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 10.12

 

611 Gateway/Esker Therapeutics - Page 1

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is made this ____ day of July, 2021, between 611 GATEWAY CENTER LP, a Delaware limited partnership (“Landlord”), and ESKER THERAPEUTICS, INC., a Delaware corporation (“Tenant”).

 

Building:

611 Gateway Boulevard, South San Francisco, California

 

Premises:

That portion of the Building, commonly known as Suite 820, containing approximately 13,943 rentable square feet, as determined by Landlord, as shown on Exhibit A.

 

Project:

The real property on which the Building in which the Premises are located, together with all improvements thereon and appurtenances thereto as described on Exhibit B. In addition to the Building, the Project shall include the buildings located at 601, 651, 681, 685 and 701 Gateway Boulevard, South San Francisco and any additional buildings and land that Landlord may elect to include in the future; provided, however, any such addition or subtraction of buildings shall change Tenant’s Share of Operating Expenses of Building and the Building’s Share of Operating Expenses of Project.

 

Base Rent:

$4.05 per rentable square foot of the Premises per month, subject to adjustment pursuant to Section 4 hereof.

 

Rentable Area of Premises: 13,943 sq. ft.

 

Rentable Area of Building: 258,337 sq. ft.

 

Rentable Area of Project: 784,151 sq. ft.

 

Tenant’s Share of Operating Expenses of Building: 5.4%. Notwithstanding the foregoing to the contrary, for the time period from the Rent Commencement Date through the day immediately preceding the six (6) month anniversary of the Rent Commencement Date (the “Partial Rent Abatement Period”), Tenant’s Share of Operating Expenses with respect to the Premises shall be partially abated so that during this period the Tenant’s Share of Operating Expenses shall be calculated based on 10,000 rentable square feet of the Premises (with the Tenant’s Share of Operating Expenses for the remaining 3,943 rentable square feet being abated). Accordingly, during the Partial Rent Abatement Period the Tenant’s Share of Operating Expenses of Building shall be deemed to be 3.87%.

 

Building’s Share of Operating Expenses of Project: 32.94%

 

Security Deposit: $112,938.30

 

Target Commencement Date: August 1, 2021

 

Rent Adjustment Percentage: 3% (See Section 4 below)

 

Base Year:

2021

 

Base Term:

Beginning on the Commencement Date and ending 37 months from the first day of the first full month following the Rent Commencement Date. For clarity, if the Rent Commencement Date occurs on the first day of a month, the expiration of the Base Term shall be measured from that date. If the Rent Commencement Date occurs on a day other than the first day of a month, the expiration of the Base Term shall be measured from the first day of the following month.

 

 

611 Gateway/Esker Therapeutics - Page 2

 

Permitted Use:

Office and related uses consistent with the character of the Project and otherwise in compliance with the provisions of Section 7 hereof.

 

Address for Rent Payment:	Landlord’s Notice Address:
Gateway Portfolio Holdings LLC	26 North Euclid Avenue
P.O. Box 102430	Pasadena, CA 91101
Pasadena, CA 91189-2430	Attention: Corporate Secretary

  

Tenant’s Notice Address:

611 Gateway Boulevard, Suite 820

South San Francisco, California 94080

Attention: Lease Administrator

 

The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

 

x EXHIBIT A - PREMISES DESCRIPTION	x EXHIBIT B - DESCRIPTION OF PROJECT
x EXHIBIT C - INTENTIONALLY OMITTED	x EXHIBIT D - COMMENCEMENT DATE
x EXHIBIT E - RULES AND REGULATIONS	x EXHIBIT F - TENANT’S PERSONAL PROPERTY

  

1.            Lease of Premises. Upon and subject to all of the terms and conditions hereof, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The portions of the Project which are for the non-exclusive use of tenants of the Project are collectively referred to herein as the “Common Areas.” Landlord reserves the right to modify Common Areas, provided that such modifications do not materially adversely affect Tenant’s use of the Premises for the Permitted Use. From and after the Commencement Date through the expiration of the Term, Tenant shall have access to the Building and the Premises 24 hours a day, 7 days a week, except in the case of emergencies, as the result of Legal Requirements, the performance by Landlord of any installation, maintenance or repairs, or any other temporary interruptions, and otherwise subject to the terms of this Lease.

 

2.            Delivery; Acceptance of Premises; Commencement Date. Landlord shall use reasonable efforts to deliver the Premises to Tenant on or before the Target Commencement Date (“Delivery” or “Deliver”). Tenant acknowledges that Landlord is currently leasing the Premises to another third party tenant (the “Existing Tenant”) and that this Lease is expressly conditioned upon Landlord and such Existing Tenant entering into a lease termination agreement with respect to Existing Tenant’s lease. Such lease termination agreement shall be upon such terms and conditions as are acceptable to Landlord in its sole discretion. If Landlord fails to timely Deliver the Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Lease shall not be void or voidable except as provided herein.

 

The “Commencement Date” shall be the date Landlord Delivers the Premises to Tenant. The “Rent Commencement Date” shall be the earlier of: (i) 20 days after the Commencement Date; and (ii) the date Tenant conducts any business in the Premises or any part thereof (it being agreed that Tenant’s installation and set-up of its furniture, fixtures and equipment shall not be considered conducting business in the Premises). The period commencing on the Commencement Date through the day immediately preceding the Rent Commencement Date may be referred to herein as the “Abatement Period.” Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement Date, the Rent Commencement Date and the expiration date of the Term when such are established in the form of the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D; provided, however, Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder. The “Term” of this Lease shall be the Base Term, as defined above on the first page of this Lease.

 

 

611 Gateway/Esker Therapeutics - Page 3

 

For the period of 90 consecutive days after the Commencement Date, Landlord shall, at its sole cost and expense (which shall not constitute an Operating Expense), be responsible for any repairs that are required to be made to the Building or Building Systems (as defined in Section 13), unless Tenant or any Tenant Party was responsible for the cause of such repair, in which case Tenant shall pay the cost.

  

During the period from the Commencement Date through the day immediately preceding the Rent Commencement Date, Landlord shall permit Tenant access to the Premises commencing on the Commencement Date for Tenant’s installation and set-up of its furniture, fixtures and equipment in the Premises (collectively, “FF&E Installation”), provided that such FF&E Installation is coordinated with Landlord, and Tenant complies with this Lease and all other reasonable restrictions and conditions Landlord may impose during the FF&E Installation. All such access shall be during normal business hours. Notwithstanding the foregoing, Tenant shall have no right to enter onto any portion of the Premises or the Project unless and until Tenant shall deliver to Landlord evidence reasonably satisfactory to Landlord demonstrating that the insurance required to be carried by Tenant pursuant to Section 17 is in full force and effect.

 

In connection with this Lease and Tenant’s use of the Premises hereunder, Landlord hereby agrees to permit Tenant, during the Base Term, to utilize the furniture, fixtures and equipment currently located in the Premises (“FF&E”). Tenant hereby acknowledges that Landlord makes no representations, warranties or promises with respect to the FF&E, including, without limitation, any representation or warranty as to the condition thereof or the fitness thereof for any purposes, and Tenant accepts the FF&E for Tenant’s use during the Base Term in its “AS-IS, WHERE-IS” and “WITH ALL FAULTS” condition. The Existing Tenant represented to Landlord that it conveyed the FF&E to Landlord free and clear of all liens, mortgages and encumbrances. Upon the expiration of this Lease, Tenant shall have the right to either (i) surrender the FF&E to Landlord in good condition, normal wear and tear excepted or (ii) provided Tenant is not in default under this Lease beyond any applicable notice and cure periods, elect to acquire the FF&E pursuant to a bill of sale in a form reasonably proscribed by Landlord conveying such FF&E to Tenant for One Dollar ($1.00), in which case Tenant shall be required to remove all such FF&E from the Premises prior to the expiration of the Lease. Notwithstanding anything to the contrary in this Lease, Tenant, at its sole cost and expense, shall have the right to make repairs to any of the FF&E and may dispose of any FF&E in the event such FF&E becomes too damaged to repair or use.

 

Except as otherwise expressly set forth in this Lease: (i) Tenant shall accept the Premises in their condition as of the Commencement Date; (ii) Landlord shall have no obligation for any defects in the Premises; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time possession was taken. Landlord shall professionally clean the Premises prior to Tenant’s occupancy of the Premises.

 

Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Premises or the Project, and/or the suitability of the Premises or the Project for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises or the Project are suitable for the Permitted Use. This Lease constitutes the complete agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and all prior representations, inducements, promises, agreements, understandings and negotiations which are not contained herein. Landlord in executing this Lease does so in reliance upon Tenant’s representations, warranties, acknowledgments and agreements contained herein.

 

3.            Rent.

 

(a)          Base Rent. Base Rent for the month in which Rent Commencement Date occurs (or, if the Rent Commencement Date does not occur on the first day of a calendar month, Base Rent for the first full calendar month following the Rent Commencement Date) and the Security Deposit shall be due and payable concurrently with Tenant’s delivery of an executed copy of this Lease to Landlord. Tenant shall pay to Landlord in advance, without demand, abatement, deduction or set-off, monthly installments of Base Rent on or before the first day of each calendar month during the Term hereof after the Rent Commencement Date, in lawful money of the United States of America, at the office of Landlord for payment of Rent set forth above, or to such other person or at such other place as Landlord may from time to time designate in writing, or via federally insured wire transfer (including ACH) pursuant to the wire instructions provided by Landlord. Payments of Base Rent for any fractional calendar month shall be prorated. The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any Rent (as defined in Section 5) due hereunder except for any abatement as may be expressly provided in this Lease.

 

 

611 Gateway/Esker Therapeutics - Page 4

 

Notwithstanding anything herein to the contrary, during the Partial Rent Abatement Period, the Base Rent payable by Tenant shall be partially abated so that during this period the Base Rent shall be calculated only on 10,000 rentable square feet of the Premises (with the Base Rent for the remaining 3,943 rentable square feet being abated).

 

(b)          Additional Rent. In addition to Base Rent, Tenant agrees to pay to Landlord as additional rent (“Additional Rent”): (i) commencing on January 1, 2022, Tenant’s Share of “Operating Expenses” (as defined in Section 5), and (ii) any and all other amounts Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, any and all other sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after any applicable notice and cure period.

 

4.            Base Rent Adjustments. Base Rent shall be increased on each annual anniversary of the Rent Commencement Date (provided, however, that if the Rent Commencement Date occurs on a day other than the first day of a calendar month, then Base Rent shall be increased on each annual anniversary of the first day of the first full calendar month immediately following the Rent Commencement Date) (each an “Adjustment Date”) by multiplying the Base Rent payable immediately before such Adjustment Date by the Rent Adjustment Percentage and adding the resulting amount to the Base Rent payable immediately before such Adjustment Date. Base Rent, as so adjusted, shall thereafter be due as provided herein. Base Rent adjustments for any fractional calendar month shall be prorated.

 

5.            Operating Expense Payments. Landlord shall deliver to Tenant a written estimate of Operating Expenses for each calendar year during the Term (the “Annual Estimate”), which may be revised by Landlord from time to time during such calendar year. Commencing on January 1, 2022, and continuing thereafter on the first day of each month, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Excess Operating Expenses. Payments for any fractional calendar month shall be prorated. The term “Excess Operating Expenses” means Operating Expenses for the applicable year in excess of Operating Expenses for the Base Year. Notwithstanding anything to the contrary contained in this Lease, Landlord shall have the right to pass through any new line item or category of costs or expenses arising during the Term which were not included in the Base Year (including subsidies) without reference to a base year.

 

The term “Operating Expenses” means all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord with respect to the Building (including the Building’s Share of all costs and expenses of any kind or description incurred or accrued by Landlord with respect to the Project which are not specific to the Building or any other building located in the Project) (including, without duplication, (u) Taxes (as defined in Section 9), (v) the cost of reasonable upgrades to the Building or Project or enhanced services provided at the Building and/or Project which are reasonably intended to encourage social distancing, promote and protect health and physical well-being and/or intended to limit the spread of communicable diseases and/or viruses of any kind or nature that are more virulent than the seasonal flu (collectively, “Infectious Conditions”), (w) the cost (including, without limitation, any subsidies which Landlord may provide in connection with amenities serving the Project (the “Project Amenities”)) of the Project Amenities now or hereafter located at or outside the Project, (x) costs related to any parking structure or parking areas serving the Project and costs for transportation services (including the cost of the Shuttle Services (as defined in Section 40(q)), (y) capital repairs, improvements and replacements amortized over the lesser of 10 years and the useful life of such capital repairs, improvements and replacements, and (z) the costs of Landlord’s third party property manager or, if there is no third party property manager, administration rent in the amount of 3% of Base Rent, excluding only:

 

 

611 Gateway/Esker Therapeutics - Page 5

 

(a)           the original construction costs of the Project and renovation prior to the date of this Lease and costs of correcting defects in such original construction or renovation;

  

(b)          capital expenditures for expansion of the Project;

 

(c)           interest, principal payments of Mortgage (as defined in Section 27) debts of Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or unsecured;

 

(d)          depreciation of the Project (except for capital improvements, the cost of which are includable in Operating Expenses);

 

(e)           advertising, legal and space planning expenses and leasing commissions and other costs and expenses incurred in procuring and leasing space to tenants for the Project, including any leasing office maintained in the Project, free rent and construction allowances for tenants;

 

(f)            legal and other expenses incurred in the negotiation or enforcement of leases;

 

(g)          completing, fixturing, improving, renovating, painting, redecorating or other work, which Landlord pays for or performs for other tenants within their premises, and costs of correcting defects in such work;

 

(h)          costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by Tenant or other tenants of the Project, whether or not actually paid;

 

(i)           salaries, wages, benefits and other compensation paid to officers and employees of Landlord who are not assigned in whole or in part to the operation, management, maintenance or repair of the Project;

 

(j)            general organizational, administrative and overhead costs relating to maintaining Landlord’s existence, either as a corporation, partnership, or other entity, including general corporate, legal and accounting expenses;

 

(k)           costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu thereof) incurred in connection with disputes with tenants, other occupants, or prospective tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees of the Building;

 

(l)            costs incurred by Landlord due to the violation by Landlord, its employees, agents or contractors or any tenant of the terms and conditions of any lease of space in the Project or any Legal Requirement (as defined in Section 7);

 

(m)          penalties, fines or interest incurred as a result of Landlord’s inability or failure to make payment of Taxes and/or to file any tax or informational returns when due, or from Landlord’s failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency;

 

(n)          overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;

 

(o)          costs of Landlord’s charitable or political contributions, or of fine art maintained at the Project;

 

(p)          costs in connection with services (including electricity), items or other benefits of a type which are not standard for the Project and which are not available to Tenant without specific charges therefor, but which are provided to another tenant or occupant of the Project, whether or not such other tenant or occupant is specifically charged therefor by Landlord;

 

 

611 Gateway/Esker Therapeutics - Page 6

 

(q)          costs incurred in the sale or refinancing of the Project;

 

(r)           net income taxes of Landlord or the owner of any interest in the Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Project or any portion thereof or interest therein;

 

(s)           any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by persons other than tenants of the Project under leases for space in the Project;

 

(t)           costs in connection with the presence of any Hazardous Materials (as defined below) except to the extent such costs arise as a result of a change in law after the date of this Lease; and

 

(u)          expense reserves (however, Tenant acknowledges that Operating Expenses shall include Taxes that are allocable to each calendar year during the Term but may not be payable until a later date).

 

In addition, notwithstanding anything to the contrary contained in this Lease, Operating Expenses incurred or accrued by Landlord with respect to any capital improvements which are reasonably expected by Landlord to reduce overall Operating Expenses (for example, without limitation, by reducing energy usage at the Project) (the “Energy Savings Costs”) shall be amortized over a period of years equal to the least of (A) 10 years, (B) the useful life of such capital items, or (C) the quotient of (i) the Energy Savings Costs, divided by (ii) the annual amount of Operating Expenses reasonably expected by Landlord to be saved as a result of such capital improvements.

 

Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail: (a) the total of and Tenant’s Share of actual Excess Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of Excess Operating Expenses for such year. If Tenant’s Share of actual Excess Operating Expenses for such year exceeds Tenant’s payments of Excess Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant. If Tenant’s payments of Excess Operating Expenses for such year exceed Tenant’s Share of actual Excess Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. Landlord’s and Tenant’s obligations to pay any overpayments or deficiencies due pursuant to this paragraph shall survive the expiration or earlier termination of this Lease.

 

The Annual Statement shall be final and binding upon Tenant unless Tenant, within 60 days after Tenant’s receipt thereof, shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor. If, during such 60 day period, Tenant reasonably and in good faith questions or contests the accuracy of Landlord’s statement of Tenant’s Share of Excess Operating Expenses, Landlord will provide Tenant with access to Landlord’s books and records relating to the operation of the Project and such information as Landlord reasonably determines to be responsive to Tenant’s questions (the “Expense Information”). If after Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Excess Operating Expenses, then Tenant shall have the right to have a regionally recognized independent public accounting firm selected by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or delayed), working pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense), audit and/or review the Expense Information for the year in question (the “Independent Review”). The results of any such Independent Review shall be binding on Landlord and Tenant. If the Independent Review shows that the payments actually made by Tenant with respect to the Excess Operating Expenses for the calendar year in question exceeded Tenant’s Share of Excess Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding installments of estimated Excess Operating Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such statement, except that after the expiration, or earlier termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. If the Independent Review shows that Tenant’s payments with respect to Excess Operating Expenses for such calendar year were less than Tenant’s Share of Excess Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30 days after delivery of such statement. If the Independent Review shows that Tenant has overpaid with respect to Excess Operating Expenses by more than 5% then Landlord shall reimburse Tenant for all costs incurred by Tenant for the Independent Review. Excess Operating Expenses for the calendar years in which Tenant’s obligation to share therein begins and ends shall be prorated. Notwithstanding anything set forth herein to the contrary, if the Building is not at least 95% occupied on average during any year of the Term, Tenant’s Share of Excess Operating Expenses for such year shall be computed as though the Building had been 95% occupied on average during such year.

 

 

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“Tenant’s Share” shall be the percentage set forth on the first page of this Lease as Tenant’s Share as reasonably adjusted by Landlord for changes in the physical size of the Premises or the Project occurring thereafter. Landlord may equitably increase Tenant’s Share for any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only the Premises or only a portion of the Project that includes the Premises or that varies with occupancy or use. Base Rent, Tenant’s Share of Excess Operating Expenses and all other amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”

 

6.            Security Deposit. On or before October 1, 2021, Tenant shall deposit with Landlord a security deposit (the “Security Deposit”) for the performance of all of Tenant’s obligations hereunder in the amount set forth on page 1 of this Lease, which Security Deposit shall be in the form of an unconditional and irrevocable letter of credit (the “Letter of Credit”): (i) in form and substance satisfactory to Landlord, (ii) naming Landlord as beneficiary, (iii) expressly allowing Landlord to draw upon it at any time from time to time by delivering to the issuer notice that Landlord is entitled to draw thereunder, (iv) issued by an FDIC-insured financial institution satisfactory to Landlord, and (v) redeemable by presentation of a sight draft in the state of Landlord’s choice. If Tenant does not provide Landlord with a substitute Letter of Credit complying with all of the requirements hereof at least 10 days before the stated expiration date of any then current Letter of Credit, Landlord shall have the right to draw the full amount of the current Letter of Credit and hold the funds drawn in cash without obligation for interest thereon as the Security Deposit. The Security Deposit shall be held by Landlord as security for the performance of Tenant’s obligations under this Lease. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of a Default (as defined in Section 20), Landlord may use all or any part of the Security Deposit to pay delinquent payments due under this Lease, future rent damages under California Civil Code Section 1951.2, and the cost of any damage, injury, expense or liability caused by such Default, without prejudice to any other remedy provided herein or provided by law. Landlord’s right to use the Security Deposit under this Section 6 includes the right to use the Security Deposit to pay future rent damages following the termination of this Lease pursuant to Section 21(c) below. Upon any use of all or any portion of the Security Deposit, Tenant shall pay Landlord on demand the amount that will restore the Security Deposit to the amount set forth on Page 1 of this Lease. Tenant hereby waives the provisions of any law, now or hereafter in force, including, without limitation, California Civil Code Section 1950.7, which provide that 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 Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. Upon bankruptcy or other debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for periods prior to the filing of such proceedings. If Tenant shall fully perform every provision of this Lease to be performed by Tenant, the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within 90 days after the expiration or earlier termination of this Lease.

 

 

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If Landlord transfers its interest in the Project or this Lease, Landlord shall either (a) transfer any Security Deposit then held by Landlord to a person or entity assuming Landlord’s obligations under this Section 6, or (b) return to Tenant any Security Deposit then held by Landlord and remaining after the deductions permitted herein. Upon such transfer to such transferee or the return of the Security Deposit to Tenant, Landlord shall have no further obligation with respect to the Security Deposit, and Tenant’s right to the return of the Security Deposit shall apply solely against Landlord’s transferee. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Landlord’s obligation respecting the Security Deposit is that of a debtor, not a trustee, and no interest shall accrue thereon.

  

7.            Use. The Premises shall be used solely for the Permitted Use set forth in the basic lease provisions on page 1 of this Lease, and in compliance with all laws, orders, judgments, ordinances, regulations, codes, directives, permits, licenses, covenants and restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof, including, without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant thereto, “ADA”) (collectively, “Legal Requirements” or “applicable laws” and each, a “Legal Requirement” or “applicable law”). Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority (as defined in Section 9) having jurisdiction to be a violation of a Legal Requirement. Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance, increase the insurance risk, or cause the disallowance of any sprinkler or other credits. Tenant shall not permit any part of the Premises to be used as a “place of public accommodation”, as defined in the ADA or any similar legal requirement. Tenant shall reimburse Landlord promptly upon demand for any additional premium charged for any such insurance policy by reason of Tenant’s failure to comply with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of the Premises. Tenant will use the Premises in a careful, safe and proper manner and will not commit or permit waste, overload the floor or structure of the Premises, subject the Premises to use that would damage the Premises or obstruct or interfere with the rights of Landlord or other tenants or occupants of the Project, including conducting or giving notice of any auction, liquidation, or going out of business sale on the Premises, or using or allowing the Premises to be used for any unlawful purpose. Tenant shall cause any equipment or machinery to be installed in the Premises so as to reasonably prevent sounds or vibrations from the Premises from extending into Common Areas, or other space in the Project. Tenant shall not place any machinery or equipment weighing 500 pounds or more in or upon the Premises or transport or move such items through the Common Areas of the Project or in the Project elevators without the prior written consent of Landlord. Tenant shall not, without the prior written consent of Landlord, use the Premises in any manner which will require ventilation, air exchange, heating, gas, steam, electricity or water beyond the existing capacity of the Project as proportionately allocated to the Premises based upon Tenant’s Share as usually furnished for the Permitted Use.

 

Landlord shall be responsible for the Common Areas of the Project with the ADA as of the Commencement Date. Tenant, at its sole expense, shall make any alterations or modifications to the interior of the Premises that are required by Legal Requirements (including, without limitation, compliance of the Premises with the ADA) related to Tenant’s use or occupancy of the Premises. Notwithstanding any other provision herein to the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in investigating or resisting the same (including, without limitation, reasonable attorneys’ fees, charges and disbursements and costs of suit) (collectively, “Claims”) arising out of or in connection with Legal Requirements related to Tenant’s use or occupancy of the Premises, and Tenant shall indemnify, defend, hold and save Landlord harmless from and against any and all Claims arising out of or in connection with any failure of the Premises to comply with any Legal Requirement related to Tenant’s use or occupancy of the Premises.

 

Tenant acknowledges that Landlord may, but shall not be obligated to, seek to obtain Leadership in Energy and Environmental Design (LEED), WELL Building Standard, or other similar “green” certification with respect to the Project and/or the Premises, and Tenant, at no material additional out-of-pocket cost to Tenant, agrees to reasonably cooperate with Landlord, and to provide such information and/or documentation as Landlord may reasonably request, in connection therewith.

 

 

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8.            Holding Over. If, with Landlord’s express written consent, Tenant retains possession of the Premises after the termination of the Term, (i) unless otherwise agreed in such written consent, such possession shall be subject to immediate termination by Landlord at any time, (ii) all of the other terms and provisions of this Lease (including, without limitation, the adjustment of Base Rent pursuant to Section 4 hereof) shall remain in full force and effect (excluding any expansion or renewal option or other similar right or option) during such holdover period, (iii) Tenant shall continue to pay Base Rent in the amount payable upon the date of the expiration or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in such written consent, and (iv) all other payments shall continue under the terms of this Lease. If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly rental shall be equal to 150% of Rent in effect during the last 30 days of the Term, and (B) Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, including consequential damages. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Section 8 shall not be construed as consent for Tenant to retain possession of the Premises. Acceptance by Landlord of Rent after the expiration of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.

  

9.            Taxes. Except as expressly provided in Operating Expense exclusion (r) above, Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees, assessments and governmental charges of any kind, existing as of the Commencement Date or thereafter enacted (collectively referred to as “Taxes”), imposed by any federal, state, regional, municipal, local or other governmental authority or agency, including, without limitation, quasi-public agencies (collectively, “Governmental Authority”) during the Term, including, without limitation, all Taxes: (i) imposed on or measured by or based, in whole or in part, on rent payable to (or gross receipts received by) Landlord under this Lease and/or from the rental by Landlord of the Project or any portion thereof, or (ii) based on the square footage, assessed value or other measure or evaluation of any kind of the Premises or the Project, or (iii) assessed or imposed by or on the operation or maintenance of any portion of the Premises or the Project, including parking, or (iv) assessed or imposed by, or at the direction of, or resulting from Legal Requirements, or interpretations thereof, promulgated by any Governmental Authority, or (v) imposed as a license or other fee, charge, tax, or assessment on Landlord’s business or occupation of leasing space in the Project. Landlord may contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens securing Taxes. Taxes shall not include any net income taxes imposed on Landlord except to the extent such net income taxes are in substitution for any Taxes payable hereunder. If any such Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. Tenant shall pay, prior to delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant. If any Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Project is increased by a value attributable to improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time allocates Taxes to all tenants in the Project, Landlord shall have the right, but not the obligation, to pay such Taxes. Landlord’s determination of any excess assessed valuation shall be binding and conclusive, absent manifest error. The amount of any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord immediately upon demand.

 

10.          Parking. Subject to all applicable Legal Requirements, Force Majeure, a Taking (as defined in Section 19 below) and the exercise by Landlord of its rights hereunder, Tenant shall have the right, in common with other tenants of the Project pro rata in accordance with the rentable area of the Premises and the rentable areas of the Project occupied by such other tenants, to park in those areas designated for non-reserved parking, subject in each case to Landlord’s rules and regulations. As of the Commencement Date, Tenant’s share of parking spaces shall be equal to 3.3 parking spaces per 1,000 rentable square feet of the Premises. Landlord may allocate parking spaces among Tenant and other tenants in the Project pro rata as described above if Landlord determines that such parking facilities are becoming crowded. Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties, including other tenants of the Project.

 

 

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11.          Utilities, Services. The hours of operation of the Building are 6:00 a.m. to 6:00 p.m., Monday through Friday, state and national holidays excepted. During such periods (and outside of such hours but subject to additional charges as may be imposed by Landlord for after-hours HVAC or ventilation), Landlord shall provide, subject to the terms of this Section 11, water, electricity, heat, light, power, sewer, ventilation, air conditioning and other utilities (including gas and fire sprinklers to the extent the Project is plumbed for such services), refuse and trash collection and janitorial services (collectively, “Utilities”). Upon reasonable advance notice from Tenant to Landlord, Landlord shall make available after-hours HVAC or ventilation. Commencing on the Commencement Date, Tenant shall be required to pay to Landlord a fee at the rate of $266.97 per operating hour for providing such after-hours HVAC and $126.63 per operating hour for providing such after-hours ventilation, which fees may be amended by Landlord from time to time upon reasonable advance written notice to Tenant. The minimum use of after-hours HVAC shall be determined by Landlord and may thereafter be amended by Landlord as the same may change from time to time upon reasonable advance notice to Tenant. Landlord shall pay, as part of Operating Expenses for all Utilities used on the Premises, all maintenance charges for Utilities imposed by any Governmental Authority or Utility provider, any taxes, penalties, surcharges or similar charges thereon (other than as expressly excluded from the definition of Operating Expenses above). Landlord may cause, at Landlord’s expense, any Utilities to be separately metered or charged directly to Tenant by the provider. Commencing on the Commencement Date, Tenant shall pay directly to the Utility provider, prior to delinquency, any separately metered Utilities and services which may be furnished to Tenant or the Premises during the Term. Tenant shall pay, as part of Excess Operating Expenses, its share of all charges for jointly metered Utilities based upon consumption, as reasonably determined by Landlord. No interruption or failure of Utilities, from any cause whatsoever other than Landlord’s willful misconduct, shall result in eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent. Tenant agrees to limit use of water and sewer with respect to Common Areas to normal restroom use.

 

Notwithstanding anything to the contrary set forth herein, if (i) a stoppage of an Essential Service (as defined below) to the Premises shall occur and such stoppage is due solely to the gross negligence or willful misconduct of Landlord and not due in any part to any act or omission on the part of Tenant or any Tenant Party or any matter beyond Landlord’s reasonable control (any such stoppage of an Essential Service being hereinafter referred to as a “Service Interruption”), and (ii) such Service Interruption continues for more than 5 consecutive business days after Landlord shall have received written notice thereof from Tenant, and (iii) as a result of such Service Interruption, the conduct of Tenant’s normal operations in the Premises are materially and adversely affected, then there shall be an abatement of one day’s Base Rent for each day during which such Service Interruption continues after such 5 business day period; provided, however, that if any part of the Premises is reasonably useable for Tenant’s normal business operations or if Tenant conducts all or any part of its operations in any portion of the Premises notwithstanding such Service Interruption, then the amount of each daily abatement of Base Rent shall only be proportionate to the nature and extent of the interruption of Tenant’s normal operations or ability to use the Premises. The rights granted to Tenant under this paragraph shall be Tenant’s sole and exclusive remedy resulting from a failure of Landlord to provide services, and Landlord shall not otherwise be liable for any loss or damage suffered or sustained by Tenant resulting from any failure or cessation of services. For purposes hereof, the term “Essential Services” shall mean the following services: HVAC service, water, sewer and electricity, but in each case only to the extent that Landlord has an obligation to provide same to Tenant under this Lease. The provisions of this paragraph shall only apply as long as the original Tenant is the tenant occupying the Premises under this Lease and shall not apply to any assignee or sublessee.

 

Tenant agrees to provide Landlord with access to Tenant’s water and/or energy usage data on a monthly basis, either by providing Tenant’s applicable utility login credentials to Landlord’s Measurabl online portal, or by another delivery method reasonably agreed to by Landlord and Tenant. The costs and expenses incurred by Landlord in connection with receiving and analyzing such water and/or energy usage data (including, without limitation, as may be required pursuant to applicable Legal Requirements) shall be included as part of Operating Expenses.

 

 

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12.         Alterations and Tenant’s Property. Any alterations, additions, or improvements made to the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature upon any doors or windows in the Premises, but excluding installation, removal or realignment of furniture systems (other than removal of furniture systems owned or paid for by Landlord) not involving any modifications to the structure or connections (other than by ordinary plugs or jacks) to Building Systems (as defined in Section 13) (“Alterations”) shall be subject to Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if any such Alteration affects the structure or Building Systems and shall not be otherwise unreasonably withheld. Tenant may construct nonstructural Alterations in the Premises without Landlord’s prior approval if the aggregate cost of all such work in any 12 month period does not exceed $75,000 (a “Notice-Only Alteration”), provided Tenant notifies Landlord in writing of such intended Notice-Only Alteration, and such notice shall be accompanied by plans, specifications, work contracts and such other information concerning the nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which notice and accompanying materials shall be delivered to Landlord not less than 15 business days in advance of any proposed construction. If Landlord approves any Alterations, Landlord may impose such conditions on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem appropriate in Landlord’s sole and absolute discretion. Any request for approval shall be in writing, delivered not less than 15 business days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord, including the identities and mailing addresses of all persons performing work or supplying materials. Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements. Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord, as Additional Rent, on demand an amount equal to 3% of all charges incurred by Tenant or its contractors or agents in connection with any Alteration to cover Landlord’s overhead and expenses for plan review, coordination, scheduling and supervision. Before Tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred by Landlord by reason of faulty work done by Tenant or its contractors, delays caused by such work, or inadequate cleanup.

  

Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance for workers’ compensation and other coverage in amounts and from an insurance company satisfactory to Landlord protecting Landlord against liability for personal injury or property damage during construction. Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration.

 

Except for Removable Installations (as hereinafter defined), all Installations (as hereinafter defined) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term, and shall remain upon and be surrendered with the Premises as a part thereof. Notwithstanding the foregoing, Landlord may, at the time its approval of any such Installation is requested, or at the time it receives notice of a Notice-Only Alteration, notify Tenant that Landlord requires that Tenant remove such Installation upon the expiration or earlier termination of the Term, in which event Tenant shall remove such Installation in accordance with the immediately succeeding sentence. Upon the expiration or earlier termination of the Term, Tenant shall remove (i) all wires, cables or similar equipment which Tenant has installed in the Premises or in the risers or plenums of the Building, (ii) any Installations for which Landlord has given Tenant notice of removal in accordance with the immediately preceding sentence, and (iii) all of Tenant’s Property (as hereinafter defined), and Tenant shall restore and repair any damage caused by or occasioned as a result of such removal, including, without limitation, capping off all such connections behind the walls of the Premises and repairing any holes. During any restoration period beyond the expiration or earlier termination of the Term, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant. If Landlord is requested by Tenant or any lender, lessor or other person or entity claiming an interest in any of Tenant’s Property to waive any lien Landlord may have against any of Tenant’s Property, and Landlord consents to such waiver, then Landlord shall be entitled to reimbursement from Tenant for its actual, reasonable out-of-pocket costs incurred in connection with the preparation and negotiation of each such waiver of lien.

 

 

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For purposes of this Lease, (x) “Removable Installations” means any items listed on Exhibit F attached hereto and any items agreed by Landlord in writing to be included on Exhibit F in the future, (y) “Tenant’s Property” means Removable Installations and, other than Installations, any personal property or equipment of Tenant that may be removed without material damage to the Premises, and (z) “Installations” means all property of any kind paid for by Landlord, all Alterations, all fixtures, and all partitions, hardware, built-in machinery, built-in casework and cabinets and other similar additions, equipment, property and improvements built into the Premises so as to become an integral part of the Premises, including, without limitation, fume hoods which penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch.

 

13.          Landlord’s Repairs. Landlord, as an Operating Expense, shall maintain all of the structural, exterior, parking and other Common Areas of the Project, including HVAC, plumbing, fire sprinklers, elevators, electrical, lighting and all other building systems serving the Premises and other portions of the Project (“Building Systems”), in good repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant’s assignees, sublessees, licensees, agents, servants, employees, invitees and contractors (or any of Tenant’s assignees, sublessees and/or licensees respective agents, servants, employees, invitees and contractors) (collectively, “Tenant Parties”) excluded. Losses and damages caused by Tenant or any Tenant Party shall be repaired by Landlord, to the extent not covered by insurance, at Tenant’s sole cost and expense. Landlord reserves the right to stop Building Systems services when necessary (i) by reason of accident or emergency, or (ii) for planned repairs, alterations or improvements, which are, in the judgment of Landlord, desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed. Landlord shall have no responsibility or liability for failure to supply Building Systems services during any such period of interruption; provided, however, that Landlord shall, except in case of emergency, make a commercially reasonable effort to give Tenant 24 hours advance notice of any planned stoppage of Building Systems services for routine maintenance, repairs, alterations or improvements. Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Section, after which Landlord shall make a commercially reasonable effort to effect such repair. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after Tenant’s written notice of the need for such repairs or maintenance. Tenant waives its rights under any state or local law to terminate this Lease or to make such repairs at Landlord’s expense and agrees that the parties’ respective rights with respect to such matters shall be solely as set forth herein. Repairs required as the result of fire, earthquake, flood, vandalism, war, or similar cause of damage or destruction shall be controlled by Section 18.

 

14.         Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its expense, shall repair, replace and maintain in good condition all portions of the Premises, including, without limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of demising walls. Should Tenant fail to make any such repair or replacement or fail to maintain the Premises, Landlord shall give Tenant notice of such failure. If Tenant fails to commence cure of such failure within 10 days of Landlord’s notice, and thereafter diligently prosecute such cure to completion, Landlord may perform such work and shall be reimbursed by Tenant within 10 days after demand therefor; provided, however, that if such failure by Tenant creates or could create an emergency, Landlord may immediately commence cure of such failure and shall thereafter be entitled to recover the costs of such cure from Tenant. Subject to Sections 17 and 18, Tenant shall bear the full uninsured cost of any repair or replacement to any part of the Project that results from damage caused by Tenant or any Tenant Party and any repair that benefits only the Premises.

 

 

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15.          Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed against the Premises or against the Project for work claimed to have been done for, or materials claimed to have been furnished to, Tenant within 10 days after the filing thereof, at Tenant’s sole cost and shall otherwise keep the Premises and the Project free from any liens arising out of work performed, materials furnished or obligations incurred by Tenant. Should Tenant fail to discharge any lien described herein, Landlord shall have the right, but not the obligation, to pay such claim or post a bond or otherwise provide security to eliminate the lien as a claim against title to the Project and the cost thereof shall be immediately due from Tenant as Additional Rent. If Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal property of a removable nature utilized by Tenant in the operation of Tenant’s business, Tenant warrants that any Uniform Commercial Code Financing Statement filed as a matter of public record by any lessor or creditor of Tenant will upon its face or by exhibit thereto indicate that such Financing Statement is applicable only to removable personal property of Tenant located within the Premises. In no event shall the address of the Project be furnished on the statement without qualifying language as to applicability of the lien only to removable personal property, located in an identified suite held by Tenant.

  

16.          Indemnification. Tenant hereby indemnifies and agrees to defend, save and hold Landlord, its officers, directors, employees, managers, agents, sub-agents, constituent entities and lease signators (collectively, “Landlord Indemnified Parties”) harmless from and against any and all Claims for injury or death to persons or damage to property occurring within or about the Premises or the Project arising directly or indirectly out of use or occupancy of the Premises or the Project (including, without limitation, any act, omission or neglect by Tenant or any Tenant’s Parties in or about the Premises or at the Project) or a breach or default by Tenant in the performance of any of its obligations hereunder, except in each case to the extent caused by the willful misconduct or negligence of Landlord Indemnified Parties. Landlord shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal property (including, without limitation, loss of records kept within the Premises). Tenant further waives any and all Claims for injury to Tenant’s business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of records). Landlord Indemnified Parties shall not be liable for any damages arising from any act, omission or neglect of any tenant in the Project or of any other third party or Tenant Parties.

 

17.          Insurance. Landlord shall maintain all risk property and, if applicable, sprinkler damage insurance covering the full replacement cost of the Project. Landlord shall further procure and maintain commercial general liability insurance with a single loss limit of not less than $2,000,000 for bodily injury and property damage with respect to the Project. Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem necessary, including, but not limited to, flood, environmental hazard and earthquake, loss or failure of building equipment, errors and omissions, rental loss during the period of repair or rebuilding, workers’ compensation insurance and fidelity bonds for employees employed to perform services and insurance for any improvements installed by Tenant or which are in addition to the standard improvements customarily furnished by Landlord without regard to whether or not such are made a part of the Project. All such insurance shall be included as part of the Operating Expenses. The Project may be included in a blanket policy (in which case the cost of such insurance allocable to the Project will be determined by Landlord based upon the insurer’s cost calculations).

 

Tenant, at its sole cost and expense, shall maintain during the Term: all risk property insurance with business interruption and extra expense coverage, covering the full replacement cost of all property and improvements installed or placed in the Premises by Tenant at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with employers liability limits of $1,000,000 bodily injury by accident – each accident, $1,000,000 bodily injury by disease – policy limit, and $1,000,000 bodily injury by disease – each employee; and commercial general liability insurance, with a minimum limit of not less than $2,000,000 per occurrence for bodily injury and property damage with respect to the Premises. The commercial general liability insurance maintained by Tenant shall name Alexandria Real Estate Equities, Inc., and Landlord, its officers, directors, employees, managers, agents, sub-agents, constituent entities, joint venture partners and lease signators (collectively, “Landlord Insured Parties”), as additional insureds; insure on an occurrence and not a claims-made basis; be issued by insurance companies which have a rating of not less than policyholder rating of A and financial category rating of at least Class X in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30 days prior written notice shall have been given to Landlord from the insurer; not contain a hostile fire exclusion; contain a contractual liability endorsement; and provide primary coverage to Landlord Insured Parties (any policy issued to Landlord Insured Parties providing duplicate or similar coverage shall be deemed excess over Tenant’s policies, regardless of limits). Copies of such policies (if requested by Landlord), or certificates of insurance showing the limits of coverage required hereunder and showing Landlord as an additional insured, along with reasonable evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by Tenant (i) concurrent with Tenant’s delivery to Landlord of a copy of this Lease executed by Tenant, and (ii) prior to each renewal of said insurance. Tenant’s policy may be a “blanket policy” with an aggregate per location endorsement which specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy. Tenant shall, at least 5 days prior to the expiration of such policies, furnish Landlord with renewal certificates.

 

 

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In each instance where insurance is to name Landlord as an additional insured, Tenant shall upon written request of Landlord also designate and furnish certificates so evidencing Landlord as additional insured to: (i) any lender of Landlord holding a security interest in the Project or any portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the real property on which the Project is located, if the interest of Landlord is or shall become that of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Project.

 

The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors, employees, managers, agents, invitees and contractors (“Related Parties”), in connection with any loss or damage thereby insured against. Neither party nor its respective Related Parties shall be liable to the other for loss or damage caused by any risk insured against under property insurance required to be maintained hereunder, and each party waives any claims against the other party, and its respective Related Parties, for such loss or damage. The failure of a party to insure its property shall not void this waiver. Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all claims against such parties for, business interruption and losses occasioned thereby sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the Premises or the Project from any cause whatsoever. If the foregoing waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed not released but shall be secondary to the other’s insurer.

 

Landlord may require insurance policy limits to be raised to conform with requirements of Landlord’s lender and/or to bring coverage limits to levels then being generally required of new tenants within the Project.

 

18.          Restoration. If, at any time during the Term, the Project or the Premises are damaged or destroyed by a fire or other insured casualty, Landlord shall notify Tenant within 60 days after discovery of such damage as to the amount of time Landlord reasonably estimates it will take to restore the Project or the Premises, as applicable (the “Restoration Period”). If the Restoration Period is estimated to exceed 12 months (the “Maximum Restoration Period”), Landlord may, in such notice, elect to terminate this Lease as of the date that is 75 days after the date of discovery of such damage or destruction; provided, however, that notwithstanding Landlord’s election to restore, Tenant may elect to terminate this Lease by written notice to Landlord delivered within 5 business days of receipt of a notice from Landlord estimating a Restoration Period for the Premises longer than the Maximum Restoration Period. Unless either Landlord or Tenant so elects to terminate this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds (with any deductible to be treated as a current Operating Expense), promptly restore the Premises (excluding the improvements installed by Tenant or by Landlord and paid for by Tenant), subject to delays arising from the collection of insurance proceeds, from Force Majeure events; provided, however, that if repair or restoration of the Premises is not substantially complete as of the end of the Maximum Restoration Period or, if longer, the Restoration Period, Landlord may, in its sole and absolute discretion, elect not to proceed with such repair and restoration, or Tenant may by written notice to Landlord delivered within 30 days of the expiration of the Maximum Restoration Period or, if longer, the Restoration Period, elect to terminate this Lease, in which event Landlord shall be relieved of its obligation to make such repairs or restoration and this Lease shall terminate as of the date that is 75 days after the discovery of such damage or destruction, but Landlord shall retain any Rent paid and the right to any Rent payable by Tenant prior to such election by Landlord or Tenant.

 

 

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Tenant, at its expense, shall promptly perform, subject to delays arising from the collection of insurance proceeds or from Force Majeure events, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease. Notwithstanding the foregoing, Landlord and Tenant may terminate this Lease by written notice to the other party if the Premises are damaged during the last year of the Term and Landlord reasonably estimates that it will take more than 2 months to repair such damage, or if insurance proceeds are not available for such restoration. Rent shall be abated from the date of damage until the Premises are repaired and restored, in the proportion which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises, unless Landlord provides Tenant with other space during the period of repair that is suitable for the temporary conduct of Tenant’s business. Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18, Tenant waives any right to terminate this Lease by reason of damage or casualty loss.

 

The provisions of this Lease, including this Section 18, 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, or any other portion of the Project, and any statute or regulation which is now or may hereafter be in effect shall have no application to this Lease or any damage or destruction to all or any part of the Premises or any other portion of the Project, the parties hereto expressly agreeing that this Section 18 sets forth their entire understanding and agreement with respect to such matters.

 

19.          Condemnation. If the whole or any material part of the Premises or the Project is taken for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking would in Landlord’s reasonable judgment, either prevent or materially interfere with Tenant’s use of the Premises or materially interfere with or impair Landlord’s ownership or operation of the Project, then upon written notice by Landlord this Lease shall terminate and Rent shall be apportioned as of said date. If part of the Premises shall be Taken, and this Lease is not terminated as provided above, Landlord shall promptly restore the Premises and the Project as nearly as is commercially reasonable under the circumstances to their condition prior to such partial Taking and the rentable square footage of the Building, the rentable square footage of the Premises, Tenant’s Share of Excess Operating Expenses and the Rent payable hereunder during the unexpired Term shall be reduced to such extent as may be fair and reasonable under the circumstances. Upon any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award. Tenant shall have the right, to the extent that same shall not diminish Landlord’s award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be separately awarded or recoverable by Tenant for moving expenses and damage to Tenant’s trade fixtures, if a separate award for such items is made to Tenant. Tenant hereby waives any and all rights it might otherwise have pursuant to any provision of state law to terminate this Lease upon a partial Taking of the Premises or the Project.

 

20.          Events of Default. Each of the following events shall be a default (“Default”) by Tenant under this Lease:

 

(a)           Payment Defaults. Tenant shall fail to pay any installment of Rent or any other payment hereunder when due; provided, however, that Landlord will give Tenant notice and an opportunity to cure any failure to pay Rent within 5 days of any such notice not more than twice in any 12 month period and Tenant agrees that such notice shall be in lieu of and not in addition to, or shall be deemed to be, any notice required by law.

 

(b)           Insurance. Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain replacement insurance at least 5 days before the expiration of the current coverage.

 

 

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(c)          Abandonment. Tenant shall abandon the Premises.

 

(d)          Improper Transfer. Tenant shall assign, sublease or otherwise transfer or attempt to transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly permitted herein, or Tenant’s interest in this Lease shall be attached, executed upon, or otherwise judicially seized and such action is not released within 90 days of the action.

 

(e)           Liens. Tenant shall fail to discharge or otherwise obtain the release of any lien placed upon the Premises in violation of this Lease within 10 days after any such lien is filed against the Premises.

 

(f)           Insolvency Events. Tenant or any guarantor or surety of Tenant’s obligations hereunder shall: (A) make a general assignment for the benefit of creditors; (B) commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property (collectively a “Proceeding for Relief”); (C) become the subject of any Proceeding for Relief which is not dismissed within 90 days of its filing or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other entity).

 

(g)           Estoppel Certificate or Subordination Agreement. Tenant fails to execute any document required from Tenant under Sections 23 or 27 within 5 business days after a second notice requesting such document.

 

(h)          Other Defaults. Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 20, and, except as otherwise expressly provided herein, such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant.

 

Any notice given under Section 20(h) hereof shall: (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice; provided that if the nature of Tenant’s default pursuant to Section 20(h) is such that it cannot be cured by the payment of money and reasonably requires more than 30 days to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30 day period and thereafter diligently prosecutes the same to completion; provided, however, that such cure shall be completed no later than 60 days from the date of Landlord’s notice.

 

21.          Landlord’s Remedies.

 

(a)           Payment By Landlord; Interest. Upon a Default by Tenant hereunder, Landlord may, without waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act. All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the “Default Rate”), whichever is less, shall be payable to Landlord on demand as Additional Rent. Nothing herein shall be construed to create or impose a duty on Landlord to mitigate any damages resulting from Tenant’s Default hereunder.

 

(b)          Late Payment Rent. Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord under any Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord an additional sum equal to 5% of the overdue Rent as a late charge. Notwithstanding the foregoing, before assessing a late charge the first time in any calendar year, Landlord shall provide Tenant written notice of the delinquency and will waive the right if Tenant pays such delinquency within 5 days thereafter. The parties agree that this late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition to the late charge, Rent not paid when due shall bear interest at the Default Rate from the 5th day after the date due until paid.

 

 

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(c)          Remedies. Upon the occurrence of a Default, Landlord, at its option, without further notice or demand to Tenant, shall have in addition to all other rights and remedies provided in this Lease, at law or in equity, 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.

 

(i)            Terminate this Lease, or at Landlord’s option, Tenant’s right to possession only, 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 for damages therefor;

 

(ii)            Upon any termination of this Lease, whether pursuant to the foregoing Section 21(c)(i) or otherwise, Landlord may recover from Tenant the following:

 

(A)            The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus

 

(B)            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

 

(C)            The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

 

(D)            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

 

(E)            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 21 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 21(c)(ii)(A) and (B), above, the “worth at the time of award” shall be computed by allowing interest at the Default Rate. As used in Section 21(c)(ii)(C) 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 1%.

 

(iii)            Landlord may continue this Lease in effect after Tenant’s Default and recover rent as it becomes due (Landlord and Tenant hereby agreeing that Tenant has the right to sublet or assign hereunder, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease following a Default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies hereunder, including the right to recover all Rent as it becomes due.

 

 

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(iv)            Whether or not Landlord elects to terminate this Lease following a Default by Tenant, 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. Upon 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.

 

(v)            Independent of the exercise of any other remedy of Landlord hereunder or under applicable law, Landlord may conduct an environmental test of the Premises as generally described in Section 30(c) hereof, at Tenant’s expense.

 

(d)          Effect of Exercise. Exercise by Landlord of any remedies hereunder or otherwise available shall not be deemed to be an acceptance of surrender of the Premises and/or a termination of this Lease by Landlord, it being understood that such surrender and/or termination can be effected only by the express written agreement of Landlord and Tenant. Any law, usage, or custom to the contrary notwithstanding, Landlord shall have the right at all times to enforce the provisions of this Lease in strict accordance with the terms hereof; and the failure of Landlord at any time to enforce its rights under this Lease strictly in accordance with same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions, and covenants of this Lease or as having modified the same and shall not be deemed a waiver of Landlord’s right to enforce one or more of its rights in connection with any subsequent default. A receipt by Landlord of Rent or other payment with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord. To the greatest extent permitted by law, Tenant waives the service of notice of Landlord’s intention to re-enter, re-take or otherwise obtain possession of the Premises as provided in any statute, or to institute legal proceedings to that end, and also waives all right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge. Any reletting of the Premises or any portion thereof shall be on such terms and conditions as Landlord in its sole discretion may determine. Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the Premises or collect rent due in respect of such reletting or otherwise to mitigate any damages arising by reason of Tenant’s Default.

 

22.          Assignment and Subletting.

 

(a)           General Prohibition. Without Landlord’s prior written consent subject to and on the conditions described in this Section 22, Tenant shall not, directly or indirectly, voluntarily or by operation of law, assign this Lease or sublease the Premises or any part thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises, and any attempt to do any of the foregoing shall be void and of no effect. If Tenant is a corporation, partnership or limited liability company, the shares or other ownership interests thereof which are not actively traded upon a stock exchange or in the over-the-counter market, a transfer or series of transfers whereby 50% or more of the issued and outstanding shares or other ownership interests of such corporation are, or voting control is, transferred (but excepting transfers upon deaths of individual owners) from a person or persons or entity or entities which were owners thereof at time of execution of this Lease to persons or entities who were not owners of shares or other ownership interests of the corporation, partnership or limited liability company at time of execution of this Lease, shall be deemed an assignment of this Lease requiring the consent of Landlord as provided in this Section 22.

 

 

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(b)          Permitted Transfers. If Tenant desires to assign, sublease, hypothecate or otherwise transfer this Lease or sublet the Premises other than pursuant to a Permitted Assignment (as defined below), then at least 15 business days, but not more than 45 business days, before the date Tenant desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall give Landlord a notice (the “Assignment Notice”) containing such information about the proposed assignee or sublessee, including the proposed use of the Premises and any Hazardous Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or sublessee, and all material terms and conditions of the proposed assignment or sublease, including a copy of any proposed assignment or sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of the Assignment Notice: (i) grant such consent (provided that Landlord shall further have the right to review and reasonably approve or disapprove the proposed form of sublease prior to the effective date of any such subletting), which such consent shall not be unreasonably withheld, conditioned or delayed or (ii) refuse such consent, in its reasonable discretion. Among other reasons, it shall be reasonable for Landlord to withhold its consent in any of these instances: (1) the proposed assignee or subtenant is a governmental agency; (2) in Landlord’s reasonable judgment, the use of the Premises by the proposed assignee or subtenant would entail any alterations that would materially lessen the value of the leasehold improvements in the Premises, or would materially require increased services by Landlord; (3) in Landlord’s reasonable judgment, the proposed assignee or subtenant is lacks the creditworthiness to support the financial obligations it will incur under the proposed assignment or sublease; (4) in Landlord’s reasonable judgment, the character, reputation, or business of the proposed assignee or subtenant is inconsistent with the desired tenant-mix or the quality of other tenancies in the Project or is inconsistent with the type and quality of the nature of the Building; (5) Landlord has received from any prior landlord to the proposed assignee or subtenant a negative report concerning such prior landlord’s experience with the proposed assignee or subtenant; (6) Landlord has experienced previous defaults by or is in litigation with the proposed assignee or subtenant; (7) the use of the Premises by the proposed assignee or subtenant will violate any applicable Legal Requirement; (8) the proposed assignee or subtenant, or any entity that, directly or indirectly, controls, is controlled by, or is under common control with the proposed assignee or subtenant, is then an occupant of the Project; (9) the proposed assignee or subtenant is an entity with whom Landlord is negotiating to lease space in the Project; or (10) the assignment or sublease is prohibited by Landlord’s lender. No failure of Landlord to deliver a timely notice in response to the Assignment Notice, shall be deemed to be Landlord’s consent to the proposed assignment, sublease or other transfer. Tenant shall pay to Landlord a fee equal to One Thousand Five Hundred Dollars ($1,500) in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents. Notwithstanding the foregoing, Landlord’s consent to an assignment of this Lease or a subletting of any portion of the Premises to any entity controlling, controlled by or under common control with Tenant (a “Control Permitted Assignment”) shall not be required, provided that Landlord shall have the right to approve the form of any such sublease or assignment. In addition, Tenant shall have the right to assign this Lease, upon 30 days prior written notice to Landlord, but without obtaining Landlord’s prior written consent, to a corporation or other entity which is a successor-in-interest to Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (i) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring this Lease, and (ii) the net worth (as determined in accordance with generally accepted accounting principles (“GAAP”)) of the assignee is not less than the greater of the net worth (as determined in accordance with GAAP) of Tenant as of (A) the Commencement Date, or (B) as of the date of Tenant’s most current quarterly or annual financial statements, and (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease (a “Corporate Permitted Assignment”). Control Permitted Assignments and Corporate Permitted Assignments are hereinafter referred to as “Permitted Assignments.”

  

(c)          Additional Conditions. As a condition to any such assignment or subletting, whether or not Landlord’s consent is required, Landlord may require that any assignee or subtenant agree, in writing at the time of such assignment or subletting, that if Landlord gives such party notice that Tenant is in default under this Lease, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under the Lease, and any such third party shall agree to attorn to Landlord or its successors and assigns should this Lease be terminated for any reason; provided, however, in no event shall Landlord or its successors or assigns be obligated to accept such attornment.

 

 

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(d)          No Release of Tenant, Sharing of Excess Rents. Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times remain fully and primarily responsible and liable for the payment of Rent and for compliance with all of Tenant’s other obligations under this Lease. If the Rent due and payable by a sublessee or assignee (or a combination of the rental payable under such sublease or assignment plus any bonus or other consideration therefor or incident thereto in any form) exceeds the sum of the rental payable under this Lease, (excluding however, any Rent payable under this Section) and actual and reasonable brokerage fees, legal costs, tenant improvements allowances and any design or construction fees directly related to and required pursuant to the terms of any such sublease (“Excess Rent”), then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such Excess Rent within 10 days following receipt thereof by Tenant. If Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any such subletting, and Landlord as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.

  

(e)           No Waiver. The consent by Landlord to an assignment or subletting shall not relieve Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee or sublessee of Tenant from full and primary liability under this Lease. The acceptance of Rent hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting, assignment or other transfer of the Premises.

 

23.          Estoppel Certificate. Tenant shall, within 10 business days after receipt of written notice from Landlord, execute, acknowledge and deliver a statement in writing on any other form reasonably requested by a current or proposed lender or encumbrancer or proposed purchaser, (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such further information with respect to this Lease or the Premises as may be requested thereon. Any such statements may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part. Tenant’s failure to deliver such statement within 5 business days after Tenant’s receipt of a second written notice from Landlord shall, at the option of Landlord, constitute a Default under this Lease, and, in any event, shall be conclusive upon Tenant that this Lease is in full force and effect and without modification except as may be represented by Landlord in any certificate prepared by Landlord and delivered to Tenant for execution.

 

24.          Quiet Enjoyment. So long as Tenant is not in Default under this Lease, Tenant shall, subject to the terms of this Lease, at all times during the Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.

 

25.          Prorations. All prorations required or permitted to be made hereunder shall be made on the basis of a 360 day year and 30 day months.

 

26.          Rules and Regulations. Tenant shall, at all times during the Term and any extension thereof, comply with all reasonable rules and regulations at any time or from time to time established by Landlord covering use of the Premises and the Project. Such rules and regulations may include, without limitation, rules and regulations relating to the use of the Project Amenities and/or rules and regulations which are intended to encourage social distancing, promote and protect health and physical well-being within the Building and the Project and/or intended to limit the spread of Infectious Conditions. The current rules and regulations are attached hereto as Exhibit E. If there is any conflict between said rules and regulations and other provisions of this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project and shall not enforce such rules and regulations in a discriminatory manner.

 

 

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27.         Subordination. This Lease and Tenant’s interest and rights hereunder are hereby made and shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created on or against the Project or the Premises, and all amendments, restatements, renewals, modifications, consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant; provided, however that so long as there is no Default hereunder, Tenant’s right to possession of the Premises shall not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the election of the Holder of any such Mortgage, to attom to any such Holder. Tenant agrees upon demand to execute, acknowledge and deliver such instruments, confirming such subordination, and such instruments of attornment as shall be requested by any such Holder, provided any such instruments contain appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24 hereof. Notwithstanding the foregoing, any such Holder may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution, delivery or recording and in that event such Holder shall have the same rights with respect to this Lease as though this Lease had been executed prior to the execution, delivery and recording of such Mortgage and had been assigned to such Holder. The term “Mortgage” whenever used in this Lease shall be deemed to include deeds of trust, security assignments and any other encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to include the beneficiary under a deed of trust.

  

28.         Surrender. Upon the expiration of the Term or earlier termination of Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in the same condition as received, subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by Tenant or any Tenant Parties, broom clean, ordinary wear and tear and casualty loss and condemnation covered by Sections 18 and 19 excepted.

 

Tenant shall immediately return to Landlord all keys and/or access cards to parking, the Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by Tenant. If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s election, either the cost of replacing such lost access card or key or the cost of reprogramming the access security system in which such access card was used or changing the lock or locks opened by such lost key. Any Tenant’s Property, Alterations and property not so removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and/or disposition of such property. All obligations of Tenant hereunder not fully performed as of the termination of the Term, including the obligations of Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the Term, including, without limitation, indemnity obligations, payment obligations with respect to Rent and obligations concerning the condition and repair of the Premises.

 

29.          Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

30.          Environmental Requirements.

 

(a)          Prohibition/Compliance. Except for Hazardous Material contained in products customarily used by tenants in de minimis quantities for ordinary cleaning and office purposes, Tenant shall not permit or cause any party to bring any Hazardous Material upon the Premises or the Project or use, store, handle, treat, generate, manufacture, transport, release or dispose of any Hazardous Material in, on or from the Premises or the Project without Landlord’s prior written consent which may be withheld in Landlord’s sole discretion. Tenant, at its sole cost and expense, shall operate its business in the Premises in strict compliance with all Environmental Requirements and shall remove or remediate in a manner satisfactory to Landlord any Hazardous Materials released on or from the Project by Tenant or any Tenant Party. Tenant shall complete and certify disclosure statements as requested by Landlord from time to time relating to Tenant’s use, storage, handling, treatment, generation, manufacture, transportation, release or disposal of Hazardous Materials on or from the Premises. The term “Environmental Requirements” means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any Governmental Authority regulating or relating to health, safety, or environmental conditions on, under, or about the Premises or the Project, or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder. The term “Hazardous Materials” means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and shall be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom.

 

 

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(b)          Indemnity. Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents and contractors harmless from any and all actions (including, without limitation, remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation, punitive damages and damages based upon diminution in value of the Premises or the Project, or the loss of, or restriction on, use of the Premises or any portion of the Project), expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, property damage, or contamination of, or adverse effects upon, the environment, water tables or natural resources), liabilities or losses which arise during or after the Term as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal, or restoration work required by any federal, state or local Governmental Authority because of Hazardous Materials present in the air, soil or ground water above, on, or under the Premises. Without limiting the foregoing, if the presence of any Hazardous Materials on the Premises, the Building, the Project or any adjacent property caused or permitted by Tenant or any Tenant Party results in any contamination of the Premises, the Building, the Project or any adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance with applicable law as are necessary to return the Premises, the Building, the Project or any adjacent property to the condition existing prior to the time of such contamination, provided that Landlord’s approval of such action shall first be obtained, which approval shall not unreasonably be withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises, the Building or the Project. Notwithstanding anything to the contrary contained in this Section 30, Tenant shall not be responsible for, and the indemnification and hold harmless obligation set forth in this paragraph shall not apply to (i) contamination in the Premises which Tenant can prove to Landlord’s reasonable satisfaction existed in the Premises immediately prior to the Commencement Date, or (ii) the presence of any Hazardous Materials in the Premises which Tenant can prove to Landlord’s reasonable satisfaction migrated from outside of the Premises into the Premises, unless in either case, the presence of such Hazardous Materials (x) is the result of a breach by Tenant of any of its obligations under this Lease, or (y) was caused, contributed to or exacerbated by Tenant or any Tenant Party.

 

(c)           Landlord’s Tests. Upon forty-eight (48) hours’ notice (except in the event of an emergency when no such notice is required) Landlord shall have access to, and a right to perform inspections and tests of, the Premises to determine Tenant’s compliance with Environmental Requirements, its obligations under this Section 30, or the environmental condition of the Premises or the Project. In connection with such testing, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such non-proprietary information concerning the use of Hazardous Materials in or about the Premises by Tenant or any Tenant Party. Access shall be granted to Landlord upon Landlord’s prior notice to Tenant and at such times so as to minimize, so far as may be reasonable under the circumstances, any disturbance to Tenant’s operations. Such inspections and tests shall be conducted at Landlord’s expense, unless such inspections or tests reveal that Tenant has not complied with any Environmental Requirement, in which case Tenant shall reimburse Landlord for the reasonable cost of such inspection and tests. Tenant shall, at its sole cost and expense, promptly and satisfactorily remediate any environmental conditions identified by such testing in accordance with all Environmental Requirements. Landlord’s receipt of or satisfaction with any environmental assessment in no way waives any rights that Landlord may have against Tenant.

 

 

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(d)           Tenant’s Obligations. Tenant’s obligations under this Section 30 shall survive the expiration or earlier termination of this Lease. During any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises and the completion of the approved Surrender Plan), Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord’s sole discretion, which Rent shall be prorated daily.

 

31.          Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a period of time in excess of 30 days, then after such period of time as is reasonably necessary). Upon any default by Landlord, Tenant shall give notice by registered or certified mail to any Holder of a Mortgage covering the Premises and to any landlord of any lease of property in or on which the Premises are located and Tenant shall offer such Holder and/or landlord a reasonable opportunity to cure the default, including time to obtain possession of the Project by power of sale or a judicial action if such should prove necessary to effect a cure; provided Landlord shall have furnished to Tenant in writing the names and addresses of all such persons who are to receive such notices. All obligations of Landlord hereunder shall be construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord’s obligations hereunder.

 

All obligations of Landlord under this Lease will be binding upon Landlord only during the period of its ownership of the Premises and not thereafter. The term “Landlord” in this Lease shall mean only the owner for the time being of the Premises. Upon the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term upon each new owner for the duration of such owner’s ownership.

 

32.          Inspection and Access. Landlord and its agents, representatives, and contractors may enter the Premises at any reasonable time to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease and for any other business purpose. Landlord and Landlord’s representatives may enter the Premises during business hours on not less than 48 hours advance written notice (except in the case of emergencies in which case no such notice shall be required and such entry may be at any time) for the purpose of effecting any such repairs, inspecting the Premises, showing the Premises to prospective purchasers and, during the last 12 months of the Term, to prospective tenants or for any other business purpose. Landlord may erect a suitable sign on the Premises stating the Premises are available to let or that the Project is available for sale. Landlord may grant easements, make public dedications, designate Common Areas and create restrictions on or about the Premises, provided that no such easement, dedication, designation or restriction materially, adversely affects Tenant’s use or occupancy of the Premises for the Permitted Use. At Landlord’s request, Tenant shall execute such instruments as may be necessary for such easements, dedications or restrictions. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or its agents, representatives, contractors or guests while the same are in the Premises, provided such escort does not materially and adversely affect Landlord’s access rights hereunder.

 

 

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33.         Security. Tenant acknowledges and agrees that security devices and services, if any, while intended to deter crime may not in given instances prevent theft or other criminal acts and that Landlord is not providing any security services with respect to the Premises. Tenant agrees that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises. Tenant shall be solely responsible for the personal safety of Tenant’s officers, employees, agents, contractors, guests and invitees while any such person is in, on or about the Premises and/or the Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant desires protection against such criminal acts.

 

Subject to Landlord’s approval (which shall not be unreasonably withheld, conditioned or delayed), Tenant, at Tenant’s sole cost and expense, shall be permitted to install a card-key security system to the Premises. Upon the expiration or earlier termination of the Lease, Tenant shall be required to remove such security system and restore the areas affected by such removal.

 

34.          Force Majeure. Except for the payment of Rent, neither Landlord nor Tenant shall be held responsible or liable for delays in the performance of its obligations hereunder when caused by, related to, or arising out of acts of God, sinkholes or subsidence, strikes, lockouts, or other labor disputes, embargoes, quarantines, weather, national, regional, or local disasters, calamities, or catastrophes, inability to obtain labor or materials (or reasonable substitutes therefor) at reasonable costs or failure of, or inability to obtain, utilities necessary for performance, governmental restrictions, orders, limitations, regulations, or controls, national emergencies, local, regional or national epidemic or pandemic, delay in issuance or revocation of permits, enemy or hostile governmental action, terrorism, insurrection, riots, civil disturbance or commotion, fire or other casualty, and other causes or events beyond their reasonable control (“Force Majeure”).

 

35.          Brokers. Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “Broker”) in connection with this transaction and that no Broker brought about this transaction, other Raise Commercial Real Estate, Inc. and Newmark Knight Frank. Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than Raise Commercial Real Estate, Inc. and Newmark Knight Frank, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction.

 

36.          Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, 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; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

 

 

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Tenant acknowledges and agrees that measures and/or services implemented at the Project, if any, intended to encourage social distancing, promote and protect health and physical well-being and/or intended to limit the spread of Infectious Conditions, may not prevent the spread of such Infectious Conditions. Neither Landlord nor any Landlord Indemnified Parties shall have any liability and Tenant waives any claims against Landlord and the Landlord Indemnified Parties with respect to any loss, damage or injury in connection with (x) the implementation, or failure of Landlord or any Landlord Indemnified Parties to implement, any measures and/or services at the Project intended to encourage social distancing, promote and protect health and physical well-being and/or intended to limit the spread of Infectious Conditions, or (y) the failure of any measures and/or services implemented at the Project, if any, to limit the spread of any Infections Conditions.

  

37.          Severability. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. It is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or provision as similar in effect to such illegal, invalid or unenforceable clause or provision as shall be legal, valid and enforceable.

 

38.          Signs; Exterior Appearance. Tenant shall not, without the prior written consent of Landlord, which may be granted or withheld in Landlord’s sole discretion: (i) attach any awnings, exterior lights, decorations, balloons, flags, pennants, banners, painting or other projection to any outside wall of the Project, (ii) use any curtains, blinds, shades or screens other than Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) place any bottles, parcels, or other articles on the window sills, (v) place any equipment, furniture or other items of personal property on any exterior balcony, or (vi) paint, affix or exhibit on any part of the Premises or the Project any signs, notices, window or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises. Interior signs on doors and the directory tablet shall be inscribed, painted or affixed for Tenant by Landlord at the sole cost and expense of Tenant, and shall be of a size, color and type acceptable to Landlord. Nothing may be placed on the exterior of corridor walls or corridor doors other than Landlord’s standard lettering. The directory tablet shall be provided exclusively for the display of the name and location of tenants.

 

39.          Intentionally Omitted.

 

40.          Miscellaneous.

 

(a)           Notices. All notices or other communications between the parties shall be in writing and shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier, addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices.

 

(b)          Joint and Several Liability. If and when included within the term “Tenant,” as used in this instrument, there is more than one person or entity, each shall be jointly and severally liable for the obligations of Tenant.

 

(c)           Financial Information. Tenant shall furnish to Landlord with true and complete copies of (i) upon Landlord’s written request on an annual basis, Tenant’s most recent audited annual financial statements, provided, however, that Tenant shall not be required to deliver to Landlord such annual financial statements for any particular year sooner than the date that is 90 days after the end of each of Tenant’s fiscal years during the Term, (ii) upon Landlord’s written request on a quarterly basis, Tenant’s most recent unaudited quarterly financial statements; provided, however, that Tenant shall not be required to deliver to Landlord such quarterly financial statements for any particular quarter sooner that the date that is 45 days after the end of each of Tenant’s fiscal quarters during the Term, (iii) upon Landlord’s written request from time to time, updated business plans, including cash flow projections and/or pro forma balance sheets and income statements, all of which shall be treated by Landlord as confidential information belonging to Tenant, (iv) upon Landlord’s written request from time to time, corporate brochures and/or profiles prepared by Tenant for prospective investors, and (v) upon Landlord’s written request from time to time, any other financial information or summaries that Tenant typically provides to its lenders or shareholders. Notwithstanding anything to the contrary contained in this Lease, Landlord’s written request for financial information pursuant to this Section 40(c) may delivered to Tenant via email. So long as Tenant is a “public company” and its financial information is publicly available, then the foregoing delivery requirements of this Section 40(c) shall not apply.

 

 

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(d)          Recordation. Neither this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record. Landlord may prepare and file, and upon request by Landlord Tenant will execute, a memorandum of lease.

 

(e)           Interpretation. The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease or any exhibits or amendments hereto. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease.

 

(f)           Not Binding Until Executed. The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any right or impose any obligations upon either party until execution of this Lease by both parties.

 

(g)           Limitations on Interest. It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate or amount of any interest payable on or in connection with this Lease. If applicable law is ever judicially interpreted so as to render usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

 

(h)          Choice of Law. Construction and interpretation of this Lease shall be governed by the internal laws of the state in which the Premises are located, excluding any principles of conflicts of laws.

 

(i)            Time. Time is of the essence as to the performance of Tenant’s obligations under this Lease.

 

(j)            OFAC. Tenant and all beneficial owners of Tenant are currently (a) in compliance with and shall at all times during the Term of this Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, which are all maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.

 

(k)           Incorporation by Reference. All exhibits and addenda attached hereto are hereby incorporated into this Lease and made a part hereof. If there is any conflict between such exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.

 

(l)            Entire Agreement. This Lease, including the exhibits attached hereto, constitutes the entire agreement between Landlord and Tenant pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, letters of intent, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements, express or implied, made to either party by the other party in connection with the subject matter hereof except as specifically set forth herein.

 

 

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(m)          No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Base Rent or any Additional Rent will be other than on account of the earliest stipulated Base Rent and Additional Rent, nor will any endorsement or statement on any check or letter accompanying a check for payment of any Base Rent or Additional Rent be an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this Lease.

 

(n)           EV Charging Stations. Landlord shall not unreasonably withhold its consent to Tenant’s written request to install 1 or more electric vehicle car charging stations (“EV Stations”) in the parking area serving the Project; provided, however, that Tenant complies with all reasonable requirements, standards, rules and regulations which may be imposed by Landlord, at the time Landlord’s consent is granted, in connection with Tenant’s installation, maintenance, repair and operation of such EV Stations, which may include, without limitation, the charge to Tenant of a reasonable monthly rental amount for the parking spaces used by Tenant for such EV Stations, Landlord’s designation of the location of Tenant’s EV Stations, and Tenant’s payment of all costs whether incurred by Landlord or Tenant in connection with the installation, maintenance, repair and operation of each Tenant’s EV Station(s). Nothing contained in this paragraph is intended to increase the number of parking spaces which Tenant is otherwise entitled to use at the Project under Section 10 of this Lease nor impose any additional obligations on Landlord with respect to Tenant’s parking rights at the Project.

 

(o)          California Accessibility Disclosure. For purposes of Section 1938(a) of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Project has not undergone inspection by a Certified Access Specialist (CASp). In addition, the following notice is hereby provided pursuant to Section 1938(e) of the California Civil Code: “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 and in connection with such notice: (i) Tenant, having read such notice and understanding Tenant’s right to request and obtain a CASp inspection, hereby elects not to obtain such CASp inspection and forever waives its rights to obtain a CASp inspection with respect to the Premises, Building and/or Project to the extent permitted by Legal Requirements; and (ii) if the waiver set forth in clause (i) hereinabove is not enforceable pursuant to Legal Requirements, then Landlord and Tenant hereby agree as follows (which constitutes the mutual agreement of the parties as to the matters described in the last sentence of the foregoing notice): (A) Tenant shall have the one-time right to request for and obtain a CASp inspection, which request must be made, if at all, in a written notice delivered by Tenant to Landlord; (B) any CASp inspection timely requested by Tenant shall be conducted (1) at a time mutually agreed to by Landlord and Tenant, (2) in a professional manner by a CASp designated by Landlord and without any testing that would damage the Premises, Building or Project in any way, and (3) at Tenant’s sole cost and expense, including, without limitation, Tenant’s payment of the fee for such CASp inspection, the fee for any reports prepared by the CASp in connection with such CASp inspection (collectively, the “CASp Reports”) and all other costs and expenses in connection therewith; (C) the CASp Reports shall be delivered by the CASp simultaneously to Landlord and Tenant; (D) Tenant, at its sole cost and expense, shall be responsible for making any improvements, alterations, modifications and/or repairs to or within the Premises to correct violations of construction-related accessibility standards including, without limitation, any violations disclosed by such CASp inspection; and (E) if such CASp inspection identifies any improvements, alterations, modifications and/or repairs necessary to correct violations of construction-related accessibility standards relating to those items of the Building and Project located outside the Premises that are Landlord’s obligation to repair as set forth in this Lease, then Landlord shall perform such improvements, alterations, modifications and/or repairs as and to the extent required by Legal Requirements to correct such violations, and Tenant shall reimburse Landlord for the cost of such improvements, alterations, modifications and/or repairs within 10 business days after Tenant’s receipt of an invoice therefor from Landlord.

 

 

611 Gateway/Esker Therapeutics - Page 28

 

(p)          Counterparts. This Lease may be executed in 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 process complying with the U.S. federal ESIGN Act of 2000) 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. Electronic signatures shall be deemed original signatures for purposes of this Lease and all matters related thereto, with such electronic signatures having the same legal effect as original signatures.

 

(q)          Shuttle Services. Genentech Inc., a Delaware corporation (“Genentech”), an employer located in South San Francisco, California and in the vicinity of the Project, is a party to a shuttle service agreement with SFO Airporter, Inc. and/or other provider(s) (collectively, “Operator”) (the “Shuttle Agreement”). Genentech has agreed to extend shuttle services (“Shuttle Services”) under the Shuttle Agreement to tenants at the Project.

 

Tenant acknowledges that as an amenity to Tenant, Landlord plans to offer the Shuttle Services to Tenant and other tenants at the Project; provided, however, that neither Landlord nor any affiliate of Landlord shall be obligated to provide the Shuttle Services (or, once the Shuttle Services have commenced, to continue to contract with Genentech to provide the Shuttle Services for any specific period of time) or to cause the Shuttle Services to follow any specific route, make any specific stops, or adhere to any specific schedule or hours of operation. When the Shuttle Services become available, (i) Landlord shall give Tenant written notice of the date such operation will commence (“Shuttle Services Commencement Date”) and the planned route, stops, schedule, and hours of operation, (ii) Tenant’s employees actually employed at the Project shall be permitted, upon evidence to Operator that they are tenants at the Project, to use the Shuttle Services, and (iii) commencing on the Shuttle Services Commencement Date through the earlier of the expiration of the Term or the date that the Shuttle Services cease, Operating Expenses shall include the cost incurred by Landlord in connection with the Shuttle Services (with the first 12 months of costs for such Shuttle Services being deemed the Base Year amount). Tenant acknowledges and agrees that Landlord has not made any representations or warranties regarding the commencement, reliability or continued availability of the Shuttle Services throughout the Term. Tenant further acknowledges that the wi-fi provided by the Shuttle Services, if any, is unsecured, has no guarantee of security and Tenant agrees to inform Tenant’s employees to take appropriate precautions when using the Shuttle Services.

 

Landlord and the Landlord Parties shall not have any liability to Tenant or any of Tenant’s employees for any matters in connection with the Shuttle Services and Landlord (and the Landlord Parties) shall not be liable for any damages arising from any act, omission or neglect of Genentech or Operator. Tenant hereby waives all Claims against Landlord (and the Landlord Parties) for losses or damages resulting from any accident or occurrence arising in connection with the Shuttle Services.

 

(r)            Project Specific Requirements. This Lease is made and accepted subject to the provisions, covenants, conditions and restrictions set forth in that certain Declaration of Restrictive Covenants to Run with Certain Land, recorded November 25, 1981 in the official records of San Mateo County (the “Official Records”) as Instrument No. 11467AT, as amended by that certain First Amendment to Declaration of Restrictive Covenants to Run with Certain Land, recorded April 9, 1985 in the Official Records as Instrument No. 85033403, the provisions of which are incorporated herein by this reference.

 

[ Signatures on next page ]

 

 

611 Gateway/Esker Therapeutics - Page 29

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written.

 

TENANT:	ESKER THERAPEUTICS, INC.,
	a Delaware corporation
	By:	/s/ David Zhang
	Its:	Chief Information Officer
	By:	June H. Lee
	Its:	CEO

 

 

LANDLORD:	611 GATEWAY CENTER LP,
	a Delaware limited partnership
	By:	GATEWAY CENTER GP LLC,
		a Delaware limited liability company,
		general partner
		By:	GATEWAY PORTFOLIO MEMBER LLC
			a Delaware limited liability company,
			managing member
			By:	GATEWAY PORTFOLIO HOLDINGS LLC,
				a Delaware limited liability company,
				managing member
				By:	ARE-SAN FRANCISCO NO. 83, LLC
					a Delaware limited liability company,
					managing member
					By:	ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
						a Delaware limited partnership,
						managing member
						By:	ARE-QRS CORP.,
							a Maryland corporation,
							general partner
							By:	/s/ Allison Grochola
							Its:	Senior Vice President RE Legal Affairs

 

611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT A TO LEASE

  

DESCRIPTION OF PREMISES

 

 

 

 

611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT B TO LEASE

  

DESCRIPTION OF PROJECT¹

 

 

 

 

 611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT C TO LEASE

  

INTENTIONALLY OMITTED

 

 

611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT D TO LEASE

  

ACKNOWLEDGMENT OF COMMENCEMENT DATE

 

This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this ____ day of ____________, 2021, between 611 GATEWAY CENTER LP, a Delaware limited partnership (“Landlord”), and ESKER THERAPEUTICS, INC., a Delaware corporation (“Tenant”), and is attached to and made a part of the Lease dated ____________ __, 2021 (the “Lease”), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

 

Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the Commencement Date of the Base Term of the Lease is ____________, _________, the Rent Commencement Date is ____________, ______, and the termination date of the Base Term of the Lease shall be midnight on ____________. ______. In case of a conflict between the terms of the Lease and the terms of this Acknowledgment of Commencement Date, this Acknowledgment of Commencement Date shall control for all purposes.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above written.

 

[Signatures are on the next page]

 

 

611 Gateway/Esker Therapeutics - Page 2

 

 

TENANT:	ESKER THERAPEUTICS, INC.,
	a Delaware corporation
	By:
	Its:
	By:
	Its:

 

 

LANDLORD:	611 GATEWAY CENTER LP,
	a Delaware limited partnership
	By:	GATEWAY CENTER GP LLC,
		a Delaware limited liability company,
		general partner
		By:	GATEWAY PORTFOLIO MEMBER LLC
			a Delaware limited liability company,
			managing member
			By:	GATEWAY PORTFOLIO HOLDINGS LLC,
				a Delaware limited liability company,
				managing member
				By:	ARE-SAN FRANCISCO NO. 83, LLC
					a Delaware limited liability company,
					managing member
					By:	ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
						a Delaware limited partnership,
						managing member
						By:	ARE-QRS CORP.,
							A Maryland corporation,
							general partner
							By:
							Its:

 

Rules and Regulations

611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT E TO LEASE

   

Rules and Regulations

 

1.            The sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or any Tenant Party, or used by them for any purpose other than ingress and egress to and from the Premises.

 

2.            Tenant shall not place any objects, including antennas, outdoor furniture, etc., in the parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the Project.

 

3.            Except for animals assisting the disabled, no animals shall be allowed in the offices, halls, or corridors in the Project.

 

4.            Tenant shall not disturb the occupants of the Project or adjoining buildings by the use of any radio or musical instrument or by the making of loud or improper noises.

 

5.            If Tenant desires telegraphic, telephonic or other electric connections in the Premises, Landlord or its agent will direct the electrician as to where and how the wires may be introduced; and, without such direction, no boring or cutting of wires will be permitted. Any such installation or connection shall be made at Tenant’s expense.

 

6.            Tenant shall not install or operate any steam or gas engine or boiler, or other mechanical apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas or inflammable liquids for heating, lighting or any other purpose is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Project.

 

7.            Parking any type of recreational vehicles is specifically prohibited on or about the Project. Except for the overnight parking of operative vehicles, no vehicle of any type shall be stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be removed within 48 hours. There shall be no “For Sale” or other advertising signs on or about any parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with all signs and other markings. All parking will be open parking, and no reserved parking, numbering or lettering of individual spaces will be permitted except as specified by Landlord.

 

8.            Tenant shall maintain the Premises free from rodents, insects and other pests.

 

9.            Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any manner do any act in violation of the Rules and Regulations of the Project.

 

10.            Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness. Landlord shall not be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitors or any other employee or person.

 

11.            Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service equipment affecting the Premises.

 

12.            Tenant shall not permit storage outside the Premises, including without limitation, outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful materials to be placed in any drainage system or sanitary system in or about the Premises.

 

13.            All moveable trash receptacles provided by the trash disposal firm for the Premises must be kept in the trash enclosure areas, if any, provided for that purpose.

 

 

Rules and Regulations

611 Gateway/Esker Therapeutics – Page 2

 

14.            No auction, public or private, will be permitted on the Premises or the Project.

 

15.            No awnings shall be placed over the windows in the Premises except with the prior written consent of Landlord.

 

16.            The Premises shall not be used for lodging, sleeping or cooking or for any immoral or illegal purposes or for any purpose other than that specified in the Lease. No gaming devices shall be operated in the Premises.

 

17.            Tenant shall ascertain from Landlord the maximum amount of electrical current which can safely be used in the Premises, taking into account the capacity of the electrical wiring in the Project and the Premises and the needs of other tenants, and shall not use more than such safe capacity. Landlord’s consent to the installation of electric equipment shall not relieve Tenant from the obligation not to use more electricity than such safe capacity.

 

18.            Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage.

 

19.            Tenant shall not install or operate on the Premises any machinery or mechanical devices of a nature not directly related to Tenant’s ordinary use of the Premises and shall keep all such machinery free of vibration, noise and air waves which may be transmitted beyond the Premises.

 

20.            Tenant shall cause any vendors and other service providers hired by Tenant to perform services at the Premises or the Project to maintain in effect workers’ compensation insurance as required by Legal Requirements and commercial general liability insurance with coverage amounts reasonably acceptable to Landlord. Tenant shall cause such vendors and service providers to name Landlord and Alexandria Real Estate Equities, Inc. as additional insureds under such policies and shall provide Landlord with certificates of insurance evidencing the required coverages (and showing Landlord and Alexandria Real Estate Equities, Inc. as additional insureds under such policies) prior to the applicable vendor or service provider providing any services to Tenant at the Project.

 

21.            Neither Tenant nor any of the Tenant Parties shall have the right to photograph, videotape, film, digitally record or by any other means record, transmit and/or distribute any images, pictures or videos of all or any portion of the Premises or the Project.

 

22.            Tenant shall regularly review the guidelines published by the Centers for Disease Control (CDC) and any state and/or local Governmental Agencies, and will implement the practices and procedures suggested thereby, as well as industry standard best practices, to prevent the spread of Infectious Conditions, including, without limitation, COVID-19.

 

23.            Landlord shall have the right to (a) require tenants to implement and enforce reasonable screening and tracking protocols intended to identify and track the activity at the Project of employees, agents, contractors and visitors seeking access to or accessing the Premises and or the Project exhibiting flu-like symptoms or symptoms consistent with those associated with any currently known or unknown Infectious Conditions including, without limitation, COVID-19 (collectively, “Symptoms”), (b) require tenant employees, agents, contractors and visitors to comply with reasonable screening and tracking protocols implemented by Landlord, Landlord’s property manager and/or any operator of Project Amenities, intended to identify and track the activity at the Project of individuals seeking access to or accessing the Premises or the Project (including the Project Amenities) exhibiting Symptoms, (c) require tenants to implement and enforce protocols to prohibit individuals exhibiting Symptoms, from accessing the Premises and/or the Project, (d) require tenants to immediately report to Landlord incidences of (i) tenant employees, agents, contractors and visitors accessing the Premises or any portion of the Project while exhibiting Symptoms, and/or (ii) tenant employees, agents, contractors and visitors known to have accessed the Premises or the Project being diagnosed with an Infectious Condition including, without limitation, COVID-19.

 

 

Rules and Regulations

611 Gateway/Esker Therapeutics – Page 3

 

24.            Landlord may exclude or expel from the Project any person that has Symptoms associated with any currently known or unknown Infectious Condition including, without limitation, COVID-19.

 

25.            Notwithstanding anything to the contrary contained herein, if, at any time during the Term, Landlord becomes aware that any Tenant Party exhibiting Symptoms and/or diagnosed with an Infectious Condition had access to the Premises or any portion of the Project (including, without limitation, the Project Amenities), Tenant shall be responsible for any costs incurred by Landlord to perform additional or deep cleaning of the Premises and/or the Common Areas of the Project or to take other measures deemed reasonably necessary or prudent by Landlord which are intended to limit the spread of such Infectious Condition due to such Tenant Party’s presence at the Project.

 

26.            Landlord reserves the right to implement additional rules and regulations relating to access to the Premises, the Building and/or the Project (including, without limitation, the Project Amenities) which are intended to promote and protect health and physical well-being and/or intended to limit the spread of Infectious Conditions.

 

 

611 Gateway/Esker Therapeutics – Page 1

 

EXHIBIT F TO LEASE

  

TENANT’S PERSONAL PROPERTY

 

None.

  

 

Exhibit 10.15

 

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 10.16

 

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 10.17

 

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 10.18

 

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 10.19

 

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 10.20

 

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 10.21

 

 

 

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 10.22

 

 

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 10.23

 

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