instructions for effecting the surrender or cancellation of each certificate or certificates which immediately prior to the Closing represent Shares (the “Company Certificate(s)”) in exchange for the amount to be paid to Seller pursuant to Section 3.1 in respect of such Company Certificate(s).

 

(b)         No Liability. Notwithstanding anything to the contrary in this Section 3.5, neither the Company nor Purchaser shall be liable to Seller for any amount properly paid to a public official pursuant to any abandoned property, escheat or similar Law.

 

(c)         Withholding. Purchaser and the Company, and all of their respective Affiliates, successors, and assigns, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to Seller such amounts as Purchaser and the Company, and any of their respective Affiliates, successors, and assigns, as applicable, are required to deduct and withhold under the Code, or any provision of state, local or foreign Tax Law, with respect to the making of such payment. To the extent that amounts are so withheld by Purchaser, the Company or any of their Affiliates, successors, and assigns, as applicable, and paid over to the applicable Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to Seller in respect of whom such deduction and withholding was made by Purchaser or the Company or any such Affiliate, successor or assign. Promptly upon becoming aware that any such withholding is required to be made from any payment payable to the Seller pursuant to this Agreement, Purchaser shall notify Seller about such requirement, but in no event later than ten (10) days prior to making such payment, and the parties shall work together in good faith to mitigate or eliminate any such withholding obligation.

 

Section 3.6          Escrow Account. Prior to or simultaneously with the Closing, Purchaser and Seller will enter into an escrow agreement with a nationally chartered United States bank with assets of not less than five billion dollars ($5 Billion) (the “Escrow Agent”), substantially in the form of Exhibit B (the “Escrow Agreement”). Pursuant to the terms of the Escrow Agreement, at the Closing, Purchaser will deposit the Escrow Cash into the escrow account, which account is to be managed by the Escrow Agent (the “Escrow Account”). Distributions of any Escrow Cash from the Escrow Account shall be governed by the terms and conditions of the Escrow Agreement. Purchaser and Seller shall issue joint written instructions to the Escrow Agent authorizing and directing the Escrow Agent to make distributions of Escrow Cash subject to and in accordance with Article IX.

 

Section 3.7          No Further Ownership Rights in Shares. At and after the Closing, Seller shall cease to have any rights as a stockholder of the Company.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Contemporaneously with the execution and delivery of this Agreement by the Company to Purchaser, the Company shall deliver to Purchaser a confidential disclosure schedule (the “Company Disclosure Schedule”). Subject to the exceptions and qualifications set forth in the Company Disclosure Schedule, each of Seller and the Company hereby represents and warrants to Purchaser, as of the date hereof and as of the Closing Date, as follows:

 

 

Section 4.1          Corporate Status. The Company (a) is duly organized, validly existing and in good standing under the Laws of the State of Delaware, (b) has all requisite power and authority to carry on its Business and (c) is duly qualified to do business and is in good standing in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets and the conduct of its Business requires it to be so qualified, licensed or authorized, other than as would not be material. True and complete copies of (a) the Organizational Documents of the Company, each as amended and in effect as of the date of this Agreement, (b) the stock records of the Company and (c) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the stockholders of the Company, the Company Board of Directors and all committees thereof have been made available to Purchaser. There has not been any violation of any of the provisions of the Organizational Documents of the Company and the Company has not taken any action that is inconsistent in any material respect with any resolution adopted by the stockholders of the Company, the Company Board of Directors or any committees thereof.

 

Section 4.2          Authority and Enforceability.

 

(a)        The Company has all necessary corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder, and the consummation by the Company of the transactions contemplated by this Agreement, have been duly authorized by the board of directors of the Company (the “Company Board of Directors”), and no other corporate action on the part of the Company is necessary to authorize the execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder or the consummation by the Company of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by the Company and (assuming due authorization, execution and delivery by the other Parties to this Agreement) constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by or subject to (a) bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally or (b) the effect of rules of Law and general principles of equity, including those governing specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at Law) (the “Enforceability Exceptions”).

 

(b)        At a meeting duly called and held, the Company Board of Directors has (i) unanimously determined that this Agreement and the transactions contemplated hereby are fair to, advisable and in the best interests of the Company’s stockholders and (ii) unanimously approved and adopted this Agreement and the transactions contemplated hereby (the “Seller Board Approval”).

 

Section 4.3          No Conflict; Government Authorizations.

 

(a)         The execution and delivery of this Agreement, the performance by the Company of its obligations hereunder and the Ancillary Documents to which the Company is or will be a party, and the consummation by the Company of the transactions contemplated by this Agreement or the Ancillary Documents to which the Company is or will be a party, does not and will not (i) conflict with, or result in any violation of the Company’s Organizational Documents; (ii) subject to the matters described in Section 4.3(b), conflict with or result in a violation of any Permit or Law applicable to the Company or its assets in any material respect; or (iii) result in a material breach of, or constitute a material default (or event which with the giving of notice or lapse of time, or both, would become a material default) under, or give rise to any rights of termination, cancellation or acceleration of any obligation or to loss of a benefit under, or result in the creation of any Encumbrance (not including Permitted Encumbrances) upon any of the rights or assets of the Company pursuant to any Material Contract of the Company.

 

 

(b)         No consent of, or registration, declaration, notice or filing with, any Governmental Authority is required to be obtained or made by the Company in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents to which the Company is or will be a party or the consummation of the transactions contemplated hereby or thereby.

 

Section 4.4          Capitalization.

 

(a)         As of the date of this Agreement, the authorized capital stock of the Company consists of 100,000 shares of Company Common Stock, of which 100,000 shares are issued and outstanding. All issued and outstanding shares of Company Capital Stock have been duly authorized, validly issued, fully paid, and are nonassessable and free and clear of any and all Encumbrances and free and clear of any covenant, condition, restriction, voting trust arrangement or adverse claim of any kind and have been issued in compliance with all applicable federal and state securities Laws. There are no outstanding options, convertible notes or other rights to acquire Company Capital Stock. No shares of the Company Capital Stock (1) are subject to preemptive rights or rights of first refusal or (2) were issued in violation of any preemptive, subscription or other similar rights under any provision of applicable Law, the Company’s Organizational Documents or any Contract of the Company.

 

(b)         Seller owns all of the outstanding Shares.

 

(c)         The Company does not own, directly or indirectly, any equity or other similar interest, or any right (contingent or otherwise) to acquire any such interest, in any other Person or in any joint venture.

 

(d)         There are no securities, options, convertible notes, restricted stock, stock appreciation rights, restricted stock units, phantom stock, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company is a party or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities or securities convertible into, or linked to or exchangeable for equity interests or voting securities of the Company or any of its Subsidiaries or obligating the Company to issue, grant, extend or enter into any such security, option, convertible note, call, right, commitment, agreement, arrangement or undertaking. Except as set forth in the Company’s Organizational Documents there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of the Company. There are no bonds, debentures, notes or other Debt of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of the Company’s voting securities or interests may vote. Seller is an “accredited investor” as such term is defined in Rule 501(a) of the Securities Act.

 

Section 4.5          Financial Statements; Undisclosed Liabilities.

 

(a)         The Company has made available to Purchaser copies of the financial statements of the Company along with FronThera Pharmaceuticals, its wholly owned Subsidiary, (including the balance sheet, the related statements of operations and, with respect to FronThera Pharmaceuticals, a statement of cash flows) as of and for the years ended December 31, 2020 (unaudited), December 31, 2019 (unaudited) and December 31, 2018 (unaudited) (collectively, the “Company Financial Statements”). The Company Financial Statements (including in each case, the notes thereto, if any) present fairly, in all material respects, the combined financial position and results of operations and cash flows of the Company along with FronThera Pharmaceuticals as of the dates thereof and for the periods covered thereby. The Company Financial Statements have been prepared from books and records maintained by the Company and FronThera Pharmaceuticals.

 

 

(b)         The books of account and other financial records of the Company along with FronThera Pharmaceuticals have been kept accurately in the ordinary course of business consistent with applicable Laws, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company and FronThera Pharmaceuticals have been properly recorded therein in all material respects. The Company and FronThera Pharmaceuticals have established and maintain a system of internal accounting controls reasonable for a company of their size and stage of development. Since December 31, 2020, there have been no changes in any accounting controls, policies, principles, methods or practices, including any change with respect to reserves (whether for bad Debts, contingent liabilities or otherwise).

 

(c)         Neither the Company nor FronThera Pharmaceuticals have any Liabilities other than (i) those set forth on their respective balance sheets as of December 31, 2020 (unaudited) (the “Base Balance Sheets”), (ii) incurred in the ordinary course of business consistent with past practice since the Base Balance Sheets that are not material in amount or significance, either individually or in the aggregate, and do not result from a breach of Contract, breach of warranty, violation of Law, infringement, misappropriation, or other tort, (iii) Closing Debt or Unpaid Company Transaction Expenses, or (iv) as would not reasonably be expected to be material to the Company or FronThera Pharmaceuticals.

 

Section 4.6          Absence of Certain Changes. Since December 31, 2020 until the date of this Agreement, there has not been, occurred or arisen: any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, any Material Adverse Effect.

 

Section 4.7          Taxes.

 

(a)         (i) The Company has timely filed with the appropriate Governmental Authority all income and other material Tax Returns required to be filed by it (taking into account all applicable valid extensions); (ii) all income and other material Tax Returns that the Company has filed (whether required or otherwise) are complete and accurate in all material respects, (iii) all accounting books and financial statements as well as any other record or register provided for by the applicable Tax Laws have been and are duly prepared, kept and updated and include all relevant records and annotations in compliance in all material respects with the applicable Tax Laws; and (iv) all Taxes payable by the Company (whether or not shown as payable on any Company Tax Returns) have been paid, and there are no Encumbrances with respect to Taxes upon any of the assets or properties of the Company, other than Permitted Encumbrances. The Company has made available to Purchaser accurate and complete copies of all income, franchise, sales, use, VAT and other material Tax Returns filed by, on behalf of, or with respect to, the Company and complete and accurate copies of all audit or examination reports and statements of deficiencies assessed against the Company, in each case, for which the applicable statute of limitations has not yet expired.

 

(b)         The unpaid Taxes of the Company have been properly accrued on the Company Financial Statements in accordance with GAAP. The Company has not incurred any liability for Taxes since the Company Financial Statements outside of the ordinary course of business, except in connection with the transactions contemplated by this Agreement.

 

 

(c)         The Company has withheld or collected all material Taxes required to have been withheld or collected in connection with any amounts paid or owing to any employee, independent contractor, customer, creditor, stockholder or other third party and timely paid over any such Taxes and other amounts to the appropriate Governmental Authority in accordance with applicable Law.

 

(d)         There are no Tax Proceedings in progress or pending, or, to the Company’s Knowledge, any threatened or contemplated Tax Proceedings by any Governmental Authority and there are no matters relating to Taxes under discussion between any Governmental Authority and the Company.

 

(e)         The Company has never received from any Governmental Authority any written: (i) notice indicating an intent to open an audit or other review with respect to any Tax of the Company or any Company Tax Return; (ii) request for information related to Tax matters; or (iii) notice of deficiency or proposed Tax adjustment, which is still outstanding. The Company has not agreed to any waiver or extension of the statutory period of limitations with respect to a Tax assessment or deficiency, which waiver or extension is currently in effect nor has any request been made in writing for any such waiver or extension. No written claim has ever been made by a Governmental Authority in a jurisdiction where the Company does not pay Taxes or file Tax Returns asserting that the Company is or may be subject to Taxes assessed by such jurisdiction.

 

(f)          The Company is not party to, is not bound by, and has no obligation under, any Tax sharing, Tax allocation or Tax indemnity agreement or similar Contract or arrangement, except for customary gross-up or indemnification provisions in credit agreements, derivatives, leases or other commercial agreements entered into in the ordinary course of business not primarily related to Tax.

 

(g)         The Company does not have any Liability for the Taxes of any other Person (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Law), (ii) as a transferee or successor, or (iii) by Contract (other than customary gross-up or indemnification provisions in credit agreements, derivatives, leases or other commercial agreements entered into in the ordinary course of business not primarily relating to Tax). The Company has not been a member of any group of corporations filing Tax Returns on a combined, consolidated, unitary or similar basis (other than a group the common parent of which is the Company).

 

(h)         The Company has not been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.

 

(i)          The Company has not participated in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4.

 

(j)          The Company (and Purchaser or its Affiliates as a result of its acquisition of the Company) will not be required to include any income or gain in or exclude any deduction or loss from taxable income for any Tax period or portion thereof beginning after the Closing Date as a result of (A) any adjustment under Section 481 of the Code (or any corresponding provision of state, local or non-U.S. Tax law) by reason of a change in a method of accounting, or use of an improper method of accounting, or otherwise (including as a result of the transactions contemplated by this Agreement) for a taxable period that ends on or prior to the Closing Date, (B) any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of applicable state, local or non-U.S. Law) entered into on or prior to the Closing Date, (C) any intercompany transaction (including any intercompany transaction subject to Section 367 or 482 of the Code) or excess loss account described in the Treasury Regulations promulgated pursuant to Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) with respect to a transaction occurring before the Closing, (D) any installment sale or open transaction disposition made on or prior to the Closing Date, or (E) any deferred revenue or prepaid amount received outside the ordinary course of business on or prior to the Closing Date. The Company has not made an election under Section 965(h) prior to the Closing. The Company uses the accrual method of accounting for income Tax purposes.

 

 

(k)         The Company has not been either a “distributing corporation” or a “controlled corporation” in a transaction intended to be governed by Section 355 of the Code.

 

(l)          Each Company Benefit Plan and other Contract that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder. No compensation has been or would reasonably be expected to be includable in the gross income of any Service Provider of the Company or any of its Subsidiaries as a result of the operation of Section 409A of the Code. No compensation has been or would reasonably be expected to be includable in the gross income of any Service Provider of the Company or any of its Subsidiaries as a result of the operation of Section 409A of the Code. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event (whether contingent or otherwise) will result in any “parachute payment” under Section 280G of the Code (or any corresponding provision of state, local, or non-U.S. Tax Law) that is subject to deduction limitations or excise taxes as a result of the operation of Section 280G of the Code (or any corresponding provision of state, local, or non-U.S. Tax Law).

 

(m)        The Company is and always has been a domestic corporation taxable under subchapter C of the Code for U.S. federal income Tax purposes. The Company has never had any direct or indirect ownership interest in any trust, corporation, partnership, limited liability company, joint venture or other business entity for U.S. federal income Tax purposes, other than FronThera U.S. Pharmaceutical LLC. The Company is not, and has never been, a party to any joint venture, partnership or other arrangement or Contract that would be treated as a partnership for Tax purposes.

 

(n)         Section 4.7(n) of the Company Disclosure Schedule sets forth all Tax exemptions, Tax holidays, Tax concessions or other Tax reduction agreements or arrangements (“Tax Incentives”) applicable to the Company. The Company has made available to Purchaser all documentation relating to such Tax Incentives. The Company is in material compliance with the requirements for any such Tax Incentive and none of the Tax Incentives will be jeopardized or altered by, or could be subject to clawback or recapture, as a result of the transactions contemplated by this Agreement.

 

(o)         The Company has disclosed on its Tax Returns any Tax reporting position taken in any Tax Return which could reasonably result in the imposition of penalties under Section 6662 of the Code (or any comparable provisions of state, local or non-U.S. Law). The Company has not (i) consummated or participated in any transaction which was or is a “tax shelter” transaction, as defined in Section 6662 or Section 6111 of the Code or the Treasury Regulations promulgated thereunder, (ii) participated in any “reportable transaction” as defined in Section 6707A(c) of the Code or the Treasury Regulations promulgated thereunder, (iii) engaged in any transaction that would require the filing of an IRS Schedule UTP, or (iv) participated or engaged in any other transaction that is subject to disclosure requirements pursuant to a corresponding or similar provision of state, local or non-U.S. Tax Law.

 

(p)         The Company has in its possession official foreign government receipts for any Taxes paid by it to any foreign Tax authorities for which receipts have been provided or are customarily provided. The Company does not have, and has never had, a permanent establishment (as defined in any applicable Tax treaty or convention), an office or fixed place of business, or otherwise is or has been subject to Tax, in any country other than the country in which it is organized.

 

 

(q)          No written Tax ruling, clearance or consent has been issued to the Company, and the Company has not applied for any Tax ruling, clearance or consent.

 

(r)           The Company is in compliance in all material respects with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company. All transactions and agreements entered into between the Company and any related parties have been made on arm’s length terms for purposes of all applicable transfer pricing laws, including the Treasury Regulations promulgated under Section 482 of the Code.

 

(s)          None of the Shares were issued in connection with the performance of services and subject to vesting for which no valid and timely election was filed pursuant to Section 83(b) of the Code. The Company has delivered to Purchaser correct and complete copies of all election statements under Section 83(b) of the Code, together with evidence of timely filing of such election statements with the appropriate Internal Revenue Service center with respect to any shares of Company Capital Stock or other property that was initially subject to a vesting arrangement issued by the Company to any of its employees, non-employee directors, consultants or other service providers.

 

(t)           The Company has collected, remitted and reported to the appropriate taxing authority all sales, use, value added, excise and similar Taxes required to be so collected, remitted or reported pursuant to all applicable Tax laws. The Company has complied in all material respects with all applicable Laws relating to record retention (including to the extent necessary to claim any exemption from Tax collection and maintaining adequate and current resale certificates to support any such claimed exemption).

 

(u)          The Company has (i) not deferred, extended or delayed the payment of the employer’s share of any “applicable employment taxes” under Section 2302 of the CARES Act, (ii) properly complied with and duly accounted for all credits received under Sections 7001 through 7005 of the Families First Coronavirus Response Act (Public Law 116-127) and Section 2301 of the CARES Act, and (iii) not sought, and do not intend to seek, a covered loan under Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)), as added by Section 1102 of the CARES Act.

 

Section 4.8           Legal Proceedings; Governmental Orders. As of the date of this Agreement, there are and, since January 1, 2018, there have been no Actions pending by or against or, to the Knowledge of the Company, threatened against, the Company or any executive officer or director of the Company in his or her capacity as such, and the Company is not, and since January 1, 2018, has not been, subject to any Governmental Order that restricts the activities of the Business. There is no Action pending by the Company or which the Company intends to initiate against any other Person.

 

Section 4.9           Compliance with Laws; Permits; Filings.

 

(a)          The Company is, and since January 1, 2018, has been in compliance in all material respects with, and conducts its Business and research and development activities, including clinical studies, in compliance in all material respects with, all applicable Laws. Since January 1, 2018, the Company has not received any notice from any Governmental Authority to the effect that the Company is not in compliance with any applicable Law in any material respect.

 

 

(b)          The Company holds, and is operating in compliance in all material respects with, all Permits that are necessary for the conduct of its Business as presently conducted by the Company. Section 4.9(b) of the Company Disclosure Schedule sets forth a true and complete list of each such Permit in effect as of the date of this Agreement. All such Permits are, and since January 1, 2018, have been, valid, and in full force and effect, the Company is not and, since January 1, 2018, has not been in violation or default of any Permit held by it and the Company has not received any notification from any Governmental Authority that it intends to or is threatening to revoke, suspend, modify or limit any Permit. The Company has fulfilled and performed all of its obligations with respect to the Permits, and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any Permit.

 

Section 4.10         Environmental Matters.

 

(a)          The Company complies, and since January 1, 2018, has complied, in all material respects with all applicable Environmental Laws.

 

(b)          There is not now and has not been since January 1, 2018, any Hazardous Materials used, generated, treated, stored, transported, disposed of, or released by the Company from any real property leased or owned by the Company and used in the Business except in material compliance with all applicable Environmental Laws.

 

(c)          The Company has not received any written notice of alleged, actual or potential responsibility for, or any inquiry or investigation regarding, any release or threatened release of Hazardous Materials or alleged violation of, or non-compliance with, any Environmental Law.

 

(d)          There are no material Liabilities of the Company arising under or relating to any Environmental Law or any Hazardous Materials and, to the Knowledge of the Company, there is no condition, situation or set of circumstances that could reasonably be expected to result in or be the basis for any such Liability.

 

(e)          There has been no environmental investigation, study, audit, test, review or other analysis conducted to the Company’s Knowledge in relation to the Business of the Company or any property or facility now or previously owned or leased by the Company that has not been delivered to Purchaser.

 

(f)           For purposes of this Section 4.10, the term “Company” shall include any entity that is, in whole or in part, a predecessor of the Company.

 

Section 4.11         Employee Matters and Benefit Plans.

 

(a)          Section 4.11(a) of the Company Disclosure Schedule sets forth a true and complete list of each Company Benefit Plan in effect as of the date of this Agreement. Each Company Benefit Plan complies in form and in operation, and has been administered in accordance with, its terms and the applicable requirements of ERISA, the Code and other applicable Law, in all material respects. Other than routine claims for benefits, there is no action, suit, complaint, charge, litigation, audit, investigation or proceeding, whether administrative, civil or criminal, in Law or in equity, or before any Governmental Authority or arbitrator (each, a “Proceeding”) pending or, to the Knowledge of the Company, threatened in writing with respect to a Company Benefit Plan or any fiduciary or service provider thereof and, to the Knowledge of the Company, there is no fact or circumstance that would give rise to any such Proceeding.

 

 

 

(b)            With respect to each Company Benefit Plan, the Company has provided to Purchaser true and complete copies, as applicable, of: (i)  each such Company Benefit Plan, including all amendments thereto, the most recent summary plan description and summary of material modifications, and any other notice or description provided to employees (as well as any modifications or amendments thereto), (ii)  the most recent determination or opinion letter, if any, issued by the Internal Revenue Service and each currently pending request for such a letter with respect to any Company Benefit Plan that is intended to be qualified under Section  401(a)  of the Code, (iii)  if such Company Benefit Plan is intended to be qualified under Section  401(a)  of the Code, all discrimination tests, if any, required under the Code for such Company Benefit Plan for the three most recent plan years, (iv)  the most recent annual report (Form  5500 series) filed with the Internal Revenue Service, (v)  any related trust or funding agreements or other material Contracts, and (vi)  all filings, records, notices and correspondence to and from Governmental Authority.

  

(c)            Each Company Benefit Plan that is intended to qualify under Section  401(a)  of the Code is so qualified and either (i)  has received a current favorable determination letter from the Internal Revenue Service as to its qualified status or (ii)  may rely upon a current prototype opinion letter from the Internal Revenue Service. No fact or event has occurred that could reasonably be expected to adversely affect or cause the loss of such qualified status. Each trust established in connection with any Company Benefit Plan which is intended to be exempt from federal income taxation under Section  501(a)  of the Code is so exempt, and no fact or event has occurred that could reasonably be expected to adversely affect the exempt status of any such trust.

  

(d)            No Company Benefit Plan is, and none of the Company, any of its Subsidiaries, or any of their respective ERISA Affiliates has ever sponsored, maintained, participated in, contributed to, or had any Liability or obligation (contingent or otherwise) with respect to any (i)  Multiemployer Plan (as such term is defined in Section  3(37) of ERISA), (ii)  other pension plan subject to Title IV or Part  3 of Title I of ERISA or Section  412 of the Code, (iii)  “multiple employer plan” (within the meaning of Section  413(c)  of the Code), or (iv)  multiple employer welfare arrangement (within the meaning of Section  3(40) of ERISA). No Company Benefit Plan provides, and none of the Company, any of its Subsidiaries, or any of their respective ERISA Affiliates has any obligation or Liability to provide any of the following retiree or post-employment benefits to any Person: medical, accident, disability, life insurance, death or welfare benefits, except as required by the applicable requirements of Section  4980B of the Code or any similar state Law. The obligations of all Company Benefit Plans that provide health, welfare or similar insurance to any employees are fully insured by bona fide third-party insurers.

  

(e)            With respect to each Company Benefit Plan: (i)  no breaches of fiduciary duty or other failures to act or comply in connection with the administration or investment of the assets of such Company Benefit Plan have occurred, (ii)  no liens, claims, charges, pledges, security interests, Encumbrances or other restrictions and limitations of any kind (collectively, “Liens”) have been imposed under the Code, ERISA or any other applicable Law, and (iii)  there has been no non-exempt prohibited transaction (within the meaning of Section  406 of ERISA or Section  4975 of the Code).

  

(f)             Except as set forth on Section  4.11(f)  of the Company Disclosure Schedule, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event (whether contingent or otherwise) could (i)  entitle any current or former Service Provider of the Company or any of its Subsidiaries to any payment; (ii)  increase the amount of compensation or benefits due to any such Service Provider or any such group of Service Providers; (iii)  limit the right of the Company or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Company Benefit Plan or related trust; or (iv)  accelerate the vesting, funding or time of payment of any compensation, equity award or other benefit. There is no Contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party which requires the Company or such Subsidiary to pay a Tax gross-up or reimbursement payment to any Person, including without limitation, with respect to any Tax-related payments under Section  409A of the Code or Section  280G of the Code.

  

  

(g)            All payments, benefits, contributions (including all employer contributions and employee salary reduction contributions) and premiums related to each Company Benefit Plan, including all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of any Service Providers, have been timely paid or made in full or, to the extent not yet due, properly accrued on the balance sheet in accordance with the terms of the Company Benefit Plan and all applicable Laws. No Company Benefit Plan, and none of the Company, any of its Subsidiaries or any Company Benefit Plan fiduciary with respect to any Company Benefit Plan, in any case, is the subject of an audit or investigation by the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or any other Governmental Authority, nor is any such audit or investigation pending or, to the Company’s Knowledge, threatened.

  

(h)            Each of the Company, its Subsidiaries, and each of their respective ERISA Affiliates is, and since January  1, 2018 has been, in compliance in all material respects with the applicable requirements of (i)  Section  4980B of the Code and any similar state Law, (ii)  the applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, and the Laws (including the proposed regulations) thereunder and (iii)  the Patient Protection and Affordable Care Act of 2010, and all rules  and official guidance promulgated thereunder, and no circumstance exists or event has occurred, and no circumstance is expected to exist or event expected to occur, which reasonably could be expected to result in a material violation of, or material penalty or Liability under, any of the foregoing.

  

(i)             None of the Company or any of its Subsidiaries has sponsored, maintained, contributed to, or has been required to sponsor, maintain, participate in or contribute to, any employee benefit plan, program, or other arrangement providing compensation or benefits to any employee or former employee (or any dependent thereof) which is subject to the Laws of any jurisdiction outside of the United States.

  

(j)             Each Company Benefit Plan may be amended, terminated, or otherwise modified by the Company to the greatest extent permitted by applicable law, including the elimination of any and all future benefit accruals thereunder and no employee communications or provision of any Company Benefit Plan has failed to effectively reserve the right of the Company or the ERISA Affiliate to so amend, terminate or otherwise modify such Company Benefit Plan. Neither the Company nor any of its ERISA Affiliates has announced its intention to modify or terminate any Company Benefit Plan or adopt any arrangement or program which, once established, would come within the definition of a Company Benefit Plan. Each asset held under each Company Benefit Plan may be liquidated or terminated without the imposition of any redemption fee, surrender charge or comparable liability.

  

 Section  4.12             Labor.

  

(a)            The Company has provided to the Purchaser a true and correct list, as of the date of this Agreement, containing the names of each current employee and independent contractor and stating for each: (i)  name and identification as either a full-time, part-time or temporary employee or independent contractor; (ii)  the annual dollar amount of all compensation (including wages, salary, consulting fees, commissions, and bonuses); (iii)  dates of hire or engagement; (iv)  title; (v)  the employing or contracting entity; (vi)  any eligibility to receive severance, notice of termination, retention payment, change of control payment, or other similar compensation; (vii)  visa status, if applicable; and (viii)  with respect to employees, a designation of whether they are classified as exempt or non-exempt for purposes of the Fair Labor Standards Act, as amended and any similar state law. The employment or engagement of each employee and independent contractor can be terminated at any time for any reason without notice or payment of severance, termination fee, or other compensation or consideration being owed to such individual other than amounts earned as of the date of termination or as required under applicable Law.

  

  

(b)            (i)  Neither the Company nor any of its Subsidiaries has ever experienced any strike, work stoppage, lockout, or other labor dispute, and to the Knowledge of the Company no such strike, work stoppage, lockout or other labor dispute is currently threatened; (ii)  neither the Company nor any of its Subsidiaries has experienced any grievance, claim of unfair labor practices, or other collective bargaining dispute; and (iii)  to the Knowledge of the Company, no union organizing activity has been made or threatened by or on behalf of any labor organization, works council, or trade association with respect to employees of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is or has at any time been bound by any collective bargaining or similar agreement, and, to the Knowledge of the Company, there are no organizational campaigns, petitions, or other unionization activities seeking to authorize representation of any employee.

  

(c)            Since January  1, 2018, neither the Company nor any of its Subsidiaries has taken any action implicating the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar Law (collectively, the “WARN Act”).

  

(d)            There are no Proceedings against the Company or any of its Subsidiaries pending, or to the Company’s Knowledge, threatened in writing to be brought or filed, before any Governmental Authority in connection with the employment or engagement of any Service Provider or applicant for employment, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, with respect to payment of wages, salary or overtime pay or any other similar employment related matter arising under applicable employment Laws.

  

(e)            Each of Company and each of its Subsidiaries is, and since January  1, 2018 has been, in compliance in all material respects with all applicable Laws relating to employment and employment practices, including, but not limited to, Laws related to workers’ compensation, terms and conditions of employment, worker classification, wages and hours, discrimination, immigration, collective bargaining, and the WARN Act. All current and former employees of the Company and its Subsidiaries have provided documentation evidencing their authorization under applicable immigration Laws to be employed by the Company and the Company has obtained and maintained valid Form  I9s for each such current and former employee in accordance with applicable Law. Except as would not reasonably be expected to result in material Liability, the Company and each of its Subsidiaries have properly classified their respective Service Providers as “employees” or “independent contractors” and as “exempt” or “non-exempt” for all purposes and have properly paid and reported all compensation paid to such Service Providers for all purposes.

  

(f)             To the Knowledge of the Company, since January  1, 2018, (i)  no allegations of discrimination, retaliation, sexual harassment, or similar misconduct have been made against (A)  any employee, officer, or director of the Company or its Subsidiaries or (B)  any Service Provider who supervises other employees of the Company, and (ii)  the Company has not entered into any settlement agreement or conducted any investigation related to allegations of sexual harassment or sexual misconduct by a Service Provider.

  

 Section  4.13             Intellectual Property.

  

(a)            Section  4.13(a)  of the Company Disclosure Schedule sets forth a true and complete list of all Company Intellectual Property that is both (i)  owned by the Company or exclusively licensed to the Company and (ii)  has been registered, issued, or otherwise granted by, or for which an application for registration, issue, or grant is pending with, a Governmental Authority. The foregoing list shall include the record owner, and, if different, the legal and beneficial owner, of each listed item and the jurisdiction in which such item has been registered or filed and, except for domain name registrations, the applicable application, registration or serial number.

  

  

(b)            (i)  To the Company’s Knowledge, the conduct of the Business of the Company as currently conducted, and as currently proposed by the Company to be conducted, does not infringe upon, misappropriate, violate or otherwise constitute the unauthorized use of, the Intellectual Property rights of any Person; and (ii)  no claim is pending or, to the Company’s Knowledge threatened in writing, against the Company alleging any of the foregoing, and to the Company’s Knowledge, there are no facts or circumstances that would reasonably be likely to provide a basis for any such claim; and (iii)  the Company owns or has valid rights to use any Intellectual Property used by the Company in the conduct of the Business of the Company as currently conducted and as currently proposed by the Company to be conducted. All Company Intellectual Property is either (x)  owned by, or subject to an obligation of assignment to, the Company, free and clear of all Encumbrances (other than Permitted Encumbrances) and other exceptions to title that restrict use by the Company of its Intellectual Property in any way or require the Company to make any payment as a condition to use any way of such Intellectual Property, or (y)  licensed to (or otherwise authorized for use by) the Company free and clear of all Encumbrances (other than Permitted Encumbrances).

  

(c)            None of the Patents included in the Company Controlled Intellectual Property is the subject of any litigation, reissue, interference, inter partes review, post grant review, reexamination, or opposition proceeding, and to the Company’s Knowledge, there has been no threat that any such proceeding will hereafter be commenced. The Company’s Patents (excluding patent applications and other than registrations or applications that are not material to the Company’s Business and that the Company has, at least thirty (30) days prior to the date of this Agreement, decided to cancel, let expire, not maintain or permit to go abandoned in its reasonable business judgment) (i)  are, to the Company’s Knowledge, valid and enforceable, (ii)  have not been adjudged invalid or unenforceable in whole or in part, (iii)  are not undergoing cancellation, inter partes review, post grant review, re-examination, termination or withdrawal proceedings and (iv)  have been properly obtained in accordance with all applicable rules  and regulations governing the prosecution of applications for such Patent. To the Company’s Knowledge, there are no Patents of any third party that are dominating or interfering or potentially dominating or interfering, with the Patents included in the Company Controlled Intellectual Property or that could be reasonably asserted by a Person to exclude or prevent the Company from practicing the Patents included in the Company Controlled Intellectual Property to conduct the Business of the Company as currently conducted or currently proposed to be conducted by the Company.

  

(d)            All applications and registrations for Company Controlled Intellectual Property have been filed, prosecuted and maintained in good faith and in a commercially reasonable manner and, to the Company’s Knowledge, in compliance with applicable Law. All registered Company Controlled Intellectual Property (other than pending Patent applications and pending Trademark applications) is, to the Company’s Knowledge, valid and enforceable and in full force and effect as of the date hereof, and, to the Company’s Knowledge, other than registrations or applications that are not material to the Company’s Business and that the Company has, at least thirty (30) days prior to the date of this Agreement, decided to cancel, let expire, not maintain or permit to go abandoned in its reasonable business judgment, has not lapsed, been abandoned, been disclaimed, been canceled or been forfeited, in whole or in part, and, to the Company’s Knowledge, there are no facts or circumstances that would reasonably be likely to provide a basis for abandonment, invalidity, cancellation, forfeiture, or unenforceability of the registered Company Controlled Intellectual Property (except for expiration at the end of their statutory terms). No registered Company Controlled Intellectual Property has been or is subject to any cancellation, nullification, inter partes review, post grant review, interference, conflict, concurrent use or opposition proceeding, reissue, reexamination, invalidity, or other similar proceeding challenging the scope, validity, priority, duration, inventorship, ownership, registrability, effectiveness, use or right to use any of the registered Company Controlled Intellectual Property and to the Company’s Knowledge there has been no threat that any such proceeding will hereafter be commenced. Neither the Company nor any of its Representatives engaged in prosecuting the Company Intellectual Property has engaged in any fraud, or violation of 37 C.F.R. §1.56, with regard to the prosecution or procurement of the Company’s Patents.

  

  

(e)            Since January  1, 2018, there have not been any, nor are there any Actions pending, or, to the Company’s Knowledge, threatened in writing, against the Company (i)  challenging or seeking to deny or restrict the use by the Company of the Company Controlled Intellectual Property or (ii)  alleging that any services provided by, processes used by, or Company Products being developed by the Company in relation to its Business as currently conducted or as currently proposed by the Company to be conducted infringe or misappropriate any Intellectual Property right of any third party.

  

(f)             Except with respect to registrations or applications that are not material to the Company’s Business and that the Company has, at least thirty (30) days prior to the date of this Agreement, decided to cancel, let expire, not maintain or permit to go abandoned in its reasonable business judgment, all application fees, maintenance fees, annuity fees, renewal fees or other similar payments to any Governmental Authority for each jurisdiction in which each Patent, Patent application, Trademark, Trademark application, trade name, trade name registration, brand name, brand name registration, service mark, service mark registration, Copyright, Copyright application, domain name or domain name application, whether issued or pending, that is included within the Company Intellectual Property has issued or is pending have been timely paid and all necessary documents and certificates in connection therewith have been filed with the relevant Governmental Authority for the purpose of maintaining such registrations or applications.

  

(g)            To the Knowledge of the Company, (i)  no Person is engaging in any activity that infringes, dilutes, violates or misappropriates the Company Controlled Intellectual Property; (ii)  no such claims or assertions have been made against a Person by or on behalf of the Company or by or on behalf of the owner or licensor of any Intellectual Property exclusively licensed to the Company; and (iii)  there are no facts or circumstances that would reasonably be likely to provide a basis for any such claims or assertions.

  

(h)            The Company has used reasonable efforts, consistent with industry standards, to maintain, protect, and preserve the security, confidentiality, value and ownership of confidential Know-How and confidential information included in the Company Controlled Intellectual Property, including by requiring employees and consultants, and any other Person with access to such confidential Know-How and confidential information to execute a reasonably customary confidentiality agreement. To the Company’s Knowledge, no such current or former employees or consultants, and no other such Person is in violation in any material respect of any such confidentiality agreements. To the Knowledge of the Company, there has been no misappropriation of any trade secrets or other confidential information of the Company with respect to its Business.

  

(i)             The Company has not (i)  transferred ownership of, (ii)  granted any exclusive license of, exclusive right to use or option to exclusively license or use, or (iii)  authorized the retention of any exclusive rights to use, or (iv)  authorized joint ownership of any owned Company Intellectual Property.

  

  

(j)             All past and present employees, officers, consultants and independent contractors of the Company with access to the Company’s confidential information with respect to its Business are parties to written agreements under which each such Person is obligated to maintain the confidentiality of confidential information of the Company. All past and present employees, officers, consultants and independent contractors of the Company who are, or have been, involved in the creation or development of Company Intellectual Property have executed written agreements pursuant to which such Persons have assigned to the Company all their rights in and to all Intellectual Property arising out of or relating to such Person’s activities with respect to the Company’s Business. To the Company’s Knowledge, no such officers, employees, consultants and independent contractors of the Company are in violation of such agreements. All material Intellectual Property created by the Company’s founders or other Persons for or on behalf of or in contemplation of the Company (i)  prior to the inception of the Company or (ii)  prior to such Person’s commencement of employment with the Company has been irrevocably assigned to the Company. The Company is not utilizing (A)  any Intellectual Property authored, invented, created, conceived or developed by any employee or other Person that the Company intends to hire prior to such employee or Person’s employment by the Company, or (B)  in the Company’s Business, to the Knowledge of the Company, any confidential information of any other Persons to which such employees or Persons were exposed prior to their employment by the Company.

  

(k)            Section  4.13(k)  of the Company Disclosure Schedule sets forth a true and accurate list of all Contracts in effect as of the date of this Agreement relating to any right in, to or under any Company Intellectual Property (including all licenses, options, settlement agreements, coexistence agreements, consent agreements, assignments, security interests) that have been granted (i)  to the Company (other than Standard Business Agreements), or (ii)  by the Company to any other Person. The Company is in material compliance with the terms of all such agreements and other obligations and, with respect to sublicenses of Company Intellectual Property to the Company, to the Knowledge of the Company, the Company’s licensor is in compliance in all material respects with all agreements granting such Intellectual Property rights to such licensor. The Company has not entered into any Contract (i)  granting any Person the right to bring infringement actions with respect to, or otherwise to enforce rights with respect to, any of the Company Controlled Intellectual Property, or (ii)  granting any Person the right to control the prosecution of any of the Company Controlled Intellectual Property except as set forth in Section  4.13(k)  of the Company Disclosure Schedule. The Company has not assigned, transferred, conveyed, or granted any licenses (or options to any licenses) to Intellectual Property that would have been Company Controlled Intellectual Property, but for such assignment, transfer, conveyance, license or option grant. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated by this Agreement (alone or in combination with any other event) and the compliance with the provisions of this Agreement do not and will not (i)  result in the material breach of, or create on behalf of any third party the right to terminate or modify, (A)  any license, sublicense or other agreement relating to any Company Intellectual Property owned by the Company, or (B)  any license, sublicense or other agreement as to which the Company is a party and pursuant to which any third party is authorized by the Company to use any Company Controlled Intellectual Property, or (ii)  otherwise conflict with, alter, or impair, any of the rights of the Company in any Company Intellectual Property, or, to the Company’s Knowledge, the validity, enforceability, use, right to use, ownership, priority, duration, scope or effectiveness of any such Company Intellectual Property.

  

(l)             Except as set forth in Section  4.13(l)  of the Company Disclosure Schedule and except for non-negotiated, non-exclusive licenses to off-the-shelf generally commercially available software with annual license fees under $25,000 or any other Standard Business Agreements, there are no agreements, arrangements or understandings (including all licenses, options, settlement agreements, coexistence agreements, consent agreements, assignments, security interests), in each case, whether written or oral, pursuant to which the Company is obligated to make payments or provide other consideration (in any form, including royalties, profit-share revenue, milestones, sublicense revenue and other contingent payments) to third parties for use of any Intellectual Property. Except for non- negotiated, non-exclusive licenses to off-the-shelf generally commercially available software with annual license fees under $25,000 or any other Standard Business Agreements, Section  4.13(l)  of the Company Disclosure Schedule sets forth a list and description of any payments or other monetary consideration (in any form, including royalties, profit-share revenue, milestones, sublicense revenue and other contingent payments) required to be made by the Company to any third party for use of any Intellectual Property.

  

  

(m)           No Governmental Authority has any right to (including any “step-in” or “march-in” rights with respect to), ownership of, or right to royalties or other payments for, or to impose any requirement on the manufacture or commercialization of any product incorporating, any Company Intellectual Property owned or exclusively licensed to the Company. Without limiting the generality of the foregoing, no invention claimed or covered by any patent or patent application within the Company Controlled Intellectual Property (i)  was conceived or reduced to practice in connection with any research activities funded, in whole or in part, by the federal government of the United States or any agency thereof, (ii)  is a “subject invention” as that term is described in 35 U.S.C. Section  201(e)  or (iii)  is otherwise subject to the provisions of the Bayh-Dole Act or any similar Law of any other jurisdiction, including with respect to any patent or patent application that is part of the Company Controlled Intellectual Property. No funding, facilities, or employee or independent contractor of any educational or research institution were used, directly or indirectly, to develop or create in whole or in part, any of the Company Controlled Intellectual Property, and no educational institution has any right to, or right to royalties for, or to impose any requirement on the manufacture or commercialization of any product incorporating, any Company Controlled Intellectual Property. The Company Intellectual Property constitutes all of the Intellectual Property necessary to operate the Business.

  

(n)            None of the assets transferred pursuant to the Asset Transfer and Assumption Agreement (i)  is or was necessary or reasonably useful for the conduct of the Business as conducted prior to the Closing or as currently planned by the Company to be conducted, or (ii)  constitutes Company Intellectual Property that is otherwise applicable to or incorporated or embodied in any of the Company Products.

  

 Section  4.14             Material Contracts.

  

(a)            Section  4.14(a)  of the Company Disclosure Schedule lists each of the following Contracts (other than Company Benefit Plans and other than Contracts with respect to Leased Real Property) in effect as of the date of this Agreement to which the Company is a party, by which it is or any of its assets are bound, or by which any Affiliate of Company is bound with respect to any Company Product or any research or development relating thereto (each, a “Company Material Contract” and collectively, the “Company Material Contracts”):

  

 (i)            any indenture, credit agreement, loan agreement, security agreement, guarantee, note, mortgage or other evidence of Debt or agreement providing for Debt;

  

 (ii)           any Contract containing a covenant not to compete restricting the ability of the Company to compete in any line of business or in geographic area or during any period of time;

  

 (iii)          any Contract which creates a partnership or joint venture or similar arrangement;

  

 (iv)          each Lease;

  

 (v)           any stockholders, investors rights or similar Contracts;

  

 (vi)          any collective bargaining or other similar labor or union Contracts;

  

  

 (vii)         any Contract providing for retention payments, change of control payments, accelerated vesting or any other payment or benefit to any Person that may or will become due as a result of any of the transactions contemplated by this Agreement;

  

 (viii)        any independent contractor agreement, consulting agreement or similar Contract with any current Service Provider that is not immediately terminable at will by the Company without notice, severance or other cost or liability;

  

 (ix)           any Contract relating to the acquisition, transfer, use, development, sharing or license of any technology or any Intellectual Property, other than Standard Business Agreements;

  

 (x)            any Contracts, other than Contracts made in connection with this Agreement and the Asset Transfer and Assumption Agreement, relating to (i)  the disposition of the Business or any assets of the Company (other than sales of inventory in the ordinary course of business), (ii)  the purchase or sale or transfer of any outstanding Company Capital Stock, (iii)  any merger, consolidation or business combination involving the Company, or (iv)  restructuring or sale of the Company, its assets or the Business;

  

 (xi)           any Contract that contains an option or grants any right of first refusal or right of first offer, right of first negotiation or similar right in favor of a party other than the Company or that limits or purports to limit the ability of the Company to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or businesses;

  

 (xii)          any Contracts under which the Company has agreed to indemnify third parties (other than in the ordinary course of business) or which provide for earnouts or other contingent liabilities;

  

 (xiii)         any Contract under which (A)  any Person has directly or indirectly guaranteed any liabilities or obligations of the Company or (B)  the Company has guaranteed liabilities or obligations of any other Person (in each case other than endorsements for the purposes of collection in the ordinary course of business consistent with past practice);

  

 (xiv)        any Contract with any Related Person other than confidentiality agreements, employment agreements or consulting agreements entered into in the ordinary course of business consistent with past practice;

  

 (xv)         any confidentiality agreements with parties other than employees other than agreements entered into with Service Providers in the ordinary course of business consistent with past practice;

  

 (xvi)        any agreements which purport to bind Affiliates of the Company to any material obligation;

  

 (xvii)       any Contract that results in any Person holding a power of attorney from the Company other than any such Contract entered into in the ordinary course of business;

  

 (xviii)      Contracts (pursuant to which the Company or any other party thereto has continuing obligations) involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company or income or revenues related to any Company Product;

  

  

 (xix)         each joint development agreement, joint venture agreement, collaboration agreement or similar such Contract relating to Company Products or inventions of the Company included in the Company Intellectual Property;

  

 (xx)          each Contract pursuant to which a third party manages or provides services in connection with clinical trials relating to any Company Product;

  

 (xxi)         each Contract relating to Company Products (i)  in which the Company has granted development rights, “most favored nation” pricing provisions or marketing or distribution rights relating to any product or product candidate or (ii)  in which the Company has agreed to purchase a minimum quantity of goods relating to any product or product candidate or has agreed to purchase goods relating to any product or product candidate exclusively from a certain party;

  

 (xxii)        each Contract pursuant to which the Company obtains the Company Products or any components thereof and each Contract related to the manufacturing of the Company Products;

  

 (xxiii)       any Contract explicitly requiring payments by the Company in excess of $100,000 in the current fiscal year;

  

 (xxiv)       any Contract with a Governmental Authority;

   

 (xxv)        any Contract explicitly providing for receipts by the Company in excess of $50,000 in the current fiscal year;

  

 (xxvi)       all Contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of Company, or income or revenues related to any product of Company;

  

 (xxvii)      any Contract: (1)  relating to the employment of, or the performance of services by, any employee, contractor, or consultant of the Company or its Subsidiaries, other than any at-will employment or services agreement providing no severance or other-post-termination benefits (other than continuation coverage required by law) or standard agreements pertaining to confidentiality and invention assignment on the Company’s standard forms therefor (which standard forms have been made available to Purchaser); or (2)  pursuant to which the Company or its Subsidiaries is or may become obligated to make any severance, termination or similar payment to any current or former employee, director of the Company, individual consultants, contractors; or (3)  pursuant to which the Company is or may become obligated to make any bonus or similar payment (other than payments constituting base salary) in excess of $100,000 to any current or former employee, director, individual consultants, or contractors; and

  

 (xxviii)     all Contracts with Major Suppliers.

  

(b)            Neither the Company, nor to the Knowledge of the Company, any other party to any Company Material Contract, is in breach of or default under any Company Material Contract in a way that materially adversely affects the rights of the Company and, to the Knowledge of the Company, no event has occurred that (with or without notice or lapse of time) will, or would reasonably be expected to (i)  result in a violation, breach or penalty under any of the material provisions of any Company Material Contract, (ii)  give any Person the right to declare a default or exercise any remedy under any Company Material Contract, (iii)  give any Person the right to accelerate the maturity or performance of any such Company Material Contract, or (iv)  give any Person the right to cancel, terminate or modify any Company Material Contract. The Company has not received any written notice or claim of any breach or default from the counterparty to any Company Material Contract. Each Company Material Contract is in full force and effect and is valid, binding and enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. True and complete copies of each written Company Material Contract have been made available to Purchaser prior to the date of this Agreement.

  

  

Section  4.15            Real Property. The Company does not own any real property. Section  4.15 of the Company Disclosure Schedule sets forth a true and complete list of all of the real property that is leased by the Company (the “Leased Real Property”). The Company has a valid, binding and enforceable leasehold interest in each Leased Real Property as provided in the applicable lease (a “Lease”), free and clear of any Encumbrances other than Permitted Encumbrances. The Company (a)  is not in material violation of any Lease and (b)  has not been informed in writing that the lessor under any Lease has taken action or threatened to terminate the Lease before the expiration of the Lease, and, to the Knowledge of the Company, no other party to any Lease is in violation of such Lease. The Company has not assigned any Lease or subleased, sublicensed, or otherwise granted to any Person, the right to use or occupy any Leased Real Property.

  

 Section  4.16           Company Property.

  

(a)            The Company has good and marketable, indefeasible, fee simple title to, or in the case of leased property and assets, has valid leasehold interests in, all personal property and assets reflected on the latest balance sheet included in the Company Financial Statements or acquired after August  31, 2020, except for properties and assets sold since such date in the ordinary course of business consistent with past practice. None of such property or assets is subject to any Encumbrances (other than Permitted Encumbrances).

  

(b)            All tangible assets owned or leased by the Company have been maintained in all material respects in accordance with generally accepted industry practice and are in all material respects in good operating condition and repair, ordinary wear and tear excepted.

  

(c)            To the Company’s Knowledge, all of the inventory of the Company Products is in good condition and free of any material defect or deficiency, is not obsolete, is useable in the ordinary course of the Business as currently being conducted.

  

  This Section  4.16 does not relate to any real property or interests in real property, such items being the subject of Section  4.15, or to Intellectual Property, such items being the subject of Section  4.13.

  

 Section  4.17           Insurance. Section  4.17 of the Company Disclosure Schedule sets forth a true and complete list of all insurance policies relating to the assets, Business, operations, employees, officers or directors of the Company in effect as of the date of this Agreement. The Company has made available to Purchaser true and complete copies of all such policies. All such policies are in full force and effect, and all premiums with respect thereto covering all periods have been paid, and no written notice of pending cancellation or termination has been received with respect to any such policy. There are no pending claims under any such policies. Such policies are of the type and in amounts customarily carried by Persons conducting businesses similar to those of the Company.

  

 Section  4.18           Finder’s Fee. Except as detailed and set forth in Section  4.18 of the Company Disclosure Schedule (for each Person identified therein, an accurate and complete copy of whose engagement agreement has been provided to Purchaser and whose fees and expenses shall be treated as an Unpaid Company Transaction Expense hereunder), the Company has not incurred any Liability to any party for any brokerage, investment bankers’ or finders’ fees or commissions in connection with the transactions contemplated by this Agreement.

  

  

 Section  4.19           Affiliate Transactions. No present or former director, officer, employee, record or beneficial owner of five percent (5%) or more of the Company Capital Stock, Affiliate or “associate”, or members of any of their “immediate family” (as such terms are respectively defined in Rule  12b-2 and Rule  16a-1 of the Exchange Act), of the Company (each of the foregoing, a “Related Person”), other than in its capacity as a director, officer or employee of the Company (i)  is or was involved, directly or indirectly, in any business arrangement, transaction, Contract or other relationship (whether written or oral) with the Company or any assets or property thereof, (ii)  directly or indirectly owned or owns, or otherwise had or has any right, title, claim, interest in, to or under, any asset, property or right, tangible or intangible, that is used by the Company (iii)  is or was engaged, directly or indirectly, in the conduct of the Business of the Company, (iv)  has any claim or cause of action against the Company or (v)  owes any money to, or is owed any money by, the Company, other than for advances made to directors or officers of the Company in the ordinary course of business to meet reimbursable business expenses reasonably anticipated to be incurred by such individuals.

  

 Section  4.20           Privacy and Information Security.

  

(a)            The Company is and has been, except as would not reasonably be expected to be material to the Company, in compliance with (i)  all applicable Laws relating to the privacy of patient medical records and all other personal information and personal data, including with respect to the collection, storage, use, sharing, transfer, disposition, protection and processing thereof (including in connection with any pre-clinical trials conducted with respect to any Company Product), and (ii)  all privacy policies, information security policies and other privacy notices of the Company relating to the privacy of patient medical records and all other personal information and personal data. There have not been any (A)  proceedings or investigations initiated by any other Person against the Company (including any investigation by any Governmental Authority) or (B)  any claims, notices, audits or complaints asserted by any other Person (including any Governmental Authority) in writing, or to the Knowledge of the Company, orally, regarding any collection or use of any patient medical records or other personal information or personal data by or on behalf of the Company or any violation of applicable Laws relating to the privacy of patient medical records and all other personal information and personal data, and the Company has not received any written notices, correspondence or other communications from any Person alleging any of the foregoing. The Company has complied with all contractual and legal requirements of the Company pertaining to privacy and security with respect to the privacy of patient medical records and all other personal information and personal data, except as would not reasonably be expected to be material to the Company. All Personal Data that is or was used in any of the pre-clinical or clinical trials conducted with respect to the Company Products may be used by the Company immediately after the Closing in the same manner as used by the Company prior to the Closing. The Company is not a covered entity or business associate, as those terms are defined under HIPAA, nor is the Company subject to any business associate contract as described under HIPAA. The Company has not, to the Knowledge of the Company, except as would not reasonably be expected to be material to the Company, experienced any security breach or other security incident resulting in the unauthorized access to, or unauthorized use or disclosure of, Personal Data maintained by the Company, or unauthorized access to Company Systems.

  

(b)            The computer systems, including software, used by the Company in the conduct of the Business (collectively, the “Company Systems”) are sufficient in capacity and amount for the Business as currently conducted. Except as would not reasonably be expected to be material to the Company, the Company maintains commercially reasonable security, disaster recovery and business continuity plans, procedures and facilities. In the last eighteen (18) months, there have not been any failures, breakdowns, continued substandard performance or other adverse events affecting any such Company Systems that have caused substantial disruption or interruption in or to the use of such Company Systems and/or the conduct of the Company’s business and to the Knowledge of the Company, there have been no material failures with respect to any of the Company Systems that have not been remedied or replaced in all material respects. Except as would not reasonably be expected to be material to the Company, the Company has taken reasonable actions to protect the security and integrity of the Company Systems within its possession or otherwise in its operational control and the sensitive or confidential data stored or contained therein or transmitted thereby including, without limitation, procedures designed to prevent unauthorized access and the introduction of a virus and the taking and storing on-site and off-site of back-up copies of critical data. Except as would not reasonably be expected to be material to the Company, there have been no unauthorized intrusions or breaches of the security of the Company Systems, including any such intrusions or breaches resulting in unauthorized access to, or destruction or acquisition of, any sensitive or confidential data or other information contained therein.

  

  

 Section  4.21             Regulatory Matters.

  

(a)            The Company is and, since its incorporation, has been in material compliance with all Health Care Laws applicable to the Company or Company Products, and the Company has not, since its incorporation, engaged in activities which are, as applicable, cause for civil penalties, or mandatory or permissive exclusion from any government healthcare program. The Company has not received any written notification, correspondence or any other written (or, to the Company’s Knowledge, oral) communication, including any such notification of any pending or threatened Action from any court, arbitrator, third-party or Governmental Authority, including, without limitation, the FDA, the Centers for Medicare  & Medicaid Services, the U.S. Department of Justice, or the U.S. Department of Health and Human Services Office of Inspector General, of potential or actual non-compliance by, or Liability of, the Company under any Health Care Laws, and to the Company’s Knowledge, no such Action is threatened, in writing. To the Company’s Knowledge, there are no facts or circumstances that would reasonably be expected to give rise to Liability of the Company under any Health Care Laws. The Company is not a party to and does not have any ongoing reporting obligations pursuant to or under any Governmental Order or corporate integrity agreements, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders, plans of correction or similar agreements with or imposed by any Governmental Authority.

  

(b)            The Company owns all inventory of the Company Products. Section  4.21(b)  of the Company Disclosure Schedule sets forth a true and complete list of (i)  all quantities of inventory of the Company Products in excess of 100 mg, (ii)  where such inventory is located, and (iii)  the name of the Company Affiliate or other Person that possesses such inventory as of the date of this Agreement.

  

(c)            All Company Products are being, and at all times have been, developed, tested, labeled, manufactured, stored, imported, exported and distributed, as applicable, in compliance in all material respects with all applicable Laws, including, to the extent applicable, the Health Care Laws administered by the FDA, and all similar Laws of any other jurisdiction applicable to the Company or the Company Products, including, as applicable, those Laws relating to current good manufacturing practices, good laboratory practices and good clinical practices.

  

  

(d)            The clinical, pre-clinical and other studies and tests conducted by or on behalf of, at the direction of, or sponsored by the Company or in which the Company or the Company Products have participated were and, if still pending, are being conducted in all material respects in accordance with all applicable Laws, including, but not limited to, the Federal Food, Drug and Cosmetic Act and its applicable implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58 and 312. Except as set forth in Section  4.21(d)  of the Disclosure Schedule, no investigational new drug application has been filed by or on behalf of the Company with the FDA or any applicable Governmental Authority in any other jurisdiction with respect to any Company Product. No investigational new drug application filed by or on behalf of the Company with the FDA or any applicable Governmental Authority has been placed on clinical hold by the FDA, and neither the FDA nor any other Governmental Authority has commenced, or, to the Knowledge of the Company, threatened to initiate, any action to place a clinical hold order on, or otherwise terminate, delay or suspend, any proposed or ongoing clinical investigation conducted or proposed to be conducted by or on behalf of the Company. Except as set forth in Section  4.21(d)  of the Disclosure Schedule, all regulatory filings submitted in connection with any clinical study conducted by or on behalf of, at the direction of, or sponsored by the Company or in which the Company or the Company Products have participated (each, a “Clinical Study”) in any jurisdiction have been filed in the Company’s name. With respect to each Clinical Study, except as set forth in Section  4.21(d)  of the Disclosure Schedule, Haisco and any Person managing such Clinical Study have (i)  transferred to Company all documents, data, and other records relating to such Clinical Study and (ii)  transferred to Company all inventory of Company Product or any active ingredient incorporated into any Company Product held for use in connection with such Clinical Study.

  

(e)            Neither the Company nor any Affiliate of the Company has entered into any Contract with any third party to develop, promote or market any Company Product or that otherwise grants such third party any license to develop, manufacture, supply, distribute, market, commercialize, sell, offer, import or otherwise commercialize any Company Product.

  

(f)             None of the Company or any of its officers, employees or, to the Company’s Knowledge, agents, or Persons with an ownership interest of five percent (5%) or more of the Company, has been convicted of any crime or engaged in any conduct that has resulted, or would reasonably be expected to result, in exclusion, suspension, debarment or ineligibility to participate in any government program under applicable Law, including, 21 U.S.C. Section  335a, and 42 U.S.C. 1320a-7. No Governmental Orders or Actions that would reasonably be expected to result in such a debarment, suspension, ineligibility, or exclusion of the Company are pending or, to the Company’s Knowledge, threatened, against the Company or any of its officers, employees, or agents or Person with an ownership interest of five percent (5%) or more of the Company.

  

(g)            The Company has not had any Company Product or manufacturing site (whether Company-owned or that of a Contract manufacturer for the Company Products) subject to a Governmental Authority (including FDA or other Governmental Authority) shutdown or import or export prohibition, nor received any warning letter or untitled letter, report of inspectional observations, including FDA Form  483s, establishment inspection reports, notices of violation, clinical holds, enforcement notices, recall notices or other documents from any Governmental Authority, or any domestic or foreign institutional review board, privacy board or ethics committee approving any clinical trial involving any Company Product (a “Review Board”) or similar body, alleging a lack of compliance by the Company with any applicable Laws, Permits, or requests or requirements of a Governmental Authority, and to the Knowledge of the Company, no Governmental Authority is considering such action.

  

(h)            Section  4.21(h)  of the Company Disclosure Schedule sets forth a list of (i)  all recalls, field notifications, field corrections, market withdrawals or replacements, safety alerts or other notice of action relating to an alleged lack of safety, efficacy, or regulatory compliance of the Company Products (“Safety Notices”) since the date of the Company’s incorporation; and (ii)  the dates such Safety Notices, if any, were resolved or closed.

  

(i)             The Company has made available to Purchaser complete and accurate copies of (i)  all filings with the FDA, EMA or equivalent Governmental Authority relating to all Company Products, (ii)  all material correspondence with the FDA, EMA or equivalent Governmental Authority relating to all Company Products and (iii)  all material, data, information, results, analyses, publications, and reports relating to all Company Products, including all clinical trial protocols, trial statistical analysis plans and published trial results. The foregoing materials are true and correct in all material respects of the matters reflected therein.

  

  

(j)             The registration and regulatory files, dossiers and supporting materials of the Company with respect to the Company Products have been maintained in all material respects in accordance with all applicable Law. None of the filings, communications, documents and other information submitted by or on behalf of the Company to the FDA, EMA, an equivalent Governmental Authority or to any Review Board relating to any Company Product contained any untrue statement of a material fact or fraudulent statement or omitted to state any material fact necessary to make the statements therein not misleading Neither the Company nor any of its officers, employees, nor, to the Company’s Knowledge, agents has committed any other act, or made a statement, or failed to make a statement that could reasonably be expected to provide a basis for the FDA or any other Governmental Authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September  10, 1991) or any similar policy.

  

 Section  4.22             Anticorruption Matters; Export Controls and Sanctions Matters.

  

(a)            Neither the Company, nor any of its officers, directors, employees, nor, to the Company’s Knowledge, agents or other Persons acting on its behalf has, directly or indirectly, (i)  taken any action in violation of any applicable anticorruption Law, including the U.S. Foreign Corrupt Practices Act (“FCPA”) (15 U.S.C. § 78 dd-1 et seq.), or (ii)  offered, paid, given, promised to pay or give, or authorized the payment or gift of anything of value, directly or indirectly, to any Public Official, for purposes of unlawfully (A)  influencing any act or decision of any Public Official in his or her official capacity, (B)  inducing such Public Official to do or omit to do any act in violation of his lawful duty, (C)  securing any improper advantage or (D)  inducing such Public Official to use his or her influence with a Governmental Authority, or commercial enterprise owned or controlled by any Governmental Authority (including state-owned or controlled veterinary or medical facilities), in order to assist the Company or any Person related to the Company, in obtaining or retaining business. None of the officers, directors or employees of the Company are themselves Public Officials. There have been no false or fictitious entries made in the books or records of the Company relating to any payment that the FCPA prohibits, and the Company has not established or maintained a secret or unrecorded fund for use in making any such payments. There are no pending or, to the Company’s Knowledge, threatened claims, charges, investigations, violations, settlements, civil or criminal enforcement actions, lawsuits, or other court actions against the Company with respect to violation of any applicable anticorruption Law, including the FCPA, relating to the Company. The Company has ethics policies that address and prescribe compliance with applicable anticorruption Laws, including the FCPA.

  

(b)            Neither the Company, nor any of the Representatives of the Company acting on its behalf has, directly or indirectly, taken any action in violation of any applicable export control Law, trade or economic sanctions Law, or antiboycott Law, in the U.S. or any other jurisdiction, including: the Arms Export Control Act (22 U.S.C.A. § 2278), the Export Administration Act (50 U.S.C. App. §§ 2401-2420), the International Traffic in Arms Regulations (22 C.F.R. 120-130), the Export Administration Regulations (15 C.F.R. 730 et seq.), the Office of Foreign Assets Control Regulations (31 C.F.R. Chapter V), the Customs Laws of the United States (19 U.S.C. § 1 et seq.), the International Emergency Economic Powers Act (50 U.S.C. §  1701-1706), the U.S. Commerce Department antiboycott regulations (15 C.F.R. 560), the U.S. Treasury Department antiboycott requirements (26 U.S.C. § 999), any other export control regulations issued by the agencies listed in Part  730 of the Export Administration Regulations, or any applicable non-U.S. Laws of a similar nature. Neither the Company, nor any of the Representatives of the Company acting on its behalf, is listed on the U.S. Office of Foreign Assets Control “Specially Designated Nationals and Blocked Persons” or any other similar list. The Company has ethics policies that address and prescribe compliance program appropriate to ensure compliance with the Laws identified in this Section  4.22.

  

  

Section  4.23        Major Suppliers. Section  4.23 of the Company Disclosure Schedule lists the ten (10)  largest suppliers (measured by invoiced dollars) of the Business for the fiscal year ended December  31, 2020 (“Major Suppliers”) and the dollar amount of business conducted with each Major Supplier in such year. The Company is not engaged in any dispute with any Major Supplier, the Company is not in material breach of or in default of any agreement with any of the Major Suppliers, to the Company’s Knowledge, no Major Supplier intends to cancel or otherwise substantially modify its relationship with the Company or to decrease materially or limit its services, supplies or materials to the Company, and to the Company’s Knowledge, the consummation of the transactions contemplated hereby will not adversely affect the relationship of Purchaser or the Company with any Major Supplier.

  

 Section  4.24             Products Liability.

  

(a)            No claim has been made or threatened in writing to the Company in connection with the product liability of any Company Product and no Governmental Authority has commenced or threatened in writing to initiate any Action or requested the recall of any Company Product, or commenced or threatened in writing to initiate any Action to enjoin the production of any Company Product, and to the Company’s Knowledge, there is no basis for any such claim or Action, nor any reason to believe that any Governmental Authority is considering such Action.

  

(b)            The Company Products supplied by or on behalf of the Company have complied in all material respects with all Laws and with all government, trade association and other mandatory and voluntary requirements, specifications and other forms of guidance.

  

(c)            No customer of the Company has complained in writing to the Company of any quality, design, engineering or safety issue with respect to any Company Product that could materially and adversely impact the Business.

  

No Company Product developed, used, manufactured or sold by or on behalf of the Company prior to the Closing contained or will contain any material quality, design, engineering, manufacturing or safety defect.

  

 Section  4.25           No Additional Representations. Except as otherwise expressly set forth in this Article  IV or in the Exhibits attached to this Agreement, the Company expressly disclaims any representations or warranties of any kind or nature, express or implied, including any representations or warranties of the Company, its business or operations or otherwise in connection with this Agreement or the transactions contemplated hereby.

  

(b)            Without limiting the generality of the foregoing, neither the Company or the Seller has made any representations or warranties, express or implied, other than those set forth in this Agreement and in the Exhibits attached to this Agreement, in the materials relating to the business and affairs of the Company that have been made available to Purchaser, including diligence materials, or in any presentation of the business and affairs of the Company by the management of the Company or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by Purchaser in executing, delivering and performing this Agreement and the transactions contemplated hereby. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including but not limited to, any offering memorandum or similar materials made available by the Company and its representatives, are not and shall not be deemed to be or to include representations or warranties of the Company, and are not and shall not be deemed to be relied upon by Purchaser in executing, delivering and performing this Agreement and the transactions contemplated hereby.

  

  

Article  V
REPRESENTATIONS AND WARRANTIES of seller

  

 Seller represents and warrants to Purchaser as follows:

  

 Section  5.1             Power and Authority; Organization and Standing. Seller has full corporate power and authority to enter into and perform this Agreement and all documents and instruments executed by Seller in connection with this agreement, including all Ancillary Documents to which Seller is a party (all such documents and instruments, collectively, “Seller’s Ancillary Documents”). Seller is an exempted company duly incorporated with limited liability, validly existing and in good standing under the Laws of the Cayman Islands.

  

 Section  5.2            Execution and Delivery. This Agreement and Seller’s Ancillary Documents have been duly executed and delivered by Seller and constitute legal, valid and binding agreements of Seller, enforceable against Seller in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or any other similar Law affecting creditors’ rights generally or by general principles of equity.

  

 Section  5.3            Ownership. Seller is the record and beneficial owner of all of the Shares, free and clear of all Liens (other than those Liens arising solely pursuant to applicable federal and state securities laws). Seller does not own any equity securities of the Company other than the Shares.

  

  Section  5.4           Conflicts. Neither the execution and delivery of this Agreement and Seller’s Ancillary Documents by Seller, nor the consummation by Seller of the transactions contemplated hereby or thereby (i)  violates, is in conflict with, accelerates the performance required by, requires any notice or constitutes a default (or an event which, with notice or lapse of time or both, would constitute a default) under any Contract to which Seller is a party or by which Seller is bound, in any material respect
(ii)  violates any Law or any Order of any court or other Governmental Authority applicable to Seller in any material respect, (iii)  violates, is in conflict with or constitutes a breach of any of the terms, conditions or provisions of the Company’s or Seller’s Organizational Documents in any material respect, or (iv)  results in the creation of any Lien upon any property (including the Shares) of Seller under any Contract to which Seller is a party.

  

 Section  5.5            Brokers and Finders. Neither Seller nor any of its Affiliates has retained, engaged or entered into any Contract with any Person who is or will be entitled to a broker’s commission, finder’s fee, investment banker’s fee or similar payment in connection with (i)  the negotiation, execution or performance of this Agreement or (ii)  introducing the parties hereto to each other.

  

 Section  5.6            Proceedings. There is no Proceeding pending or, to Seller’s knowledge, threatened, against Seller or its officers or directors: (a)  with respect to or affecting Seller’s ability to perform its obligations hereunder, or (b)  that is reasonably likely to prohibit or restrict the performance of this Agreement and Seller’s Ancillary Documents by Seller.

  

 

Article  VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

 Purchaser represents and warrants to the Company, as of the date hereof and as of the Closing, as follows:

  

 Section  6.1            Corporate Status. Purchaser (a)  is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, (b)  has all requisite power and authority to carry on its business as it is now being conducted and (c)  is duly qualified to do business and is in good standing in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets and the conduct of its business requires it to be so qualified, licensed or authorized, except for those jurisdictions where the failure to be so qualified, licensed or authorized would not have a Material Adverse Effect on Purchaser or materially impair the ability of Purchaser to consummate the transactions contemplated by this Agreement.

  

 Section  6.2            Authority. Purchaser has all necessary corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Purchaser, the performance by Purchaser of its obligations hereunder, and the consummation by Purchaser of the transactions contemplated by this Agreement, have been duly authorized by the Board of Directors (or equivalent governing body) of Purchaser, and no other corporate action on the part of Purchaser is necessary to authorize the execution and delivery of this Agreement by Purchaser, the performance by Purchaser of its obligations hereunder or the consummation by Purchaser of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Purchaser and (assuming due authorization, execution and delivery by the other Parties to this Agreement) constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to the Enforceability Exceptions.

  

 Section  6.3            No Conflict; Government Authorization.

  

(a)            The execution and delivery of this Agreement, the performance by Purchaser of its obligations hereunder and the Ancillary Documents to which Purchaser is or will be a party, and the consummation by Purchaser of the transactions contemplated by this Agreement and the Ancillary Documents to which Purchaser is or will be a party, does not and will not (i)  conflict with, or result in any violation of the Organizational Documents of Purchaser; (ii)  subject to the matters described in Section  6.3(b), conflict with or result in a violation of any material Permit or Law applicable to Purchaser, or any of its assets; or (iii)  result in a material breach of, or constitute a material default (or event which with the giving of notice or lapse of time, or both, would become a material default) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a benefit under, or result in the creation of any Encumbrance (not including Permitted Encumbrances) upon any of the rights or assets of Purchaser pursuant to, any Contract to which Purchaser is a party or by which it is bound or affected.

  

(b)            No consent of, or registration, declaration, notice or filing with, any Governmental Authority is required to be obtained or made by Purchaser in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents to which Purchaser is or will be a party or the consummation of the transactions contemplated hereby or thereby, other than any filings required under state securities Laws.

  

 Section  6.4            Legal Proceedings. There are no Actions pending by or against, or to the knowledge of Purchaser, threatened against, Purchaser, or any of the directors or officers of Purchaser in their capacity as directors or officers of Purchaser that would have a material adverse effect on the ability of Purchaser to perform its respective obligations under this Agreement or consummate the transactions contemplated by this Agreement. Purchaser is not subject to any Governmental Order that would prevent Purchaser from performing its obligations under this Agreement or consummating the transactions contemplated by this Agreement.

  

  

 Section  6.5            Finder’s Fee. Purchaser has not incurred any Liability to any party for any brokerage, investment bankers’ or finders’ fees or commissions in connection with the transactions contemplated by this Agreement.

  

 Section  6.6           Cash Resources. Purchaser has sufficient cash resources to pay the Consideration provided for in this Agreement.

  

 Section  6.7           Independent Investigation; No Further Representations. Purchaser acknowledges (for itself and on behalf of its Affiliates and the Representatives of any of the foregoing) that it has conducted and completed its own investigation, analysis and evaluation of the Company, that it has made all such reviews and inspections of the financial condition, business, results of operations, properties and assets of the Company as it has deemed necessary or appropriate, that it has had the opportunity to request all information it has deemed relevant to the foregoing from the Company and has received responses it deems adequate and sufficient to all such requests for information, and that in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby it has relied solely on its own investigation, analysis and evaluation of the Company and the express terms of this Agreement, including the representations and warranties set forth in Article  IV. Without waiving, amending or limiting the express terms of this Agreement (including Article  IV), Purchaser acknowledges that neither the Company, the Sellers, nor any other Person makes, or has made, any representation or warranty, express or implied, relating to the Company or any of its businesses or operations or otherwise in connection with this Agreement or the transactions contemplated hereby outside of this Agreement and the Exhibits attached to this Agreement and Purchaser represents that it is not relying on such representations or warranties in connection with entering into this Agreement or the transactions contemplated hereby.

  

Article  VII
ADDITIONAL AGREEMENTS

  

 Section  7.1            Further Action. Subject to the terms and conditions provided in this Agreement, each of the Parties to this Agreement shall use its commercially reasonable efforts to deliver, or cause to be delivered, such further certificates, instruments and other documents, and to take, or cause to be taken, such further actions, as may be necessary, proper or advisable under applicable Law to consummate and make effective the transactions contemplated by this Agreement.

  

 Section  7.2              Tax Covenants.

  

(a)            Tax Returns. The Company shall prepare and timely file (or cause to be prepared and timely filed) any Tax Return required to be filed by the Company after the date hereof and on or before the Closing Date, and timely pay any Tax reflected thereon; provided, however, the Company will submit any such Tax Returns for income or other material Taxes to Purchaser for review and comment at least twenty (20) days prior to the due date for filing such Tax Return, and will consider in good faith any reasonable comments received in writing within ten (10)  days of the Company’s delivery of such Tax Return to Purchaser. Purchaser shall prepare (or cause to be prepared) in a manner consistent with the Company’s past practice, unless otherwise required by applicable Law, and file (or cause to be filed) all Tax Returns of the Company for all periods or portions thereof ending on or before the Closing Date that are required to be filed after the Closing Date (“Purchaser Prepared Returns”); provided, however, Seller shall be responsible for any Taxes attributable to any Pre-Closing Tax Periods in accordance with Article  IX. In the event that any Purchaser Prepared Return shows any material Pre-Closing Taxes that form the basis for a claim of indemnification against Seller pursuant to this Agreement, Purchaser shall deliver to Seller a draft of each such Tax Return at least twenty (20) days prior to the date such Tax Return is to be filed, and shall permit Seller to review and comment on such Tax Returns and shall incorporate any reasonable comments received in writing within ten (10)  days of Purchaser’s delivery of such Tax Return to Seller. The Parties agree that the value of the assets transferred pursuant to the Asset Transfer and Assumption Agreement is [***], and shall prepare all Tax Returns consistent with such agreement unless otherwise required by a “determination” within the meaning of Section  1313(a)  of the Code. All tax deductions arising from the consummation of the transactions contemplated by this Agreement (including any Unpaid Company Transaction Expenses) shall be reported in a Pre Closing Tax Period to the maximum extent allowable under applicable Law.

  

  

(b)            Cooperation on Tax Matters. Purchaser, the Company and Seller shall each cooperate fully, as and to the extent reasonably requested by each Party, in connection with the filing of Tax Returns pursuant to this Agreement and any Tax Proceeding with respect to Taxes attributable to any Pre-Closing Tax Period. Such cooperation shall include the retention and (upon the relevant Party’s request) the provision of records and information which are reasonably relevant to any such Tax Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

  

(c)            Transfer Taxes. All Transfer Taxes arising out of or in connection with the transactions contemplated by this Agreement shall be borne one-half by Seller and one-half by Purchaser, and the Party that is required by applicable Law to file any necessary Tax Returns and other documentation with respect to such Transfer Taxes shall file such Tax Returns in accordance with applicable Law. The Parties shall cooperate in timely filing such Tax Returns, including such Tax
Returns Seller is not permitted to file under applicable Law. Upon request, the filing Party shall provide evidence satisfactory to the non-filing Party that such Tax Returns have been duly and timely filed and the relevant Transfer Taxes duly and timely paid, and the non-filing Party shall promptly reimburse the filing Party for any Taxes so borne by the non-filing Party.

  

(d)            Tax Proceedings. If, subsequent to the Closing, Purchaser or the Company receives notice of a Tax Proceeding with respect to any Tax Return for a Pre-Closing Tax Period, then within fifteen (15) days or reasonable period after receipt of such notice, Purchaser shall notify Seller of the same and provide Seller with a copy of such notice. Purchaser shall have the right to control the conduct and resolution of such Tax Proceeding, provided, however, that Purchaser shall keep Seller reasonably informed of the progress of such Tax Proceeding and Seller shall have the right to participate (at Seller’s own expense) in such Tax Proceeding. Neither Purchaser, the Company nor any of their Affiliates shall settle, resolve, concede or otherwise compromise any issue, matter or item arising in such Tax Proceeding related to a Pre-Closing Tax Period that would give rise to an indemnity claim pursuant to this Agreement without obtaining Seller’s prior written consent thereto, which shall not be unreasonably withheld, conditioned or delayed. In the event of any conflict or overlap between the provisions of this Section  7.2(d)  and Article  IX, the provisions of this Section  7.2(d)  shall control.

  

(e)            FIRPTA Certificate. The Company shall deliver to Purchaser at the Closing a certificate executed by a duly authorized representative of the Company, dated as of the Closing Date, in accordance with Treasury Regulations Section  1.897-2(h)  for purposes of satisfying the requirements of Treasury Regulations Sections 1.1445-2(c)(3), to the effect that Company is not and has not been within the last five (5)  years a “United States real property holding corporation” within the meaning of Section  897 of the Code.

  

 

(f)            Unless otherwise required by applicable Law, without the prior written consent of Seller (which consent shall not be unreasonably withheld, conditioned or delayed), Purchaser shall not, and shall not cause or permit the Company to, (i)  make a Tax election that has a retroactive effect on Taxes or Tax Returns of the Company for a Pre-Closing Tax Period, (ii)  amend or cause to be amended any material Tax Return of the Company for a Pre-Closing Tax Period, (iii)  initiate discussions or examinations with a Tax authority or make any voluntary disclosures with respect to Taxes or Tax Returns of the Company for a Pre-Closing Tax Period, (iv)  extend or waive any statute of limitations with respect to Taxes or Tax Returns of the Company for a Pre-Closing Tax Period, or (v)  make an election under Sections 336(e)  or 338 of the Code with respect to the transactions contemplated by this Agreement, in each case, unless the foregoing would not increase the Seller’s, or the Seller’s equityholders’, liability for Taxes pursuant to this Agreement or otherwise.

  

 Section  7.3            Payoff Letters and Invoices. The Company shall obtain and deliver to Purchaser no later than three (3)  Business Days prior to the Closing Date: (a)  payoff letters with respect to all Closing Debt for borrowed money (together with any accrued and unpaid interest thereon) and the amounts payable to the lender thereof to fully satisfy and discharge such Closing Debt in accordance with its terms (each, a “Payoff Letter”) and (b)  an invoice from each advisor or other service provider to the Company with respect to all Unpaid Company Transaction Expenses estimated to be due and payable to such advisor or other service provider, as the case may be, as of the Closing Date (each, an “Invoice”). At the Closing, Purchaser shall pay on behalf of the Company each of the (i)  debtors pursuant to each such Payoff Letter the full amount set forth therein, and (ii)  advisors or other service providers to the Company pursuant to each such Invoice the full amount set forth therein, in each case to the extent that such amounts were included in the calculation of the Estimated Initial Consideration.

  

 Section  7.4            Termination of Employee Plans. Prior to the Closing, the Company shall terminate any Company Benefit Plan intended to be qualified under Section  401(a)  of the Code, such termination to be contingent upon the Closing and effective as of no later than the day immediately preceding the Closing Date, unless Purchaser provides written notice to the Company that any such Company Benefit Plan shall not be terminated. The Company shall provide Purchaser with evidence that all such Company Benefit Plans will be terminated pursuant to resolutions of the board of directors (or similar body) of the Company or its ERISA Affiliates, as the case may be. The form and substance of such resolutions shall be subject to review and approval of Purchaser (acting reasonably). The Company also shall take such other actions in furtherance of terminating any such Company Benefit Plan as Purchaser may reasonably require. In the event that termination of such a Company Benefit Plan triggers liquidation charges, surrender charges or other fees, then such charges and/or fees shall be included in Unpaid Company Transaction Expenses and shall be the responsibility of the Company, and the Company shall take such actions as are necessary to reasonably estimate the amount of such charges and/or fees and provide Purchaser with an estimate thereof.

  

 Section  7.5            Covenant Not to Compete. For a period of [***] following the Closing, Seller will not, directly or indirectly, in any manner (whether on his own account, or as an owner, operator, manager, consultant, officer, director, employee, investor, agent or otherwise), anywhere throughout the world (the “Applicable Area”), engage directly or indirectly in any business that is primarily focused on the discovery and development of small molecule compounds that bind to and directly modulate the target known as TYK2 (a “Competing Business”), or own any interest in, manage, control, provide financing to, participate in (whether as an owner, operator, manager, consultant, officer, director, employee, investor, agent, representative or otherwise), or consult with or render services for any Person that is engaged in a Competing Business in the Applicable Area; provided, however, nothing herein shall prohibit the Seller from (i)  being a passive owner of not more than two percent (2%) of the outstanding stock of any publicly traded corporation or (ii)  being a passive owner of not more than ten (10%) percent of the outstanding limited partnership interests or similar securities of any unaffiliated, third-party investment fund or investment vehicle, which shall not be deemed to be engaging solely by reason thereof in any of its portfolio companies’ business.

  

  

 Section  7.6            Release. Seller, for itself, and its predecessors, successors and assigns (collectively, the “Releasors”), hereby forever fully and irrevocably releases and discharges the Company, each of its subsidiaries, and each of their respective predecessors, successors, direct or indirect subsidiaries and past and present stockholders, members, managers, directors, officers, employees, agents and other representatives (collectively, the “Released Parties”) from any and all actions, suits, claims, demands, debts, agreements, obligations, promises, judgments, or liabilities of any kind whatsoever in law or equity and causes of action of every kind and nature, or otherwise (including, claims for damages, costs, expense, and attorneys’, brokers’ and accountants fees and expenses) arising out of or related to events, facts, conditions or circumstances existing or arising prior to the Closing Date, which the Releasors can, shall or may have against the Released Parties, whether known or unknown (collectively, the “Released Claims”), and hereby irrevocably agree to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any suit, action, or proceeding of any kind, in any court or before any tribunal, against any Released Party based upon any Released Claim. Notwithstanding the preceding sentence of this Section  7.6, “Released Claims” does not include, and the provisions of this Section  7.6 shall not release or otherwise diminish, the obligations or rights of any Party set forth in or arising under any provisions of this Agreement or the Ancillary Documents, including but not limited to the right, following the Closing, of the Seller to receive the Initial Consideration or Contingent Consideration as provided hereunder.

  

 Section  7.7            Indemnification of Officers and Directors of the Company.

  

(a)            For a period of [***] following the Closing, Purchaser shall, and shall cause the Company to, indemnify and hold harmless each person who is now, or has been at any time prior to the date of this Agreement or who becomes prior to the Closing, an officer, director or employee of the Company (the “Company Indemnified Parties”) against all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement (the “Company Indemnified Liabilities”) of or in connection with any claim, action, suit, proceeding or investigation by reason of the fact that such person is or was a director, officer or employee of the Company (a “Company Indemnified Proceeding”), whether pertaining to any matter existing or occurring at or prior to the Closing and whether asserted or claimed prior to, or at or after the Closing and all Company Indemnified Liabilities based on, or relating to this Agreement or the transactions contemplated hereby (to the extent that such losses, claims, damages, costs, expenses, liabilities or judgments or amounts arose from or are related to this Agreement or the transactions contemplated hereby), in each case to the fullest extent a corporation is permitted by law to indemnify its own directors, officers and employees. In the event any Company Indemnified Party is or becomes involved in any Company Indemnified Proceeding, Purchaser shall, or shall cause the Company to, pay expenses in advance of the final disposition of any such Company Indemnified Proceeding to each Company Indemnified Party to the fullest extent permitted by law upon receipt of any undertaking contemplated by Section  145 of the Delaware Law. Without limiting the foregoing, in the event any such Company Indemnified Proceeding is brought against any Company Indemnified Party, (i)  the Company Indemnified Parties may retain counsel of their choosing, (ii)  Purchaser shall, or shall cause the Company to, pay all reasonable and documented fees and expenses of one counsel for all of the Company Indemnified Parties with respect to each such Company Indemnified Proceeding unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Company Indemnified Parties, in which case Purchaser shall pay the fees of such additional counsel required by such conflict, promptly as statements therefor are received; provided, however, that neither Purchaser nor the Company shall be liable for any settlement of any claim effected without its written consent, which consent shall not be unreasonably withheld or delayed. Any Company Indemnified Party wishing to claim indemnification under this Section  7.7(a)  upon becoming aware of any such Company Indemnified Proceeding shall promptly notify Purchaser and the Company (but the failure to so notify Purchaser or the Company shall not relieve Purchaser or the Company from any liability it may have under this Section  7.7(a)  except to the extent such failure materially prejudices Purchaser or the Company), and shall deliver to Purchaser and the Company the undertaking contemplated by Section  145 of Delaware Law.

  

 

(b)            For a period of [***]following the Closing, Purchaser shall, and shall cause the Company to, fulfill and honor in all respects the obligations of the Company pursuant to any indemnification agreements in effect as of the Closing between the Company and the Company Indemnified Parties, subject to applicable Law. For a period of [***]following the Closing, the certificate of incorporation and bylaws of the Company will contain provisions with respect to exculpation and indemnification that are at least as favorable to the Company Indemnified Parties as those contained in the Organizational Documents as in effect on the Closing, which provisions will not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of Company Indemnified Parties.

  

(c)            This Section  7.7 is intended to be for the benefit of, and shall be enforceable by the Company Indemnified Parties and their heirs and personal representatives and shall be binding on Purchaser and the Company and its successors and assigns.

  

(d)            Notwithstanding any other available sources of recovery, the Company Indemnified Parties shall be entitled to first seek recovery of any Company Indemnified Liabilities of or in connection with any Company Indemnified Proceeding from Purchaser or the Company, and Purchaser and the Company waive all rights of subrogation against any third party indemnitors.

  

(e)            If Purchaser, the Company or any of their successors or assigns (i)  consolidates with or merges into any other person and shall not be the continuing or Company or entity of such consolidation or merger, or (ii)  transfers or conveys all or substantially all of their assets and Intellectual Property rights to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Purchaser or the Company, as the case may be, shall assume the obligations set forth in this Section  7.7.

  

Article  VIII
CONDITIONS TO CLOSING

  

 Section  8.1            Conditions to Obligations of Seller and the Company. The obligations of Seller and the Company to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, fulfillment or written waiver by the Company, at or prior to the Closing, of each of the following conditions:

  

(a)            Representations and Warranties; Covenants. (i)  The representations and warranties of Purchaser set forth in this Agreement and in any certificate delivered pursuant to this Agreement shall be true and correct in all material respects (when read without any exceptions or qualification as to materiality or Material Adverse Effect) at and as of the date of this Agreement and as of the Closing Date as though then made (except that those representations and warranties that are made as of a specific date need only be true and correct as of such date), (ii)  the covenants and agreements set forth in this Agreement to be performed or complied with by Purchaser at or prior to the Closing shall have been performed or complied with in all material respects, and (iii)  the Company shall have received an officer’s certificate of Purchaser, dated as of the Closing Date, certifying as to the matters set forth in clauses (i)  and (ii)  of this Section  8.1(a).

  

 

(b)            No Law or Governmental Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions.

  

(c)            Asset and Liability Transfer. The Asset and Liability Transfer shall have been consummated pursuant to the terms of the Asset Transfer and Assumption Agreement in the form attached as Exhibit  F.

  

(d)            Confirmatory Assignment Agreement. The Confirmatory Assignment Agreement in the form attached hereto as Exhibit  G or in a form reasonably satisfactory to Purchaser shall have been executed by the parties thereto.

  

 Section  8.2            Conditions to Obligations of Purchaser. The obligations of Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, fulfillment or written waiver by Purchaser, at or prior to the Closing, of each of the following conditions:

  

(a)            Representations and Warranties; Covenants. (i)  The representations and warranties of the Company and Seller set forth in this Agreement and in any certificate delivered pursuant to this Agreement shall be true and correct as of the date of this Agreement and the Closing Date (except that those representations and warranties that are made as of a specific date need only be true and correct as of such date) in all material respects (when read without any exception or qualification as to materiality or Material Adverse Effect) (ii)  the covenants and agreements set forth in this Agreement to be performed or complied with by the Company at or prior to the Closing shall have been performed or complied with in all material respects, and (iii)  Purchaser shall have received an officer’s certificate of the Company, dated as of the Closing Date, certifying as to the matters set forth in clauses (i)  and (ii)  this Section  8.2(a).

  

(b)            No Litigation. No Action shall have been instituted, commenced, threatened or remain pending that seeks to or could reasonably be expected to (i)  restrain, prevent, enjoin, prohibit or make illegal the material transactions contemplated by this Agreement, (ii)  cause any of the material transactions contemplated by this Agreement to be rescinded following the Closing Date, (iii)  impose material limitations on the ability of the Company to conduct its business following the Closing Date or (iv)  compel Purchaser or the Company to dispose of any material portion of the Business.

  

(c)            No Law or Governmental Action. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order which is in effect and has the effect of making the material transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of the transactions contemplated by this Agreement.

  

(d)            Third Party Consents. The Company shall have received all consents listed on Schedule 8.2(d), provided in a manner satisfactory to Purchaser.

  

(e)            Effective Agreements. Purchaser shall have received the following agreements and documents, each of which shall be in full force and effect:

  

 (i)             a Director and Officer Release in the form of Exhibit  C, executed by the persons listed on Schedule 8.2(e)(i);

  

 (ii)            an Employee Release in the form of Exhibit  H, executed by the persons listed on Schedule 8.2(e)(ii); and

   

 

 (iii)           a certificate executed on behalf of the Seller by its Secretary certifying that the Seller Board Approval has been obtained and has not been revoked, rescinded or amended and are in full force and effect as of the date thereof (and attaching thereto true, correct and complete copies of the resolutions containing the Seller Board Approval).

  

(f)             Resignation Letters. Written resignations, in a form reasonably satisfactory to Purchaser, of all directors and officers of the Company, to be effective as of the Closing.

  

(g)            Employees. As of immediately prior to the Closing, the Company will have no employees and FronThera Pharmaceuticals will have no employees or will have entered into releases in the form of Exhibit  H with its employees.

  

(h)            Terminated Contracts. Purchaser shall have received written evidence of termination, in form and substance reasonably acceptable to Purchaser, of each of the Contracts set forth on Schedule 8.2(h).

  

Article  IX
INDEMNIFICATION

  

 Section  9.1            Survival of Representations. The representations and warranties made by Seller and the Company in this Agreement or in any certificate delivered pursuant to this Agreement, on the one hand, and made by Purchaser in this Agreement or in any certificate delivered pursuant to this Agreement, on the other hand, shall survive the Closing and shall expire on, and no claim for indemnification pursuant to Section  9.2(a)(i)  or Section  9.2(b)(i)  may be asserted after the date that is [***] after the Closing Date; provided, however, that (w)  the Company Key Representations shall expire on the date that is [***] after the Closing, (x)  the Company Fundamental Representations shall expire on the date that is [***] after the Closing Date, (y)  the covenants contained herein to be performed by the Company at or prior to the Closing shall survive the Closing and shall expire on the shorter of (i)  [***] after the applicable statute of limitations, and (ii)  the date that is [***] after the Closing Date, and (z)  the covenants contained herein to be performed by Seller from and after the Closing shall survive the Closing and shall expire on the date that is the shorter of (i)  [***] after the Closing Date, and (ii)  the date when such covenants expire in accordance with their terms (the date of expiration under the preceding clauses (w), (x), (y)  and (z), the “Expiration Date”); provided, further, however, that if, at any time prior to the [***] anniversary of the Closing Date or the applicable Expiration Date, as applicable, (i)  Purchaser (acting in good faith) delivers to Seller a written notice alleging the existence of an inaccuracy in or a breach of any of the representations and warranties or covenants made by the Company or Seller in this Agreement or in any certificate delivered pursuant to this Agreement (and setting forth in reasonable detail the basis for Purchaser’s belief that such an inaccuracy or breach may exist) and asserting a claim for recovery under Section  9.2(a)  based on such alleged inaccuracy or breach, or (ii)  Seller (acting in good faith) delivers to the Company a written notice alleging the existence of an inaccuracy in or a breach of any of the representations and warranties made by Purchaser in this Agreement or in any certificate delivered pursuant to this Agreement (and setting forth in reasonable detail the basis for Seller’s belief that such an inaccuracy or breach may exist) and asserting a claim for recovery under Section  9.2(b)  based on such alleged inaccuracy or breach then, in the case of clause (i)  or clause (ii), then such representation, warranty or covenant referenced in such notice shall survive until such time as such claim is fully and finally resolved.

  

 

 Section  9.2              Right to Indemnification.

  

(a)            Subject to the limitations and procedural requirements set forth in this Article  IX, from and after the Closing, Seller shall hold harmless and indemnify each of the Purchaser Indemnitees from and against, and shall compensate and reimburse each of the Purchaser Indemnitees for, any Damages which are suffered or incurred by any of the Purchaser Indemnitees or to which any of the Purchaser Indemnitees may otherwise become subject and which arise from or as a result of: (i)  any breach of any representation or warranty of the Company or Seller set forth in this Agreement or in any certificate delivered pursuant to this Agreement or any Ancillary Document; (ii)  any breach of any covenant or agreement of the Company or Seller set forth in this Agreement or any Ancillary Document, (iii)  any Closing Debt or Unpaid Company Transaction Expenses, to the extent not paid pursuant to Section  3.1 and Section  3.2; (iv)  any claim by any Person seeking to assert or based upon: (A)  ownership or rights to ownership of any Shares or the right to obtain Shares; (B)  any claim, whether derivative or otherwise, against any director or officer of the Company relating to the sale of the Company or any right relating to corporate governance or under the Company’s Organizational Documents, or under any indemnification agreement between Seller, on the one hand, and the Company, on the other; (C)  any claim by any Person that his, her or its securities were wrongfully canceled or repurchased by the Company; and (D)  any claim against the Company, Purchaser or any of their Affiliates by Seller based on any act or failure to act, or any alleged act or failure to act, of Seller (including Fraud, gross negligence, willful misconduct or bad faith) in breach of its obligations hereunder, including any failure or alleged failure to distribute properly all or any portion of the consideration payable hereunder, (v)  any Pre-Closing Taxes, to the extent not included in Closing Debt or Unpaid Company Transaction Expenses and accounted for in the determination of the Initial Consideration, or (vi)  the matters set forth on Exhibit  D.

  

(b)            Subject to the applicable limitations and procedural requirements set forth in this Article  IX, from and after the Closing, Purchaser shall hold harmless and indemnify Seller from and against, and shall compensate and reimburse Seller for, any Damages which are suffered or incurred by Seller or to which Seller may otherwise become subject and which arise from or as a result of: (i)  any breach of any representation or warranty of Purchaser set forth in this Agreement or in any certificate delivered pursuant to this Agreement (when read without any exception or qualification as to materiality); or (ii)  any breach of any covenant or agreement of Purchaser set forth in this Agreement.

  

Section  9.3        Limitations on Liability.

  

(a)            Other than (i)  the Company Key Representations, (ii)  the Company Fundamental Representations and (iii)  Fraud committed by or on behalf of Seller in connection with the transactions contemplated hereby, the maximum liability of Seller under Section  9.2(a)(i)  for breaches or inaccuracies of the representations and warranties contained of the Company in Article  IV, breaches or inaccuracies of the representations and warranties contained of the Seller in Article  V and the covenants contained herein to be performed by the Company or the Seller as the case may be, shall be the amount of funds then remaining in the Escrow Account. The maximum liability of Seller under Section  9.2(a)(i)  for breaches or inaccuracies of all representations and warranties other than the Company Fundamental Representations shall be $[***]. Seller shall not have any Liability under this Article  IX in excess of the Consideration payable to Seller pursuant to this Agreement (less the Loan Payoff Amount payable by the Purchaser at Closing pursuant to Section  2.1). The maximum aggregate Liability of Purchaser under this Agreement shall be the Initial Consideration and the Contingent Consideration.

  

(b)            Without limiting the effect of any other limitation contained in this Article  IX, the indemnification provided for in Section  9.2(a)(i)  shall not apply except to the extent that the aggregate Damages against which the Purchaser Indemnitees would otherwise be entitled to be indemnified pursuant to Section  9.2(a)(i)  exceeds $[***] in the aggregate (the “Basket”), and with respect to any given claim for Damages, such claim is individually in excess of $[***] (which shall not be applied against the Basket), in which event the Purchaser Indemnitees shall, subject to the other limitations contained herein, be entitled to be indemnified against all of such Damages, including the Basket; provided, however, that this limitation shall not apply to any Damages related to (i)  Fraud committed by or on behalf of Seller in connection with the transactions contemplated hereby, (ii)  a breach of the Company Key Representations or (iii)  a breach of the Company Fundamental Representations.

  

  

(c)            Without limiting the effect of any other limitation contained in this Article IX, Purchaser shall not be entitled to indemnification under this Article IX for any Damages to the extent that the amount otherwise indemnifiable hereunder has been included in the calculation of the Initial Consideration.

 

(d)            The representations, warranties, agreements, covenants and obligations of the Company, and the rights and remedies that may be exercised by the Purchaser Indemnitees, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, any of the Purchaser Indemnitees. For purposes of both determining whether a breach or inaccuracy in any representation or warranty of the Company has occurred and calculating the amount of Damages arising from any such breach or inaccuracy, the Company shall be deemed to have been made such representations and warranties without any qualifications as to materiality and, accordingly, all references herein and therein to “material,” “in all material respects,” “material adverse effect,” and similar qualifications as to materiality shall be deemed to be deleted therefrom. Recoveries under this Article IX by the Purchaser Indemnitees shall first be from the Escrow Account and thereafter any Consideration paid or payable to Seller.

 

(e)            Nothing in this Agreement shall limit any remedy Purchaser may have against any Person for claims based on Fraud that such Person committed.

 

(f)            Notwithstanding anything to the contrary elsewhere in this Agreement, no Purchaser Indemnitee shall be indemnified for Damages with respect to (i) the amount, value or condition of, or any limitations on, any Tax asset or attribute (e.g., net operating loss or Tax credit) of the Company after the Closing, including the ability of any Purchaser Indemnitee to utilize such Tax asset or attribute after the Closing, (ii) any Taxes arising as a result of an action taken by Purchaser or its Affiliates (including the Company after the Closing) outside the ordinary course of business on the Closing Date after the Closing (other than as explicitly contemplated by this Agreement) or (iii) any Taxes arising from an election made by Purchaser with respect to the Company under Sections 336 or 338 of the Code.

 

Section 9.4         Claims and Procedures.

 

(a)            If an Indemnitee (as defined below) determines in good faith that it has a bona fide claim for indemnification pursuant to this Article IX and the Indemnitee intends to make such indemnification claim, then Purchaser (in the case of any indemnification claim pursuant to Section 9.2(a)) or Seller (in the case of any indemnification claim pursuant to Section 9.2(b)), as the case may be, shall promptly thereafter deliver to Seller or Purchaser, as the case may be, a written notice (any notice delivered in accordance with the provisions of this Section 9.4(a), a “Claim Certificate”) stating that the Indemnitee has a claim for indemnification pursuant to this Article IX and, to the extent possible, containing a preliminary estimate of the of Damages; and specifying in reasonable detail the material facts giving rise to such claim. No delay in providing such Claim Certificate shall affect an Indemnitee’s rights hereunder, unless (and then only to the extent that) the Indemnitor (as defined below) is materially prejudiced thereby.

 

(b)            If Seller or Purchaser, as the case may be, objects to any claim made in any Claim Certificate, then Seller or Purchaser, as the case may be, shall deliver a written notice (a “Claim Dispute Notice”) to Purchaser or Seller, as the case may be, during the 30-day period commencing upon receipt by Seller or Purchaser, as the case may be, of the Claim Certificate. The Claim Dispute Notice shall set forth in reasonable detail the principal basis for the dispute of any claim made in the applicable Claim Certificate. If Seller or Purchaser, as the case may be, does not deliver a Claim Dispute Notice hereunder prior to the expiration of such 30-day period, then each claim for indemnification set forth in such Claim Certificate shall be deemed to have been conclusively determined in favor of the applicable Indemnitee for purposes of this Article IX on the terms set forth in the Claim Certificate.

 

 

(c)            If a Claim Dispute Notice is properly delivered hereunder, then Purchaser and Seller shall attempt in good faith to resolve any such objections raised in such Claim Dispute Notice. If Purchaser and Seller agree to a resolution of such objection, then a memorandum setting forth the matters conclusively determined by Purchaser and Seller shall be prepared and signed by both parties.

 

(d)            If no such resolution can be reached during the 45-day period following receipt of a given Claim Dispute Notice hereunder, then upon the expiration of such 45-day period, either Purchaser or Seller may bring suit to resolve the objection in accordance with Section 10.10 and Section 10.11.

 

Section 9.5         Defense of Third-Party Claims.

 

Upon receipt by any Person seeking to be indemnified pursuant to Section 9.2 (the “Indemnitee”) of notice of any actual or possible Action that has been or may be brought or asserted by a third party against such Indemnitee and that may be subject to indemnification hereunder (a “Third-Party Claim”), the Indemnitee shall promptly deliver a Claim Certificate with respect to such Third-Party Claim to the Person from whom indemnification is sought under Section 9.2 (the “Indemnitor”). The Indemnitee shall have the right, at its election, to proceed with the defense of such Third-Party Claim on its own. If Indemnitee so proceeds with the defense of any such Third-Party Claim:

 

(a)            Indemnitor shall, and shall use commercially reasonable efforts to cause each other Indemnitor to, make available to Indemnitee any documents and materials in its possession or control that may be necessary to the defense of such Third-Party Claim; and

 

(b)            Indemnitee shall have the right to control, settle, adjust or compromise such Proceeding without the consent of the Indemnitor; provided, however, that except with the consent of the Indemnitor (which consent shall not be unreasonably withheld, conditioned or delayed), no settlement of any such Proceeding shall be determinative of, or introduced as evidence of, either the fact that Liability may be recovered by the applicable Indemnitee in respect of such Proceeding pursuant to the indemnification provisions of this Article IX or the amount of such Liability that may be recovered by the applicable Indemnitee in respect of such Third-Party Claim pursuant to the indemnification provisions of this Article IX. If the Indemnitor consents to such settlement, the Indemnitor will not have any power or authority to object to the amount or validity of any claim by or on behalf of an Indemnitee for indemnity with respect such settlement.

 

The Indemnitee shall give the Indemnitor prompt notice of the commencement of any such Third-Party Claim; provided, however, that any failure on the part of Indemnitee to so notify the Indemnitor shall not limit any of the obligations of the Indemnitors under this Article IX (except to the extent such failure materially prejudices the defense of such Proceeding).

 

Section 9.6         No Subrogation. The Indemnitor shall not be entitled to exercise, and shall not be subrogated to, any rights and remedies (including rights of indemnity, rights of contribution and other rights of recovery) that the Indemnitee or any of the Indemnitee’s Subsidiaries or other Affiliates may have against any other Person with respect to any Damages, circumstances or matter to which such indemnification is directly or indirectly related.

 

 

Section 9.7         Limitation on Damages. Notwithstanding anything to the contrary elsewhere in this Agreement or provided for under any applicable Law, no Party nor any current or former stockholder, director, officer, employee, Affiliate or advisor of any of the foregoing, shall, in any event, be liable to any other Person, either in Contract, tort or otherwise, for any punitive or exemplary Damages (except to the extent such Damages are granted by a court in connection with a Third-Party Claim).

 

Section 9.8         Characterization of Indemnification Payments. The Parties agree that any indemnification payments made pursuant to this Article IX shall be treated for all Tax purposes as an adjustment to the Consideration unless otherwise required by Law.

 

Section 9.9         Right to Set Off. Notwithstanding any provision of this Agreement to the contrary, the Parties hereby acknowledge and agree that, in addition to any other right or remedy hereunder, the obligation of Purchaser to pay any Contingent Consideration hereunder shall be qualified in its entirety by the right of Purchaser to set off, subject to (i) the Purchaser Indemnitees first having sought recovery against the Escrow Account (except with respect to Fraud committed by or on behalf of Seller in connection with the transactions contemplated hereby or breaches of the Company Key Representations or the Company Fundamental Representations) and (ii) the express limitations set forth in this Article IX, the amount of any such Contingent Consideration at the time that such Contingent Consideration becomes payable pursuant to Section 3.3, by the amount of any Damages resulting from a breach of the Company Key Representations (as limited pursuant to Section 9.3(a)) and the Company Fundamental Representations incurred or suffered or (until the amount is finally determined in accordance with this Article IX) that Purchaser determines is reasonably likely to be incurred or suffered by any Purchaser Indemnitee (to the extent any Purchaser Indemnitee has an indemnification claim under this Article IX); provided, that the maximum amount of any portion of the Contingent Consideration which may be set off by the Purchaser to satisfy breaches of the Company Key Representations shall be an amount equal to [***] of the Contingent Consideration. If the final amount of Damages determined to be payable in respect of such indemnification claim in accordance with this Article IX is less than the amount withheld by Purchaser from the Contingent Consideration, as applicable, then Purchaser shall promptly pay the difference to Seller. If the final amount of Damages determined to be payable in respect of such indemnification claim exceeds the amount withheld from the Contingent Consideration then, subject to this Section 9.9, the applicable Purchaser Indemnitee shall continue to be entitled to indemnification in an amount equal the amount of such excess pursuant to the terms and conditions of this Article IX. Each of the Parties acknowledges and agrees that such set off right shall not give rise to any indemnification obligations of the Seller which are separate from, in addition to, or beyond the scope of those obligations set forth under Article IX, or to extend any of the survival periods set forth under Section 9.1.

 

Section 9.10       Exclusive Remedy. From and after the Closing, the right of the Purchaser Indemnitees to be indemnified pursuant to this Article IX shall be the sole and exclusive remedy of the Purchaser Indemnitees (other than specific performance pursuant to the provisions of Section 10.12 or for claims based on Fraud against the Seller or its Affiliates or those acting on behalf of the Seller or its Affiliates in connection with the transactions contemplated hereby) with respect to any breach of any representation, warranty, covenant or agreement of the Company or Seller contained in, or any other breach by the Company or Seller of, this Agreement. From and after the Closing, the right of Seller to be indemnified pursuant to this Article IX shall be the sole and exclusive remedy of Seller (other than specific performance pursuant to the provisions of Section 10.12 or for claims based on Fraud against the Purchaser or its Affiliates or those acting on behalf of the Purchaser or its Affiliates in connection with the transactions contemplated hereby) with respect to any breach of any representation, warranty, covenant or agreement of Purchaser contained in, or any other breach by Purchaser of, this Agreement.

 

 

Article X
GENERAL PROVISIONS

 

Section 10.1       Expenses. Except as otherwise expressly provided in this Agreement, all costs and expenses (including all fees and disbursements of counsel, financial advisors and accountants) incurred in connection with the negotiation and preparation of this Agreement, the performance of the terms of this Agreement and the consummation of the transactions contemplated by this Agreement, shall be paid by the respective party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

Section 10.2       Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent
by nationally recognized overnight air courier, one (1) Business Day after mailing; (c) if sent by facsimile transmission or electronic mail, with a copy mailed on the same day in the manner provided in clauses
(a) or (b) of this Section 10.2, when transmitted and receipt is confirmed and (d) if otherwise actually personally delivered, when delivered; provided, that such notices, requests, demands and other communications are delivered to the address set forth below, or to such other address as any party shall provide by like notice to the other Parties to this Agreement:

 

(a)            if to Purchaser or the Company, to:

 

FL2021-001, Inc. 

601 California Street, Suite 600 

San Francisco, CA 94108 

Attention: Chief Executive Officer 

Telephone: (415) 787-6009 

Email: [***]

 

with a copy (which shall not constitute notice) to:

 

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 

3570 Carmel Mountain Road, Suite 200 

San Diego, CA 92130 

Attention: Jeffrey C. Thacker and Jonathan Spencer 

Email: [***];[***]

 

(b)            if to Seller, to:

 

Fronthera International 

Attention: Qing Dong 

Telephone: [***] 

Email: [***]

 

 

with a copy (which shall not constitute notice) to:

 

Wilson Sonsini Goodrich & Rosati, P.C. 

650 Page Mill Rd. 

Palo Alto, CA 94304 

Attention: Miranda Biven and Ethan Lutske 

Email: [***]; [***]
with a copy (which shall not constitute notice) to:

 

Section 10.3       Public Announcements. The initial press release announcing the execution of this Agreement or upon the Closing, if any, shall be issued in such form as shall be mutually agreed upon by Seller and Purchaser. Unless otherwise required by applicable Law or applicable stock exchange rules and regulations, no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated by this Agreement, or otherwise communicate with any news media regarding this Agreement or the transactions contemplated by this Agreement, without the prior written consent of the other Parties to this Agreement. If a public statement is required to be made pursuant to applicable Law or applicable stock exchange rules and regulations, the Parties shall consult with each other, to the extent reasonably practicable, in advance as to the contents and timing thereof.

 

Section 10.4       Interpretation. The Article and Section headings in this Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision of this Agreement. References to Articles, Sections, Schedules or Exhibits in this Agreement, unless otherwise indicated, are references to Articles, Sections, Schedules and Exhibits of or to this Agreement. The Parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises with respect to any term or provision of this Agreement, this Agreement shall be construed as if drafted jointly by the Parties to this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any party to this Agreement by virtue of the authorship of any of the terms or provisions of this Agreement. Any reference to any federal, state, county, local or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. All references to “$” or “dollars” herein shall be references to the lawful currency of the United States of America. For all purposes of and under this Agreement, (a) the word “including” shall be deemed to be immediately followed by the words “without limitation;” (b) words (including defined terms) in the singular shall be deemed to include the plural and vice versa; (c) words of one gender shall be deemed to include the other gender as the context requires; (d) the terms “hereof,” “herein,” “hereto,” “herewith” and any other words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits to this Agreement) and not to any particular term or provision of this Agreement, unless otherwise specified; (e) the use of the word “or” shall not be exclusive; and (f) all references to “days” mean calendar days.

 

Section 10.5       Severability. In the event that any one or more of the terms or provisions contained in this Agreement or in any other certificate, instrument or other document referred to in this Agreement, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or any other such certificate, instrument or other document referred to in this Agreement, and the Parties to this Agreement shall use their commercially reasonable efforts to substitute one or more valid, legal and enforceable terms or provisions into this Agreement which, insofar as practicable, implement the purposes and intent of this Agreement. Any term or provision of this Agreement held invalid, illegal or unenforceable only in part, degree or within certain jurisdictions shall remain in full force and effect to the extent not held invalid, illegal or unenforceable to the extent consistent with the intent of the Parties as reflected by this Agreement.

 

 

Section 10.6       Entire Agreement. This Agreement (including the Company Disclosure Schedule, the other Schedules and the Exhibits to this Agreement) and the Confidentiality Agreement constitute the entire agreement of the Parties to this Agreement with respect to the subject matter of this Agreement and the Confidentiality Agreement, and supersede all prior agreements and undertakings, both written and oral, among the Parties to this Agreement with respect to the subject matter of this Agreement and the Confidentiality Agreement, except as otherwise expressly provided in this Agreement.

 

Section 10.7       Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties to this Agreement (whether by operation of Law or otherwise) without the prior written consent of the other parties to this Agreement, and any purported assignment or other transfer without such consent shall be void and unenforceable; provided, that Purchaser may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to any Person; provided, that such transfer or assignment shall not relieve Purchaser of its obligations hereunder or enlarge, alter or change any obligation of any other Party hereto or due to Purchaser. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties to this Agreement and their respective successors and assigns.

 

Section 10.8       No Third-Party Beneficiaries. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties hereto, any rights or remedies under or by reason of this Agreement.

 

Section 10.9       Waivers and Amendments. This Agreement may be amended or modified only by a written instrument executed by all of the Parties to this Agreement. Any failure of the Parties to this Agreement to comply with any obligation, covenant, agreement or condition in this Agreement may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver. No delay on the part of any party to this Agreement in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party to this Agreement of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Unless otherwise provided, the rights and remedies provided for in this Agreement are cumulative and are not exclusive of any rights or remedies which the Parties to this Agreement may otherwise have at Law or in equity. Whenever this Agreement requires or permits consent by or on
behalf of a party, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10.9.

 

Section 10.10      Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to Contracts executed in and to be performed entirely within such State. Each of the Parties to this Agreement hereby irrevocably and unconditionally submits, for itself and its assets and properties, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting within the State of Delaware, and any appellate court from any thereof, in any Action arising out of or relating to this Agreement, the agreements delivered in connection with this Agreement, or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment relating thereto, and each of the Parties to this Agreement hereby irrevocably and unconditionally (a) agrees not to commence any such Action except in such courts; (b) agrees that any claim in respect of any such Action may be heard and determined in such Delaware State court or, to the extent permitted by Law, in such Federal court; (c) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Action in any such Delaware State or Federal court; and (d) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Action in any such Delaware State or Federal court. Each of the Parties to this Agreement hereby agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the Parties to this Agreement hereby irrevocably consents to service of process in the manner provided for notices in Section 10.2. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by applicable Law.

 

 

Section 10.11      Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE, IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.

 

Section 10.12     Specific Performance. Each of the Parties to this Agreement hereby acknowledge and agree that the failure of it to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part in accordance with the terms and conditions of this Agreement to consummate the transactions contemplated in this Agreement, will cause irreparable injury to the other parties, for which Damages, even if available, will not be an adequate remedy. Accordingly, each of the Parties to this Agreement hereby (a) consents to the issuance of injunctive relief by any court of competent jurisdiction to prevent breaches of this Agreement and to compel performance of such party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder, without proof of actual Damages and without any requirement that a bond or other security be posted, and (b) agrees that the right of specific performance is an integral part of the transactions contemplated by this Agreement and without that right, the other parties would not have entered into this Agreement. Each of the Parties to this Agreement hereby agrees to waive the defense in any such Action that the other party to this Agreement has an adequate remedy at Law, and agrees not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason or that a remedy of monetary Damages would provide an adequate remedy, and further agrees to interpose no opposition, legal or otherwise, as to the propriety of injunction or specific performance as a remedy, and hereby agrees to waive any requirement to post any bond in connection with obtaining such relief. The equitable remedies described in this Section 10.12 shall be in addition to, and not in lieu of, any other remedies at Law or in equity that the Company may elect to pursue.

 

Section 10.13     Company Disclosure Schedule. The Parties acknowledge and agree that (a) matters reflected in the Company Disclosure Schedule are not necessarily limited to matters required by this Agreement to be reflected therein, and any additional matters are set forth for information purposes and do not necessarily include other matters of a similar nature, and the inclusion of any items or information in the Company Disclosure Schedule that are not required by this Agreement to be so included is solely for the convenience of Purchaser; (b) the disclosure of any matter or item in the Company Disclosure Schedule shall not be deemed to constitute, or be deemed to be, an admission of any Liability of the Company or any of its Affiliates, in each case to any Person that is not party to this Agreement, nor an admission against the Company’s or any of its Affiliates’ interests to such third Person; (c) each statement or other item of information set forth in the Company Disclosure Schedule shall not be deemed to be a representation and warranty made by the Company in this Agreement; (d) any disclosure set forth in the Company Disclosure Schedule with respect to a particular representation, warranty or covenant shall be deemed to be a disclosure with respect to all other applicable representations, warranties and covenants contained in this Agreement to the extent that it is readily apparent on its face from a reading of such disclosure that it also qualifies or applies to such other representations, warranties or covenants, notwithstanding the omission of a cross-reference or the omission of a reference in the particular representation, warranty or covenant to the applicable section of the Company Disclosure Schedule; and (e) headings have been inserted in the Company Disclosure Schedule for convenience of reference only.

 

 

Section 10.14     Counterparts. This Agreement may be executed and delivered (including by facsimile transmission or electronic mail in portable document format) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

Section 10.15     Waiver of Conflicts Regarding Representation.

 

(a)            Wilson Sonsini Goodrich & Rosati (“WSGR”) has acted as counsel for the Seller in connection with this Agreement and the transactions contemplated hereby (the “Acquisition Engagement”) and, in that connection, not as counsel for any other Person, including, without limitation, Purchaser or any of its Affiliates. Only the Seller shall be considered the client of WSGR in the Acquisition Engagement. If the Seller so desires, WSGR shall be permitted, without the need for any future waiver or consent, to represent any of the Seller’s securityholders after the Closing in connection with any matter related to the matters contemplated by this Agreement or any disagreement or dispute relating thereto and may in connection therewith represent the agents or Affiliates of the Seller’s securityholders, in any of the foregoing cases including, without limitation, in any dispute, litigation or other adversary proceeding against, with or involving Purchaser, the Company or any of their agents or Affiliates.

 

(b)            To the extent that communications between Seller, on the one hand, and WSGR, on the other hand, relate to the Acquisition Engagement, such communication shall be deemed to be attorney-client confidences that belong solely to the Seller. Neither Purchaser nor any of its Affiliates, including the Company, shall have access to (and Purchaser hereby waives, on behalf of each, any right of access it may otherwise have with respect to) any such communications or the files or work product of WSGR, to the extent that they relate to the Acquisition Engagement, whether or not the Closing occurs. Without limiting the generality of the foregoing, Purchaser acknowledges and agrees, for itself and on behalf of its Affiliates, including the Company, upon and after the Closing: (i) the Seller and WSGR shall be the sole holders of the attorney-client privilege of the Seller with respect to the Acquisition Engagement, and neither Purchaser nor any of its Affiliates, including the Company, shall be a holder thereof; (ii) to the extent that files or work product of WSGR in respect of the Acquisition Engagement constitute property of the client, only the Seller, shall hold such property rights and have the right to waive or modify such property rights; and (iii) WSGR shall have no duty whatsoever to reveal or disclose any such attorney-client communications, files or work product to Purchaser or any of its Affiliates, including the Company, by reason of any attorney-client relationship between WSGR and the Company or otherwise; provided, that, to the extent any communication is unrelated to the Acquisition Engagement, WSGR shall provide (and the Seller shall instruct WSGR to provide) appropriately redacted versions of such communications, files or work product to Purchaser or its Affiliates, including the Company. Notwithstanding the foregoing, in the event that a dispute arises between any of Purchaser or its Affiliates, including the Company, on one hand and the Seller, on the other hand, concerning the matters contemplated in this Agreement, Purchaser, for itself and on behalf of its Affiliates, including the Company, agrees that Purchaser and its Affiliates, including the Company, shall not offer into evidence or otherwise attempt to use or assert the foregoing attorney-client communications, files or work product against the Seller.

  

(c)            Without limitation of the foregoing, any other communication between Seller, on the one hand, and any representative of Seller (other than WSGR) or any other third person (other than Purchaser and its Affiliates), relating to the Acquisition Engagement and prior to the Closing shall be deemed confidential information of the Seller, and from and after the Closing, such communications shall be deemed to be confidential information that belong solely to the Seller, for and on behalf of the Seller. Prior to the Closing, the Company shall be entitled to transfer possession of such communications (including any tangible and intangible copies of such communications) to the Seller.

 

[Remainder of Page Intentionally Left Blank]

  

 

IN WITNESS WHEREOF, Purchaser, Seller and the Company have caused this Agreement to be executed by their respective officers thereunto duly authorized, in each case as of the date first above written.

 

PURCHASER:	FL2021-001, INC.
	By:	/s/ June Lee
	Name:	June Lee
	Title:	Chief Executive Officer
SELLER:	FRONTHERA INTERNATIONAL GROUP LIMITED (CAYMAN)
	By:	/s/ Qing Dong
	Name:	Qing Dong
	Title:	President
COMPANY:	FRONTHERA U.S. HOLDINGS, INC.
	By:	/s/ Qing Dong
	Name:	Qing Dong
	Title:	President

 

[Signature page to Stock Purchase Agreement]

 

 

Exhibit A

 

Form of Stock Power

 

 

Seller’s Stock Power And Assignment 

Separate From Stock Certificate

 

[***]

 

 

Exhibit B

 

Form of Escrow Agreement

 

[***]

 

 

Exhibit C

 

Form of Director and Officer Release

 

[***]

 

 

Exhibit D

 

Specified Indemnification Matters

 

None.

 

 

Exhibit E

 

Milestone Payments

 

1.     Milestones.

 

(a)            Within [***] after Purchaser or any TYK2 Product Party achieves each milestone event described in the table set forth below (each, a “Milestone Event”), Purchaser shall pay, or cause to be paid to, the Seller the applicable milestone fee listed next to each such Milestone Event (each such fee, the applicable “Milestone Payment”). The Milestone Events and corresponding Milestone Payments are as follows:

 

Milestone Event			Milestone Payment
1.	First administration of a TYK2 Product to the first (1st) patient in the first Phase 2 Clinical Trial.		$	37,000,000.00
2.	The earlier to occur of (a) the first administration of a TYK2 Product to the first (1st) patient in the first Phase 3 Clinical Trial in a country other than China, or (b) filing of the first Drug Approval Application in the U.S. or a Major European Country, whichever occurs first.		$	23,000,000.00
3.	[***].		$	[***]
4.	[***].		$	[***]
5.	[***].		$	[***]

 

(b)            All Milestone Payments shall be made in U.S. dollars and shall be paid by wire transfer or direct deposit in immediately available funds. Each of the Milestone Payments shall be payable one (1) time only, with respect to the first achievement of the relevant Milestone Event, regardless of how many times such Milestone Event is achieved and regardless of how many TYK2 Products achieve such Milestone Event. In accordance with the foregoing, the maximum total Milestone Payments payable by Purchaser to the Seller shall not exceed $120,000,000.00 (the “Total Milestone Payment Amount”).

 

(c)            If Purchaser or any TYK2 Product Party achieves Milestone Event 2 in the table in Section 1(a) above before Milestone Event 1 in such table, then Milestone Event 1 shall be automatically deemed achieved and Purchaser shall pay, or cause to be paid, to the Seller the Milestone Payment for Milestone Event 1 together with the Milestone Payment for Milestone Event 2. If Purchaser or any TYK2 Product Party achieves Milestone Event 5 in the table in Section 1(a) above before Milestone Event 4 in such table, then Milestone Event 4 shall be automatically deemed achieved and Purchaser shall pay, or cause to be paid, to the Seller the Milestone Payment for Milestone Event 5 together with the Milestone Payment for Milestone Event 4.

 

2.     Commercially Reasonable Efforts.

 

(a)            During the period commencing on the Closing Date and ending on the earliest of (i) the date upon which the Milestone Payment for Milestone Event 1 in the table in Section 1(a) above has been paid to the Seller, and (ii) the date on which the aggregate amount Purchaser has spent on research and development activities for a TYK2 Product (including, without limitation, employee salaries, but excluding stock-based compensation, benefits, utilities, facilities, insurance, overhead, capital expenditures and travel expenses) equals or exceeds [***], Purchaser covenants and agrees that it will use, and shall cause all TYK2 Product Parties to use, Commercially Reasonable Efforts to achieve Milestone Event 1. Without limiting the generality of the foregoing, Purchaser shall not, and shall not authorize or permit any TYK2 Product Party to, take any action or omit to take any action with the specific intent of avoiding or reducing the payment of any Milestone Payment(s).

 

 

(b)            In addition, in the event that Purchaser grants to a third party rights to develop and/or commercialize any TYK2 Product in the United States or a Major European Country(ies) (each, a “Major Market TYK2 Product Agreement”), and the Milestone Events pertaining to such country(ies) have not previously been achieved, Purchaser shall promptly notify Seller following the execution of each such Major Market TYK2 Product Agreement and provide to Seller with full details of the diligence obligations required to be exercised by such third party towards the achievement of the Milestone Events (subject to Seller agreeing to any reasonable confidentiality obligations required under such Major Market TYK2 Product Agreement necessary to receive such information from Purchaser). Until the achievement of all of the Milestone Events pertaining to [***], to the extent covered by a particular Major Market TYK2 Product Agreement, Purchaser covenants and agrees to (i) assess whether the third party is meeting the diligence obligations required to be exercised by such third party under such Major Market TYK2 Product Agreement, (ii) to determine whether and how to remedy any failure by such third party to meet its diligence obligations, and (iii) Purchaser’s board of directors shall determine in good faith whether to pursue litigation to enforce any such failure to meet diligence obligations.

 

3.     Reports. Each Milestone Payment shall be accompanied by a summary report regarding the development activities that occurred with respect to the achievement of such Milestone Event. Within [***] after the end of each calendar year following the Closing Date and ending on the earliest of (i) the date upon which the last Milestone Payment has been made, and (ii) the [***] full calendar year following the calendar year in which the Closing Date occurs (such period, the “Reporting Period”), Purchaser shall provide the Seller with a written report summarizing its and all TYK2 Product Parties’ material, development and regulatory activities pertaining to the achievement of the Milestone Events during the previous calendar year (each such report, an “Update Report”). In addition, at least once in each successive [***] period following the Closing Date until the expiration of the [***] period in which the Reporting Period expires, upon Seller’s request and no later than [***] after such a request, Representatives of Purchaser who are responsible for managing the activities and business relating to the TYK2 Products and knowledgeable about such operations shall meet with Representatives of Seller, telephonically or in person, to discuss the status of development and regulatory activities pertaining to the achievement of the Milestone Events, and any reasonable inquiries the Seller may have regarding such matters and/or the information contained in the Update Reports. Each of Purchaser and Seller shall bear its own costs and expenses regarding such meetings.

 

4.     Acknowledgement. The Seller acknowledges and agrees that: (i) the Milestone Payments are contingent upon achievement of the corresponding Milestone Event provided for in Section 1 of this Exhibit E, which may not be achieved and as a result, some or all of such payments may never be paid, (ii) Purchaser has no obligation to Seller under this Agreement to extend any effort to achieve any Milestone Event except as expressly set forth in Section 2 of this Exhibit E and no implied duties of any kind shall apply, and (iii) the Base Initial Consideration and the Milestone Payments (if the corresponding Milestone Events are achieved) constitute sufficient consideration for entering into this Agreement. The Company hereby waives, disclaims and forever relinquishes any right to any claim in respect of a Milestone Payment based on any representation, warranty, covenant or agreement other than those expressly set forth in this Agreement, including this Exhibit E.

 

 

5.     Milestone Event Disputes. If Seller believes that any Milestone Event has occurred and Purchaser has not paid the corresponding Milestone Payment in accordance with this Exhibit E, then Seller may deliver to Purchaser written notice thereof (a “Milestone Dispute Notice”), in reasonable detail. During the [***] following the delivery of a Milestone Dispute Notice, Purchaser and Seller shall attempt in good faith to resolve any dispute as to whether any Milestone Event has occurred and whether any Milestone Payment is payable. Following such thirty-day period, either party may initiate litigation of such dispute in accordance with Section 10.10 of the Agreement.

 

6.     Definitions. For purposes of this Exhibit E:

 

“China” means the People’s Republic of China.

 

“Clinical Trial” means any human clinical study of any TYK2 Product.

 

“Commercially Reasonable Efforts” means [***].

 

“Commercialization Approval” means [***].

 

“Drug Approval Application” means [***].

 

“FTP-637” means the compound known as FTP-637 having the molecular structure, set forth in Schedule E-1.

 

“FTP-638” means the compound known as FTP-638 having the molecular structure, set forth in Schedule E-2

 

“FTP-1817” means the compound known as FTP-1817 having the molecular structure, set forth in Schedule E-3.

 

“FTP-1866” means the compound known as FTP-1866 having the molecular structure, set forth in Schedule E-4.

 

“Marketing Approval” means approval of a Drug Approval Application by the applicable Regulatory Authority.

 

“Major European Country” means any one of the following: [***].

 

“Phase 2 Clinical Trial” means a Clinical Trial in which a primary endpoint is designed to preliminarily evaluate clinical efficacy of a TYK2 Product, for one or more indications and/or to obtain an indication of the dosage regimen required, or a Clinical Trial that would otherwise satisfy the requirements defined in 21 CFR 312.21(b), or other comparable regulation imposed by the FDA, the EMA or their foreign counterparts for an equivalent Clinical Trial in the applicable country where such Clinical Trial takes place.

 

 

“Phase 3 Clinical Trial” means a pivotal Clinical Trial designed to be used to establish safety and efficacy of a TYK2 Product as a basis for obtaining Marketing Approval in the applicable country where such Clinical Trial takes place, or a Clinical Trial that would otherwise satisfy the requirements defined in 21 C.F.R. 312.21(c), or other comparable regulation imposed by the FDA, the EMA or their foreign counterparts for an equivalent Clinical Trial in the applicable country where such Clinical Trial takes place.

 

“Regulatory Authority” means, with respect to a country, the applicable regulatory authority(ies) with legally binding authority over the testing, manufacture, use, storage, importation, promotion, marketing, pricing or sale of a TYK2 Product labeled for the prevention or treatment of a human disease, state or condition in such country, including the FDA and the European Medicines Agency, or any successor organization to the foregoing.

 

“TYK2 Compound” means (a) (i) FTP-637, FTP-638, FTP-1817, or FTP-1866, or (ii) any other compound that is specifically claimed in a Valid Claim of: (A) any of the following patents or patent applications included in the TYK2 Portfolio as of the date of this Agreement: PCT/US2019/057485, US16/938,183, PCT/US2020/021850 or US63/079,217; or (B) any Patents filed after the Closing that claim priority to the Patents described in clause (a)(ii)(A); or (b) any derivative of any compound described in clause (a), including any salt, polymorph, hydrate, solvate, isomer, ester, prodrug of any compound described in clause (a).

 

“TYK2 Portfolio” means all (a) Patents listed on Section 4.13(a) of the Company Disclosure Schedule, (b) Patents that (i) are filed during the period commencing on the date of this Agreement and ending on the day that is [***] after the Closing, and (ii) name as an inventor an individual who was an employee of or consultant to the Company prior to the date of this Agreement, (c) any Patents issuing from any Patent described in clause (a) or (b), or (d) any Patent that claims priority to a Patent described in clause (a), (b) or (c), but only to the extent each such Patent claims the same subject matter as the Patent application to which it claims priority.

 

“Patent(s)” means patents and patent applications anywhere in the world, any substitution, division, continuation, continuation-in-part (but only to the extent such continuation-in-part claims the same subject matter as the application to which it claims priority), patent of addition, renewal, restoration, supplementary protection certificate, registration or confirmation patent, patent issuing from post-grant proceedings, reexamination, extension, renewal, or reissue of any of the foregoing and any patents or patent applications claiming or entitled to claim priority to any of the foregoing and all rights of priority attendant to such patents and patent applications and any foreign equivalents of any of the foregoing.

 

“TYK2 Product” means any pharmaceutical product containing a TYK2 Compound that would infringe any Valid Claim of a Patent within the TYK2 Portfolio, absence a license to or ownership of such patent or patent application.

 

“TYK2 Product Party” means, collectively, Purchaser, its Affiliates and/or its or their respective licensees, and/or sublicensees, and any assignees and/or successors of any of the foregoing with respect to rights to a TYK2 Product, or any other Person who receives from any of the foregoing Persons rights for the development or commercialization of any TYK2 Product or that has been delegated responsibility for achieving a Milestone Event for which a Milestone Payment has not previously been paid.

 

 

“Valid Claim” means a composition of matter or method of use claim of: (a) of any issued, unexpired Patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; or (b) of any Patent application that has not been cancelled, withdrawn or abandoned, without being re-filed in another application in the applicable jurisdiction.

 

 

Exhibit F

 

Asset Transfer and Assumption Agreement

 

[***]

 

 

 

Exhibit G

 

Confirmatory Assignment Agreement

 

[***]

 

 

Exhibit H

 

Form of Employee Release

 

[***] 

 

 

Schedule 1.1(p)

 

Encumbrances

 

 

 

Schedule 8.2(d)

 

Third Party Consents

 

 

Schedule 8.2(e)(i)

 

Director and Officer Release Persons

 

 

Employee Release Persons

 

Schedule 8.2(e)(ii)

 

 

Schedule 8.2(h)

 

Terminated Contracts

 

 

 

Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Registration Statement on Form S-1 of Alumis Inc. of our report dated April 10, 2024 relating to the financial statements of Alumis Inc., which appears in this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

/s/ PricewaterhouseCoopers LLP
San Jose, California
June 7, 2024

 

 

 

Exhibit 107

 

Calculation of Filing Fee Tables

 

Form S-1

 

Alumis Inc.

 

Table 1: Newly Registered Securities

		Security Type		Security Class Title		Fee Calculation or Carry Forward Rule		Amount Registered		Proposed Maximum Offering Price Per Unit		Maximum Aggregate Offering Price(1)		Fee Rate		Amount of Registration Fee(2)
Fees to Be Paid		Equity		Common Stock, par value $0.0001 per share(3)(4)		457(o)		—		—		$100,000,000.00		0.00014760		$14,760.00
		Total Offering Amounts										$100,000,000.00		—		$14,760.00
		Total Fee Offsets										—		—		—
		Net Fee Due										—		—		$14,760.00

 

(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).
(2)	Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price.
(3)	Includes up to an additional 15% of the aggregate offering price to cover a 30-day option granted to the underwriters to purchase additional shares of our common stock to cover over-allotments, if any.
(4)	Pursuant to Rule 416(a) of the Securities Act, the shares of common stock registered hereby also includes an indeterminable number of additional securities that may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.