Exhibit 3.1

 

Sagimet Biosciences INC.

 

TENTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

 

Sagimet Biosciences Inc., a corporation organized and existing under and by virtue of the Delaware General Corporation Law, hereby certifies as follows:

 

The name of this corporation is Sagimet Biosciences Inc. and the original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on December 19, 2006.

 

The Tenth Amended and Restated Certificate of Incorporation, in the form of Exhibit A attached hereto, has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law.

 

The Ninth Amended and Restated Certificate of Incorporation as heretofore adopted is hereby amended and restated to read in its entirety as set forth in Exhibit A attached hereto.

 

In Witness Whereof, this Tenth Amended and Restated Certificate of Incorporation has been signed this 21st day of December, 2020.

 

	Sagimet Biosciences Inc.
	By:	/s/ George Kemble
	Name:	George Kemble
	Title:	Chief Executive Officer

 

 

EXHIBIT A

TENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

Sagimet Biosciences INC.

 

FIRST

 

The name of this corporation is Sagimet Biosciences Inc. (the “Company”).

 

SECOND

 

The address of the Company’s registered office in the State of Delaware is 2140 South Dupont Highway, in the City of Camden, County of Kent, 19934. The name of its registered agent at such address is Paracorp Incorporated.

 

THIRD

 

The purpose of this Company is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law.

 

FOURTH

 

A.         The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The aggregate number of shares that the Company shall have authority to issue is 2,964,360,924, of which 1,590,550,754 shares shall be Common Stock with the par value of $0.0001 per share (the “Common Stock”), and of which 1,373,810,170 shares shall be Preferred Stock with the par value of $0.0001 per share (the “Preferred Stock”).

 

B.          23,301 of the authorized shares of Preferred Stock are hereby designated “Series A Preferred Stock” (“Series A Preferred”), 720,199 of the authorized shares of Preferred Stock are hereby designated “Series A’ Preferred Stock” (“Series A’ Preferred”), 3,217 of the authorized shares of Preferred Stock are hereby designated “Series B Preferred Stock” (“Series B Preferred”), 1,953,304 of the authorized shares of Preferred Stock are hereby designated “Series B’ Preferred Stock” (“Series B’ Preferred”), 8,827,439 of the authorized shares of Preferred Stock are hereby designated “Series B-1 Preferred Stock” (“Series B-1 Preferred”), 14,001,243 of the authorized shares of Preferred Stock are hereby designated “Series B-1’ Preferred Stock” (“Series B-1’ Preferred”), 22,732,250 of the authorized shares of Preferred Stock are hereby designated “Series C Preferred Stock” (“Series C Preferred”), 1,037 of the authorized shares of Preferred Stock are hereby designated “Series C’ Preferred Stock” (“Series C’ Preferred”), 24,509,954 of the authorized shares of Preferred Stock are hereby designated “Series D Preferred Stock” (“Series D Preferred”), 3,475,426 of the authorized shares of Preferred Stock are hereby designated “Series D’ Preferred Stock” (“Series D’ Preferred”), 51,331,148 of the authorized shares of Preferred Stock are hereby designated “Series D-1 Preferred Stock” (“Series D-1 Preferred”), 631,638,725 of the authorized shares of Preferred Stock are hereby designated “Series E Preferred Stock” (“Series E Preferred”), and 614,592,927 of the authorized shares of Preferred Stock are hereby designated “Series F Preferred Stock” (“Series F Preferred”). As used herein, the term “Series Preferred” shall collectively mean the Series A Preferred, the Series A’ Preferred, the Series B Preferred, the Series B’ Preferred, the Series B-1 Preferred, the Series B-1’ Preferred, the Series C Preferred, the Series C’ Preferred, the Series D Preferred, the Series D’ Preferred, the Series E Preferred and the Series F Preferred. For the avoidance of doubt, the Series Preferred shall not include the Series D-1 Preferred.

 

 

C.          The terms and provisions of the Series Preferred, the Series D-1 Preferred and Common Stock are as set forth below. Unless otherwise indicated, references to “Sections,” “Subsections” or “paragraphs” in this Part C of this Article FOURTH refer to sections, subsections and paragraphs of Part C of this Article FOURTH.

 

1.                          Dividends.

 

(a)                  Treatment of Series Preferred. The Series Preferred shall be entitled to receive dividends at an annual rate of eight percent (8%) of the respective Series A Original Issue Price (as hereinafter defined), Series A’ Original Issue Price (as hereinafter defined), Series B Original Issue Price (as hereinafter defined), Series B’ Original Issue Price (as hereinafter defined), Series B-1 Original Issue Price (as hereinafter defined), Series B-1’ Original Issue Price (as hereinafter defined), Series C Original Issue Price (as hereinafter defined), Series C’ Original Issue Price (as hereinafter defined), Series D Original Issue Price (as hereinafter defined), Series D’ Original Issue Price (as hereinafter defined), Series E Original Issue Price (as hereinafter defined) or Series F Original Issue Price (as hereinafter defined), as the case may be, per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the applicable Series Preferred) per annum, out of any assets at the time legally available therefor, when, as and if declared by the Company’s Board of Directors (the “Board”), prior and in preference to any dividend or Distributions (as defined below), declared, paid or set aside on shares of the Common Stock. No dividends or Distributions other than those payable solely in Common Stock shall be paid on any Common Stock unless and until (i) the aforementioned dividend or Distribution is paid on each outstanding share of Series Preferred, and (ii) a dividend or Distribution is paid with respect to all outstanding shares of Series Preferred in an amount equal to or greater than the aggregate amount of dividends or Distributions which would be payable to the holder of Series Preferred if, immediately prior to the record date set for such dividend payment or Distribution on Common Stock, such share of Series Preferred had been converted into Common Stock. The Board is under no obligation to declare dividends, no rights shall accrue to the holders of Series Preferred if dividends are not declared, and any dividends on the Series Preferred shall be noncumulative.

 

(b)                    Treatment of Common Stock. If, after dividends in the full preferential amounts specified in Subsection 1(a) for the Series Preferred have been paid or declared and set apart in any calendar year of the Company, any additional dividends or Distributions declared by the Board out of funds legally available therefor shall be distributed among all holders of Common Stock held by each as of the record date fixed for determining those entitled to receive such Distribution; provided that no such per share dividends or Distributions on the Common Stock shall exceed the per share dividends or Distributions paid on the Series Preferred (on an as-converted to Common Stock basis) during any calendar year.

 

 

(c)                    Distribution. “Distribution” means the transfer of cash, property or securities without consideration, whether by way of dividend or otherwise, or the purchase of shares of capital stock of the Company (other than in connection with the repurchase of shares of Common Stock issued to or held by employees, consultants, officers or directors at a price not greater than the amount paid by such persons for such shares upon termination of their employment or services pursuant to agreements providing for the right of said repurchase or upon exercise of a right of first refusal approved by the Board) for cash or property.

 

(d)                    Consent to Certain Repurchases. As authorized by Section 402.5(c) of the General Corporation Law of California, Sections 502 and 503 of the General Corporation Law of California, to the extent otherwise applicable, shall not apply with respect to Distributions made by the Company in connection with the repurchase of shares of Common Stock issued to or held by employees, consultants, officers or directors at a price not greater than the amount paid by such person for such shares upon termination of their employment or services pursuant to agreements providing for the right of said repurchase or upon exercise of a right of first refusal, which agreements were authorized by the Board.

 

2.                          Liquidation Rights.

 

(a)                     Definitions.

 

(i)               “Series A Original Issue Price” shall mean, with respect to each share of Series A Preferred, $10.00 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series A Preferred following the filing date hereof).

 

(ii)               “Series A’ Original Issue Price” shall mean Series A Original Issue Price.

 

(iii)            “Series A Liquidation Preference” shall mean, with respect to each share of Series A Preferred, the Series A Original Issue Price plus all declared and unpaid dividends on each such share.

 

(iv)              “Series B Original Issue Price” shall mean, with respect to each share of Series B Preferred, $11.50 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series B Preferred following the filing date hereof).

 

(v)                 “Series B’ Original Issue Price” shall mean Series B Original Issue Price.

 

(vi)              “Series B Liquidation Preference” shall mean, with respect to each share of Series B Preferred, the Series B Original Issue Price plus all declared and unpaid dividends on each such share.

 

 

(vii)              “Series B-1 Original Issue Price” shall mean, with respect to each share of Series B-1 Preferred, $0.88 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series B-1 Preferred following the filing date hereof).

 

(viii)            “Series B-1’ Original Issue Price” shall mean Series B-1 Original Issue Price.

 

(ix)           “Series B-1 Liquidation Preference” shall mean, with respect to each share of Series B-1 Preferred, the Series B-1 Original Issue Price plus all declared and unpaid dividends on each such share.

 

(x)               “Series C Original Issue Price” shall mean, with respect to each share of Series C Preferred, $0.88 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series C Preferred following the filing date hereof).

 

(xi)               “Series C’ Original Issue Price” shall mean Series C Original Issue Price.

 

(xii)              “Series C Liquidation Preference” shall mean, with respect to each share of Series C Preferred, the Series C Original Issue Price plus all declared and unpaid dividends on each such share.

 

(xiii)            “Series D Original Issue Price” shall mean, with respect to each share of Series D Preferred, $0.88 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series D Preferred following the filing date hereof).

 

(xiv)            “Series D’ Original Issue Price” shall mean Series D Original Issue Price.

 

(xv)             “Series D Liquidation Preference” shall mean, with respect to each share of Series D Preferred, the Series D Original Issue Price plus all declared and unpaid dividends on each such share.

 

(xvi)             “Series D-1 Original Issue Price” shall mean, with respect to each share of Series D-1 Preferred, $0.88 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series D-1 Preferred following the filing date hereof).

 

(xvii)           “Series D-1 Liquidation Preference” shall mean, with respect to each share of Series D-1 Preferred, the Series D-1 Original Issue Price.

 

(xviii)         “Series E Original Issue Price” shall mean, with respect to each share of Series E Preferred, $0.09219 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series E Preferred following the filing date hereof).

 

 

(xix)           “Series E Liquidation Preference” shall mean, with respect to each share of Series E Preferred, the Series E Original Issue Price plus all declared and unpaid dividends on each such share.

 

(xx)           “Series F Original Issue Price” shall mean, with respect to each share of Series F Preferred, $0.13020 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series F Preferred following the filing date hereof).

 

(xxi)            “Series F Liquidation Preference” shall mean, with respect to each share of Series F Preferred, the Series F Original Issue Price plus all declared and unpaid dividends on each such share.

 

(b)                    Liquidation Preference. In the event of any Liquidation, either voluntary or involuntary, the holders of the Series F Preferred, the Series E Preferred, the Series D-1 Preferred, the Series D Preferred, the Series C Preferred, the Series B-1 Preferred, the Series B Preferred and the Series A Preferred shall be entitled to receive, out of the assets of the Company, the Series F Liquidation Preference, the Series E Liquidation Preference, the Series D-1 Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference, the Series B-1 Liquidation Preference, the Series B Liquidation Preference and the Series A Liquidation Preference, respectively, on a pari passu basis, then held by such holder before any payment shall be made or any assets distributed to the holders of the Common Stock by reason of their ownership thereof. If upon a Liquidation, the assets to be distributed among the holders of the Series F Preferred, the Series E Preferred, the Series D-1 Preferred, the Series D Preferred, the Series C Preferred, the Series B-1 Preferred, the Series B Preferred and the Series A Preferred are insufficient to permit the payment to such holders of the full Series F Liquidation Preference, the Series E Liquidation Preference, the Series D-1 Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference, the Series B-1 Liquidation Preference, the Series B Liquidation Preference and the Series A Liquidation Preference, respectively, for their shares, then the entire remaining assets of the Company legally available for distribution shall be distributed with equal priority and pro rata among the holders of the Series F Preferred, the Series E Preferred, the Series D-1 Preferred, the Series D Preferred, the Series C Preferred, the Series B-1 Preferred, the Series B Preferred and the Series A Preferred at the time outstanding based upon the aggregate Series F Liquidation Preference, the Series E Liquidation Preference, the Series D-1 Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference, the Series B-1 Liquidation Preference, the Series B Liquidation Preference and the Series A Liquidation Preference, respectively.

 

(c)                     Remaining Assets. After the payment to the holders of Series F Preferred, Series E Preferred, Series D-1 Preferred, Series D Preferred, Series C Preferred, Series B-1 Preferred, Series B Preferred and Series A Preferred, respectively, of the Series F Liquidation Preference, Series E Liquidation Preference, Series D-1 Liquidation Preference, Series D Liquidation Preference, Series C Preferred Liquidation Preference, Series B-1 Liquidation Preference, Series B Liquidation Preference and Series A Liquidation Preference (each, a “Liquidation Preference”), any remaining assets of the Company shall be distributed pro rata among the holders of the Common Stock according to the number of shares of Common Stock held by such holders.

 

 

(d)                    Deemed Conversion. Notwithstanding anything to the contrary contained herein, for purposes of determining the amount each holder of shares of Series Preferred is entitled to receive with respect to any Liquidation, each such holder of shares of a series of Series Preferred shall be deemed to have converted (regardless of whether such holder actually converted) such holder’s shares of such series into shares of Common Stock immediately prior to the Liquidation if, as a result of an actual conversion, such holder would receive with respect to their shares of such series, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert their shares of such series of Series Preferred into shares of Common Stock. If any such holder shall be deemed to have converted shares of Series Preferred into shares of Common Stock pursuant to this paragraph, then such holder shall not be entitled to receive any Distribution upon a Liquidation that would otherwise be made to holders of shares of such series of Series Preferred that have not converted (or have not been deemed to have converted) into shares of Common Stock.

 

(e)                    Contingent Payments. If any portion of the consideration payable to the stockholders of the Company in connection with a Liquidation is placed into escrow and/or is payable to the stockholders of the Company subject to contingencies, the documentation pursuant to which the transaction giving rise to such Liquidation shall provide that (i) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Company in accordance with Subsections 2(b) and 2(c) hereof as if the Initial Consideration were the only consideration payable in connection with such Liquidation, and (ii) any additional consideration that becomes payable to the stockholders of the Company upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Company in accordance with this Section 2 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the avoidance of doubt, in applying Distributions upon a Liquidation that involves installment or contingent payments, the holders of the Preferred Stock will be entitled to an amount, re-calculated at the time of each installment or contingent payment and applied on a cumulative basis, that is the greater of, but not exceeding, (1) the amounts specified in Subsection 2(b) payable to such holder of Preferred Stock, or (2) the amount to which such holder of Series Preferred would be entitled pursuant to Subsection 2(c) if such shares of Series Preferred were deemed to have converted to Common Stock pursuant to Subsection 2(d) immediately prior to the Liquidation, taking into account cumulative installment or contingent payments. For the further avoidance of doubt, in applying Distributions upon a Liquidation, all amounts received by a holder of Preferred Stock in previous Distributions in connection with such Liquidation shall be cumulated, and recognized as having already been paid to such holder of Preferred Stock, in connection with any new Distribution made in connection with such Liquidation, such that the total amounts payable to the holders of Preferred Stock and Common Stock will be determined as if all previous and current Distributions made in connection with such Liquidation were made as part of the same transaction.

 

 

(f)                       Liquidation. Each of the following events shall be considered a “Liquidation” unless a majority of the Board and the holders of a majority of the then-outstanding Series Preferred, voting together as a single class on an as-converted to Common Stock basis, which majority must include holders of a majority of the then-outstanding Series F Preferred Stock, elect otherwise by written notice sent to the Company at least ten (10) days prior to the effective date of any such event: (i) the voluntary or involuntary liquidation, dissolution or winding up of the Company; (ii) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganizations, provided that the applicable transaction shall not be deemed a Liquidation unless the Company’s stockholders constituted immediately prior to such transaction do not hold more than fifty percent (50%) of the voting power of the surviving or acquiring entity (or its parent) immediately following such transaction (taking into account only voting power resulting from stock of the Company held by such stockholders prior to such transaction); (iii) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power outstanding before such transaction is transferred; or (iv) a sale, conveyance or other disposition by the Company or any subsidiary of the Company, in a single transaction or series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries taken as a whole (including without limitation a license by the Company or any subsidiary of the Company of all or substantially all of the Company’s or such subsidiary’s, as the case may be, intellectual property that is either exclusive or otherwise structured in a manner that constitutes a license of all or substantially all of the assets of the Company and its subsidiaries taken as a whole) or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company 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 Company; provided that a Liquidation shall not include (x) a merger or consolidation with a wholly-owned subsidiary of the Company, (y) a merger effected exclusively for the purpose of changing the domicile of the Company or (z) any transaction or series of related transactions principally for bona fide equity financing purposes in which the Company is the surviving corporation.

 

(g)                     Determination of Value if Proceeds Other than Cash. In any Liquidation, if the proceeds received by the Company or its stockholders are other than cash, its value will be deemed its fair market value as determined in good faith by the Board. Any securities shall be valued as follows:

 

(i)                        Securities not subject to investment letter or other similar restrictions on free marketability covered by Subsection 2(g)(ii) below:

 

(A)                If traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the twenty (20) trading-day period ending three (3) trading days prior to the closing of the Liquidation;

 

(B)                  If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the twenty (20) trading-day period ending three (3) trading days prior to the closing of the Liquidation; and

 

 

(C)                  If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.

 

(ii)            The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in Subsection 2(g)(i)(A), 2(g)(i)(B) or 2(g)(i)(C) to reflect the approximate fair market value thereof, as determined in good faith by the Board.

 

(h)                     Effecting Certain Liquidation Events. The Company shall not have the power to effect a Liquidation referred to in the Subsections above unless the agreement or agreements for such transaction provide that the consideration payable to the stockholders of the Company shall be allocated among the holders of capital stock of the Company in accordance with this Section 2.

 

3.             Conversion. The Series Preferred shall have conversion rights as follows:

 

(a)                     Right to Convert. Each share of Series Preferred shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Company or any transfer agent for the Series Preferred. Each share of Series Preferred, other than Series F Preferred and Series E Preferred, shall be convertible into that number of fully-paid and nonassessable shares of Common Stock that is equal to $0.88 (as adjusted for stock splits, combinations, reorganizations and the like with respect to such series of the Series Preferred following the filing date hereof) divided by the applicable Series Preferred Conversion Price (defined below). The Series F Preferred shall be convertible into that number of fully-paid and nonassessable shares of Common Stock that is equal to the Series F Original Issue Price divided by the applicable Series Preferred Conversion Price. The Series E Preferred shall be convertible into that number of fully-paid and nonassessable shares of Common Stock that is equal to the Series E Original Issue Price divided by the applicable Series Preferred Conversion Price. The “Series Preferred Conversion Price” with respect to all shares of Series Preferred other than Series F Preferred and Series E Preferred shall initially be $0.88, and with respect to the Series F Preferred and Series E Preferred shall initially be the Series F Original Issue Price and the Series E Original Issue Price, respectively, and in each case shall be subject to adjustment as provided herein. For the avoidance of doubt, the Series D-1 Preferred shall not be convertible into shares of Common Stock pursuant to this Subsection 3(a).

 

(b)                    Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the then-effective applicable Series Preferred Conversion Price or Series D-1 Preferred Conversion Price (as defined below) as applicable (the Series Preferred Conversion Price and the Series D-1 Preferred Conversion Price are referred to herein collectively as the “Conversion Price”) for such share immediately upon (each, an “Automatic Conversion”) (1) the affirmative vote of the holders of a majority of the then-outstanding shares of Series Preferred, voting together as a single class on an as-converted to Common Stock basis, and the affirmative vote of the holders of a majority of the then-outstanding shares of Series F Preferred, or (2) the closing of the sale of shares of Common Stock to the public at a price of at least 1.25 times the Series F Original Issues Price in a firmly underwritten public offering pursuant to the Securities Act of 1933, as amended (the “Securities Act”), on Form S-1 (as defined in the Securities Act) or any successor form, with aggregate gross proceeds to the Company in such offering not less than $50,000,000 (before deduction of underwriters’ discounts and commissions) and in connection with such offering the Common Stock is listed on the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (a “Qualified IPO”). Each share of Series D-1 Preferred shall be convertible pursuant to this Subsection 3(b) only, and shall be convertible into that number of fully-paid and nonassessable shares of Common Stock that is equal to $0.88 (as adjusted for stock splits, combinations, reorganizations and the like with respect to such series of the Preferred Stock following the filing date hereof) divided by the Series D-1 Preferred Conversion Price. “Series D-1 Preferred Conversion Price” shall initially be $18,000,000, and shall be subject to adjustment as provided herein.

 

 

(c)                     Mechanics of Conversion. 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 of Series Preferred would otherwise be entitled, the Company shall pay the fair market value cash equivalent of such fractional share as determined in good faith by the Board. For such purpose, all shares of Series Preferred held by each holder shall be aggregated, and any resulting fractional share of Common Stock shall be paid in cash. In lieu of any fractional shares to which the holder of Series D-1 Preferred would otherwise be entitled, the Company shall round up to the nearest whole share. Before any holder of Preferred Stock shall be entitled to convert the same into full shares of Common Stock, and to receive certificate(s) therefor, it shall surrender the Preferred Stock certificate or certificates, duly endorsed, at the office of the Company or of any transfer agent for the Preferred Stock, and shall give written notice to the Company at such office that such holder elects to convert such shares; provided, however, that in the event of an Automatic Conversion pursuant to Subsection 3(b) above, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Company or its transfer agent; provided, further, however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such Automatic Conversion unless either the certificates evidencing such shares of Preferred Stock are delivered to the Company or its transfer agent as provided above, or the holder notifies the Company or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued and, if applicable, any event on which such conversion is contingent.

 

The Company shall, as soon as practicable after delivery of the Preferred Stock certificate(s) to the Company, issue and deliver to such holder of Preferred Stock or its nominee, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock, plus any declared and unpaid dividends on the converted Preferred Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date; provided, however, that if the conversion is in connection with an underwritten offer of securities registered pursuant to the Securities Act, the conversion may, at the option of any holder tendering Preferred Stock for conversion, be conditioned upon the closing of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of the sale of such securities.

 

 

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, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and shall not be reissued as shares of such respective series, and, notwithstanding any other approvals otherwise required hereunder, the Company (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly with respect to such converted shares.

 

Upon any such conversion, no additional adjustment to the respective Conversion Price shall be made for any declared and unpaid dividends on the Preferred Stock surrendered for conversion that remain unpaid or on the Common Stock delivered upon conversion.

 

(d)                    Adjustments for Subdivisions or Combinations of Common Stock. If at any time or from time to time on or after the date that the first share of Series F Preferred is issued (the “Original Issue Date”), the outstanding shares of Common Stock shall be subdivided (by stock split, stock dividend or otherwise), into a greater number of shares of Common Stock without a corresponding subdivision of the Preferred Stock, the applicable Conversion Price in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. If at any time or from time to time on or after the Original Issue Date, if the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock without a corresponding combination of the Preferred Stock, the applicable Conversion Price in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

 

(e)                     Adjustments for Reclassification, Exchange and Substitution. If at any time or from time to time on or after the Original Issue Date, the Common Stock issuable upon conversion of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of securities, whether by capital reorganization, recapitalization, reclassification or other event (other than a subdivision or combination of shares pursuant to Subsection 3(d) above), concurrently with the effectiveness of such capital reorganization, recapitalization, reclassification or other event, the Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of securities equivalent to the number of such shares or securities that would have been received by the holder of a number of shares of Common Stock issuable upon conversion of the Preferred Stock immediately prior to such capital reorganization, recapitalization, reclassification or other event. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights of the holders of Preferred Stock after the capital reorganization, recapitalization, reclassification or other event to the end that the provisions of this Section 3 (including adjustment of the applicable Conversion Price then in effect and the number and type of shares or other securities issuable upon conversion of the Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

 

 

(f)                       Adjustment for Common Stock Dividends and Distributions. If at any time or from time to time on or after the Original Issue Date, the Company 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 the applicable 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 equal to:

 

(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, 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 plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

 

provided, however, that 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, the applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the applicable Conversion Price shall be adjusted pursuant to this Subsection as of the time of actual payment of such dividends or distributions; and provided further, however, that no such adjustment shall be made if the holders of Preferred Stock simultaneously receive (i) 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 Preferred Stock had been converted into Common Stock on the date of such event or (ii) a dividend or other distribution of shares of Preferred Stock which are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

 

(g)                     Adjustments for Other Dividends and Distributions. If at any time or from time to time on or after the Original Issue Date, the Company shall make or issue, or fix a record date for the determination of holders of capital stock of the Company entitled to receive, a dividend or other distribution payable in securities of the Company (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 Subsection 3(f) 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 such capital 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.

 

 

 

(h)                    Adjustments for Reorganization, Merger, Consolidation or Sale of Assets. If at any time or from time to time on or after the Original Issue Date, the Common Stock issuable upon conversion of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by a reorganization, merger or consolidation of the Company with or into another entity, or the sale of all or substantially all of the Company’s properties and assets to any other person or entity (other than as provided for elsewhere in this Section 3 or a transaction subject to Section 2 above) then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the holders of Preferred Stock shall thereafter be entitled to receive upon conversion of the then-outstanding Preferred Stock, the number of shares of stock or other securities or property of the Company, or of the successor entity resulting from such merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion of the Preferred Stock would have been entitled to receive upon such capital reorganization, merger consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights and interests of the holders of the then-outstanding Preferred Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 3 (including adjustments of the applicable Conversion Price then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

 

(i)                       Adjustments for Dilutive Issuances.

 

(i)                        If at any time or from time to time on or after the Original Issue Date, the Company shall issue or sell any shares of Common Stock (as actually issued or, pursuant to paragraph (iii) below, deemed to be issued) without consideration or for a consideration per share less than the Conversion Price applicable to a series of Preferred Stock in effect immediately prior to such issue or sale, then immediately upon such issue or sale the Conversion Price applicable to such series shall be reduced to a price (calculated to the nearest cent) determined by multiplying the Conversion Price applicable to such series in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the number of shares of “Calculated Securities” (defined below) outstanding immediately prior to such issue or sale plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of shares of Common Stock so issued or sold (or deemed to be issued or sold) would purchase at the applicable Conversion Price in effect immediately prior to such issuance or sale, and the denominator of which shall be the number of shares of Calculated Securities outstanding immediately prior to such issue or sale plus the number of shares of Common Stock so issued or sold. “Calculated Securities” means (A) all shares of Common Stock actually outstanding and (B) all shares of Common Stock issuable upon exercise, conversion or exchange of all Convertible Securities (as defined below).

 

 

(ii)                    For the purposes of paragraph (i) above, none of the following issuances (or deemed issuances) shall be considered the issuance (or deemed issuance) or sale of Common Stock:

 

(A)                  The issuance of Common Stock upon the conversion of any outstanding Convertible Securities as of the date of the filing of this Tenth Amended and Restated Certificate of Incorporation (this “Restated Certificate”), including the Preferred Stock. “Convertible Securities” shall mean any bonds, debentures, notes or other evidences of indebtedness, and any stock, options, warrants, purchase rights or any other securities directly or indirectly convertible into, exercisable for, or exchangeable for Common Stock.

 

(B)                    Shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 3(f) or Subsection 3(g) above and shares of Common Stock issued or deemed issued as a dividend or Distribution on the Preferred Stock.

 

(C)                  The issuance of shares of Common Stock and/or options, warrants or other Common Stock purchase rights and the Common Stock issued pursuant to such options, warrants or other rights to employees, officers or directors of, or consultants or advisors to, the Company or any subsidiary either directly or pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board.

 

(D)                  The issuance of shares of Common Stock or Convertible Securities to financial institutions, equipment lessors, landlords, brokers or similar entities in connection with commercial credit arrangements, equipment financings, commercial property lease transactions or similar transactions, the principal purpose of which is other than the raising of capital through the sale of equity securities of the Company and the terms of which are approved by the Board.

 

(E)                  The issuance of shares of Common Stock or Convertible Securities in connection with bona fide acquisitions, mergers or similar transactions, the terms of which are approved by the Board.

 

(F)                    Shares of Common Stock issued or issuable pursuant to a Qualified IPO.

 

(G)                 The issuance of shares of Common Stock or Convertible Securities to an entity in connection with a corporate strategic relationship or transaction, the principal purpose of which is other than the raising of capital through the sale of equity securities of the Company and which terms are approved by the Board.

 

(H)                  The issuance of Common Stock upon conversion of the Series Preferred.

 

(I)                  The issuance of Series F Preferred pursuant to that certain Series F Preferred Stock Purchase Agreement between the Company and certain purchasers of Series F Preferred, dated on or about the filing date hereof.

 

(J)                    The issuance of Common Stock upon the exercise, conversion or exchange of Convertible Securities issued in accordance with this paragraph (ii).

 

(iii)                 For the purposes of paragraph (i) above, the following subparagraphs (A) to (E), inclusive, shall also be applicable:

 

(A)               In case at any time the Company shall grant any warrants, rights or options to subscribe for, purchase or otherwise acquire Convertible Securities or Common Stock (excluding Convertible Securities and Common Stock issued in accordance with Subsection 3(i)(ii) above) (collectively “Options”) or shall fix a record date for the determination of holders entitled to received such Options, whether or not such Options are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options (determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of such Options, plus, in the case of any such Options which relate to such Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options as set forth in the instrument relating thereto assuming the satisfaction of any conditions to the exercisability, convertibility or exchangeability) shall be less than the applicable Conversion Price in effect immediately prior to the time of the granting of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall (as of the date of granting of such Options) be deemed to be outstanding and to have been issued for such price per share.

 

(B)                    In case at any time the Company shall issue or sell any Convertible Securities (excluding Convertible Securities and Common Stock issued in accordance with Subsection 3(i)(ii) above), whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such exercise, conversion or exchange (determined by dividing (x) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities as set forth in the instrument relating thereto assuming the satisfaction of any conditions to the exercisability, convertibility or exchangeability) shall be less than the applicable Conversion Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon exercise, conversion or exchange of such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share, provided that if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or to purchase or any option to purchase any such Convertible Securities for which adjustments of the applicable Conversion Price have been or are to be made pursuant to other provisions of this paragraph (iii), no further adjustment of the applicable Conversion Price shall be made by reason of such issue or sale.

 

 

(C)                     In case at any time any shares of Common Stock, Convertible Securities or Options shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor. In case any shares of Common Stock, Convertible Securities or Options shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair market value of such consideration as determined in good faith by the Board. In case any shares of Common Stock, Convertible Securities or Options shall be issued in connection with any merger of another entity into the Company, the amount of consideration therefor shall be deemed to be the fair value of the assets of such merged corporation as determined in good faith by the Board after deducting therefrom all cash and other consideration (if any) paid by the Company in connection with such merger.

 

(D)                  If the terms of any Convertible Security or Option (excluding Convertible Securities or Options issued in accordance with Subsection 3(i)(ii) above), the issuance of which resulted in an adjustment to the Conversion Price pursuant to the terms of this Subsection 3(i), are revised (either automatically pursuant to the provisions contained therein or as a result of an amendment to such terms) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Convertible Security or Option or (2) any increase or decrease in the consideration payable to the Company upon such exercise, conversion or exchange, then, effective upon such increase or decrease becoming effective, the applicable Conversion Price computed upon the original issue of such Convertible Security or Option (or upon the occurrence of a record date with respect thereto) shall be readjusted to such applicable Conversion Price as would have been obtained had such revised terms been in effect upon the original date of issuance of such Convertible Security or Option. Notwithstanding the foregoing, no adjustment pursuant to this paragraph (D) shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower of (i) the applicable Conversion Price on the original adjustment date, or (ii) the applicable Conversion Price that would have resulted from any issuances of shares of Common Stock without consideration or for a consideration per share less than the applicable Conversion Price in effect immediately prior to such issue or sale between the original adjustment date and such readjustment date.

 

(E)                    If the original issuance of any Convertible Security or Option (excluding Convertible Securities or Options which, upon exercise, conversion or exchange thereof, would entitle the holder thereof to receive securities issued in accordance with Subsection 3(i)(ii) above), did not result in an adjustment to the applicable Conversion Price pursuant to the terms of Subsection 3(i), either because (1) the consideration per share (determined pursuant to Subsection 3(i)(iii)(C) above) of the Common Stock was equal to or greater than the applicable Conversion Price then in effect, or (2) such Convertible Security was issued before the date of filing of this Restated Certificate, are revised after the date of filing of this Restated Certificate (either automatically pursuant to the provisions contained therein or as a result of an amendment to such terms) to provide for either (A) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Convertible Security or Option or (B) any increase or decrease in the consideration payable to the Company upon such exercise, conversion or exchange, then such Convertible Security or Option, as so amended, and the Common Stock subject thereto (determined in the manner provided in Subsection 3(i)(iii)(A) and (B) above, as applicable) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

 

(iv)                  Waiver. Any adjustments to any of the rights, powers, preferences and other terms of a series of Series Preferred made in accordance with this Subsection 3(i) may be waived on behalf of all holders of such series by the affirmative written consent or vote of the holders of a majority of the Series Preferred then outstanding, voting together as a single, separate class on an as-converted to Common Stock basis; provided, however, that adjustments to any of the rights, powers, preferences and other terms of the Series F Preferred made in accordance with this Subsection 3(i) may be waived only by the affirmative written consent or vote of the holders of a majority of the Series F Preferred, voting together as a single, separate class on an as-converted to Common Stock basis.

 

(j)                       Certificate of Adjustments. Upon the occurrence of each adjustment of the applicable Conversion Price pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment and furnish to each holder of Preferred Stock a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company shall, as promptly as practicable, upon the written request at any time of any holder of Preferred Stock, furnish to such holder a like certificate setting forth (i) any and all adjustments made to the Preferred Stock since the Original Issue Date, (ii) the applicable Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Preferred Stock.

 

(k)                    Notices of Record Date. In the event that the Company shall propose at any time (i) to declare any dividend or Distribution; (ii) to effect any reclassification or recapitalization; or (iii) to effect a Liquidation; then, in connection with each such event, the Company shall send to the holders of the Preferred Stock written notice at least twenty (20) days prior to the record date or effective date for such event. The notice shall specify, 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 reclassification, recapitalization or Liquidation 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 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 stock or securities) for securities or other property deliverable upon such reclassification, recapitalization or Liquidation, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Any notice required by the provisions hereof to be given to a holder of shares of Preferred Stock shall be deemed sent to such holder if deposited in the United States mail, postage prepaid, and addressed to such holder at such holder’s address appearing on the books of the Company.

 

(l)                 Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then-outstanding shares of the 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 Company will take such corporate action as may, in the opinion of its counsel, be necessary (including, without limitation, engaging in reasonable best efforts to obtain the requisite stockholder approval of any amendment to this Restated Certificate) to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

 

4.                          Certain Conversion Election Rights. The rights set forth in this Section 4 apply notwithstanding any other provision of this Restated Certificate.

 

(a)                     In the event of an Automatic Conversion in connection with the closing of the first firmly underwritten public offering of the Company’s securities pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock for the account of the Company (the “IPO”), each holder of the Company’s securities that would beneficially own (for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, 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, immediately following such Automatic Conversion, in excess of 9.99% of any class of securities of the Company registered or to be registered under the Exchange Act in connection with the IPO (each, a “Qualifying Holder”), may elect (the “Non-Voting Common Election Right”) in its sole discretion to convert in such Automatic Conversion any shares of Preferred Stock held by such Qualifying Holder into (i) shares of Common Stock or (ii) shares of a class of non-voting Common Stock (the “Non-Voting Common Stock”) to be newly created in connection with the IPO, subject to the Beneficial Ownership Limitation (as defined below). The “Beneficial Ownership Limitation” means that, in connection with the Non-Voting Common Election Right, a Qualifying Holder may elect to convert any shares of Preferred Stock held by such Qualifying Holder into Non-Voting Common Stock only if such conversion would not result in such Qualifying Holder beneficially owning (for purposes of Section 13(d) of the Exchange Act) less than 9.99% of the outstanding Common Stock immediately following the IPO; provided that, such percentage may be increased or decreased for each Qualifying Holder and/or its affiliates to such other percentage as such Qualifying Holder and/or its affiliates may designate in writing upon 61 days’ notice by such Qualifying Holder to the Company. The Non-Voting Common Stock shall be non-voting and convertible into Common Stock on an one (1) share to one (1) share basis (as adjusted for stock splits, combinations, reorganizations and the like following the IPO), and shall otherwise have the same terms, conditions, rights and obligations as the Common Stock.

 

5.                          Voting.

 

(a)                     Except as otherwise expressly provided herein or as required by law, the holders of Series Preferred and the holders of Common Stock all vote together and not as separate classes, including, but not limited to, with respect to any increase or decrease of the authorized shares of Common Stock. Except as otherwise required by law, holders of Common Stock shall not be entitled to vote, in their capacity as such, on any amendment to this Restated Certificate, as amended and/or restated from time to time, that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate or pursuant to the Delaware General Corporation Law. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares of Common Stock then outstanding) by the affirmative vote of the holders of a majority of the stock of the Company entitled to vote (voting together as a single class on an as-converted to Common Stock basis).

 

 

(b)                    Series Preferred. Each holder of shares of Series Preferred shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Series Preferred held by such holder could then be converted. The holders of the Series Preferred shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares of Common Stock into which shares of Series Preferred held by each holder could be converted), shall be disregarded. Notwithstanding the foregoing, the Series D-1 Preferred shall not be entitled by reason of their ownership thereof to vote on any matters submitted to the stockholders of the Company other than matters submitted to such holders pursuant to Subsection 6(c) below or as required pursuant to applicable law.

 

(c)                     Common Stock. Each holder of shares of Common Stock shall be entitled to one vote for each share thereof held.

 

(d)                    Election of Directors. The holders of the Series Preferred, voting separately as a single class (on an as-converted to Common Stock basis), shall be entitled to elect five (5) directors of the Company. The holders of Common Stock, voting separately as a single class, shall be entitled to elect one (1) director of the Company. The holders of the Common Stock and the Series Preferred, voting together as a single class (on an as-converted to Common Stock basis), shall be entitled to elect all other directors of the Company. Any director elected pursuant to the preceding sentences of this Subsection 5(d) may be removed with or without cause only by the affirmative vote of the holders of the shares of the class, series or classes of stock entitled to elect such director or directors. Any vacancies on the Board shall be filled by vote of the holders of the class, series or classes that elected the director pursuant to this Subsection 5(d) whose absence created such vacancy. If the holders of shares of Series Preferred 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 first and second sentence of this Subsection 5(d), then any directorship not so filled shall remain vacant until such time as the holders of the Series Preferred 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 Company other than by the stockholders of the Company that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class. Notwithstanding the foregoing or the provisions of Sections 223(a)(1) and 223(a)(2) of the Delaware General Corporation Law, any newly created directorships resulting from any increase in the authorized number of directors or amendment of this Restated Certificate 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 such newly created directorship is in relation to the directors elected by the holders of a class or series of stock, the holders of shares of such class or series may override the action of the Board to fill such newly created directorship as provided for herein. 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. Holders of the shares of the class, series or classes of stock entitled to elect or remove a director or directors under this Subsection 5(d) may elect or remove such director or directors by affirmative vote or written consent in lieu of a meeting.

 

 

6.             Amendments and Changes.

 

(a)           Approval by Series Preferred. Notwithstanding Section 5 above and in addition to any vote otherwise required herein or by law, so long as at least 2,500,000 shares (as adjusted for stock splits, combinations, reorganizations and the like following the filing date hereof) of Series Preferred are outstanding, the approval (by vote or written consent as provided by law) of (1) the holders of a majority of the Series Preferred then outstanding, voting together as a single, separate class on an as-converted to Common Stock basis, and (2) the majority of the Board shall be necessary for effecting or validating the following actions (directly or indirectly, whether by merger, recapitalization or otherwise, or in any other manner) 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:

 

(i)                any alteration, repeal, change or amendment of the rights, privileges or preferences of the Series Preferred in a manner that adversely affects such rights, privileges or preferences;

 

(ii)               any increase or decrease of the authorized number of shares of Common Stock, Preferred Stock or any series of Preferred Stock;

 

(iii)             any authorization, creation or issuance of (or any obligation to authorize, create or issue) any securities of the Company having rights, preferences or privileges senior to, or pari passu with, any of the rights, preferences or privileges of any Series Preferred;

 

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

 

 

(v)               any redemption or repurchase of shares of the Company’s stock or securities, except with the approval of the Board in connection with the repurchase of shares of Common Stock issued to or held by employees, consultants, officers or directors upon termination of their employment or services pursuant to agreements providing for the right of said repurchase or the exercise of a contractual right of first refusal in favor of the Company at no greater than the original purchase price thereof;

 

(vi)              any consummation of a Liquidation or an initial public offering which is not a Qualified IPO, or waiver of treatment of a transaction or series of related transactions as a Liquidation;

 

(vii)             any amendment, alteration, repeal or waiver of any provision of this Restated Certificate, as amended and/or restated from time to time, or the bylaws of the Company;

 

(viii)            any conversion of all outstanding Preferred Stock into Common Stock;

 

(ix)             any incurrence of indebtedness for borrowed money, including but not limited to obligations and contingent obligations under guarantees, if the aggregate indebtedness of the Company for borrowed money following such action would exceed $1,000,000;

 

(x)               any change in the authorized number of directors of the Company;

 

(xi)              any action that encumbers all or substantially all of the property or business of the Company or its subsidiaries;

 

(xii)             any grant of an exclusive license for all or substantially all of the intellectual property of the Company or its subsidiaries;

 

(xiii)            the creation or adoption of any new equity compensation plan or increase the number of shares reserved under any existing equity compensation plan;

 

(xiv)             any action to permit any subsidiary to issue or obligate itself to issue, any shares of any class or series of capital stock (other than to the Company or a wholly-owned subsidiary of the Company), or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Company, 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;

 

(xv)              the entry into or joinder as a party to any transaction with any director or officer of the Company (other than for the payment of salary and reimbursement of expenses made in the ordinary course of business), unless approved by a majority of the directors who are disinterested in such transaction (with any interested director being required to recuse himself or herself);

 

 

(xvi)             the entry into or joinder as a party to any joint venture agreement or strategic alliances involving the sale, license, pledge or encumbrance of the Company’s assets of TVB-2640;

 

(xvii)           the purchase of, or declaration of any dividend on, any shares of the Company’s stock or securities, or the making a distribution to stockholders; or

 

(xviii)         any action to cause or permit any of its subsidiaries to, without approval of the Board, sell, issue, sponsor, create or distribute any digital tokens, cryptocurrency or other blockchain-based assets (collectively, “Tokens”), including through a pre-sale, initial coin offering, token distribution event or crowdfunding, or through the issuance of any instrument convertible into or exchangeable for Tokens.

 

(b)           Approval by Series F Preferred. Notwithstanding Section 5 above and in addition to any vote otherwise required herein or by law, so long as 65,000,000 shares (as adjusted for stock splits, combinations, reorganizations and the like following the filing date hereof) of Series F Preferred are outstanding, the approval (by vote or written consent as provided by law) of the holders of a majority of the Series F Preferred, voting together as a single, separate class on an as-converted to Common Stock basis, shall be necessary for effecting or validating the following actions (directly or indirectly, whether by merger, recapitalization or otherwise, or in any other manner) 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:

 

(i)                any increase or decrease (other than by conversion) to the total number of authorized shares of Series F Preferred, or any issuance or sale of any shares of Series F Preferred other than pursuant to that certain Series F Preferred Stock Purchase Agreement, dated on or about the Original Issue Date, among the Company and the other parties thereto;

 

(ii)              any amendment, alteration, repeal or waiver of any provision of this Restated Certificate, as amended and/or restated from time to time, or the bylaws of the Company in a manner that adversely affects the powers, preferences or rights of the Series F Preferred;

 

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

 

(iv)               any waiver of treatment of a transaction or a series of related transactions as a Liquidation; or

 

 

(v)               any redemption or repurchase of shares of the Company’s stock or securities, except in connection with the repurchase of shares of Common Stock issued to or held by employees, consultants, officers or directors upon termination of their employment or services at no greater than the original purchase price thereof.

 

(c)            Approval by Series F Preferred Supermajority. Notwithstanding Section 5 above and in addition to any vote otherwise required herein or by law, from the date hereof through December 21, 2023, and for so long as 65,000,000 shares (as adjusted for stock splits, combinations, reorganizations and the like following the filing date hereof) of Series F Preferred are outstanding, the approval (by vote or written consent as provided by law) of the holders of at least a 75% of the outstanding shares of Series F Preferred, voting together as a single, separate class on an as-converted to Common Stock basis, shall be necessary for effecting or validating the following actions (directly or indirectly, whether by merger, recapitalization or otherwise, or in any other manner) 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:

 

(i)                a Liquidation that results in per share proceeds to the holders of Series F Preferred of less than 2.5x of the Series F Original Issue Price; or

 

(ii)               any sale, license, pledge or encumbrance of any material intellectual property of the Company related to the Company’s primary assets of TVB-2640 and TVB-3567.

 

(d)          For so long as at least 365,250 shares of Series A Preferred, 365,250 shares of Series A’ Preferred, 652,174 shares of Series B Preferred, 652,174 shares of Series B’ Preferred, 5,707,171 shares of Series B-1 Preferred, 5,707,171 shares of Series B-1’ Preferred, 5,686,153 shares of Series C Preferred, 5,686,153 shares of Series C’ Preferred, 8,522,727 shares of Series D Preferred, 8,522,727 shares of Series D’ Preferred, 157,000,000 shares of Series E Preferred or 65,000,000 shares of Series F Preferred, as the case may be, remain outstanding (each as may be adjusted for stock splits, combinations and the like with respect to such series of the Series Preferred following the date hereof), in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least thirty three and one-third percent (33⅓%) of the outstanding shares of the Series A Preferred and Series A’ Preferred voting together as a single class, Series B Preferred and Series B’ Preferred voting together as a single class, Series B-1 Preferred and Series B-1’ Preferred voting together as a single class, Series C Preferred and Series C’ Preferred voting together as a single class or Series D Preferred and Series D’ Preferred voting together as a single class, a majority of the outstanding shares of the Series E Preferred and a majority of the outstanding shares of the Series F Preferred, respectively and each class voting as a separate series, and the approval of a majority of the Board shall be necessary for effecting any amendment, alteration, or repeal of any provision of this Restated Certificate or the bylaws of the Company, each, as amended and/or restated from time to time, that alters or changes the voting or other powers, preferences or other special rights, privileges or restrictions of such series of the Series Preferred, whether by merger, consolidation or otherwise, so as to affect such series of the Series Preferred adversely and in a manner different than any other such series of Preferred Stock, provided, however, that a series of the Series Preferred shall not be deemed to be adversely affected as a result of the proportional differences in the respective Conversion Prices or liquidation preferences with respect to other series of Preferred Stock; provided, further that any of the foregoing acts or transactions taken or entered into without the requisite consents or votes shall be null and void ab initio, and of no force or effect

 

 

(e)           For so long as any shares of Series D-1 Preferred remain outstanding, in addition to any other vote or consent required herein or by law, the vote or written consent of the holders of at least thirty three and one-third percent (33⅓%) of the outstanding shares of the Series D-1 Preferred, and the approval of a majority of the Board shall be necessary for effecting any amendment, alteration, or repeal of any provision of this Restated Certificate or the bylaws of the Company, each, as amended and/or restated from time to time, that alters or changes the voting or other powers, preferences or other special rights, privileges or restrictions of the Series D-1 Preferred Stock, whether by merger, consolidation or otherwise, so as to affect the Series D-1 Preferred Stock adversely and in a manner different than any other such series of Preferred Stock, provided, however, that the Series D-1 Preferred Stock shall not be deemed to be adversely affected as a result of the proportional differences in the respective Conversion Prices or liquidation preferences with respect to other series of Preferred Stock.

 

7.            Redemption. The Preferred Stock is not redeemable.

 

8.            Notices. Any notice required by the provisions of this Article FOURTH to be given to the holders of Common Stock and Preferred Stock shall be in writing and shall be deemed given if deposited in the United States mail, postage prepaid, if deposited with a nationally recognized overnight courier, or if personally delivered, and addressed to each holder of record at such holder’s address appearing on the books of the Company.

 

FIFTH

 

Subject to any additional vote required by this Restated Certificate, as amended and/or restated from time to time, the Board shall have the power to adopt, amend and repeal the bylaws of the Company (except insofar as the bylaws of the Company as adopted by action of the stockholders of the Company shall otherwise provide). Any bylaws made by the Board under the powers conferred hereby may be amended or repealed by the Board or by the Company’s stockholders, and the powers conferred in this Article FIFTH shall not abrogate the right of the Company’s stockholders to adopt, amend and repeal bylaws of the Company. Each director shall be entitled to one (1) vote on each matter presented to the Board.

 

SIXTH

 

Election of Company directors need not be by written ballot unless the bylaws of the Company shall so provide.

 

SEVENTH

 

Subject to the provisions set forth in this Restated Certificate, the Company reserves the right to amend the provisions in this Restated Certificate and in any certificate amendatory hereof in the manner now or hereafter prescribed by law and this Restated Certificate, and all rights conferred on stockholders or others hereunder or thereunder are granted subject to such reservation.

 

 

EIGHTH

 

The Company renounces any interest or expectancy of the Company 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 Company who is not an employee of the Company or any of its subsidiaries, or (ii) any holder of Series Preferred or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Company or any of its subsidiaries (collectively, “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 Company.

 

NINTH

 

A.            The Company shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnified Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Company or, while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnified Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Company shall be required to indemnify an Indemnified Person in connection with a Proceeding (or part thereof) commenced by such Indemnified Person only if the commencement of such Proceeding (or part thereof) by the Indemnified Person was authorized in the specific case by the Board. Any amendment, repeal or modification of this Article NINTH, or adoption of any provision of this Restated Certificate inconsistent with this Article NINTH, shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

 

B.            The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

 

C.           The Company is authorized to provide indemnification of agents (as defined in Section 317 of the California General Corporation Law (“CGCL”)) for breach of duty to the Company and its stockholders through provisions of the bylaws of the Company or through agreements with the agents, or through stockholder resolutions, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the CGCL, subject, at any time or times that the Company is subject to Section 2115(b) of the CGCL, to the limits on such excess indemnification set forth in Section 204 of the CGCL.

 

 

TENTH

 

A.           For purposes of Section 500 of the CGCL (to the extent applicable), in connection with any repurchase of shares of Common Stock permitted under this Restated Certificate from employees, officers, directors or consultants of the Company in connection with a termination of employment or services pursuant to agreements or arrangements approved by the Board (in addition to any other consent required under this Restated Certificate), 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 CGCL).  Accordingly, for purposes of making any calculation under CGCL 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).

 

* * * * *

 

 

CERTIFICATE OF AMENDMENT TO 

TENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF 

SAGIMET BIOSCIENCES INC.

 

SAGIMET BIOSCIENCES INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies that:

 

FIRST: The name of the Corporation is Sagimet Biosciences Inc.

 

SECOND: The date on which the Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware is December 19, 2006 and the original name of this Corporation was 3-V Biosciences, Inc.

 

THIRD: The Board of Directors of the Corporation, acting in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware (the “DGCL”), duly approved and adopted resolutions amending its Certificate of Incorporation as follows:

 

Article Fourth, Part A shall be amended and restated to read in its entirety as follows:

 

“FOURTH

 

A. The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The aggregate number of shares that the Company shall have authority to issue is 2,982,180,170, of which 1,608,370,000 shares shall be Common Stock with the par value of $0.0001 per share (the “Common Stock”), and of which 1,373,810,170 shares shall be Preferred Stock with the par value of $0.0001 per share (the “Preferred Stock”).”

 

FOURTH: This Certificate of Amendment was duly adopted in accordance with Sections 141 and 242 of the DGCL.

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer this 27th day of September, 2022.

 

	SAGIMET BIOSCIENCES INC.
	By:	/s/ George Kemble
	Name:	George Kemble
	Title:	Chief Executive Officer

 

 

 

 

 

Exhibit 3.3

 

Amended and Restated

 

Bylaws

 

Of

 

3-v Biosciences, Inc.

(a Delaware corporation)

 

Adopted as of December 19, 2006

 

Amended on April 5, 2007

 

Amended on July 7, 2009

 

 

Table of Contents

 

		Page
ARTICLE I	IDENTIFICATION; OFFICES	1
Section 1.	Name	1
Section 2.	Principal and Business Offices	1
Section 3.	Registered Agent and Office	1
Section 4.	Place of Keeping Corporate Records	1
ARTICLE II	STOCKHOLDERS	1
Section 1.	Annual Meeting	1
Section 2.	Special Meeting	1
Section 3.	Place of Stockholder Meetings	2
Section 4.	Notice of Meetings	2
Section 5.	Quorum and Adjourned Meetings	2
Section 6.	Fixing of Record Date	2
Section 7.	Voting List	3
Section 8.	Voting	4
Section 9.	Proxies	4
Section 10.	Ratification of Acts of Directors and Officers	4
Section 11.	Informal Action of Stockholders	4
Section 12.	Organization	5
ARTICLE III	DIRECTORS	5
Section 1.	Number and Tenure Of Directors	5
Section 2.	Election of Directors	5
Section 3.	Special Meetings	5
Section 4.	Notice of Special Meetings of The Board of Directors	5
Section 5.	Quorum	5
Section 6.	Voting	5
Section 7.	Vacancies	6
Section 8.	Removal of Directors	6
Section 9.	Informal Action of Directors	6
Section 10.	Participation by Conference Telephone	6
Section 11.	Compensation of Directors	6

 

 

Table of Contents

(CONTINUED)

 

		Page
ARTICLE IV	WAIVER OF NOTICE	6
Section 1.	Written Waiver of Notice	6
Section 2.	Attendance as Waiver of Notice	7
ARTICLE V	COMMITTEES	7
Section 1.	General Provisions	7
ARTICLE VI	OFFICERS	7
Section 1.	General Provisions	7
Section 2.	Election and Term of Office	7
Section 3.	Removal of Officers	8
Section 4.	The Chief Executive Officer	8
Section 5.	The President	8
Section 6.	The Chairman Of The Board	8
Section 7.	Vice Chairman of The Board	9
Section 8.	The Vice President	9
Section 9.	The Secretary	9
Section 10.	The Assistant Secretary	9
Section 11.	The Treasurer	9
Section 12.	The Assistant Treasurer	10
Section 13.	Other Officers, Assistant Officers and Agents	10
Section 14.	Absence of Officers	10
Section 15.	Compensation	10
ARTICLE VII	INDEMNIFICATION	10
Section 1.	Right to Indemnification of Directors and Officers	10
Section 2.	Prepayment of Expenses of Directors and Officers	10
Section 3.	Claims by Directors and Officers	11
Section 4.	Indemnification of Employees and Agents	11
Section 5.	Advancement of Expenses of Employees and Agents	11
Section 6.	Non-Exclusivity Of Rights	11
Section 7.	Other Indemnification	11
Section 8.	Indemnification of Related Parties	11
Section 9.	Insurance	12
Section 10.	Amendment or Repeal	12

 

 

Table of Contents

(CONTINUED)

 

		Page
ARTICLE VIII	CERTIFICATES FOR SHARES	13
Section 1.	Certificates of Shares	13
Section 2.	Signatures of Former Officer, Transfer Agent or Registrar	13
Section 3.	Transfer of Shares	13
Section 4.	Lost, Destroyed or Stolen Certificates	13
ARTICLE IX	DIVIDENDS	14
Section 1.	Declarations of Dividends	14
Section 2.	Requirements for Payment of Dividends	14
ARTICLE X	RIGHT OF FIRST OFFER	14
Section 1.	Limitation on Transfer	14
ARTICLE XI	GENERAL PROVISIONS	16
Section 1.	Contracts	16
Section 2.	Loans	16
Section 3.	Checks, Drafts, Etc.	16
Section 4.	Deposits	16
Section 5.	Fiscal Year	16
Section 6.	Seal	17
Section 7.	Annual Statement	17
ARTICLE XII	AMENDMENTS	17
Section 1.	Amendments	17

 

 

 

 

Amended And Restated Bylaws

of
3-V Biosciences, Inc.

(a Delaware corporation)

 

Adopted as of December 19, 2006
Amended on April 5, 2007
Amended on July 7, 2009

 

ARTICLE I
IDENTIFICATION; OFFICES

 

Section 1.              Name. The name of the corporation is 3-V BioSciences, Inc. (the “Corporation”).

 

Section 2.             Principal and Business Offices. The Corporation may have such principal and other business offices, either within or outside of the state of Delaware, as the Board of Directors may designate or as the Corporation’s business may require from time to time.

 

Section 3.             Registered Agent and Office. The Corporation’s registered agent may be changed from time to time by or under the authority of the Board of Directors. The address of the Corporation’s registered agent may change from time to time by or under the authority of the Board of Directors, or the registered agent. The business office of the Corporation’s registered agent shall be identical to the registered office. The Corporation’s registered office may be but need not be identical with the Corporation’s principal office in the state of Delaware. The Corporation’s initial registered office shall be in the City of Dover, County of Kent, State of Delaware.

 

Section 4.            Place of Keeping Corporate Records. The records and documents required by law to be kept by the Corporation permanently shall be kept at the Corporation’s principal office.

 

ARTICLE II
STOCKHOLDERS

 

Section 1.             Annual Meeting. An annual meeting of the stockholders shall be held on such date as may be determined by resolution of the Board of Directors. At each annual meeting, the stockholders shall elect directors to hold office for the term provided in Article III of these Bylaws.

 

 

Section 2.             Special Meeting. A special meeting of the stockholders may be called by the President of the Corporation, the Board of Directors, or by such other officers or persons as the Board of Directors may designate.

 

Section 3.             Place of Stockholder Meetings. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting. If no such place is designated by the Board of Directors, the place of meeting will be the principal business office of the Corporation.

 

Section 4.             Notice of Meetings. Unless waived as herein provided, whenever stockholders are required or permitted to take any action at a meeting, written notice of the meeting shall be given stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Such written notice shall be given not less than ten (10) days nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at the meeting or in the event of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of all or substantially all of the Corporation’s property, business or assets not less than twenty (20) days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at the stockholder’s address as it appears on the records of the Corporation. If electronically transmitted, then notice is deemed given when transmitted and directed to a facsimile number or electronic mail address at which the stockholder has consented to receive notice. An affidavit of the 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.

 

When a meeting is adjourned to another time or place in accordance with Section 2.5 of this Article of these Bylaws, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting in which the adjournment is taken. At the adjourned meeting the Corporation may conduct any business which might have been transacted at the original meeting. 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.

 

Section 5.              Quorum and Adjourned Meetings. Unless otherwise provided by law or the Corporation’s Certificate of Incorporation, a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders. If less than a majority of the shares entitled to vote at a meeting of stockholders is present in person or represented by proxy at such meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the original meeting. The stockholders present at a meeting may continue to transact business until adjournment, notwithstanding the withdrawal of such number of stockholders as may leave less than a quorum.

 

 

Section 6.                Fixing of Record Date.

 

(a)              For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. 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.

 

(b)              For the purpose of determining stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is established by the Board of Directors, and which date shall not be more than ten (10) days after the date on which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal office, or an officer or agent of the Corporation having custody of the book in which the proceedings of meetings of stockholders are recorded. Delivery to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders’ consent to corporate action in writing without a meeting shall be the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

 

(c)               For the purpose of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect to any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix the record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining the stockholders for any such purpose shall be the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

Section 7.                Voting List. 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 stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address 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, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

 

Section 8.             Voting. Unless otherwise provided by the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by each stockholder. In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Directors shall be elected by plurality of the votes of the shares present in person or represented by a proxy at the meeting entitled to vote on the election of directors.

 

Section 9.             Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may remain irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally.

 

Section 10.           Ratification of Acts of Directors and Officers. Except as otherwise provided by law or by the Certificate of Incorporation of the Corporation, any transaction or contract or act of the Corporation or of the directors or the officers of the Corporation may be ratified by the affirmative vote of the holders of the number of shares which would have been necessary to approve such transaction, contract or act at a meeting of stockholders, or by the written consent of stockholders in lieu of a meeting.

 

Section 11.           Informal Action of Stockholders. Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be delivered to the Corporation by the holders of outstanding stock having not less than the minimum 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. Prompt notice of the taking of the corporate action without a meeting by less than unanimous consent shall be given to those stockholders who have not consented in writing. In the event that the action which is consented to is such as would have required the filing of a certificate with any governmental body, if such action had been voted on by stockholders at a meeting thereof, the certificate filed shall state, in lieu of any statement required by law concerning any vote of stockholders, that consent had been given in accordance with the provisions of Section 228 of the Delaware General Corporation Law, and that notice has been given as provided in such section. Without limiting the manner by which consent or notice may be given, written consent and written notice shall be deemed to be given if sent by electronic transmission when directed to a facsimile number or electronic mail address at which the recipient has consented to receive such electronic transmissions.

 

 

Section 12.           Organization. Such person as the Board of Directors may designate or, in the absence of such a designation, the president of the Corporation or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of such meeting. In the absence of the secretary of the Corporation, the chairman of the meeting shall appoint a person to serve as secretary at the meeting.

 

ARTICLE III
DIRECTORS

 

Section 1.              Number and Tenure Of Directors. The number of directors which shall constitute the whole Board shall be set by resolution of the Board from time to time. The directors need not be stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified; provided, however, that unless otherwise restricted by the Certificate of Incorporation or by law, any director or the entire Board of Directors may be removed, either with or without cause, from the Board of Directors at any meeting of stockholders by a majority of the stock represented and entitled to vote thereat.

 

Section 2.              Election of Directors. Except as otherwise provided in this Bylaws, directors shall be elected at the annual meeting of stockholders. Directors need not be residents of the State of Delaware. Elections of directors need not be by written ballot.

 

Section 3.              Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or at least one-third of the number of directors constituting the whole board. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them.

 

Section 4.              Notice of Special Meetings of The Board of Directors. Notice of any special meeting of the Board of Directors shall be given at least forty-eight (48) hours previous thereto by written notice to each director at his or her address. If mailed, such notice shall be deemed to be delivered when deposited in the United States Mail so addressed, with first-class postage thereon prepaid. If sent by any other means (including facsimile, courier, electronic mail or express mail, etc.), such notice shall be deemed to be delivered when actually delivered to the home or business address, electronic address or facsimile number of the director.

 

Section 5.              Quorum. A majority of the total number of directors as provided in Section 1 of this Article shall constitute a quorum for the transaction of business. If less than a majority of the directors are present at a meeting of the Board of Directors, a majority of the directors present may adjourn the meeting from time to time without further notice.

 

Section 6.              Voting. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the Delaware General Corporation Law or the Certificate of Incorporation requires a vote of a greater number.

 

 

Section 7.              Vacancies. Vacancies in the Board of Directors may be filled by a majority vote of the Board of Directors or by an election either at an annual meeting or at a special meeting of the stockholders called for that purpose. Any directors elected by the stockholders to fill a vacancy shall hold office for the balance of the term for which he or she was elected. A director appointed by the Board of Directors to fill a vacancy shall serve until the next meeting of stockholders at which directors are elected.

 

Section 8.               Removal of Directors. A director, or the entire Board of Directors, may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that if cumulative voting obtains and less than the entire Board of Directors is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors.

 

Section 9.               Informal Action of Directors. 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, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Without limiting the manner by which consent may be given, members of the Board of Directors may consent by delivery of an electronic transmission when such transmission is directed to a facsimile number or electronic mail address at which the Corporation has consented to receive such electronic transmissions, and copies of the electronic transmissions are filed with the minutes of proceedings of the Board of Directors or committee.

 

Section 10.           Participation by Conference Telephone. Members of the Board of Directors, or any committee designated by such board, may participate in a meeting of the Board of Directors, or committee thereof, by means of conference telephone or similar communications equipment as long as all persons participating in the meeting can speak with and hear each other, and participation by a director pursuant to this Section 10 shall constitute presence in person at such meeting.

 

Section 11.          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 therefore. Members of special or standing committees may be allowed like compensation for attending committee meetings.

 

ARTICLE IV
WAIVER OF NOTICE

 

Section 1.            Written Waiver of Notice. A written waiver of any required notice, signed by or electronically transmitted by the person entitled to notice, whether before or after the date stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of stockholders, directors or members of a committee of directors need be specified in any written waiver of notice.

 

 

Section 2.               Attendance as Waiver of Notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, and objects at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

ARTICLE V
COMMITTEES

 

Section 1.               General Provisions. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board 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 at any meeting of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members 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 amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation, and, unless the resolution so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger, pursuant to Section 253 of the Delaware General Corporation Law.

 

ARTICLE VI
OFFICERS

 

Section 1.               General Provisions. The Board of Directors shall elect a President and a Secretary of the Corporation. The Board of Directors may also elect a Chairman of the Board, one or more Vice Chairmen of the Board, one or more Vice Presidents, a Treasurer, one or more Assistant Secretaries and Assistant Treasurers and such additional officers as the Board of Directors may deem necessary or appropriate from time to time. Any two or more offices may be held by the same person. The officers elected by the Board of Directors shall have such duties as are hereafter described and such additional duties as the Board of Directors may from time to time prescribe.

 

 

Section 2.               Election and Term of Office. The officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as may be convenient. New offices of the Corporation may be created and filled and vacancies in offices may be filled at any time, at a meeting or by the written consent of the Board of Directors. Unless removed pursuant to Section 6.3 of these Bylaws, each officer shall hold office until his successor has been duly elected and qualified, or until his earlier death or resignation. Election or appointment of an officer or agent shall not of itself create contract rights.

 

Section 3.               Removal of Officers. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever, in its judgment, the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person(s) so removed.

 

Section 4.               The Chief Executive Officer. The Board of Directors shall designate whether the Chairman of the Board, if one shall have been chosen, or the President shall be the Chief Executive Officer of the Corporation. If a Chairman of the Board has not been chosen, or if one has been chosen but not designated Chief Executive Officer, then the President shall be the Chief Executive Officer of the Corporation. The Chief Executive Officer shall be the principal executive officer of the Corporation and shall in general supervise and control all of the business and affairs of the Corporation, unless otherwise provided by the Board of Directors. The Chief Executive Officer shall preside at all meetings of the stockholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer may sign bonds, mortgages, certificates for shares and all other contracts and documents whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation. The Chief Executive Officer shall have general powers of supervision and shall be the final arbiter of all differences between officers of the Corporation and his decision as to any matter affecting the Corporation shall be final and binding as between the officers of the Corporation subject only to the Board of Directors.

 

Section 5.               The President. In the absence of the Chief Executive Officer or in the event of his inability or refusal to act, if the Chairman of the Board has been designated Chief Executive Officer, 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. At all other times the President shall have the active management of the business of the Corporation under the general supervision of the Chief Executive Officer. The President shall have concurrent power with the Chief Executive Officer to sign bonds, mortgages, certificates for shares and other contracts and documents, whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors, or by these Bylaws to some other officer or agent of the Corporation. In general, the President shall perform all duties incident to the office of president and such other duties as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

 

Section 6.               The Chairman Of The Board. The Chairman of the Board, if one is chosen, shall be chosen from among the members of the board. If the Chairman of the Board has not been designated Chief Executive Officer, the Chairman of the Board shall perform such duties as may be assigned to the Chairman of the Board by the Chief Executive Officer or by the Board of Directors.

 

 

Section 7.               Vice Chairman of The Board. In the absence of the Chief Executive Officer or in the event of his inability or refusal to act, if the Chairman of the Board has been designated Chief Executive Officer, the Vice Chairman, or if there be more than one, the Vice Chairmen, in the order determined by the Board of Directors, 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. At all other times, the Vice Chairman or Vice Chairmen shall perform such duties and have such powers as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

 

Section 8.               The Vice President. In the absence of the President or in the event of his inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Executive Vice President and then the other Vice President or Vice Presidents in the order designated, 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 Chief Executive Officer or the Board of Directors may from time to time prescribe.

 

Section 9.               The 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. The Secretary 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 shall be. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary, 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 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 signature.

 

Section 10.           The 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 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 Chief Executive Officer or the Board of Directors may from time to time prescribe.

 

Section 11.           The 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. The Treasurer 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 President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation.

 

 

Section 12.           The 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 his 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 Chief Executive Officer or the Board of Directors may from time to time prescribe.

 

Section 13.           Other Officers, Assistant Officers and Agents. Officers, Assistant Officers and Agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the board of directors.

 

Section 14.           Absence of Officers. In the absence of any officer of the Corporation, or for any other reason the Board of Directors may deem sufficient, the Board of Directors may delegate the powers or duties, or any of such powers or duties, of any officers or officer to any other officer or to any director.

 

Section 15.           Compensation. The Board of Directors shall have the authority to establish reasonable compensation of all officers for services to the Corporation.

 

ARTICLE VII
INDEMNIFICATION

 

Section 1.               Right to Indemnification of Directors and Officers. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person in such proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 3 of this Article, the Corporation shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in advance by the Board of Directors.

 

 

Section 2.               Prepayment of Expenses of Directors and Officers. The Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article VII or otherwise.

 

Section 3.              Claims by Directors and Officers. If a claim for indemnification or advancement of expenses under this Article VII is not paid in full within thirty days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

 

Section 4.               Indemnification of Employees and Agents. The Corporation may indemnify and advance expenses to any person who was or is made or is threatened to be made or is otherwise involved in any proceeding by reason of the fact that such person, or a person for whom such person is the legal representative, is or was an employee or agent of the Corporation or, while an employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorney’s fees) reasonably incurred by such person in connection with such proceeding. The ultimate determination of entitlement to indemnification of persons who are non-director or officer employees or agents shall be made in such manner as is determined by the Board of Directors in its sole discretion. Notwithstanding the foregoing sentence, the Corporation shall not be required to indemnify a person in connection with a proceeding initiated by such person if the proceeding was not authorized in advance by the Board of Directors.

 

Section 5.              Advancement of Expenses of Employees and Agents. The Corporation may pay the expenses (including attorney’s fees) incurred by an employee or agent in defending any proceeding in advance of its final disposition on such terms and conditions as may be determined by the Board of Directors.

 

Section 6.               Non-Exclusivity Of Rights. The rights conferred on any person by this Article VII shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

Section 7.             Other Indemnification. The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer or employee of another corporation, partnership, joint venture, trust, organization or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, organization or other enterprise.

 

Section 8.              Indemnification of Related Parties. To the extent that a Covered Person is serving on the Board of Directors of the Corporation at the direction of any stockholder of the Corporation who, pursuant to the Certificate of Incorporation of the Corporation or any contractual arrangement, shall have the right to elect (either alone or together with other parties) or appoint (either alone or together with other parties) such Covered Person to the Board of Directors of the Corporation (an “Appointing Stockholder”), the Corporation shall indemnify and hold harmless such Appointing Stockholder from any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, arising by reason of the fact that Appointing Stockholder has the ability to appoint or elect the Covered Person to the Board of Directors of the Corporation or that the Covered Person is serving on the Board of Directors of the Corporation at the direction of the Appointing Stockholder, provided however, that (i) any such indemnification shall be subject to the same limitations as otherwise set forth herein; and (ii) no such indemnification shall be available to any Appointing Stockholder in the event that the Covered Person shall not be entitled to indemnification in the same or any related action or proceeding. The terms herein as they relate to procedures for indemnification of a Covered Person shall apply to any such indemnification of Appointing Stockholder.

 

 

 

 

To the extent that a Covered Person has or may have certain rights to indemnification, advancement of expenses and/or insurance provided by an Appointing Stockholder and/or certain of its affiliates and/or other third parties and may have other sources of indemnification or insurance, whether currently in force or established in the future (collectively, the “Outside Indemnitors”), the Corporation (i) shall be the indemnitor of first resort (i.e., its obligations to the Covered Person are primary and any obligation of the Outside Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Covered Person are secondary); (ii) shall be required to advance the full amount of expenses incurred by the Covered Person and shall be liable for the full amount of all expenses to the extent legally permitted and as required by the Certificate of Incorporation of the Corporation (or any agreement between the Company and the Covered Person), without regard to any rights the Covered Person may have against the Outside Indemnitors; and (iii) irrevocably waives, relinquishes and releases the Outside Indemnitors from any and all claims against the Outside Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. No advancement or payment by the Outside Indemnitors on behalf of the Covered Person with respect to any claim for which the Covered Person has sought indemnification from the Corporation shall affect the foregoing, and the Outside Indemnitors shall have a right of contribution and/or be subrogated solely to the extent such advancement or payment would be subject to recovery by the Covered Person against the Corporation.

 

Section 9.              Insurance. The Board of Directors may, to the full extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Corporation’s expense insurance: (a) to indemnify the Corporation for any obligation which it incurs as a result of the indemnification of directors, officers and employees under the provisions of this Article VII; and (b) to indemnify or insure directors, officers and employees against liability in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this Article VII.

 

Section 10.           Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. The rights provided hereunder shall inure to the benefit of any Covered Person and such person’s heirs, executors and administrators.

 

 

ARTICLE VIII
CERTIFICATES FOR SHARES

 

Section 1.              Certificates of Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, Chief Executive Officer, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation representing the number of shares registered in certificate form. Any or all the signatures on the certificate may be a facsimile.

 

Section 2.              Signatures of Former Officer, Transfer Agent or Registrar. In case 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, it may be issued by the Corporation with the same effect as if such person or entity were such officer, transfer agent or registrar at the date of issue.

 

Section 3.              Transfer of Shares. Transfers of shares of the Corporation shall be made only on the books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of certificate for such shares. Prior to due presentment of a certificate for shares for registration of transfer, the Corporation may treat a registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise have and exercise all of the right and powers of an owner of shares.

 

Section 4.              Lost, Destroyed or Stolen Certificates. Whenever a certificate representing shares of the Corporation has been lost, destroyed or stolen, the holder thereof may file in the office of the Corporation an affidavit setting forth, to the best of his knowledge and belief, the time, place, and circumstance of such loss, destruction or theft together with a statement of indemnity sufficient in the opinion of the Board of Directors to indemnify the Corporation against any claim that may be made against it on account of the alleged loss of any such certificate. Thereupon the Board may cause to be issued to such person or such person’s legal representative a new certificate or a duplicate of the certificate alleged to have been lost, destroyed or stolen. In the exercise of its discretion, the Board of Directors may waive the indemnification requirements provided herein.

 

 

ARTICLE IX
DIVIDENDS

 

Section 1.              Declarations of Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, 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.

 

Section 2.              Requirements for Payment of 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 absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may abolish any such reserve.

 

ARTICLE X
RIGHT OF FIRST OFFER

 

Section 1.              Limitation on Transfer. No stockholder shall sell, give, assign, hypothecate, pledge, encumber, grant a security interest in or otherwise dispose of (whether by operation of law or otherwise) (each, a “transfer”) any shares of common stock of the Corporation or any right, title or interest therein or thereto, except by a transfer which meets the requirements hereinafter set forth in these bylaws.

 

(a)            If any stockholder wishes to transfer all or any portion of its, his or her shares of common stock, then such stockholder shall first offer such shares of common stock to the Corporation, by sending written notice to the Corporation, which shall state (i) the number of shares of common stock proposed to be transferred; (ii) the proposed purchase price per share; (iii) the proposed transferee; and (iv) the full terms and conditions of such sale. Upon delivery of such notice, such offer shall be irrevocable unless and until the rights of first offer provided for herein shall have been waived or shall have expired.

 

(b)            For a period of fifteen (15) days immediately following the delivery of the notice pursuant to Section 1(a), the Corporation shall have the option to purchase all or less than all of the shares specified in the notice at the purchase price and upon the terms and conditions set forth in such notice. In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying the full price for the shares, and that is not otherwise exempted from the provisions of this Article 10, the price shall be deemed to be the fair market value of the common stock at such time as determined in good faith by the Board of Directors. In the event the Corporation and/or its assignee(s) elect(s) to acquire any of the shares of common stock of the transferring stockholder as specified in said transferring stockholder’s notice, the Secretary of the Corporation shall so notify the transferring stockholder, stating the number of shares of common stock that the Corporation is willing to purchase pursuant to this Article X.

 

(c)            The closing of the purchase by the Corporation under Article X shall be held at the executive office of the Corporation at 11:00 a.m., local time, on the sixtieth day after the giving of the notice pursuant to Article X or at such other time and place as the parties to the transaction may agree. At such closing, the transferring stockholder shall deliver certificates representing the shares of common stock to be transferred, duly endorsed for transfer and accompanied by all requisite transfer taxes, if any, and such shares of common stock shall be free and clear of any liens (other than those arising hereunder and those attributable to actions by the Corporation thereof) and the transferring stockholder shall so represent and warrant, and shall further represent and warrant that it is the sole beneficial and record owner of such shares of common stock. At such closing, all of the parties to the transaction shall execute such additional documents as are otherwise customary and necessary or appropriate.

 

 

(d)            In the event the Corporation and/or its assignee(s) do not elect to acquire all of the shares specified in the transferring stockholder’s notice, said transferring stockholder may transfer the shares specified in said transferring stockholder’s notice which were not acquired by the Corporation and/or its assignee(s) as specified in said transferring stockholder’s notice; provided that such sale is bona fide and made pursuant to a contract entered into within ninety (90) days after the earlier to occur of (i) the waiver by the Corporation and/or its assignee(s) of their options to purchase the shares of common stock and (ii) the expiration of the fifteen (15) day period after the delivery of the transferring stockholder’s notice to the Corporation. All shares so sold by said transferring stockholder shall continue to be subject to the provisions of these bylaws in the same manner as before said transfer. If such sale is not consummated within one hundred twenty (120) days after the earlier of (i) or (ii) in the preceding sentence, for any reason, then the restrictions provided for herein shall again become effective, and no transfer of such shares of common stock may be made thereafter by the stockholder without again offering the same to the Corporation in accordance with this Article X.

 

(e)            Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from this Article X of these bylaws:

 

(A)             a stockholder who is an individual may transfer all or a portion of his shares of common stock (during life or upon death) to (i) a member of his or her immediate family, which shall include his or her spouse, siblings, children or grandchildren; or (ii) a trust, corporation, partnership or limited liability company, all of the beneficial interests in which shall be held by such individual or one or more of his or her spouse, siblings, children or grandchildren; provided, however, that during the period that any such trust, corporation, partnership or limited liability company holds any right, title or interest in any shares of common stock, no person other than such stockholder or one or more of his or her spouse, siblings, children or grandchildren may be or may become beneficiaries, stockholders, limited or general partners or members thereof; and

 

(B)            each stockholder that is not an individual may transfer all or a portion of its shares of common stock to any of its affiliates.

 

(f)             The provisions of this bylaw maybe waived with respect to any transfer either by the Corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the Corporation (excluding the votes represented by those shares to be transferred by the transferring stockholder). This bylaw may be amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the Corporation.

 

 

(g)              Any transfer, or purported transfer, of common stock of the Corporation shall be null and void unless the terms, conditions, and provisions of this bylaw are strictly observed and followed.

 

(h)             The foregoing right of first refusal shall terminate on the date securities of the Corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.

 

(i)             The certificates representing shares of common stock of the Corporation held by stockholders who or that are not party to the Stockholders Agreement shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION.”

 

(j)             The Corporation may assign its rights hereunder.

 

ARTICLE XI
GENERAL PROVISIONS

 

Section 1.              Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

 

Section 2.              Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

 

Section 3.              Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by one or more officers or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.

 

Section 4.              Deposits. The funds of the Corporation may be deposited or invested in such bank account, in such investments or with such other depositaries as determined by the Board of Directors.

 

Section 5.               Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

 

 

Section 6.              Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

 

Section 7.               Annual Statement. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

 

ARTICLE XII
AMENDMENTS

 

Section 1.              Amendments. 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.

 

 

Exhibit 10.1

 

3-V BIOSCIENCES, INC.

 

2007 EQUITY INCENTIVE PLAN

 

1.            Purposes of the Plan. The purposes of 3-V Biosciences, Inc. 2007 Equity Incentive Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Non-Qualified Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

 

2.            Definitions. As used herein, the following definitions shall apply:

 

(a)       “Acquisition” means (i) the liquidation, dissolution or winding up of the Company; (ii) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganizations, provided that the applicable transaction shall not be deemed an Acquisition unless the Company’s stockholders constituted immediately prior to such transaction do not hold more than fifty percent (50%) of the voting power of the surviving or acquiring entity (or its parent) immediately following such transaction (taking into account only voting power resulting from stock held by such stockholders prior to such transaction); (iii) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power outstanding before such transaction is transferred or (iv) a sale, conveyance or other disposition of all or substantially all of the assets of the Company (including without limitation a license of all or substantially all of the Company’s intellectual property that is either exclusive or otherwise structured in a manner that constitutes a license of all or substantially all of the assets of the Company); provided that an Acquisition shall not include (A) a merger or consolidation with a wholly-owned subsidiary of the Company, (B) a merger effected exclusively for the purpose of changing the domicile of the Company or (C) any transaction or series of related transactions principally for bona fide equity financing purposes in which the Company is the surviving corporation.

 

(b)       “Administrator” means the Board or the Committee responsible for conducting the general administration of the Plan, as applicable, in accordance with Section 4 hereof.

 

(c)       “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

 

(d)       “Board” means the Board of Directors of the Company.

 

(e)       “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute or statutes thereto. Reference to any particular Code section shall include any successor section.

 

 

(f)           “Committee” means a committee appointed by the Board in accordance with Section 4 hereof.

 

(g)          “Common Stock” means the common stock of the Company.

 

(h)          “Company” means 3-V Biosciences, Inc., a Delaware corporation.

 

(i)           “Consultant” means any consultant or adviser if: (i) the consultant or adviser renders bona fide services to the Company or any Parent or Subsidiary of the Company; (ii) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and (iii) the consultant or adviser is a natural person who has contracted directly with the Company or any Parent or Subsidiary of the Company to render such services.

 

(j)           “Director” means a member of the Board.

 

(k)          “Employee” means any person, including an Officer or Director, who is an employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient, by itself, to constitute “employment” by the Company.

 

(l)           “Equity Restructuring” shall mean a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.

 

(m)         “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. Reference to any particular Exchange Act section shall include any successor section.

 

(n)          “Fair Market Value” means, as of any date, the value of a share of Common Stock determined as follows:

 

(i)       If the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value shall be the closing sales price for a share of such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for such date, or if no bids or sales were reported for such date, then the closing sales price (or the closing bid, if no sales were reported) on the trading date immediately prior to such date during which a bid or sale occurred, in each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

 

(ii)      If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for a share of the Common Stock on such date, or if no closing bid and asked prices were reported for such date, the date immediately prior to such date during which closing bid and asked prices were quoted for such Common Stock, in each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii)     In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

 

(o)          “Holder” means a person who has been granted or awarded an Option or Stock Purchase Right or who holds Shares acquired pursuant to the exercise of an Option or Stock Purchase Right.

 

(p)          “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator.

 

(q)          “Independent Director” means a Director who is not an Employee of the Company.

 

(r)          “Non-Qualified Stock Option” means an Option (or portion thereof) that is not designated as an Incentive Stock Option by the Administrator, or which is designated as an Incentive Stock Option by the Administrator but fails to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

(s)          “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(t)           “Option” means a stock option granted pursuant to the Plan.

 

(u)          “Option Agreement” means a written agreement between the Company and a Holder evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

 

(v)          “Parent” means any corporation, whether now or hereafter existing (other than the Company), in an unbroken chain of corporations ending with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing more than fifty percent of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

(w)         “Plan” means the 3-V Biosciences, Inc. 2007 Equity Incentive Plan.

 

(x)          “Public Trading Date” means the first date upon which Common Stock of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system.

 

 

(y)          “Restricted Stock” means Shares acquired pursuant to the exercise of an unvested Option in accordance with Section 10(h) below or pursuant to a Stock Purchase Right granted under Section 12 below.

 

(z)          “Reverse Stock Split” means that certain one (1) share to one-tenth (0.1) share reverse stock split on all authorized and outstanding shares of Common Stock effected by the Company pursuant to its Third Amended and Restated Certificate of Incorporation, filed as of November __, 2011.

 

(aa)        “Rule 16b-3” means that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time.

 

(bb)       “Section 16(b)” means Section 16(b) of the Exchange Act, as such Section may be amended from time to time.

 

(cc)        “Securities Act” means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. Reference to any particular Securities Act section shall include any successor section.

 

(dd)       “Service Provider” means an Employee, Director or Consultant.

 

(ee)        “Share” means a share of Common Stock, as adjusted in accordance with Section 13 below.

 

(ff)         “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section 12 below.

 

(gg)       “Subsidiary” means any corporation, whether now or hereafter existing (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 more than fifty percent of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

3.           Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the shares of stock subject to Options or Stock Purchase Rights shall be Common Stock. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be issued upon exercise of such Options or Stock Purchase Rights is Fourteen Million One Hundred One Thousand Eight Hundred Nine (14,101,809) Shares, which amount gives effect to the Reverse Stock Split. Shares issued upon exercise of Options or Stock Purchase Rights may be authorized but unissued, or reacquired Common Stock. If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares which are delivered by the Holder or withheld by the Company upon the exercise of an Option or Stock Purchase Right under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of this Section 3. If Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan (unless the Plan has terminated). Notwithstanding the provisions of this Section 3, no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an Incentive Stock Option under Code Section 422.

 

 

4.            Administration of the Plan.

 

(a)       Administrator. Unless and until the Board delegates administration to a Committee as set forth below, the Plan shall be administered by the Board. The Board may delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Notwithstanding the foregoing, however, from and after the Public Trading Date, a Committee of the Board shall administer the Plan and the Committee shall consist solely of two or more Independent Directors each of whom is an “outside director,” within the meaning of Section 162(m) of the Code, a “non-employee director” within the meaning of Rule 16b-3, and qualifies as “independent” within the meaning of any applicable stock exchange listing requirements. Members of the Committee shall also satisfy any other legal requirements applicable to membership on the Committee, including requirements under the Sarbanes-Oxley Act of 2002 and other Applicable Laws. Within the scope of such authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not Independent Directors the authority to grant awards under the Plan to eligible persons who are either (1) not then “covered employees,” within the meaning of Section 162(m) of the Code and are not expected to be “covered employees” at the time of recognition of income resulting from such award or (2) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a committee of one or more members of the Board who are not “non-employee directors,” within the meaning of Rule 16b-3, the authority to grant awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may only be filled by the Board.

 

(b)         Powers of the Administrator. Subject to the provisions of the Plan and the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its sole discretion:

 

(i)       to determine the Fair Market Value;

 

(ii)      to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;

 

 

(iii)     to determine the number of Shares to be covered by each such award granted hereunder;

 

(iv)     to approve forms of agreement for use under the Plan;

 

(v)      to determine the terms and conditions of any Option or Stock Purchase Right granted hereunder (such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may vest or be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine);

 

(vi)     to determine whether to offer to buyout a previously granted Option as provided in subsection 10(i) and to determine the terms and conditions of such offer and buyout (including whether payment is to be made in cash or Shares);

 

(vii)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

 

(viii)   to allow Holders to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld based on the statutory withholding rates for federal and state tax purposes that apply to supplemental taxable income. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Holders to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(ix)     to amend the Plan or any Option or Stock Purchase Right granted under the Plan as provided in Section 15; and

 

(x)      to construe and interpret the terms of the Plan and awards granted pursuant to the Plan and to exercise such powers and perform such acts as the Administrator deems necessary or desirable to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

 

(c)         Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Holders.

 

5.           Eligibility. Non-Qualified Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. If otherwise eligible, a Service Provider who has been granted an Option or Stock Purchase Right may be granted additional Options or Stock Purchase Rights.

 

 

6.           Limitations.

 

(a)         Each Option shall be designated by the Administrator in the Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares subject to a Holder’s Incentive Stock Options and other incentive stock options granted by the Company, any Parent or Subsidiary, which become exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options or other options shall be treated as Non-Qualified Stock Options.

 

For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant.

 

(b)         Neither the Plan, any Option nor any Stock Purchase Right shall confer upon a Holder any right with respect to continuing the Holder’s employment or consulting relationship with the Company, nor shall they interfere in any way with the Holder’s right or the Company’s right to terminate such employment or consulting relationship at any time, with or without cause.

 

(c)         No Service Provider shall be granted, in any calendar year, Options or Stock Purchase Rights to purchase more than One Million (1,000,000) Shares; provided, however, that the foregoing limitation shall not apply prior to the Public Trading Date and, following the Public Trading Date, the foregoing limitation shall not apply until the earliest of: (i) the first material modification of the Plan (including any increase in the number of shares reserved for issuance under the Plan in accordance with Section 3); (ii) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (iii) the expiration of the Plan; (iv) the first meeting of stockholders at which Directors of the Company are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security of the Company under Section 12 of the Exchange Act; or (v) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. The foregoing limitation shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 13. For purposes of this Section 6(c), if an Option is canceled in the same calendar year it was granted (other than in connection with a transaction described in Section 13), the canceled Option will be counted against the limit set forth in this Section 6(c). For this purpose, if the exercise price of an Option is reduced, the transaction shall be treated as a cancellation of the Option and the grant of a new Option.

 

7.           Term of Plan. The Plan shall become effective upon its initial adoption by the Board and shall continue in effect until it is terminated under Section 15 of the Plan. No Options or Stock Purchase Rights may be issued under the Plan after the tenth (10th) anniversary of the earlier of (i) the date upon which the Plan is adopted by the Board or (ii) the date the Plan is approved by the stockholders.

 

8.           Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to a Holder who, at the time the Option is granted, owns (or is treated as owning under Code Section 424) stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

 

 

9.           Option Exercise Price and Consideration.

 

(a)         Except as provided in Section 13, the per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

 

(i)        In the case of an Incentive Stock Option

 

(A)       granted to an Employee who, at the time of grant of such Option, owns (or is treated as owning under Code Section 424) stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.

 

(B)       granted to any other Employee, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(ii)       In the case of a Non-Qualified Stock Option

 

(A)       granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be at least one hundred ten percent (110%) (or such lower percentage as permitted by applicable securities laws but in no event less than one hundred percent (100%)) of the Fair Market Value per Share on the date of the grant.

 

(B)       granted to any other Service Provider, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(iii)      Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

 

(b)         The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) with the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as is a market rate of interest and which then precludes the imputation of interest under the Code), payable upon such terms as may be prescribed by the Administrator, and structured to comply with Applicable Laws, (4) with the consent of the Administrator, other Shares which (x) in the case of Shares acquired from the Company, have been owned by the Holder for more than six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) with the consent of the Administrator, surrendered Shares then issuable upon exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate exercise price of the Option or exercised portion thereof, (6) with the consent of the Administrator, property of any kind which constitutes good and valuable consideration, (7) with the consent of the Administrator, delivery of a notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Options and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided, that payment of such proceeds is then made to the Company upon settlement of such sale, or (8) with the consent of the Administrator, any combination of the foregoing methods of payment.

 

 

10.          Exercise of Option.

 

(a)         Vesting; Fractional Exercises. Except as provided in Section 13, Options granted hereunder shall be vested and exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement; provided, however, that to the extent required by applicable securities laws, Options granted to Officers, Directors or Consultants shall become vested and exercisable at a rate of no less than twenty percent (20%) per year over five (5) years from the date the Option is granted, subject to reasonable conditions, such as continuing to be a Service Provider. Option may not be exercised for a fraction of a Share.

 

(b)         Deliveries upon Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company or his or her office:

 

(i)       A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;

 

(ii)      Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Laws. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation, placing legends on share certificates and issuing stop transfer notices to agents and registrars;

 

(iii)     Upon the exercise of all or a portion of an unvested Option pursuant to Section 10(h), a Restricted Stock purchase agreement in a form determined by the Administrator and signed by the Holder or other person then entitled to exercise the Option or such portion of the Option; and

 

(iv)     In the event that the Option shall be exercised pursuant to Section 10(0 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option.

 

 

(c)         Conditions to Delivery of Share Certificates. The Company shall not be required to issue or deliver any certificate or certificates for Shares purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:

 

(i)       The admission of such Shares to listing on all stock exchanges on which such class of stock is then listed;

 

(ii)      The completion of any registration or other qualification of such Shares under any state or federal law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Administrator shall, in its sole discretion, deem necessary or advisable;

 

(iii)     The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its sole discretion, determine to be necessary or advisable;

 

(iv)     The lapse of such reasonable period of time following the exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience; and

 

(v)      The receipt by the Company of full payment for such Shares, including payment of any applicable withholding tax, which in the sole discretion of the Administrator may be in the form of consideration used by the Holder to pay for such Shares under Section 9(b).

 

(d)         Termination of Relationship as a Service Provider. If a Holder ceases to be a Service Provider other than by reason of the Holder’s disability or death, such Holder may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination; provided, however, that, prior to the Public Trading Date, such period of time shall not be less than thirty (30) days (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Holder’s termination. If, on the date of termination, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option immediately cease to be issuable under the Option and shall again become available for issuance under the Plan. If, after termination, the Holder does not exercise his or her Option within the time period specified herein, the Option shall terminate, and the Shares covered by such Option shall again become available for issuance under the Plan.

 

(e)          Disability of Holder. If a Holder ceases to be a Service Provider as a result of the Holder’s disability, the Holder may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination; provided, however, that prior to the Public Trading Date, to the extent necessary to comply with applicable securities laws, such period of time shall not be less than six (6) months (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Holder’s termination. If such disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Qualified Stock Option from and after the day which is three (3) months and one (1) day following such termination. If, on the date of termination, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately cease to be issuable under the Option and shall again become available for issuance under the Plan. If, after termination, the Holder does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall again become available for issuance under the Plan.

 

 

(f)          Death of Holder. If a Holder dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement; provided, however, that prior to the Public Trading Date, to the extent necessary to comply with applicable securities laws, such period of time shall not be less than six (6) months (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Holder’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Holder’s termination. If, at the time of death, the Holder is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately cease to be issuable under the Option and shall again become available for issuance under the Plan. The Option may be exercised by the executor or administrator of the Holder’s estate or, if none, by the person(s) entitled to exercise the Option under the Holder’s will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall again become available for issuance under the Plan.

 

(g)         Regulatory Extension. A Holder’s Option Agreement may provide that if the exercise of the Option following the termination of the Holder’s status as a Service Provider (other than upon the Holder’s death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 8 or (ii) the expiration of a period of three (3) months after the termination of the Holder’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements.

 

(h)         Early Exercisability. The Administrator may provide in the terms of a Holder’s Option Agreement that the Holder may, at any time before the Holder’s status as a Service Provider terminates, exercise the Option in whole or in part prior to the full vesting of the Option; provided, however, that subject to Section 20, Shares acquired upon exercise of an Option which has not fully vested may be subject to any forfeiture, transfer or other restrictions as the Administrator may determine in its sole discretion.

 

(i)          Buyout Provisions. The Administrator may at any time offer to buyout for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Holder at the time that such offer is made.

 

 

11.         Non-Transferability of Options and Stock Purchase Rights. Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Holder, only by the Holder.

 

12.          Stock Purchase Rights.

 

(a)         Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with Options granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer; provided, however, that to the extent required to comply with applicable securities laws, the purchase price of such Shares shall not be less than the purchase price requirements set forth in Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator.

 

(b)         Repurchase Right. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company the right to repurchase Shares acquired upon exercise of a Stock Purchase Right upon the termination of the purchaser’s status as a Service Provider for any reason. Subject to Section 20, the purchase price for Shares repurchased by the Company pursuant to such repurchase right and the rate at which such repurchase right shall lapse shall be determined by the Administrator in its sole discretion, and shall be set forth in the Restricted Stock purchase agreement.

 

(c)         Other Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

 

(d)         Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

 

13.          Adjustments upon Changes in Capitalization, Merger or Asset Sale.

 

(a)          In the event that the Administrator determines that other than an Equity Restructuring any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), reorganization, merger, consolidation, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Administrator’s sole discretion, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Option, Stock Purchase Right or Restricted Stock, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of:

 

 

(i)       the number and kind of shares of Common Stock (or other securities or property) with respect to which Options or Stock Purchase Rights may be granted or awarded (including, but not limited to, adjustments of the limitations in Section 3 on the maximum number and kind of shares which may be issued and adjustments of the maximum number of Shares that may be purchased by any Holder in any calendar year pursuant to Section 6(e)),

 

(ii)      the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Options, Stock Purchase Rights or Restricted Stock; and

 

(iii)     the grant or exercise price with respect to any Option or Stock Purchase Right.

 

(b)         In the event of any transaction or event described in Section 13(a), the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Option, Stock Purchase Right or Restricted Stock or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Option, Stock Purchase Right or Restricted Stock granted or issued under the Plan or to facilitate such transaction or event:

 

(i)       To provide for either the purchase of any such Option, Stock Purchase Right or Restricted Stock for an amount of cash equal to the amount that could have been obtained upon the exercise of such Option or Stock Purchase Right or realization of the Holder’s rights had such Option, Stock Purchase Right or Restricted Stock been currently exercisable or payable or fully vested or the replacement of such Option, Stock Purchase Right or Restricted Stock with other rights or property selected by the Administrator in its sole discretion;

 

(ii)      To provide that such Option or Stock Purchase Right shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Option or Stock Purchase Right;

 

(iii)     To provide that such Option, Stock Purchase Right or Restricted Stock be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

 

(iv)     To make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options and Stock Purchase Rights, and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Options, Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or Restricted Stock which may be granted in the future; and/or

 

(v)      To provide that immediately upon the consummation of such event, such Option or Stock Purchase Right shall not be exercisable and shall terminate; provided, that for a specified period of time prior to such event, such Option or Stock Purchase Right shall be exercisable as to all Shares covered thereby, and the restrictions imposed under an Option Agreement or Restricted Stock purchase agreement upon some or all Shares may be terminated and, in the ease of Restricted Stock, some or all shares of such Restricted Stock may cease to be subject to repurchase, notwithstanding anything to the contrary in the Plan or the provisions of such Option, Stock Purchase Right or Restricted Stock purchase agreement.

 

(c)          In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Section 13(a) and 13(b):

 

(i)       The number and type of securities subject to each outstanding Option or Stock Purchase Right and the exercise price or grant price thereof, if applicable, will be proportionately adjusted. The adjustments provided under this Section 13(c)(i) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.

 

(ii)      The Administrator shall make such proportionate adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3).

 

(d)          If the Company undergoes an Acquisition, then any surviving corporation or entity or acquiring corporation or entity, or affiliate of such corporation or entity, may assume any Options, Stock Purchase Rights or Restricted Stock outstanding under the Plan or may substitute similar stock awards (including an award to acquire the same consideration paid to the stockholders in the transaction described in this subsection 13(d)) for those outstanding under the Plan. In the event any surviving corporation or entity or acquiring corporation or entity in an Acquisition, or affiliate of such corporation or entity, does not assume such Options, Stock Purchase Rights or Restricted Stock or does not substitute similar stock awards for those outstanding under the Plan, then with respect to (i) Options, Stock Purchase Rights or Restricted Stock held by participants in the Plan whose status as a Service Provider has not terminated prior to such event, the vesting of such Options, Stock Purchase Rights or Restricted Stock (and, if applicable, the time during which such awards may be exercised) shall be accelerated and made fully exercisable and all restrictions thereon shall lapse at least ten (10) days prior to the closing of the Acquisition (and the Options or Stock Purchase Rights terminated if not exercised prior to the closing of such Acquisition), and (ii) any other Options or Stock Purchase Rights outstanding under the Plan, such Options or Stock Purchase rights shall be terminated if not exercised prior to the closing of the Acquisition.

 

 

(e)         Subject to Section 3, the Administrator may, in its sole discretion, include such further provisions and limitations in any Option, Stock Purchase Right, Restricted Stock agreement or certificate, as it may deem equitable and in the best interests of the Company.

 

(f)          The existence of the Plan, any Option Agreement or Restricted Stock purchase agreement and the Options or Stock Purchase Rights granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

14.          Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

 

15.          Amendment and Termination of the Plan.

 

(a)         Amendment and Termination. The Board may at any time wholly or partially amend, alter, suspend or terminate the Plan. However, without approval of the Company’s stockholders given within twelve (12) months before or after the action by the Board, no action of the Board may, except as provided in Section 13, increase the limits imposed in Section 3 on the maximum number of Shares which may be issued under the Plan or extend the term of the Plan under Section 7.

 

(b)         Stockholder Approval. The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)          Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Holder, unless mutually agreed otherwise between the Holder and the Administrator, which agreement must be in writing and signed by the Holder and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options, Stock Purchase Rights or Restricted Stock granted or awarded under the Plan prior to the date of such termination.

 

16.          Stockholder Approval. The Plan will be submitted for the approval of the Company’s stockholders within twelve (12) months after the date of the Board’s initial adoption of the Plan. Options, Stock Purchase Rights or Restricted Stock may be granted or awarded prior to such stockholder approval, provided that such Options, Stock Purchase Rights and Restricted Stock shall not be exercisable, shall not vest and the restrictions thereon shall not lapse prior to the time when the Plan is approved by the stockholders, and provided further that if such approval has not been obtained at the end of said twelve-month period, all Options, Stock Purchase Rights and Restricted Stock previously granted or awarded under the Plan shall thereupon be canceled and become null and void.

 

 

17.          Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

18.          Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

19.          Information to Holders and Purchasers. Prior to the Public Trading Date and to the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall provide to each Holder and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Holder or purchaser has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. Notwithstanding the preceding sentence, the Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

 

20.          Repurchase Provisions. The Administrator in its sole discretion may provide that the Company may repurchase Shares acquired upon exercise of an Option or Stock Purchase Right upon the occurrence of certain specified events, including, without limitation, a Holder’s termination as a Service Provider, divorce, bankruptcy or insolvency; provided, however, that any such repurchase right shall be set forth in the applicable Option Agreement or Restricted Stock purchase agreement or in another agreement referred to in such agreement and, provided further, that to the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations, any such repurchase right set forth in an Option or Stock Purchase Right granted prior to the Public Trading Date to a person who is not an Officer, Director or Consultant shall be upon the following terms: (i) if the repurchase option gives the Company the right to repurchase the shares upon termination as a Service Provider at not less than the Fair Market Value of the shares to be purchased on the date of termination of status as a Service Provider, then (A) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days of termination of status as a Service Provider (or in the case of shares issued upon exercise of Options or Stock Purchase Rights after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Administrator and the Plan participant and (B) the right terminates when the shares become publicly traded; and (ii) if the repurchase option gives the Company the right to repurchase the Shares upon termination as a Service Provider at the original purchase price for such Shares, then (A) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares per year over five (5) years from the date the Option or Stock Purchase Right is granted (without respect to the date the Option or Stock Purchase Right was exercised or became exercisable) and (B) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days of termination of status as a Service Provider (or, in the case of shares issued upon exercise of Options or Stock Purchase Rights, after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Plan participant.

 

 

21.         Rules Particular To Specific Countries. Notwithstanding anything herein to the contrary, the terms and conditions of the Plan with respect to Service Providers who are tax residents of a particular country may be subject to an addendum to the Plan in the form of an Appendix. To the extent that the terms and conditions set forth in an Appendix conflict with any provisions of the Plan, the provisions of the Appendix shall govern. The adoption of any such Appendix shall be pursuant to Section 15 above.

 

22.          Investment Intent. The Company may require a Plan participant, as a condition of exercising or acquiring stock under any Option or Stock Purchase Right, (i) to give written assurances satisfactory to the Company as to the participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option or Stock Purchase Right; and (ii) to give written assurances satisfactory to the Company stating that the participant is acquiring the stock subject to the Option or Stock Purchase Right for the participant’s own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (A) the issuance of the shares upon the exercise or acquisition of stock under the applicable Option or Stock Purchase Right has been registered under a then currently effective registration statement under the Securities Act or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under Then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock.

 

23.          Governing Law. The validity and enforceability of this Plan shall be governed by and construed in accordance with the laws of the State of Delaware without regard to otherwise governing principles of conflicts of law.

 

Exhibit 10.2

 

3-V BIOSCIENCES, INC.

 

2007 EQUITY INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

Early Exercise Permitted

 

3-V Biosciences, Inc., a Delaware corporation (the “Company”), pursuant to its 2007 Equity Incentive Plan, as amended from time to time (the “Plan”), hereby grants to the Optionee listed below (“Optionee”), an option to purchase the number of shares of the Company’s Common Stock set forth below, subject to the terms and conditions of the Plan and this Stock Option Agreement (this “Option Agreement”). Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

 

I.             NOTICE OF STOCK OPTION GRANT

 

Optionee:
Date of Option Agreement:
Date of Grant:
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Term/Expiration Date:

 

Type of Option:
Exercise Schedule:	☐ Same as Vesting Schedule ☒ Early Exercise Permitted
Vesting Schedule:	This Option is exercisable immediately, in whole or in part, at such times as are established by the Administrator, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Shares. The Shares subject to this Option shall vest and/or be released from the Company’s Repurchase Option, as set forth in the Restricted Stock Purchase Agreement attached hereto as Exhibit C-1, according to the following schedule:
	[Twenty-five percent (25%) of the Shares subject to the Option (rounded down to the next whole number of shares) shall vest on the first anniversary of the Date of Grant and 1/48th of the Shares subject to the Option shall vest monthly thereafter so that one hundred percent (100%) of the Shares subject to the Option are vested on the fourth anniversary of the Date of Grant.]

 

 

Termination Period:

This Option may be exercised, to the extent vested, for three (3) months after Optionee ceases to be a Service Provider, or such longer period as may be applicable upon the death or disability of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in no event later than the Term/Expiration Date as set forth above.

II.           AGREEMENT

 

1.            Grant of Option. The Company hereby grants to the Optionee an Option to purchase the number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”). Notwithstanding anything to the contrary anywhere else in this Option Agreement, this grant of an Option is subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference.

 

2.            Exercise of Option. This Option is exercisable as follows:

 

(a)          Right to Exercise.

 

(i)       This Option shall be exercisable cumulatively according to the vesting schedule set out in the Notice of Grant. Alternatively, at the election of the Optionee, this Option may be exercised in whole or in part at such times as are established by the Administrator as to Shares which have not yet vested. For purposes of this Option Agreement, Shares subject to this Option shall vest based on Optionee’s continued status as a Service Provider. Vested Shares shall not be subject to the Company’s Repurchase Option (as set forth in the Restricted Stock Purchase Agreement).

 

(ii)       As a condition to exercising this Option for unvested Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

 

(iii)       This Option may not be exercised for a fraction of a Share.

 

(iv)       In the event of Optionee’s death, disability or other termination of the Optionee’s status as a Service Provider, the exercisability of the Option shall be governed by Sections 7, 8 and 9 hereof.

 

(v)       In no event may this Option be exercised after the Expiration Date of this Option as set forth in the Notice of Grant.

 

(b)          Method of Exercise. This Option shall be exercisable by written notice to the Company (in the form attached as Exhibit A) (the “Exercise Notice”). The Exercise Notice shall state the number of Shares for which the Option is being exercised, and such other representations and agreements with respect to such Shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be signed by Optionee and, together with an executed copy of the Restricted Stock Purchase Agreement, if applicable, shall be delivered in person or by certified mail to the Secretary of the Company. The Exercise Notice and Restricted Stock Purchase Agreement shall be accompanied by payment of the Exercise Price, including payment of any applicable withholding tax.

 

 

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares.

 

3.            Optionee’s Representations. If the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

 

4.            Lock-Up Period. Optionee hereby agrees that if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period and these restrictions shall be binding on any transferee of such Shares. Notwithstanding the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by the Company or the Managing Underwriter to continue coverage by research analysts in accordance with NASD Rule 2711 or any successor rule.

 

5.            Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

 

(a)       cash;

 

(b)       check;

 

(c)        with the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as is a market rate of interest and which then precludes the imputation of interest under the Code), payable upon such terms as may be prescribed by the Administrator and structured to comply with Applicable Laws;

 

(d)       with the consent of the Administrator, surrender of other Shares of Common Stock of the Company which (A) in the case of Shares acquired from the Company, have been owned by Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised;

 

 

(e)        with the consent of the Administrator, surrendered Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the Option or exercised portion thereof;

 

(f)        with the consent of the Administrator, property of any kind which constitutes good and valuable consideration;

 

(g)       following the Public Trading Date, with the consent of the Administrator, delivery of a notice that the Optionee has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or

 

(h)       with the consent of the Administrator, any combination of the foregoing methods of payment.

 

6.            Restrictions on Exercise. This Option may not be exercised until the Plan has been approved by the stockholders of the Company. If the issuance of Shares upon such exercise or if the method of payment for such Shares would constitute a violation of any applicable federal or state securities or other law or regulation, then the Option may also not be exercised. The Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation before allowing the Option to be exercised.

 

7.            Termination of Relationship. If Optionee ceases to be a Service Provider (other than by reason of Optionee’s death or the total and permanent disability of the Optionee within the meaning of Code Section 22(e)(3)), Optionee may exercise this Option during the Termination Period set out in the Notice of Grant, to the extent the Option was vested on the date on which Optionee ceases to be a Service Provider. To the extent that the Option is not vested on the date on which Optionee ceases to be a Service Provider, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate.

 

8.            Disability of Optionee. If Optionee ceases to be a Service Provider as a result of his or her total and permanent disability within the meaning of Code Section 22(e)(3), Optionee may exercise the Option to the extent the Option was vested at the date on which Optionee ceases to be a Service Provider, but only within twelve (12) months from such date (and in no event later than the expiration date of the term of this Option as set forth in the Notice of Grant). To the extent that the Option is not vested at the date on which Optionee ceases to be a Service Provider, or if Optionee does not exercise such Option within the time specified herein, the Option shall terminate.

 

9.            Death of Optionee. If Optionee ceases to be a Service Provider as a result of the death of Optionee, the vested portion of the Option may be exercised at any time within twelve (12) months following the date of death (and in no event later than the expiration date of the term of this Option as set forth in the Notice of Grant) by Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance. To the extent that the Option is not vested on the date of death, or if the Option is not exercised within the time specified herein, the Option shall terminate.

 

 

10.           Non-Transferability of Option. This Option may not be transferred in any manner except by will or by the laws of descent or distribution. It may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

11.          Term of Option. This Option may be exercised only within the term set out in the Notice of Grant.

 

12.          Restrictions on Shares. Optionee hereby agrees that Shares purchased upon the exercise of the Option shall be subject to such terms and conditions as the Administrator shall determine in its sole discretion, including, without limitation, restrictions on the transferability of Shares, the right of the Company to repurchase Shares, and a right of first refusal in favor of the Company with respect to permitted transfers of Shares. Such tennis and conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with respect to the Option or in such other agreement as the Administrator shall determine and which the Optionee hereby agrees to enter into at the request of the Company.

 

(Signature Page Follows)

 

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one document.

 

3-V BIOSCIENCES, INC.

 

By:

 

Name:

 

Title:

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 2007 EQUITY INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

 

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof. Optionee hereby accepts this Option subject to all of the terms and provisions hereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

Dated:
			(Type Name of Optionee)
			Residence Address:

 

 

EXHIBIT A

 

3-V BIOSCIENCES, INC.

 

2007 EQUITY INCENTIVE PLAN

 

EXERCISE NOTICE

 

3-V Biosciences, Inc. 

Attention: Stock Administration

 

1.             Exercise of Option. Effective as of today, __________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase __________ shares of the Common Stock (the “Shares”) of 3-V Biosciences, Inc., a Delaware corporation (the Company”), under and pursuant to the 3-V Biosciences, Inc. 2007 Equity Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Agreement dated __________ (the “Option Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

 

Date of Grant:
Number of Shares as to which Option is Exercised:
Exercise Price per Share:		$
Total Exercise Price:		$
Certificate to be issued in name of:
Cash Payment delivered herewith:	☐	$
Other form of consideration delivered herewith:	☐	Form of Consideration:
		$

 

Type of Option:

 

2.             Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement. Optionee agrees to abide by and be bound by their terms and conditions.

 

3.             Rights as Stockholder. Until the stock certificate evidencing Shares purchased pursuant to the exercise of the Option is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 13 of the Plan.

 

 

Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal (as defined below) hereunder. Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.

 

4.             Optionee’s Rights to Transfer Shares

 

(a)            Company’s Right of First Refusal. Before any Shares held by Optionee or any permitted transferee (each, a “Holder”) may be sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of (each, a “Transfer”), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares proposed to be Transferred on the terms and conditions set forth in this Section 4 (the “Right of First Refusal”).

 

(i)             Notice of Proposed Transfer. In the event any Holder desires to Transfer any Shares, the Holder shall deliver to the Company a written notice (the “Notice”) stating: (w) the Holder’s bona fide intention to sell or otherwise Transfer such Shares; (x) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (y) the number of Shares to be Transferred to each Proposed Transferee; and (z) the bona fide cash price or other consideration for which the Holder proposes to Transfer the Shares (the “Offered Price”), and the Holder shall offer such Shares at the Offered Price to the Company or its assignee(s).

 

(ii)            Exercise of Right of First Refusal. Within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may elect in writing to purchase all, but not less than all, of the Shares proposed to be Transferred to any one or more of the Proposed Transferees. The purchase price shall be determined in accordance with Section 4(iii) hereof.

 

(iii)           Purchase Price. The purchase price (“Purchase Price”) for the Shares repurchased under this Section 4 shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board in good faith.

 

(iv)           Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times mutually agreed to by the Company and the Holder.

 

(v)            Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be Transferred are not purchased by the Company and/or its assignee(s) as provided in this Section 4, then the Holder may sell or otherwise Transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other Transfer is consummated within one hundred twenty (120) days after the date of the Notice and provided further that any such sale or other Transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 4 and the Restricted Stock Purchase Agreement, if applicable, shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not Transferred to the Proposed Transferee within such 120-day period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal as provided herein before any Shares held by the Holder may be sold or otherwise Transferred.

 

 

(b)           Exception for Certain Family Transfers. Anything to the contrary contained in this Section 4 notwithstanding, the Transfer of any or all of the Shares during the Optionee’s lifetime or upon the Optionee’s death by will or intestacy to the Optionee’s Immediate Family or a trust for the benefit of the Optionee’s Immediate Family shall be exempt from the Right of First Refusal. As used herein, “Immediate Family” shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister or stepchild (whether or not adopted). In such case, the transferee or other recipient shall receive and hold the Shares so Transferred subject to the provisions of this Section 4 (including the Right of First Refusal) and the Restricted Stock Purchase Agreement, if applicable, and there shall be no further Transfer of such Shares except in accordance with the terms of this Section 4.

 

(c)            Termination of Right of First Refusal. The Right of First Refusal shall terminate as to all Shares upon a sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (a “Public Offering”).

 

5.             Transfer Restrictions. Any transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any Transfer or attempted Transfer of any of the Shares not in accordance with the terms of this Agreement, including the Right of First Refusal provided in this Agreement, shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

 

6.             Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

7.             Restrictive Legends and Stop-Transfer Orders.

 

(a)            Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by state or federal securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

(b)           Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

(c)            Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

 

8.             Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

 

9.             Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Company’s Board of Directors or committee thereof that is responsible for the administration of the Plan (the “Administrator”), which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee.

 

10.           Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware excluding that body of law pertaining to conflicts of law. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

 

 

11.           Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

 

12.           Further Instruments. The Optionee hereby agrees to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including, without limitation, the Investment Representation Statement in the form attached to the Option Agreement as Exhibit B.

 

13.           Delivery of Payment. The Optionee herewith delivers to the Company the full Exercise Price for the Shares, as well as any applicable withholding tax.

 

14.           Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan, the Option Agreement, the Investment Representation Statement and the Restricted Stock Purchase Agreement, if applicable, constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.

 

Accepted by:	Submitted by:
3-V BIOSCIENCES, INC.	OPTIONEE

 

By:

 

Name:

 

Title:			Address:

  

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

OPTIONEE	:	______________________________
COMPANY	:	3-V Biosciences, Inc.
SECURITY	:	Common Stock
AMOUNT	:	______________________________
DATE	:

 

In connection with the purchase of the above-listed shares of Common Stock (the “Securities”) of 3-V Biosciences, Inc., a Delaware corporation (the “Company”), the undersigned (“Optionee”) represents to the Company the following:

 

(a)        Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)        Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

 

 

(c)        Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Exchange Act); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

 

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

 

(d)        Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

 

	Signature of Optionee:
	Optionee

 

Date:_____________________________, ________

 

Exhibit 10.3

 

Sagimet Biosciences Inc.

 

2017 Equity Incentive Plan

 

Adopted by the Board of Directors: September 28, 2017 

Approved by the Stockholders: October 17, 2017 

Amended by the Board of Directors: January 16, 2019 

Approved by the Stockholders: January 22, 2019 

Amended by the Board of Directors: December 17, 2020 

Approved by the Stockholders: December 19, 2020 

Amended by the Board of Directors: September 27, 2022

Approved by the Stockholders: September 27, 2022

Termination Date: September 27, 2027

 

1.           General.

 

(a)          Successor to and Continuation of Prior Plan. 

 

(i)             The Plan is intended as the successor to and continuation of the Sagimet Biosciences Inc. 2007 Equity Incentive Plan (the “Prior Plan”) which terminated in accordance with its terms in February 2017. All Awards granted on or after 12:01 a.m. Pacific Time on the Effective Date will be granted under this Plan.  All stock awards granted under the Prior Plan remain subject to the terms of the Prior Plan. 

 

(ii)              From and after 12:01 a.m. Pacific time on the Effective Date, a number of shares of Common Stock equal to the total number of shares of Common Stock subject, at such time, to outstanding stock awards granted under the Prior Plan that (A) expire or terminate for any reason prior to exercise or settlement; (B) are forfeited or reacquired because of the failure to meet a contingency or condition required to vest such shares or are repurchased at the original issuance price; or (C) are otherwise reacquired or withheld (or not issued) to satisfy the purchase or exercise price or tax withholding obligation in connection with an award (the “Returning Shares”) will immediately be added to the Share Reserve (as further described in Section 3(a) below) as and when such shares become Returning Shares (up to the maximum number set forth in Section 3(a)), and become available for issuance pursuant to Stock Awards granted hereunder.

 

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

 

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

 

(d)           Available Stock Awards. The Plan provides for the grant of the following types of Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards and (vi) Other Stock Awards.

 

 

2.             Administration.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)           To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Stock Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Stock Awards available for issuance under the Plan. Except as provided in the Plan (including subsection (viii) below) or a Stock Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Stock Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.

 

 

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

 

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

 

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

 

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

 

(xi)           To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.

 

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

 

 

(d)           Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers or Directors to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(q) below.

 

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

 

3.            Shares Subject to the Plan.

 

(a)          Share Reserve.

 

(i)             Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 269,817,810 shares, which number is the sum of (A) 264,022,625 shares of Common Stock, and (B) the Returning Shares, if any, which become available for grant under this Plan from time to time, in an aggregate amount not to exceed 5,795,185 shares (such aggregate number of shares described in (A) and (B) above, (the “Share Reserve”).

 

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

 

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

 

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

 

 

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

 

4.             Eligibility.

 

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

 

(b)           Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

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

 

5.            Provisions Relating to Options and Stock Appreciation Rights.

 

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

 

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

 

 

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

 

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

 

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

 

(ii)            pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

 

(iii)           by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

 

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

 

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

 

(vi)           in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Stock Award Agreement.

 

 

(d)          Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Award Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Award Agreement evidencing such SAR.

 

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

 

(i)              Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (and pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

 

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

 

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

 

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

 

 

(g)           Termination of Continuous Service. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which period will not be less than thirty (30) days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

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

 

(i)            Disability of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(j)            Death of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date twelve (12) months following the date of death (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

 

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

 

(l)            Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Stock Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company's then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six (6) months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.

 

(m)          Early Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 8(l), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in Section 8(l) is not violated, the Company will not be required to exercise its repurchase right until at least six (6) months (or such longer or shorter period of time required to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement.

 

(n)           Right of Repurchase. Subject to the “Repurchase Limitation” in Section 8(l), the Option or SAR may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the exercise of the Option or SAR.

 

(o)           Right of First Refusal. The Option or SAR may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option or SAR. Such right of first refusal will be subject to the “Repurchase Limitation” in Section 8(l). Except as expressly provided in this Section 5(o) or in the Stock Award Agreement, such right of first refusal will otherwise comply with any applicable provisions of the bylaws of the Company.

 

 

6.             Provisions of Stock Awards Other than Options and SARs.

 

(a)           Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)             Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)            Vesting. Subject to the “Repurchase Limitation” in Section 8(l), shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)          Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.

 

(iv)           Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

(v)            Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.

 

(vi)           Right of Repurchase.  Subject to the “Repurchase Limitation” in Section 8(l), the Restricted Stock Award Agreement may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the Restricted Stock Award. 

 

(b)          Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

 

 

(i)             Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)            Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)          Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.

 

(iv)           Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.

 

(v)            Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

 

(vi)           Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

(vii)         Right of Repurchase.  Subject to the “Repurchase Limitation” in Section 8(l), the Restricted Stock Unit Award Agreement may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the Restricted Stock Unit Award. 

 

(viii)        Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule.

 

 

(c)           Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.

 

7.            Covenants of the Company.

 

(a)           Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.

 

(b)           Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of a Stock Award or the subsequent issuance of cash or Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities law.

 

(c)           No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.

 

8.             Miscellaneous.

 

(a)           Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute general funds of the Company.

 

(b)           Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Stock Award Agreement as a result of a clerical error in the papering of the Stock Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Stock Award Agreement.

 

 

(c)            Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Stock Award has been entered into the books and records of the Company.

 

(d)           No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

 

(e)           Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee) after the date of grant of any Stock Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares subject to any portion of such Stock Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Stock Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Stock Award that is so reduced or extended.

 

(f)            Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(g)           Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

 

 

(h)           Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement.

 

(i)            Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).

 

(j)            Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. It is intended that deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

(k)          Compliance with Section 409A of the Code. To the extent that the Board determines that any Stock Award granted hereunder is subject to Section 409A of the Code, it is intended that the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code.

 

(l)            Repurchase Limitation. The terms of any repurchase right will be specified in the Stock Award Agreement. The repurchase price for vested shares of Common Stock will be the Fair Market Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested shares of Common Stock will be the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company will not exercise its repurchase right until at least six (6) months (or such longer or shorter period of time necessary to avoid classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board.

 

 

9.            Adjustments upon Changes in Common Stock; Other Corporate Events.

 

(a)          Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive.

 

(b)          Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or not subject to the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.

 

(c)          Corporate Transactions. The following provisions will apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the Stock Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Corporate Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing or completion of the Corporate Transaction:

 

(i)             arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);

 

(ii)            arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);

 

(iii)           accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five (5) days prior to the effective date of the Corporate Transaction), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Corporate Transaction, which exercise is contingent upon the effectiveness of such Corporate Transaction;

 

 

(iv)           arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;

 

(v)            cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Corporate Transaction, in exchange for such cash consideration or no consideration, as the Board, in its sole discretion, may consider appropriate; and

 

(vi)           make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the per share amount (or value of property per share) payable to holders of Common Stock in connection with the Corporate Transaction, over (B) the per share exercise price under the applicable Stock Award, multiplied by the number of shares subject to the Stock Award. For clarity, this payment may be zero ($0) if the amount per share (or value of property per share) payable to the holders of the Common Stock is equal to or less than the exercise price of the Stock Award. In addition, any escrow, holdback, earnout or similar provisions in the definitive agreement for the Corporate Transaction may apply to such payment to the holder of the Stock Award to the same extent and in the same manner as such provisions apply to the holders of Common Stock.

 

The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award.

 

(d)           Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

 

10.          Plan Term; Earlier Termination or Suspension of the Plan.

 

(a)           Plan Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)           No Impairment of Rights. Suspension or termination of the Plan will not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan.

 

11.          Effective Date of Plan.

 

This Plan will become effective on the Effective Date.

 

12.          Choice of Law.

 

The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.

 

13.          Definitions. As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

 

(a)          “Affiliate” means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing definition.

 

(b)          “Board” means the Board of Directors of the Company.

 

(c)          “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(a)          “Cause” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or an Affiliate or of any statutory duty owed to the Company or an Affiliate; (iv) such Participant’s unauthorized use or disclosure of the Company’s or an Affiliate’s confidential information or trade secrets; or (v) such Participant’s gross misconduct or gross negligence. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

 

(b)          “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)              any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;

 

 

(ii)            there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; or

 

(iii)           there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

 

Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will apply.

 

(c)           “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(d)           “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

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

 

(f)            “Company” means Sagimet Biosciences Inc., a Delaware corporation.

 

(g)           “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan.

 

 

(h)          “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

 

(i)           “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)             a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)           a sale or other disposition of more than fifty percent (50%) of the outstanding securities of the Company;

 

(iii)          a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)           a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(j)           “Director” means a member of the Board.

 

(k)          “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

(l)            “Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s stockholders, and (ii) the date this Plan is adopted by the Board.

 

(m)         “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

 

(n)           “Entity” means a corporation, partnership, limited liability company or other entity.

 

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

 

(p)           “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

 

(q)            “Fair Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.

 

(r)            “Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(s)            “Nonstatutory Stock Option” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.

 

(t)            “Officer” means any person designated by the Company as an officer.

 

(u)           “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(v)            “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(w)           “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(x)            “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(c).

 

(y)            “Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(z)            “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

 

(aa)         “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

 

(bb)         “Plan” means this Sagimet Biosciences Inc. 2017 Equity Incentive Plan.

 

(cc)          “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).

 

(dd)         “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

(ee)         “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).

 

(ff)           “Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.

 

(gg)         “Rule 405” means Rule 405 promulgated under the Securities Act.

 

(hh)         “Rule 701” means Rule 701 promulgated under the Securities Act.

 

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

 

(jj)           “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.

 

(kk)        “Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.

 

(ll)           “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right or any Other Stock Award.

 

(mm)      “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.

 

 

(nn)         “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) .

 

(oo)         “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.

 

 

Exhibit 10.4

 

3-V BIOSCIENCES, Inc.
Stock Option Grant Notice
(2017 Equity Incentive Plan)

 

3-V Biosciences, Inc. (the “Company”), pursuant to its 2017 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions as set forth in this stock option grant notice (this “Stock Option Grant Notice”), in the Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.

 

Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Shares Subject to Option:
Exercise Price (Per Share):
Total Exercise Price:
Expiration Date:

 

Type of Grant:         ☐  Incentive Stock Option¹            ☒  Nonstatutory Stock Option

 

Exercise Schedule:   ☒  Same as Vesting Schedule        ☐ Early Exercise Permitted

 

Vesting Schedule:

 

(1)

Fully vested.

 

Payment:

By one or a combination of the following items (described in the Option Agreement):

 

☐

By cash, check, bank draft, wire transfer or money order payable to the Company

☐

Pursuant to a Regulation T Program if the shares are publicly traded

☐

By delivery of already-owned shares if the shares are publicly traded

☐

If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Company’s consent at the time of exercise, by a “net exercise” arrangement

 

Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan. Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified, amended or revised except as provided in the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this option award and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of this option upon the terms and conditions set forth therein.

 

¹ If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. 

 

 

By accepting this option, Optionholder consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

3-V Biosciences, Inc.	Optionholder:

By:
Signature			Signature

Title:

Date:

Date:

 

Attachments:

Option Agreement, 2017 Equity Incentive Plan, Notice of Exercise, Early Exercise Agreement

 

 

Attachment I

 

Option Agreement

(Incentive Stock Option or Nonstatutory Stock Option)

 

Pursuant to your Stock Option Grant Notice (“Stock Option Grant Notice”) and this Option Agreement (this “Option Agreement”), 3-V Biosciences, Inc. (the “Company”) has granted you an option under its 2017 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Stock Option Grant Notice at the exercise price indicated in your Stock Option Grant Notice. The option is granted to you effective as of the date of grant set forth in the Stock Option Grant Notice (the “Date of Grant”). If there is any conflict between the terms in this Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this Option Agreement or in the Stock Option Grant Notice but defined in the Plan will have the same definitions as in the Plan.

 

The details of your option, in addition to those set forth in the Stock Option Grant Notice and the Plan, are as follows:

 

1.             Vesting. Your option will vest as provided in your Stock Option Grant Notice. Vesting will cease upon the termination of your Continuous Service.

 

2.             Number of Shares and Exercise Price. The number of shares of Common Stock subject to your option and your exercise price per share in your Stock Option Grant Notice will be adjusted for Capitalization Adjustments.

 

3.             Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt Employee”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six (6) months. Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six (6) month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).

 

4.             Exercise prior to Vesting (“Early Exercise”). If permitted in your Stock Option Grant Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option; provided, however, that:

 

(a)       a partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;

 

(b)       any shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement; and

 

(c)       you will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred

 

 

5.             Incentive Stock Option Limitation. If your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.

 

6.             Method of Payment. You must pay the full amount of the exercise price for the shares you wish to exercise. You may pay the exercise price in cash or by check, bank draft, wire transfer or money order payable to the Company or in any other manner permitted by your Stock Option Grant Notice, which may include one or more of the following:

 

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

 

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

 

(c)       If this option is a Nonstatutory Stock Option, subject to the consent of the Company at the time of exercise, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of your option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form of payment. Shares of Common Stock will no longer be outstanding under your option and will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as a result of such exercise, and (iii) are withheld to satisfy your tax withholding obligations.

 

7.            Whole Shares. You may exercise your option only for whole shares of Common Stock.

 

8.           Securities Law Compliance. In no event may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).

 

 

9.            Term. You may not exercise your option before the Date of Grant or after the expiration of the option’s term. The term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:

 

(a)       immediately upon the termination of your Continuous Service for Cause;

 

(b)       three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability, or your death (except as otherwise provided in Section 9(d) below); provided, however, that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in the section above relating to “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further, that if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;

 

(c)       twelve (12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 9(d)) below;

 

(d)       twelve (12) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;

 

(e)       the Expiration Date indicated in your Stock Option Grant Notice; and

 

(f)       the day before the tenth (10th) anniversary of the Date of Grant.

 

If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates.

 

10.          Exercise.

 

(a)       You may exercise the vested portion of your option (and the unvested portion of your option if your Stock Option Grant Notice so permits) during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable withholding taxes to the Company’s Secretary, stock plan administrator, or such other person as the Company may designate, together with such additional documents as the Company may then require.

 

(b)       By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or (ii) the disposition of shares of Common Stock acquired upon such exercise.

 

 

(c)       If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option.

 

(d)       By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rules or regulation (the “Lock-Up Period”); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 10(d). The underwriters of the Company’s stock are intended third party beneficiaries of this Section 10(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

11.          Transferability. Except as otherwise provided in this Section 11, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.

 

(a)       Certain Trusts. Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust. You and the trustee must enter into transfer and other agreements required by the Company.

 

(b)       Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement. If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

(c)       Beneficiary Designation. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.

 

 

12.          Right of First Refusal. Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may be described in the Company’s bylaws in effect at such time the Company elects to exercise its right. The Company’s right of first refusal will expire on the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on a national securities exchange or quotation system.

 

13.          Right of Repurchase. To the extent provided in the Company’s bylaws in effect at such time the Company elects to exercise its right, the Company will have the right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option. In addition, the Company will have the right to repurchase all of the shares of Common Stock you acquire pursuant to the exercise of your option upon termination of your Continuous Service for Cause. Such repurchase will be at the exercise price you paid to acquire the shares and will be effected pursuant to such other terms and conditions, and at such time, as the Company will determine.

 

14.          Option not a Service Contract. Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option will obligate the Company or an Affiliate, their respective stockholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.

 

15.          Withholding Obligations.

 

(a)       At the time you exercise your option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a “same day sale” pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.

 

(b)       If this option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the maximum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a liability for financial accounting purposes). Any adverse consequences to you arising in connection with such share withholding procedure will be your sole responsibility.

 

(c)       You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company will have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein, if applicable, unless such obligations are satisfied.

 

 

16.           Tax Consequences. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your other compensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Stock Option Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. Because the Common Stock is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined by the Board is less than the “fair market value” as subsequently determined by the Internal Revenue Service.

 

17.           Notices. Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

18.          Governing Plan Document. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your option and those of the Plan, the provisions of the Plan will control.

 

 

Attachment II

 

2017 Equity Incentive Plan

 

 

Attachment III

 

NOTICE OF EXERCISE

 

3-V Biosciences, Inc.

 

____________________

 

____________________

 

Date of Exercise: _______________

 

This constitutes notice to 3-V Biosciences, Inc. (the “Company”) under my stock option that I elect to purchase the below number of shares of Common Stock of the Company (the “Shares”) for the exercise price set forth below.

 

Type of option (check one):	Incentive ☐	Nonstatutory ☐
Stock option dated:	_______________	_______________
Number of Shares as to which option is exercised:	_______________	_______________
Certificates to be issued in name of:	_______________	_______________
Total exercise price:	$______________	$______________
Cash payment delivered herewith:	$______________	$______________
Regulation T Program (cashless exercise1):	$______________	$______________
Value of ________ Shares delivered herewith2:	$______________	$______________]

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 3-V Biosciences, Inc. 2017 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this option.

 

I hereby make the following certifications and representations with respect to the number of Shares listed above, which are being acquired by me for my own account upon exercise of the option as set forth above:

 

¹ Shares must meet the public trading requirements set forth in the option agreement.

² Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

 

 

I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws.

 

I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of the option will have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of Incorporation, Bylaws and/or applicable securities laws.

 

I further acknowledge and agree that, except for such information as required to be delivered to me by the Company pursuant to the option or the Plan (if any), I will have no right to receive any information from the Company by virtue of the grant of the option or the purchase of shares of Common Stock through exercise of the option, ownership of such shares of Common Stock, or as a result of my being a holder of record of stock of the Company. Without limiting the foregoing, to the fullest extent permitted by law, I hereby waive all inspection rights under Section 220 of the Delaware General Corporation Law and all such similar information and/or inspection rights that may be provided under the law of any jurisdiction, or any federal, state or foreign regulation, that are, or may become, applicable to the Company or the Company’s capital stock (the “Inspection Rights”). I hereby covenant and agree never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act (or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rule or regulation) (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.

 

	Very truly yours,
	Signature
	Print Name
	Address of Record:

 

 

Attachment IV

 

Early Exercise Stock Purchase Agreement

 

This Agreement is made by and between 3-V Biosciences, Inc., a Delaware corporation (the “Company”), and _______________ (“Purchaser”).

 

Witnesseth:

 

Whereas, Purchaser holds a stock option dated _______________ to purchase shares of common stock (“Common Stock”) of the Company (the “Option”) pursuant to the Company’s 2017 Equity Incentive Plan (the “Plan”); and

 

Whereas, the Option consists of a Stock Option Grant Notice and a Stock Option Agreement; and

 

Whereas, Purchaser desires to exercise the Option on the terms and conditions contained herein; and

 

Whereas, Purchaser wishes to take advantage of the early exercise provision of Purchaser’s Option and therefore to enter into this Agreement;

 

Now, therefore, it is agreed between the parties as follows:

 

1.             Incorporation of Plan and Option by Reference. This Agreement is subject to all of the terms and conditions as set forth in the Plan and the Option. If there is a conflict between the terms of this Agreement and/or the Option and the terms of the Plan, the terms of the Plan shall control. If there is a conflict between the terms of this Agreement and the terms of the Option, the terms of the Option shall control. Defined terms not explicitly defined in this Agreement but defined in the Plan shall have the same definitions as in the Plan. Defined terms not explicitly defined in this Agreement or the Plan but defined in the Option shall have the same definitions as in the Option.

 

2.             Purchase and Sale of Common Stock.

 

(a)       Agreement to purchase and sell Common Stock. Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of       (   ) shares of Common Stock at $      per share, for an aggregate purchase price of $     , payable as follows:

 

Cash, check, bank draft or money order payable to the Company	$__________
Value of ______ shares of Common Stock1	$__________
Total Exercise Price	$__________.

 

¹       Shares must meet the public trading requirements set forth in the Option. Shares must be valued in accordance with the terms of the Option being exercised, must have been owned for the minimum period required in the Option and must be owned free and clear of any liens, claims, encumbrances or security interest. Certificates must be endorsed or accompanied by an executed stock assignment.

 

 

(b)       Closing. The closing hereunder, including payment for and delivery of the Common Stock, shall occur at the offices of the Company immediately following the execution of this Agreement, or at such other time and place as the parties may mutually agree; provided, however, that if stockholder approval of the Plan is required before the Option may be exercised, then the Option may not be exercised, and the closing shall be delayed, until such stockholder approval is obtained. If such stockholder approval is not obtained within the time limit specified in the Plan, then this Agreement shall be null and void.

 

3.            Unvested Share Repurchase Option.

 

(a)       Repurchase Option. In the event Purchaser’s Continuous Service terminates, then the Company shall have an irrevocable option (the “Repurchase Option”) for a period of ninety (90) days after said termination (or in the case of shares issued upon exercise of the Option after such date of termination, within ninety (90) days after the date of the exercise), or such longer period as may be agreed to by the Company and Purchaser, to repurchase from Purchaser or Purchaser’s personal representative, as the case may be, those shares that Purchaser received pursuant to the exercise of the Option that have not as yet vested as of such termination date in accordance with the Vesting Schedule indicated on Purchaser’s Stock Option Grant Notice (the “Unvested Shares”).

 

(b)       Share Repurchase Price. The Company may repurchase all or any of the Unvested Shares at the lower of (i) the Fair Market Value of the such shares (as determined under the Plan) on the date of repurchase, or (ii) the price equal to Purchaser’s Exercise Price for such shares as indicated on Purchaser’s Stock Option Grant Notice.

 

4.             Exercise of Repurchase Option. The Repurchase Option shall be exercised by written notice signed by such person as designated by the Company, and delivered or mailed as provided herein. Such notice shall identify the number of shares of Common Stock to be purchased and shall notify Purchaser of the time, place and date for settlement of such purchase, which shall be scheduled by the Company within the term of the Repurchase Option set forth above. The Company shall be entitled to pay for any shares of Common Stock purchased pursuant to its Repurchase Option at the Company’s option in cash or by offset against any indebtedness owing to the Company by Purchaser (including without limitation any Promissory Note given in payment for the Common Stock), or by a combination of both. Upon delivery of such notice and payment of the purchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Common Stock being repurchased and all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the Common Stock being repurchased by the Company, without further action by Purchaser.

 

5.            Capitalization Adjustments to Common Stock. In the event of a Capitalization Adjustment, then any and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of Common Stock shall be immediately subject to the Repurchase Option and be included in the word “Common Stock” for all purposes of the Repurchase Option with the same force and effect as the shares of the Common Stock presently subject to the Repurchase Option, but only to the extent the Common Stock is, at the time, covered by such Repurchase Option. While the total Option Price shall remain the same after each such event, the Option Price per share of Common Stock upon exercise of the Repurchase Option shall be appropriately adjusted.

 

6.             Corporate Transactions. In the event of a Corporate Transaction, then the Repurchase Option may be assigned by the Company to the successor of the Company (or such successor’s parent company), if any, in connection with such Corporate Transaction. To the extent the Repurchase Option remains in effect following such Corporate Transaction, it shall apply to the new capital stock or other property received in exchange for the Common Stock in consummation of the Corporate Transaction, but only to the extent the Common Stock was at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Option to reflect the Corporate Transaction upon the Company’s capital structure; provided, however, that the aggregate price payable upon exercise of the Repurchase Option shall remain the same.

 

 

7.             Escrow of Unvested Common Stock. As security for Purchaser’s faithful performance of the terms of this Agreement and to insure the availability for delivery of Purchaser’s Common Stock upon exercise of the Repurchase Option herein provided for, Purchaser agrees, at the closing hereunder, to deliver to and deposit with the Secretary of the Company or the Secretary’s designee (“Escrow Agent”), as Escrow Agent in this transaction, three (3) stock assignments duly endorsed (with date and number of shares blank) in the form attached hereto as Exhibit A, together with a certificate or certificates evidencing all of the Common Stock subject to the Repurchase Option; said documents are to be held by the Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set forth in Exhibit B, attached hereto and incorporated by this reference, which instructions also shall be delivered to the Escrow Agent at the closing hereunder.

 

8.             Rights of Purchaser. Subject to the provisions of the Option, Purchaser shall exercise all rights and privileges of a stockholder of the Company with respect to the shares deposited in escrow. Purchaser shall be deemed to be the holder of the shares for purposes of receiving any dividends that may be paid with respect to such shares and for purposes of exercising any voting rights relating to such shares, even if some or all of such shares have not yet vested and been released from the Company’s Repurchase Option.

 

9.             Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock while the Common Stock is subject to the Repurchase Option. After any Common Stock has been released from the Repurchase Option, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock except in compliance with the provisions herein and applicable securities laws. Furthermore, the Common Stock shall be subject to any right of first refusal in favor of the Company or its assignees that may be contained in Purchaser’s Stock Option Agreement.

 

10.           Restrictive Legends. All certificates representing the Common Stock shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):

 

(a)       “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY.”

 

(b)       “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

 

(c)       “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS PROVIDED IN THE BYLAWS OF THE COMPANY AND IN AN AGREEMENT WITH THE COMPANY.”

 

(d)       “THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO THE EXERCISE OF AN INCENTIVE STOCK OPTION OR A NONSTATUTORY STOCK OPTION.

 

(e)       “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A TRANSFER RESTRICTION, AS PROVIDED IN THE BYLAWS OF THE COMPANY.”

 

(f)       Any legend required by appropriate blue sky officials.

 

11.           Investment Representations. In connection with the purchase of the Common Stock, Purchaser represents to the Company the following:

 

(a)       Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Stock. Purchaser is acquiring the Common Stock for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

 

(b)       Purchaser understands that the Common Stock has not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

 

(c)       Purchaser further acknowledges and understands that the Common Stock must be held indefinitely unless the Common Stock is subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the Common Stock. Purchaser understands that the certificate evidencing the Common Stock will be imprinted with a legend that prohibits the transfer of the Common Stock unless the Common Stock is registered or such registration is not required in the opinion of counsel for the Company.

 

(d)       Purchaser is familiar with the provisions of Rules 144 and 701, under the Securities Act, as in effect from time to time, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of issuance of the securities, such issuance will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the securities exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter, subject to the satisfaction of certain of the conditions specified by Rule 144 and the market stand-off provision described in Purchaser’s Stock Option Agreement and Section 12 below.

 

(e)       In the event that the sale of the Common Stock does not qualify under Rule 701 at the time of purchase, then the Common Stock may be resold by Purchaser in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things: (i) the availability of certain public information about the Company, and (ii) the resale occurring following the required holding period under Rule 144 after Purchaser has purchased, and made full payment of (within the meaning of Rule 144), the securities to be sold.

 

 

(f)       Purchaser further understands that at the time Purchaser wishes to sell the Common Stock there may be no public market upon which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the current public current information requirements of Rule 144 or 701, and that, in such event, Purchaser would be precluded from selling the Common Stock under Rule 144 or 701 even if the minimum holding period requirement had been satisfied.

 

(g)       Purchaser further warrants and represents that Purchaser has either (i) preexisting personal or business relationships, with the Company or any of its officers, directors or controlling persons, or (ii) the capacity to protect his own interests in connection with the purchase of the Common Stock by virtue of the business or financial expertise of Purchaser or of professional advisors to Purchaser who are unaffiliated with and who are not compensated by the Company or any of its affiliates, directly or indirectly. Purchaser further warrants and represents that Purchaser’s purchase the Common Stock was not accomplished by the publication of any advertisement.

 

12.           Lock-Up Period. By exercising the Option, Purchaser agrees not to sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by Purchaser, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as necessary to permit compliance with FINRA Rule 2241 and similar rules or regulations (the “Lock-Up Period”); provided, however, that nothing shall prevent the exercise of the Repurchase Option during the Lock-Up Period. Purchaser further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to Purchaser’s shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

13.           Section 83(b) Election. Purchaser understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount paid for the Common Stock and the fair market value of the Common Stock as of the date any restrictions on the Common Stock lapse. In this context, “restriction” includes the right of the Company to buy back the Common Stock pursuant to the Repurchase Option set forth above. Purchaser understands that Purchaser may elect to be taxed at the time the Common Stock is purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b) Election”) of the Code with the Internal Revenue Service within thirty (30) days of the date of purchase. Even if the fair market value of the Common Stock at the time of the execution of this Agreement equals the amount paid for the Common Stock, the 83(b) Election must be made to avoid income under Section 83(a) in the future. Purchaser understands that failure to file such an 83(b) Election in a timely manner may result in adverse tax consequences for Purchaser. Purchaser further understands that Purchaser must file an additional copy of such 83(b) Election with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Common Stock hereunder, and does not purport to be complete. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’s RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(B) of the Code. The Company and its legal counsel WILL NOT assume responsibility for failure to file the 83(b) Election in a timely manner under any circumstances. PURCHASER ASSUMES ALL RESPONSIBILITY FOR PAYING ALL TAXES RESULTING FROM SUCH ELECTION OR THE LAPSE OF THE RESTRICTIONS ON THE COMMON STOCK. Forms of 83(b) Election are attached hereto as Exhibit C for reference.

 

 

14.         Refusal to Transfer. The Company shall not be required (a) to transfer on its books any shares of Common Stock of the Company which shall have been transferred in violation of any of the provisions set forth in this Agreement, or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.

 

15.         No Employment Rights. This Agreement is not an employment contract and nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company or its Affiliates to terminate Purchaser’s employment for any reason at any time, with or without cause and with or without notice.

 

16.         Miscellaneous.

 

(a)       Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (c) five (5) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the other party hereto at such party’s address hereinafter set forth on the signature page hereof, or at such other address as such party may designate by ten (10) days advance written notice to the other party hereto.

 

(b)       Successors and Assigns. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser, Purchaser’s successors, and assigns. The Company may assign the Repurchase Option hereunder at any time or from time to time, in whole or in part.

 

(c)       Attorneys’ Fees; Specific Performance. Purchaser shall reimburse the Company for all costs incurred by the Company in enforcing the performance of, or protecting its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys’ fees. It is the intention of the parties that the Company, upon exercise of the Repurchase Option and payment for the shares repurchased, pursuant to the terms of this Agreement, shall be entitled to receive the Common Stock, in specie, in order to have such Common Stock available for future issuance without dilution of the holdings of other stockholders. Furthermore, it is expressly agreed between the parties that money damages are inadequate to compensate the Company for the Common Stock and that the Company shall, upon proper exercise of the Repurchase Option, be entitled to specific enforcement of its rights to purchase and receive said Common Stock.

 

(d)       Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. The parties agree that any action brought by either party to interpret or enforce any provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the district encompassing the Company’s principal place of business.

 

 

(e)       Further Execution. The parties agree to take all such further action(s) as may reasonably be necessary to carry out and consummate this Agreement as soon as practicable, and to take whatever steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the securities that are the subject of this Agreement.

 

(f)       Independent Counsel. Purchaser acknowledges that this Agreement has been prepared on behalf of the Company by Cooley llp, counsel to the Company and that Cooley llp does not represent, and is not acting on behalf of, Purchaser. Purchaser has been provided with an opportunity to consult with Purchaser’s own counsel with respect to this Agreement.

 

(g)       Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and merges all prior agreements or understandings, whether written or oral. This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each of the parties hereto.

 

(h)       Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

(i)       Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. This Agreement may also be executed and delivered by facsimile signature, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).

 

The parties hereto have executed this Agreement as of _______________.

 

	3-V Biosciences, Inc.

	By

	Name

Title

 

	Purchaser
	Signature
	Name (Please print)

 

Attachments: 

 

Exhibit A                Assignment Separate from Certificate

Exhibit B                Joint Escrow Instructions

Exhibit C                Forms of Section 83(b) Election

 

 

Exhibit A

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

For Value Received, _______________________ hereby sells, assigns and transfers unto 3-V Biosciences, Inc., a Delaware corporation (the “Company”), pursuant to the Repurchase Option under that certain Early Exercise Stock Purchase Agreement, dated _______________ by and between the undersigned and the Company (the “Agreement”), _______________ (_______________) shares of Common Stock of the Company standing in the undersigned’s name on the books of the Company represented by Certificate No(s). _______________ and does hereby irrevocably constitute and appoint the Company’s Secretary attorney-in-fact to transfer said Common Stock on the books of the Company with full power of substitution in the premises. This Assignment may be used only in accordance with and subject to the terms and conditions of the Agreement, in connection with the repurchase of shares of Common Stock issued to the undersigned pursuant to the Agreement, and only to the extent that such shares remain subject to the Company’s Repurchase Option under the Agreement.

 

Dated: _______________

	(Signature)
	(Print Name)

 

(Instruction: Please do not fill in any blanks other than the “Signature” line and the “Print Name” line.)

 

Exhibit B

 

JOINT ESCROW INSTRUCTIONS

 

Secretary

3-V Biosciences, Inc.

1050 Hamilton Court

Menlo Park, CA 94025

 

Dear Sir or Madam:

 

As Escrow Agent for both 3-V Biosciences, Inc., a Delaware corporation (“Company”), and the undersigned purchaser of Common Stock of the Company (“Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Early Exercise Stock Purchase Agreement (“Agreement”), dated _______________ to which a copy of these Joint Escrow Instructions is attached as Exhibit B, in accordance with the following instructions:

 

1.             In the event the Company or an assignee shall elect to exercise the Repurchase Option set forth in the Agreement, the Company or its assignee will give to Purchaser and you a written notice specifying the number of shares of Common Stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

 

2.            At the closing you are directed (a) to date any stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of Common Stock to be transferred, to the Company against the simultaneous delivery to you of the purchase price (which may include suitable acknowledgment of cancellation of indebtedness) of the number of shares of Common Stock being purchased pursuant to the exercise of the Repurchase Option.

 

3.             Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of Common Stock to be held by you hereunder and any additions and substitutions to said shares as specified in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as the Purchaser’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities and other property all documents of assignment and/or transfer and all stock certificates necessary or appropriate to make all securities negotiable and complete any transaction herein contemplated, including but not limited to any appropriate filing with state or government officials or bank officials. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

 

4.             This escrow shall terminate and the shares of stock held hereunder shall be released in full upon the expiration or exercise in full of the Repurchase Option, whichever occurs first.

 

5.             If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of same to Purchaser and shall be discharged of all further obligations hereunder; provided, however, that if at the time of termination of this escrow you are advised by the Company that the property subject to this escrow is the subject of a pledge or other security agreement, you shall deliver all such property to the pledgeholder or other person designated by the Company.

 

6.             Except as otherwise provided in these Joint Escrow Instructions, your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

 

 

7.            You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties or their assignees. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

 

8.            You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

9.            You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

 

10.          You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you.

 

11.          Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if you shall resign by written notice to the Company party. In the event of any such termination, the Secretary of the Corporation shall automatically become the successor Escrow Agent unless the Company shall appoint another successor Escrow Agent, and Purchaser hereby confirms the appointment of such successor as Purchaser’s attorney-in-fact and agent to the full extent of your appointment.

 

12.          If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

13.          It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

14.          Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, including delivery by express courier or five days after deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties hereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto:

 

	Company:	3-V Biosciences, Inc.
		1050 Hamilton Court
		Menlo Park, CA 94025
		Attn: Chief Financial Officer

 

	Purchaser:

 

 

	Escrow Agent:	3-V Biosciences, Inc.
		1050 Hamilton Court
		Menlo Park, CA 94025
		Attn: Corporate Secretary

 

15.          By signing these Joint Escrow Instructions you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

 

16.          You shall be entitled to employ such legal counsel and other experts (including without limitation the firm of Cooley llp) as you may deem necessary properly to advise you in connection with your obligations hereunder. You may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. The Company shall be responsible for all fees generated by such legal counsel in connection with your obligations hereunder.

 

17.          This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. It is understood and agreed that references to “you” or “your” herein refer to the original Escrow Agent and to any and all successor Escrow Agents. It is understood and agreed that the Company may at any time or from time to time assign its rights under the Agreement and these Joint Escrow Instructions in whole or in part.

 

18.          This Agreement shall be governed by and interpreted and determined in accordance with the laws of the State of Delaware.

 

	Very truly yours,
	3-V Biosciences, Inc.

	By

	Name:

Title

 

	Purchaser:
	Signature
	Name (Please Print)

 

Escrow Agent:

 

Secretary, 3-V Biosciences, Inc.

 

Exhibit C

 

Section 83(b) Election

(for Stock Acquired under Nonstatutory Stock Option)

 

[•], 20__

 

Department of the Treasury

Internal Revenue Service

[City, State Zip]¹

 

Re:

Election Under Section 83(b)

 

Ladies and Gentlemen:

 

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares. The following information is supplied in accordance with Treasury Regulation § 1.83-2:

 

1.

The name, social security number, address of the undersigned, and the taxable year for which this election is being made are:

 

	Name:	____________
	Social Security Number:	____________
	Address:	____________
		____________

Taxable year: Calendar year 20__.

 

2.

The property that is the subject of this election: [#] shares of common stock of 3-V Biosciences, Inc., a Delaware corporation (the “Company”).

 

3.             The property was transferred on: [•], 20__.

 

4.

The property is subject to the following restrictions:

 

The shares are subject to repurchase at less than their fair market value if the undersigned does not continue to provide services for the Company for a designated period of time. The risk of repurchase lapses over a specified vesting period..

 

5.

The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in Treasury Regulation § 1.83-3(h)): $[•] per share x [#] shares = $[•].

 

6.

For the property transferred, the undersigned paid: $[•] per share x [#] shares = $[•].

 

¹ Per Treasury Regulation § 1.83-2(c), the Section 83(b) election must be filed with the IRS office where the person otherwise files his or her tax return. See http://www.irs.gov/uac/Where-to-File-Addresses-for--Taxpayers-and--Tax-Professionals-Filing-Form-1040. Use the address in the row which includes the state in which the service provider lives and in the column entitled “And you ARE NOT enclosing a payment”.

 

 

7.

The amount to include in gross income is: $[•].2

 

The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed and the transferee of the property, if any. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

 

	Very truly yours,
	[Name]

 

² This should equal the amount in Item 5 minus the amount in Item 6, and in many cases will be $0.00. 

 

 

Section 83(b) Election

(for Stock Acquired under Incentive Stock Option)

 

[•], 20__

 

Department of the Treasury 

Internal Revenue Service 

[City, State Zip]¹

 

Re:

Election Under Section 83(b)

 

Ladies and Gentlemen:

 

The undersigned taxpayer hereby elects, pursuant to the provisions of Sections 55-56 and 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), to include in alternative minimum taxable income for the undersigned’s current taxable year, as compensation for services, the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property. The undersigned also elects pursuant to Section 83(b) of the Code to include in gross income for the taxable year in which the undersigned disposes of some or all of the property described below in a transaction which fails to satisfy the requirements of Section 422(a)(1) of the Code (a “disqualifying disposition”), as compensation for services, the lesser of (i) the excess, if any, of the fair market value of the disposed property at the time of transfer to the undersigned over the amount paid for such property; or (ii) the excess, if any of the amount realized by the undersigned in the disqualifying disposition over the amount paid for such property at the time of its transfer to the undersigned.

 

The following information is supplied in accordance with Treasury Regulation § 1.83-2:

 

1.

The name, social security number, address of the undersigned, and the taxable year for which this election is being made are:

	Name:	____________
	Social Security Number:	____________
	Address:	____________
		____________

Taxable year: Calendar year 20__.

 

2.

The property that is the subject of this election: [ #] shares of common stock of 3-V Biosciences, Inc, a Delaware corporation (the “Company”).

 

3.

The property was transferred on: [•], 20__.

 

¹ Per Treasury Regulation § 1.83-2(c), the Section 83(b) election must be filed with the IRS office where the person otherwise files his or her tax return. See http://www.irs.gov/uac/Where-to-File-Addresses-for--Taxpayers-and--Tax-Professionals-Filing-Form-1040. Use the address in the row which includes the state in which the service provider lives and in the column entitled “And you ARE NOT enclosing a payment”.

 

 

4.

The property is subject to the following restrictions:

 

The shares are subject to repurchase at less than their fair market value if the undersigned does not continue to provide services for the Company for a designated period of time. The risk of repurchase lapses over a specified vesting period.

 

5.

The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in Treasury Regulation § 1.83-3(h)): $[ •] per share x [#] shares = $[ •].

 

6.

For the property transferred, the undersigned paid: $[•] per share x [#] shares = $[•].

 

7.

The amount to include in gross income is: $[ •].2

 

The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed and the transferee of the property, if any. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

 

	Very truly yours,
	[Name]

 

² This should equal the amount in Item 5 minus the amount in Item 6, and in many cases will be $0.00.

 

Instructions for Filing Section 83(b) Election

 

Attached is a form of election under Section 83(b) of the Internal Revenue Code and an accompanying IRS cover letter. Please fill in your social security number and sign the election and cover letter, then proceed as follows:

 

(a)

Make four copies of the completed election form and one copy of the IRS cover letter.

 

(b)

Send the original election form and cover letter, the copy of the cover letter, and a self-addressed stamped return envelope to the Internal Revenue Service Center where you would otherwise file your tax return. Even if an address for an Internal Revenue Service Center is already included in the forms below, it is your obligation to verify such address. This can be done by searching for the term “where to file” on www.irs.gov or by calling 1 (800) 829-1040. Sending the election via certified mail, requesting a return receipt, is also recommended.

 

(c)

Deliver one copy of the completed election form to 3-V BIOSCIENCES, Inc.

 

(d)

Attach one copy of the completed election form to your federal personal income tax return (Form 1040) when you file it for the year of exercise.

 

(e)

Attach one copy of the completed election form to your state personal income tax return when you file it for the year of exercise (assuming you file a state income tax return).

 

(f)

Retain one copy of the completed election form for your personal permanent records.

 

Note: An additional copy of the completed election form must be delivered to the transferee (recipient) of the property if the service provider and the transferee are not the same person.

 

Please note that the election must be filed with the IRS within 30 days of the date of your stock option early exercise. Failure to file within that time will render the election void and you may recognize ordinary taxable income as your vesting restrictions lapse. 3-V BIOSCIENCES, Inc. and its counsel cannot assume responsibility for failure to file the election in a timely manner under any circumstances.

 

[ •], 20__

 

RETURN SERVICE REQUESTED

 

Department of the Treasury

Internal Revenue Service

[City, State Zip]

 

Re:

Election Under Section 83(b) of the Internal Revenue Code

 

Dear Sir or Madam:

 

Enclosed please find an executed form of election under Section 83(b) of the Internal Revenue Code of 1986, as amended, filed with respect to an interest in 3-V Biosciences, Inc.

 

Also enclosed is a copy of this letter and a stamped, self-addressed envelope. Please acknowledge receipt of these materials by marking the copy when received and returning it to the undersigned.

 

Thank you very much for your assistance.

 

	Very truly yours,
	[Name]

 

Enclosures

 

 

NOTICE OF EXERCISE

 

Sagimet Biosciences Inc.

155 Bovet Rd., Suite 303

San Mateo, CA 94402

 

Date of Exercise: _______________

 

This constitutes notice to Saigmet Biosciences Inc. (the “Company”) under my stock option that I elect to purchase the below number of shares of Common Stock of the Company (the “Shares”) for the exercise price set forth below.

 

Type of option (check one):	Incentive  ☐	Nonstatutory  ☐
Stock option dated:	_______________	_______________
Number of Shares as to which option is exercised:	_______________	_______________
Certificates to be issued in name of:	_______________	_______________
Total exercise price:	$______________	$______________
Cash payment delivered herewith:	$______________	$______________
Regulation T Program (cashless exercise1):	$______________	$______________
Value of ________ Shares delivered herewith2:	$______________	$______________]

 

By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Sagimet Biosciences Inc. 2017 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this option.

 

I hereby make the following certifications and representations with respect to the number of Shares listed above, which are being acquired by me for my own account upon exercise of the option as set forth above:

 

¹ Shares must meet the public trading requirements set forth in the option agreement.

² Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate.

 

 

I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws.

 

I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded (i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.

 

I further acknowledge that all certificates representing any of the Shares subject to the provisions of the option will have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of Incorporation, Bylaws and/or applicable securities laws.

 

I further acknowledge and agree that, except for such information as required to be delivered to me by the Company pursuant to the option or the Plan (if any), I will have no right to receive any information from the Company by virtue of the grant of the option or the purchase of shares of Common Stock through exercise of the option, ownership of such shares of Common Stock, or as a result of my being a holder of record of stock of the Company. Without limiting the foregoing, to the fullest extent permitted by law, I hereby waive all inspection rights under Section 220 of the Delaware General Corporation Law and all such similar information and/or inspection rights that may be provided under the law of any jurisdiction, or any federal, state or foreign regulation, that are, or may become, applicable to the Company or the Company’s capital stock (the “Inspection Rights”). I hereby covenant and agree never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights.

 

I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act (or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rule or regulation) (the “Lock-Up Period”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.

 

	Very truly yours,
	Signature
	Print Name
	Address of Record:

 

 

 

 

 

Exhibit 10.14

 

EXCEUTION COPY

CONFIDENTIAL

 

CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

 

EXCLUSIVE LICENSE AND DEVELOPMENT AGREEMENT

 

by and between

 

3-V Biosciences, Inc.

 

and

 

Ascletis BioScience Co. Ltd.

 

Dated January 18, 2019

 

 

EXCLUSIVE LICENSE AND DEVELOPMENT AGREEMENT

 

THIS EXCLUSIVE LICENSE AND DEVELOPMENT AGREEMENT (this “Agreement”), is executed as of January 18, 2019 by and between 3-V Biosciences, Inc., a corporation organized under the laws of Delaware (“3-V”), having a principal place of business at 3715 Haven Ave. Suite 220, Menlo Park, CA 94025, and Ascletis BioScience Co. Ltd. (also known as 歌礼生物科技（杭州）有限公司), a corporation under the laws of China having a registered office at Room 1102，Building D，198 Qidi Road, HIPARK, Xiaoshan District, Hangzhou, China (“Ascletis”). 3-V and Ascletis are sometimes collectively referred to herein as the “Parties” or individually as a “Party”.

 

RECITALS

 

WHEREAS, 3-V has developed a proprietary FASN inhibitor referred to by 3-V as TVB-2640;

 

WHEREAS, Ascletis is in the business of developing and commercializing human therapeutic products for the treatment of diseases;

 

WHEREAS, 3-V is willing to grant certain exclusive rights to Ascletis with respect to TVB-2640 to further develop and commercialize Product (as defined below) in the Territory (as defined below) upon the terms and conditions set forth herein;

 

WHEREAS, 3-V is raising up to [***] in equity financing (the “Series E Financing”), whereby Ascletis and/or its co-investors will be investing up to [***]; and

 

WHEREAS, contemporaneously with the execution of this Agreement, 3-V is closing the first tranche of the Series E Financing, whereby 3-V existing investors are investing [***] and Ascletis, its Affiliates, and/or its co-investors are investing [***] (the “First Closing”).

 

NOW THEREFORE, the Parties agree as follows:

 

ARTICLE 1.
DEFINITIONS

 

All capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth below:

 

1.1                 “3-V” has the meaning set forth in the Preamble.

 

1.2                 “3-V Collaborator” means any Third-Party licensee of 3-V or its Affiliates with respect to the Development, Manufacture, Commercialization and other Exploitation of any of the Compounds and Products in any country outside the Territory.

 

1.3                 “3-V Indemnitee” has the meaning set forth in Section 11.1.

 

 

1.4                 “3-V IP” means the 3-V Know-How and the 3-V Patents.

 

1.5                 “3-V Know-How” means (a) all Know-How pertaining to a Compound or Product that is Controlled by 3-V or its Affiliates (including such Know-How licensed by 3-V Collaborators to 3-V or its Affiliates) as of the Effective Date or at any time during the Term that is necessary or reasonably useful to Exploit a Compound or Product in the Field in the Territory; and (b) 3-V’s interest in the Joint Inventions. In the event that 3-V is acquired by a Third Party after the Effective Date, then 3-V Know-How shall exclude all Know-How of such Third Party acquiror and its Affiliates that exists as of the closing of the acquisition or is developed or acquired thereafter independent of 3-V’s program to Exploit the Product, unless such Know-How is incorporated by 3-V, its Affiliates or 3-V Collaborators in the composition or formulation of, or the process of manufacturing, the Compound or Product.

 

1.6                 “3-V Patents” means (a) all Patents Controlled by 3-V or its Affiliates (including such Patents licensed by 3-V Collaborators to 3-V or its Affiliates) as of the Effective Date or at any time during the Term that claim a Compound or Product (including composition of matter, method of make or use) in the Field in the Territory, including the Patents listed on Schedule 1.6 attached hereto; (b) 3-V’s interest in 3-V Sole Invention Patents; and (c) 3-V’s interest in the Joint Patents. In the event that 3-V is acquired by a Third Party after the Effective Date, then 3-V Patents shall exclude all Patents of such Third Party acquiror and its Affiliates that exists as of the closing of the acquisition or is developed or acquired thereafter independent of 3-V’s program to Exploit the Product, unless such Patents are incorporated by 3-V, its Affiliates or 3-V Collaborators in the composition or formulation of, or the process of manufacturing, the Compound or Product.

 

1.7                 “3-V Sole Invention Patents” has the meaning set forth in Section 8.3(a).

 

1.8                 “Ascletis” has the meaning set forth in the Preamble.

 

1.9                 “Ascletis Indemnitee” has the meaning set forth in Section 11.2

 

1.10             “Ascletis IP” means all Know-How and Patents that are developed or applied by Ascletis or its Affiliates or sublicensees in the Exploitation of the Compound or the Product under this Agreement that claim a Compound or Product (including composition of matter, method of make or use) in the Field or is necessary or reasonably useful to Exploit a Compound or Product in the Field, including Ascletis’ Sole Inventions and Ascletis’ interest in Joint Inventions. In the event that Ascletis is acquired by a Third Party after the Effective Date, then Ascletis IP shall exclude all Patents and Know-How of such Third Party acquiror and its Affiliates that exists as of the closing of the acquisition or is developed or acquired thereafter independent of Ascletis’ program to Exploit the Product, unless such Patents and Know-How are incorporated by Ascletis, its Affiliates or sublicensees in the composition or formulation of, or the process of manufacturing, the Compound or Product.

 

1.11             “Adverse Event” means any adverse event or experience as defined in the then current edition of ICH Guidelines, the CFDA Act, 21 C.F.R. §301.305, 21 C.F.R. §314.80 and any other relevant regulations or regulatory guidelines, and any medical occurrence in a patient or clinical investigation subject, temporally associated with the use of a Compound or Product, whether or not considered related to a Compound or Product. An “Adverse Event” includes any unfavorable and unintended sign (including an abnormal laboratory finding), symptom, or disease (new or exacerbated) temporally associated with the use of a Compound or Product.

 

 

1.12             “Affiliate” means any Person that, directly controls, is controlled by, or is under common control with a Party for so long as such control exists. For purposes of this definition, “control” (and, with its correlative meanings) means (a) the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (b) ownership, directly or indirectly, of 50% or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or 50% or more of the voting securities, or other voting ownership interests, in the case of any limited liability company or other type of legal entity.

 

1.13             “Agreement” has the meaning set forth in the Preamble.

 

1.14             “Applicable Law” means applicable laws, statutes, rules, regulations and guidances of any Regulatory Authorities, including the cGCPs, the cGLPs and the cGMPs.

 

1.15             “NMPA” means the National Medical Products Administration in Mainland China or any successor thereto.

 

1.16          “cGCP” means (a) the current good clinical practices as stated in Applicable Law, including, as applicable, Directive 2001/20/EC, Directive 2005/28/EC, and 21 C.F.R. Parts 50, 56 and 312 et seq., each as amended from time to time, and (b) all CFDA and, as applicable, FDA, EMA, ICH and local guidelines related thereto, including the ICH Consolidated Guidelines on Good Clinical Practices.

 

1.17             “cGLP” means (a) current good laboratory practices as stated in Applicable Law and as set forth, as applicable, in Directive 2004/10/EC and 21 C.F.R. Part 58 et seq., each as amended from time to time, and (b) all CFDA and, as applicable, FDA, Council of the Organization for Economic Cooperation and Development (OECD) and local guidelines related thereto.

 

1.18             “cGMP” means (a) current good manufacturing practices as stated in Applicable Laws as set forth in the CFDA Act, and, as applicable, 21 C.F.R. Part 210 and 211 and Directive 2003/94/EEC, each as amended from time to time, and (b) all CFDA, and, as applicable, FDA, EMA, ICH and local guidelines related thereto, including Q7 Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients promulgated by the ICH (“ICH Q7”).

 

1.19             “Claims” has the meaning set forth in Section 11.1.

 

1.20             “Clinical Data” means all information relating to the Product made, collected or otherwise generated in the performance of or in connection with any clinical trials, including any data, reports and results relating thereto.

 

1.21             “Code” has the meaning set forth in Section 2.2.

 

 

1.22             “Combination Product” means any pharmaceutical product containing a Compound that also contains, or is otherwise combined with, one or more other pharmaceutically active ingredients and sold for a single price, including products that are formulated, packaged or sold together.

 

1.23             “Commercialization” or “Commercialize” means any and all activities (whether before or after NDA Approval in a country or Region) directed to the marketing, promoting, detailing, distributing, importing, exporting, offering to sell or selling of a Product. For the avoidance of doubt, Commercialization does not include Development activities.

 

1.24             “Commercialization Report” has the meaning set forth in Section 5.2.

 

1.25           “Compound” means the molecule known as TVB-2640 as of the Effective Date (“TVB-2640”), a FASN inhibitor having the chemical structure set forth in Schedule 1.25, and all other FASN inhibitors that are claimed in the 3-V Patents or otherwise proprietary to 3-V or its Affiliates, together with all salts, polymorphs, enantiomers, rotamers, hydrates, anhydrides and prodrugs of the foregoing, provided that, in the event that 3-V is acquired by a Third Party after the Effective Date, then Compound shall exclude all molecules proprietary to such Third Party acquiror and its Affiliates that exists as of the closing of the acquisition or is developed or acquired thereafter independent of 3-V’s program to Exploit the Product, but shall include any such molecule to the extent its composition of matter is covered by a 3-V Patent Controlled by 3-V or its Affiliates prior to the closing of such acquisition.

 

1.26             “Confidential Information” means all embodiments of Know-How and all other information disclosed by one Party to another Party prior to the Effective Date or during the Term. Notwithstanding the foregoing, Confidential Information shall not include such information that: (a) as of the date of disclosure is known to the Party receiving such disclosure or its Affiliates, as shown by written documentation created before the date of disclosure, other than by virtue of a prior confidential disclosure to such Party or its Affiliates; (b) as of the date of disclosure is in, or subsequently enters, the public domain, through no fault or omission in breach of the confidentiality obligations set forth herein by the Party receiving such disclosure; or (c) as of the date of disclosure or thereafter is obtained by the receiving Party from a Third Party free from any obligation of confidentiality to the disclosing Party. Information that is otherwise Confidential Information and consists of a combination of information shall not be deemed to be in the public domain if individual elements of such information are in the public domain, unless the specific combination of those elements is also in the public domain.

 

1.27             “Control” means, with respect to any item of Know-How, Patent or other intellectual property right, possession of the right, whether directly or indirectly, whether existing as of the Effective Date or thereafter acquired, and whether by ownership, license or otherwise (other than by operation of any license and other grants hereunder), to assign or grant a license, sublicense or other right to or under such Know-How, Patent or other intellectual property right as provided for herein without any obligation to make any payments to a Third Party or violating the terms of any agreement or other arrangement with any Third Party.

 

1.28             “Cure Period” has the meaning set forth in Section 12.2(a).

 

 

1.29             “Data” means any and all scientific, technical, test and patient exposure data pertaining to any Compound or Product that is either generated by or on behalf of Ascletis, Sublicensees or their respective Affiliates or generated by or on behalf of 3-V, 3-V Collaborators or their respective Affiliates, including research data, clinical pharmacology data, CMC data, pre-clinical data, Clinical Data or Safety Data.

 

1.30             “Develop” or “Development” means the conduct of non-clinical and clinical pharmaceutical research and development activities directed to obtaining or maintaining Regulatory Approvals for Product, including toxicology, pharmacology, absorption, distribution, metabolism, and elimination (ADME) activities, CMC activities, test method development, stability testing, process development, technology transfer, formulation development, quality assurance and quality control development, packaging development, statistical analysis, clinical studies, pharmacovigilance, regulatory affairs and other regulatory activities with respect to the foregoing.

 

1.31             “Development Milestone Event” has the meaning set forth in Section 7.1.

 

1.32             “Development Plan” has the meaning set forth in Section 4.1.

 

1.33             “Diligent Efforts” means those efforts, activities and measures, with respect to the efforts to be expended by the respective Party which with respect to any objective are reasonable, diligent, good-faith efforts to accomplish such objective as a similarly situated (with respect to size, stage of research and other aspects) pharmaceutical company would use to accomplish a similar objective under similar circumstances exercising reasonable business judgement and considering the scientific, medical and commercial potential and characteristics of the Compound and Product as well as the associated risks in the development, obtaining of Regulatory Approvals and governmental pricing and reimbursement approvals, availability of exclusivity and Commercialization.

 

1.34             “Dispute” has the meaning set forth in Section 13.11.

 

1.35             “Effective Date” means the date of First Closing.

 

1.36             “Existing Lien” means the [***].

 

1.37             “Exploit” means to Develop, use, Manufacture (including having Manufactured), as applicable, or Commercialize, or otherwise dispose of, a Compound or Product, and “Exploitation” means the act of Exploiting a Compound or Product.

 

1.38             “FDA” means the United States Food and Drug Administration or any successor thereto.

 

1.39             “Field” means the diagnosis, treatment and/or prevention of human and animal diseases and conditions.

 

1.40             “First Closing” has the meaning set forth in the Recitals.

 

1.41             “First Commercial Sale” means, with respect to a Product in a Region in the Territory, the first sale of such Product in such Region by Ascletis, its Affiliates or any of its Sublicensees to a Third Party (i.e. other than sales by Ascletis to its Affiliates or Sublicensees) in a commercial, arm’s-length transaction following receipt of NDA Approval in such Region.

 

 

1.42             “Indemnitee” means an Ascletis Indemnitee(s) or 3-V Indemnitee(s), as the context requires.

 

1.43             “Indemnitor” has the meaning set forth in Section 11.3(a).

 

1.44           “Indication” means a separate and distinct disease, disorder, syndrome or other medical condition in animals or humans for which the Product is Developed or Commercialized to treat, prevent, diagnose, monitor or ameliorate.

 

1.45          “Invention” means any improvement or discovery, whether or not patented or patentable, necessary or useful to Develop, Manufacture, use or Commercialize a Compound or Product.

 

1.46             “Joint IND” has the meaning set forth in Section 4.3.

 

1.47             “Joint Inventions” has the meaning set forth in Section 8.1(b).

 

1.48             “Joint Patents” has the meaning set forth in Section 8.1(b).

 

1.49             “JSC” means the joint steering committee set forth in Section 3.1.

 

1.50             “Know-How” means all technical information, know-how and data, including trade secrets, inventions (whether patentable or not), discoveries, methods, specifications, processes, expertise, technology, Data, results, regulatory filings and documents, and other information.

 

1.51             “Loss” has the meaning set forth in Section 11.1.

 

1.52             “Manufacture” or “Manufacturing” means the synthesis, manufacture, formulating, processing, scale-up, validation, qualification and audit of manufacturing facilities, bulk production, packaging, product labeling, fill/finish work, storage and release of Compounds and Product and related quality assurance/quality control testing and release and technical support activities.

 

1.53             “Milestone Event” means a Development Milestone Event and/or Sales Milestone Event, as the context requires.

 

1.54             “NDA” means a New Drug Application, a marketing authorization application or other product registration application filed with any Regulatory Authority to obtain approval to market and sell the Product in a Region and all supplements, variations and other amendments thereof, but excluding any pricing or reimbursement approvals.

 

1.55             “NDA Approval” means, with respect to each Region, approval of the applicable NDA by the applicable Regulatory Authority.

 

 

1.56             “Net Sales” means, for any period, the gross revenues from sales of Products invoiced by Ascletis, its Affiliates or Sublicensees to Third Parties, less the following deductions related to the Product, which shall be calculated in accordance with [***] or foreign equivalent in the Territory, consistently applied: (a) discounts, rebates, commissions, refunds, retroactive price adjustments, chargebacks and other allowances paid to Third Parties that effectively reduce the net selling price; (b) freight and insurance for the Products; (c) credits or refunds actually allowed for spoiled or returned Products; (d) bad debts; (e) sales, value-added, excise taxes, tariffs and duties, and other taxes directly related to the sale (but not including taxes assessed against the income derived from such sale); and (f) governmental price reductions and government mandated rebates.

 

The transfer of Products by Ascletis to an Affiliate or Sublicensee of such Party will not be deemed a sale. A Net Sale shall be deemed to have occurred upon receipt of the proceeds thereof by Ascletis, its Affiliate or Sublicensee.

 

1.57             “Notice of Breach” has the meaning set forth in Section 12.2(a).

 

1.58             “Party” has the meaning set forth in the Preamble.

 

1.59          “Patents” means (a) all national, regional and international patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals, and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention, (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)) and (e) any similar rights or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents ((a), (b), (c) and (d)).

 

1.60             “Person” means any individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other entity or organization, including a government or political subdivision, department or agency of a government.

 

1.61           “Phase 2 Clinical Trial” means (a) a dose exploration, dose response, duration of effect, kinetics, dynamic relationship or preliminary efficacy and safety study of the Product in the patient population (e.g. a Phase 2(a) Clinical Trial), or (b) a controlled dose ranging clinical study to evaluate further the efficacy and safety of the Licensed Product in the patient population and to define the optimal dosing regimen (e.g. a “Phase 2(b) Clinical Trial).

 

1.62             “Phase 2 Global Multi-Center Trial” means the Phase 2 Clinical Trial entitled “PROTOCOL 3V2640-CLIN-005 A PHASE 2, MULTI-CENTER, SINGLE-BLIND, RANDOMIZED, PLACEBO CONTROLLED STUDY OF TVB-2640 IN SUBJECTS WITH NON-ALCOHOLIC STEATOHEPATITIS”.

 

 

1.63          “Phase 3 Clinical Trial” means a controlled clinical study of the Product that is prospectively designed to demonstrate with statistical significance the efficacy and safety of a Product for use in a particular Indication and that is sufficient to obtain NDA Approval of a Product in such Indication by the applicable Regulatory Authorities.

 

1.64             “PR China” means the People’s Republic of China.

 

1.65             [***]

 

1.66             “Product” means any pharmaceutical product containing a Compound as its active pharmaceutical ingredient, either alone or in combination with other active ingredients (but shall not contain any compound that is proprietary to 3-V but is not a Compound).

 

1.67             “Product Trademark” means one or more trademarks, trade names, service marks, trade dress and logos that are used for the Commercialization of the Product in any Region in the Territory. “Product Trademark” does not include the logo or trade name of any Party or its Affiliates or the trademarks, trade names, service marks, trade dress or logos of another product sold by such Party.

 

1.68             “Progress Report” has the meaning set forth in Section 4.5(b).

 

1.69             “Prosecuting Party” has the meaning set forth in Section 8.3(c).

 

1.70             “Region” means one or more of PR China, Hong Kong, Macau and Taiwan and their respective territories and possessions.

 

1.71             “Regulatory Approval” means, in respect of the Product, any and all NDA Approvals and other approvals (including any pricing and reimbursement approvals, if required prior to sale in the applicable jurisdiction), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity that are necessary for the Exploitation of the Product in the applicable Region.

 

1.72             “Regulatory Authority” means any (a) governmental authority, notified bodies or other organization in a country or jurisdiction that regulates the manufacture or sale of pharmaceutical or medicinal products (including pricing and reimbursement), including the NMPA, and (b) any other relevant bodies authorized by Applicable Law to review or otherwise exercise oversight over NDAs, other regulatory filings or Regulatory Approvals in the Territory.

 

1.73             “Royalties” has the meaning set forth in Section 7.4(a).

 

1.74             “Royalty Term” means, with respect to the Product in a particular Region in the Territory, the period of time beginning on the First Commercial Sale of the Product in such Region and ending upon the earlier of (a) the expiration of all Valid Claims of the 3-V Patents covering the composition of matter of, or the method of making or using, such Product in such Region; and (b) ten (10) years from the First Commercial Sale of such Product in such Region.

 

1.75             “Safety Data” means all data related to any Adverse Event as such information is reportable to Regulatory Authorities in or outside the Territory. Safety Data also includes “adverse events”, “adverse drug reactions” and “unexpected adverse drug reactions” as defined in the ICH Harmonised Tripartite Guideline for Clinical Safety Data Management: Definitions and Standards for Expedited Reporting.

 

 

1.76             “Sales Milestone Events” has the meaning set forth in Section 7.2.

 

1.77             “Series E Financing” has the meaning set forth in the Recitals.

 

1.78             “Sole Invention” has the meaning set forth in Section 8.1(b).

 

1.79             “Sublicensee” means any Third Party that is granted a sublicense under any rights licensed hereunder to Exploit a Compound or Product. For the avoidance of doubt, Sublicensees do not include bona fide pharmaceutical wholesalers or providers of pharmaceutical distribution services.

 

1.80             “Term” has the meaning set forth in Section 12.1.

 

1.81             “Territory” means all of the Regions and their respective territories and possessions.

 

1.82             “Third Party” means any Person other than a Party to this Agreement or any of its Affiliates.

 

1.83             “Third-Party Royalties” means any royalties (but excluding [***]) Ascletis, its Affiliates or Sublicensees owes to one or more Third Parties pursuant to one or more licenses to patent rights entered into during the Term by Ascletis, its Affiliates or Sublicensees to settle or avoid infringement of a Third Party’s Patent by the practice of the 3-V IP in the Exploitation of the Product, [***].

 

1.84             “Valid Claim” means, with respect to a particular Region, (a) any claim of an issued and unexpired 3-V Patent that claims the composition of matter of, or the method of making or using, the Product, or the Compound included therein, which claim has not lapsed, been canceled or become abandoned and has not been declared invalid and/or unenforceable by an unreversed and unappealable decision or judgment of a court or other appropriate body of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer (other than a terminal disclaimer); or (b) a claim of a pending patent application included in the 3-V Patents that claims the composition of matter of, or the method of making or using, the Product, or the Compound included therein, and which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application.

 

ARTICLE 2.
GRANT OF LICENSES; NON-COMPETE

 

2.1                 Grant of Licenses by 3-V. Subject to the terms and conditions of this Agreement, 3-V hereby grants to Ascletis and its Affiliates a sub-licensable (pursuant to Section 2.2 below) right and license under the 3-V IP to Develop, Manufacture, Commercialize and otherwise Exploit the Compounds and the Products in the Field in the Territory, which right and license shall be sole and exclusive (even as to 3-V, its Affiliates and 3-V Collaborators and successors should 3- V be sold), except that (a) 3-V maintains the right to manufacture or have manufactured the Compound and the Product in [***] for use in clinical Development in [***] as required or permitted by this Agreement; (b) 3-V maintains the right to manufacture or have manufactured the Compound and the Product [***] for use outside [***], and the right to procure precursors [***]; and (c) 3-V maintains the right to practice the 3-V IP (by itself or through its Affiliates and licensees) in the Territory as necessary to perform its obligations under this Agreement, including the performance of the Phase 2 Global Multi-Center Trial in the Territory.

 

 

 

2.2                 Insolvency Events. For clarity, all licenses and rights to licenses granted under or pursuant to this Agreement by a Party to the other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code (the “Code”), licenses of rights to “intellectual property” as defined under Section 101(35A) of such Code. The Parties agree that each Party, as the licensee, shall retain and may fully exercise all of its rights and elections under the Code, and that upon commencement of a bankruptcy proceeding by or against the other Party, as the licensor, under the Code, the licensee Party shall be entitled to a complete duplicate of, or complete access to (as the licensee Party deems appropriate), any such intellectual property and all embodiments of such intellectual property to the extent permitted by the Code and needed to exercise such license rights. Such intellectual property and all embodiments thereof shall be promptly delivered, as required under the Code, to the licensee Party (i) upon any such commencement of a bankruptcy proceeding upon written request therefor by the licensee Party, unless the licensor Party elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the licensor Party upon written request therefor by the licensee Party. It is understood and agreed that the licensee Party must continue to perform all its payment and other obligations under this Agreement with respect to its continued exercise of the license rights granted under this Agreement. The foregoing provisions are without prejudice to any rights the licensee Party may have arising under the Code or other Applicable Law. The parties intend for the substance of this paragraph to apply worldwide, even if the Code does not expressly apply to Ascletis or 3-V.

 

2.3                 Sublicenses.

 

(a)               Ascletis may sublicense the rights granted under Section 2.1 to a Sublicensee with the prior written consent of 3-V, such consent not to be unreasonably withheld, except that no such consent shall be required as follows:

 

(i)               Ascletis may use competent and cGCP compliant contract research organizations and other Third-Party contractors (CROs) to perform portions of the Development of a Product to the extent consistent with its normal business practices;

 

(ii)              Ascletis may engage reasonably qualified Third Parties to assist with the Commercialization of the Products through co-promotion, co-marketing and distributor arrangements and may sublicense its rights granted under Section 2.1 to such Third Parties to the extent such arrangements are commercially reasonable; and

 

(iii)          Ascletis may use competent and cGMP compliant Third Parties, including contract manufacturers, to Manufacture the Product.

 

(b)              For every sublicense granted by Ascletis, Ascletis shall ensure that

 

(i)                 the sublicense is granted under a written sublicense agreement that is consistent with the terms and conditions of this Agreement;

 

(ii)              Ascletis shall remain directly responsible for all of its obligations under this Agreement, regardless of whether any such obligation has been delegated, subcontracted or sublicensed to its Affiliates, contractors or Sublicensees;

 

(iii)            Ascletis shall ensure that its Affiliates, contractors and Sublicensees comply with the terms and conditions of this Agreement; and

 

(iv)             within [***] days after the execution of any sublicense agreement, Ascletis shall provide 3-V with a true and complete copy of such sublicense agreement.

 

 

2.4                 Non-compete.

 

(a)               Except as expressly permitted by this Agreement with respect to Products (including 3-V’s retained Manufacture rights and its obligation to perform Phase 2 Global Multi-Center Trial and other mutually agreed global clinical trials in the Territory), 3-V and its Affiliates agree not to research, Develop, Manufacture or Commercialize in the Territory any [***] in the Field in the Territory.

 

(b)              During the Term of this Agreement, Ascletis and its Affiliates shall not, either directly or indirectly through any Third Party, Develop, Manufacture or Commercialize any [***] except for the Compounds and Products in the Territory pursuant to this Agreement.

 

(c)               In the event that a Party is acquired by a Third Party after the Effective Date through merger, acquisition, consolidation or other similar transaction, and such Third Party acquiror or its Affiliates, as of the closing date of such transaction, is engaged in the conduct of a Development, Manufacture or Commercialization program [***] that, if conducted by such Party, would constitute a breach of such Party’s exclusivity obligations set forth above (a “Competing Program”), then such Third Party acquiror or its Affiliates shall have the right to continue such Competing Program and such continuation shall not constitute a breach of such Party’s exclusivity obligations set forth above, provided that such Third Party acquiror and its Affiliates conducts such Competing Program independent of the activities of this Agreement and does not use any 3-V IP or Ascletis IP in the conduct of such Competing Program.

 

2.5                 License to 3-V. Subject to the terms and conditions of this Agreement, Ascletis hereby grants to 3-V and its Affiliates a non-exclusive, sub-licensable, fully paid, royalty free license under the Ascletis IP to Develop, Manufacture, Commercialize and otherwise Exploit the Compounds and the Products outside the Territory.

 

2.6                 No Implied Licenses. Except as explicitly set forth in this Agreement, no Party grants to any of the other Parties any license, express or implied, under any other Patents, Know-How or any other intellectual property rights. No Party shall practice the Patents under which another Party has granted it a license outside of the scope of the licenses granted hereunder.

 

2.7                 Data Access.

 

(a)               Ascletis agrees to provide 3-V with access to and the right to use all Data generated by or on behalf of Ascletis, its Affiliates and Sublicensees, without additional compensation, to the extent that such Data is reasonably useful for the Development, Manufacture or Commercialization of Compounds and Products outside of the Territory. Ascletis shall transfer to 3-V all Data generated during the Term [***].

 

(b)               3-V agrees to transfer to Ascletis all Data existing as of the Effective Date no later than [***] days after the Effective Date. 3-V shall transfer to Ascletis all Data generated during the Term [***].

 

(c)               3-V agrees to provide Ascletis with access to and the right to use all Data generated by or on behalf of 3-V, without additional compensation, to the extent that such Data is reasonably useful for the Development, Manufacture or Commercialization of Compounds and Products inside the Territory.

 

(d)              3-V shall use Diligent Efforts to require each 3-V Collaborator to provide to Ascletis Data generated by 3-V Collaborators or to provide 3-V Collaborator Data directly to Ascletis, in each case at no additional cost to Ascletis.

 

 

ARTICLE 3.
GOVERNANCE

 

3.1                 Joint Steering Committee. Within [***] days following the Effective Date, the Parties shall establish a joint steering committee (“JSC”) to serve as a forum for the regular exchange of information between the Parties with regard to the Development and Manufacture of the Products in the Territory. Without limiting the foregoing or any other functions the Parties agree to delegate to the JSC, the JSC shall:

 

(a)               facilitate the exchange of Data as prescribed in Section 2.7;

 

(b)              review the Development Plan;

 

(c)               review Progress Reports from the Parties as set forth in Section 4.4(b) on the conduct of Development activities by or on behalf of it and its Affiliates, Sublicensees and 3-V Collaborators;

 

(d)              discuss relative priorities in the Development Plan and the priorities of 3-V and 3-V Collaborators outside the Territory;

 

(e)               discuss additional Development activities to be conducted by Ascletis, 3-V and 3-V Collaborators;

 

(f)           coordinate the efforts of Ascletis, 3-V and any 3-V Collaborators to instigate common arrangements for pharmacovigilance and risk planning and reporting;

 

(g)               evaluate technical issues that are raised to it by a Party; and

 

(h)              otherwise facilitate communications among the Parties.

 

The JSC shall remain in place so long as Ascletis is conducting Development activities with regard to any Compound or Product in the Territory.

 

3.2                 Membership. The JSC shall be comprised of an equal number of representatives from 3-V and Ascletis, selected by such Party. The initial number of representatives from each of 3-V and Ascletis shall be two. Each of 3-V and Ascletis may replace any or all of its representatives on the JSC at any time by providing prior written notice to the other Party. Other representatives of 3-V or Ascletis approved by the JSC may attend the meetings of the JSC as non-voting attendees; provided that such representatives are bound by obligations of confidentiality, nondisclosure and non-use with respect to any Confidential Information disclosed in the course of such meetings at least as stringent as those set forth in this Agreement.

 

3.3                 JSC Meetings. The JSC shall meet (a) [***] and (b) as otherwise requested by any of the members of the JSC. Such meetings shall be conducted in person or by videoconference or teleconference. A quorum of the JSC shall exist whenever there is present at or participating in a meeting at least one representative appointed by each Party. Each Party shall bear its own personnel and travel costs and expenses relating to JSC meetings. If for any reason a JSC meeting is cancelled or postponed, the JSC shall endeavor to meet no later than thirty (30) days following the original date of such cancelled or postponed meeting. Each JSC shall follow such other administrative procedures as it may adopt for the efficient conduct of its meetings and other matters.

 

3.4                 Officers; Minutes.

 

(a)               [***] shall select the chairperson of the JSC from its representatives to the JSC, who shall chair meetings of the JSC.

 

(b)           The JSC shall select a secretary to prepare and circulate the meeting agendas and minutes. Such minutes shall be distributed in draft form not later than fifteen (15) days following each meeting and shall be deemed accepted and effective unless the other Party has objected to the same within ten days of its receipt of such minutes; final minutes shall be promptly distributed to the Parties.

 

3.5                 Decision-Making.

 

(a)               The JSC shall have only such powers as are expressly assigned to it in this Agreement, and such powers shall be subject to the terms and conditions of this Agreement. Without limiting the generality of the foregoing, the JSC shall have no power to amend the terms of this Agreement, which amendment may occur only in compliance with the procedures set forth in Section 13.7. The JSC shall have no authority to act on behalf of the Parties or bind the Parties.

 

(b)              Decisions of the JSC shall be by unanimous vote (with each Party’s representatives collectively having one (1) vote); provided, that if the JSC is unable to reach unanimity on any matter, the matter shall be referred to the Chief Executive Officers of the Parties for resolution. In the event such Chief Executive Officers cannot reach agreement on such matter within ten (10) days after such referral, then, except as otherwise set forth in this Agreement:

 

(i)                 [***] Chief Executive Officer shall have the final decision-making authority for all decisions related to (1) [***] (excluding [***] or [***] pursuant to Section [***]), (2) [***], or (3) [***], and

 

(ii)                [***] Chief Executive Officer shall have the final decision-making authority for all decisions related to (1) [***]; (2) [***] or [***] pursuant to Section [***], provided that [***] shall consult with [***] with respect to [***] or [***] and shall consider in good faith any comments or suggestions provided by [***] regarding [***] and (3) [***].

 

 

ARTICLE 4.
DEVELOPMENT

 

4.1                 Development Plan. As soon as practical, but in no event later than [***] days after the Effective Date, the Parties shall agree on a Development plan for the Product (the “Development Plan”). The Development Plan shall cover the Development of Product in the Territory by Ascletis, and the portion of the Phase 2 Global Multi-Center Trial of the Product to be conducted in the Territory by 3-V. If the Development Plan is not agreed to by both Parties within such 90-day period, the JSC shall finalize the Development Plan.

 

4.2                 Clinical Development Plan Designs. Ascletis may submit to the JSC for review and approval any changes to the Development Plan as it relates to the Territory specific Development of Product. 3-V may submit to the JSC for review and approval any changes to the Development Plan as it relates to the portion of the Phase 2 Global Multi-Center Trial to be conducted in the Territory. Both parties should attempt to harmonize Development Plans to leverage global clinical data. Changes to the Development Plan shall become effective upon approval by the JSC in accordance with Section 3.5(b).

 

4.3                 Phase 2 Global Multi-Center Trial. 3-V shall, at its sole cost and expense and in compliance with the Development Plan, be solely responsible for, and shall use Diligent Efforts to conduct, all Development activities in connection with Phase 2 Global Multi-Center Trial to be conducted [***]. The Phase 2 Global Multi-Center Trial shall be conducted [***]. If after using Diligent Efforts to include sites for the Phase 2 Global Multi-Center Trial in the Territory, the Regulatory Authorities deny inclusion of sites in the Territory or the first patient in the Territory has not been enrolled within [***] of the date of the IND submission in the Territory, the Parties shall discuss in good faith adjustments or alternatives to the Phase 2 Global Multi-Center Trial, in which case, such adjusted or alternative clinical trial shall be deemed to be a Phase 2 Global Multi-Center Trial. Ascletis and 3V shall jointly apply for an IND in the Territory for centers located in the Territory (“Joint IND”). 3-V agrees that the proceeds from the Series E Financing will be used to complete the Phase 2 Global Multi-Center Trial [***]. [***] any other clinical trials (other than Phase 2 Global Multi-Center Trial) in the Territory, [***]. Notwithstanding the foregoing, Ascletis is responsible for the following in-kind contributions to centers located in the Territory with respect to the Phase 2 Global Multi-Center Trial:

 

(a)               Ascletis shall provide clinical staff at its sole cost and expense to supervise CROs hired by 3-V in the Territory for the Phase 2 Global Multi-Center Trial.

 

(b)              Ascletis shall provide regulatory staff at its sole cost and expense to support regulatory affairs required in the Territory for the Phase 2 Global Multi-Center Trial.

 

4.4                 Conduct of Development by Ascletis. Except as otherwise set forth in Section 4.3, Ascletis shall be solely responsible for and at its sole expense, and shall use Diligent Efforts to conduct, all Development activities in connection with obtaining and maintaining all Regulatory Approvals for Product in the Field in the Territory. Ascletis shall perform or have performed the Development activities, including the conduct of any clinical trials included in such Development activities, in compliance with the Development Plan, this Agreement, and all Applicable Law. Should 3-V wish to conduct a Phase 3 Clinical Trial in the Territory [***]. If Ascletis decides to be part of such Phase 3 Clinical Trial, then Ascletis shall be responsible for the portion of the cost of the Phase 3 Clinical Trial that is conducted in the Territory. If Ascletis elects not to participate in such Phase 3 Clinical Trial [***], then [***].

 

4.5                 Records; Progress.

 

(a)               Records. Both Parties shall maintain complete, current and accurate records of all Development work conducted by or on behalf of itself, and all Data resulting from such work. Such records shall fully and properly reflect all work done and results achieved in the performance of the Development activities in a good scientific manner appropriate for regulatory and patent purposes. The Parties shall document all clinical trials and other studies and research in formal written study reports according to applicable guidelines (e.g., ICH, cGCP, cGLP, and cGMP) and all other Applicable Law. Each Party shall make all Data, records and reports available, within a reasonable period following their creation, to the other Party for inspection and review through appropriate electronic data room facilities.

 

(b)              Progress Reports. Each Party shall regularly inform the other Party, and shall formally provide written progress reports to the JSC [***], summarizing the Development activities conducted by the Parties, its Affiliates, Sublicensees and 3-V Collaborators, including any issues relating to meeting the goals, objectives or timelines relating thereto and any ongoing and planned clinical trials and other studies and testing by or on behalf of such Parties, its Affiliates, Sublicensees and 3-V Collaborators (each a “Progress Report”).

 

 

4.6                 Regulatory Responsibilities.

 

(a)               Except for the Joint IND, which shall be jointly owned, Ascletis shall own all Regulatory Approvals for Product in the Field in the Territory. Ascletis shall have sole responsibility for:

 

(i)              obtaining and maintaining Regulatory Approvals for Products in the Field in the Territory, and shall use Diligent Efforts to obtain Regulatory Approval of the Product and, upon obtaining Regulatory Approvals for the Product in the Field in the Territory, maintain such Regulatory Approvals; and

 

(ii)              other communications with applicable Regulatory Authorities in the Territory relating to the Development and Commercialization of Compound and Product, including (i) all correspondence submitted to Regulatory Authorities in the Territory related to the design, conduct or results of non-clinical studies and clinical trials; (ii) all pricing and reimbursement approval proceedings in the Territory; and (iii) all proposed product labeling for the Product in the Field in the Territory.

 

(b)              Ascletis shall provide 3-V with synopsis of all regulatory submissions and reasonable time prior to submission for review and comment if possible, and shall consider in good faith any comments received from 3-V. In addition, Ascletis shall notify 3-V of any regulatory material submitted to or received from any Regulatory Authority in the Territory and shall provide 3-V with copies thereof ([***]) within [***] days after submission or receipt.

 

(c)               Ascletis shall provide 3-V with reasonable advance notice of any meeting or discussion with any Regulatory Authority in the Territory related to Phase 2 Global Multi-Center Trial or any Phase 2 Clinical Trials or Phase 3 Clinical Trials conducted by Ascletis in the Territory. Ascletis shall lead such meeting or discussion, provided however that 3-V or its designee shall have the right, but not the obligation, to attend and participate in such meeting or discussion. If 3-V elects not to attend such meeting or discussion, Ascletis shall promptly provide 3-V with a written [***] summary of such meeting or discussion. Regarding subsequent clinical trials (other Phase 2 Clinical Trials or Phase 3 Clinical Trials conducted by Ascletis) in the Territory, Ascletis shall provide 3-V with regular updates and summaries of such meetings.

 

(d)               Each Party hereby grants to the other Party the right of reference to all regulatory submissions pertaining to the Product submitted by or on behalf of such Party. Ascletis may use such right of reference to 3-V’s regulatory submissions solely for the purpose of seeking, obtaining and maintaining Regulatory Approval of the Product in Field in the Territory. 3-V may use the right of reference to Ascletis’ regulatory submissions solely for the purpose of seeking, obtaining and maintaining Regulatory Approval of the Product outside the Territory. For global clinical trials conducted by 3-V for the Product in the Territory, 3-V shall be entitled to conduct clinical audits (including on-site audits) as would be customary for global clinical trials and consistent with monitoring by sponsor of such trials.

 

4.7                 Technology Transfer. Without limiting the generality of Section 2.7(b), within [***] days after the Effective Date, 3-V shall transfer in electronic format to Ascletis all technical and regulatory documents possessed by 3-V that are necessary or useful for the conduct of the Development and Manufacturing activities by Ascletis. Upon Ascletis written request, 3-V will provide Ascletis within [***] days after the Effective Date with [***] documents by the applicable Authority covering (i) 3-V’s incorporation and business in good standing certificates, (ii) Data authenticity documents relevant to the Product, (iii) authorization to use Data provided by 3-V, (iv) documentation perfecting the patent license provisions of this Agreement, and (v) cGLP documents (certificates).

 

 

4.8                 Reporting Adverse Events. Ascletis shall maintain, at its own cost, a common safety database for both clinical and post-marketing Adverse Events for the Products in the Territory in the Field, which database shall be managed by Ascletis and Ascletis shall ensure that 3-V, its Affiliates and any 3-V Collaborator is able to access the Safety Data from such database in order to comply with Applicable Law and obligations by Regulatory Authorities in their respective territories. 3-V shall maintain, at its own cost, a global safety database for both clinical and post-marketing Adverse Events for the Products, which database shall be managed by 3-V and 3-V shall ensure that Ascletis, its Affiliates and Sublicensees are able to access the Safety Data from such database in order to comply with Applicable Law and obligations by Regulatory Authorities in their respective territories. Ascletis will be responsible for reporting all Adverse Events to the appropriate Regulatory Authorities in the Territory, including the NMPA, in accordance with Applicable Law. In addition, Ascletis shall report all Adverse Events to 3-V in a timely manner in order for 3-V to comply with its reporting obligations to Regulatory Authorities outside the Territory (including FDA). 3-V shall report all Adverse Events to Ascletis in a timely manner in order for Ascletis to comply with reporting obligations in the Territory. 3-V will be responsible for reporting all Adverse Events to the appropriate Regulatory Authorities outside the Territory in accordance with Applicable Law. 3-V shall provide Ascletis through the JSC with the name of a contact at each 3-V Collaborator’s pharmacovigilance department so that Ascletis may coordinate with such 3-V Collaborator regarding the allocation of responsibilities and determination of any procedures between them with respect to the collecting, sharing and reporting to applicable Regulatory Authorities regarding Adverse Events and other safety information, including providing Ascletis with access to Safety Data in accordance with Section 2.7(c).

 

4.9                 Remedial Actions. Each Party shall notify the other immediately, and promptly confirm such notice in writing, if it obtains information indicating that any Product may be subject to any recall, corrective action or other regulatory action by any Regulatory Authority (a “Remedial Action”). The Parties shall assist each other in gathering and evaluating such information as is necessary to determine the necessity of conducting a Remedial Action. Ascletis shall have sole discretion with respect to any matters relating to any Remedial Action in the Territory, including the decision to commence such Remedial Action and the control over such Remedial Action. The cost and expenses of any Remedial Action in the Territory shall be borne solely by Ascletis, except to the extent the Remedial Action is caused by a breach of this Agreement by 3-V. Ascletis shall, and shall ensure that its Affiliates and Sublicensees will, maintain adequate records to permit the Parties to trace the distribution, sale and use of the Product in the Territory.

 

ARTICLE 5.
COMMERCIALIZATION

 

5.1               Diligent Efforts. Ascletis shall use Diligent Efforts to conduct all Commercialization activities that are required to Commercialize Products in the Field in the Territory upon obtaining necessary Regulatory Approvals with respect thereto. Such Commercialization efforts may include obtaining pricing and reimbursement approvals, establishing and developing appropriate opinion leaders, promoting Products with managed care organizations and establishing Products with formularies.

 

5.2               Commercialization Report. Beginning [***] days after [***], Ascletis shall prepare and deliver [***] a report of its Commercialization activities (each a “Commercialization Report”). Each such Commercialization Report shall include, with respect to each Region in which Commercialization is planned: [***] period.

 

5.3                   Territory Restrictions. 3-V agrees, on behalf of itself, its 3-V Collaborators and their respective Affiliates, to not sell or offer to sell or otherwise distribute, directly or indirectly, Product in the Field in the Territory, and shall not sell, offer to sell or otherwise distribute, directly or indirectly, Product to a Third Party who 3-V, its 3-V Collaborators or their respective Affiliates knows or has reason to know will use, sell, offer to sell or otherwise distribute Product in the Field in the Territory. Ascletis agrees, on behalf of itself, its Sublicensees and their respective Affiliates, to not sell or offer to sell or otherwise distribute, directly or indirectly, Product outside the Field or outside the Territory, and shall not sell, offer to sell or otherwise distribute, directly or indirectly, Product to a Third Party who Ascletis, its Sublicensees or their respective Affiliates knows or has reason to know will use, sell, offer to sell or otherwise distribute Product outside the Field or outside the Territory.

 

 

ARTICLE 6.
MANUFACTURE

 

6.1                 Product for the Territory. Ascletis shall be responsible, at its sole cost and expense, to Manufacture or have Manufactured Product for use in the Territory for both Development (excluding material for the Phase 2 Global Multi-Center Trial in China which shall use existing Product) and Commercialization in the Territory, including the payment for facility expansion, equipment purchase, API process optimization, formulation development required for the future commercial supply of Product inside the Territory. In addition to providing Data in accordance with Sections 2.7(b) and 4.7, 3-V shall, [***] within [***] of the Effective Date, transfer or make available all currently available 3-V Know-How to support the Manufacture of the Product, including CMC documents. Promptly after the Effective Date, each Party shall designate a representative familiar with the Manufacture of the Product to plan and coordinate the manufacture technology transfer. Upon Ascletis’ request, 3-V shall provide Ascletis with reasonable quantities of reference standard materials for the Manufacture of the Product, and Ascletis shall reimburse 3-V for the cost of providing such materials, including the cost to qualify such materials. If Ascletis requires any technical assistance with respect to the technical transfer of the Manufacturing process to Ascletis or its designee, 3-V shall introduce Ascletis to 3-V’s contract manufacturer for the Product so that Ascletis may obtain such technical support directly from 3-V’s contract manufacturer at Ascletis’ cost and expense.

 

6.2                 Supply to 3-V. Upon 3-V’s written request, the Parties will discuss in good faith the terms upon which Ascletis (or its designee) would supply Compound and/or Product to 3-V for use outside the Territory.

 

 

ARTICLE 7.
PAYMENT

 

7.1                 Development Milestones. Ascletis shall pay to 3-V the non-refundable, non-creditable amounts set forth below opposite such Development milestone (each a “Development Milestone Event”):

 

Development Milestone Event	Payment (in US Million Dollars)
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

 

7.2                 Sales Milestones. Ascletis shall pay to 3-V the non-refundable, non-creditable amounts set forth below opposite such sales milestone (each a “Sales Milestone Events”):

 

Sales Milestone Event	Payment (in US Million Dollars)
Upon first achievement of calendar year Net Sales in Territory of [***]	[***]
Upon first achievement of calendar year Net Sales in Territory of [***]	[***]
Upon first achievement of calendar year Net Sales in Territory of [***]	[***]
Total sales milestones:	[***]

 

Only Net Sales on a Product in a Region during the applicable Royalty Term shall be included in determining whether the Net Sales thresholds set forth in this Section 7.2 have been achieved.

 

7.3                 Milestone Event Payments. Ascletis shall provide written notice to 3-V within [***] days of the achievement of a Milestone Event. 3-V shall invoice Ascletis for the applicable Milestone Event payment, and Ascletis shall pay such Milestone Event payment within [***] days of receipt of invoice. For the avoidance of doubt, each of the Milestone Event payments shall become due and payable, if at all, only one time, upon the first occurrence of such an event.

 

7.4                 Royalty Payments.

 

(a)               Ascletis shall pay 3-V royalties (“Royalties”) based on the Net Sales of the Products in the Territory as set forth below:

 

Annual Net Sales of Product in millions of United States Dollars in the Territory in a Calendar Year	Royalty Rate
< [***]	[***]
[***] to < [***]	[***]
[***] to < [***]	[***]
[***] or more	[***]

 

 

 

 

 

For example, if aggregate Net Sales of Products in the Territory for a given calendar year are [***] million, then the aggregate Royalty payable on such Net Sales of such Products for that year shall be calculated as follows: [***].

 

(b)             Combination Products. In the case of Combination Products, for purposes of determining Royalties payable with respect to the Combination Products and determining the sales thresholds set forth in Section 7.2, the Net Sales of the Combination Product will be [***], in which A is the gross selling price (in the applicable Region) of the Product portion of the Combination Product when such Product is sold separately during the applicable accounting period in which the sales of the Combination Product were made, and B is the gross selling price (in the applicable Region) of the other products of the Combination Product sold separately during the accounting period in question. All gross selling prices of the components of the Combination Product will be calculated as the average gross selling price of the components during the applicable accounting period for which the Net Sales are being calculated.

 

In any Region, if no separate sale of either such above-designated Product or such above designated other product of the end-user Combination Product are made during the accounting period in which the sale was made, Net Sales allocable to the Product in each such Region will be determined by mutual agreement reached in good faith by the Parties prior to the end of the accounting period in question based on an equitable method of determining same that takes into account, on a Region-by-Region basis, variations in potency, the relative contribution of each active component in the combination, and relative value to the end user of each active component.

 

(c)             Only Net Sales of a Product in a Region during the applicable Royalty Term shall be Royalty bearing and included in determining the Net Sales thresholds set forth in this Section 7.3.

 

(d)             Royalty Reduction. Subject to Section 7.4(f), if during an applicable Royalty Term, [***], then the royalty rates set forth above shall be reduced by [***].

 

(e)             Third-Party Royalties. Subject to Section 7.4(f), in the event that Third-Party Royalties are owed, then Ascletis shall be responsible for such Third-Party Royalties and may deduct an amount equal to [***] of any Third-Party Royalties from any Royalty due to 3-V hereunder.

 

(f)              Royalty Floor. Notwithstanding the foregoing, during any calendar quarter in the Royalty Term for a Product in a particular Region in the Territory, the operation of Sections 7.4(d) or 7.4(e) individually or in combination shall not reduce the royalty payment on Net Sales of the Product in such Region during such calendar quarter to less than [***] of the royalties that would otherwise have been due under Section 7.4(a).

 

(g)             Royalty Term Expiration. Following the expiration of the Royalty Term in respect of a Product in a Region in the Territory, the license grants to Ascletis in Section 2.1 in respect of such Product shall become fully paid-up and irrevocable with respect to such Region and the Net Sales of Products in such country shall be excluded from the Royalty calculations.

 

 

7.5           Royalty Reports; Payments. Royalty payments shall be paid within [***] days after the last day of each calendar quarter following the First Commercial Sale of a Product in a Region in the Territory and shall include a written report with respect to the preceding quarter stating: (a) [***]; (c) currency exchange rates used in determining the Royalties; and (d) a calculation of the amounts due to 3-V.

 

7.6           General Payment Terms; Audit Rights.

 

(a)             Payment Method. All amounts payable and calculations hereunder will be in United States dollars. Net Sales will be translated into United States dollars, based on the daily average closing conversion rate as reported by the Wall Street Journal for the applicable quarter in which such Net Sales were made.

 

(b)             Withholding Taxes. Ascletis may deduct the amount of any taxes imposed on 3-V that are required to be withheld or collected by Ascletis or its Sublicensees under the Applicable Law of any country on amounts owing from Ascletis to 3-V hereunder to the extent Ascletis or its Sublicensees pay such withholding taxes to the appropriate governmental authority on behalf of 3-V. Ascletis shall promptly deliver to 3-V proof of payment of such taxes together with copies of all communications from or with such governmental authority with respect thereto.

 

(c)             Late Payments. Any late payments shall bear annual interest, of [***].

 

(d)             Audit Rights. Ascletis will keep and maintain accurate and complete records regarding its payment obligations during the three preceding years. Upon at least [***] days’ prior written notice from 3-V, Ascletis will permit an independent certified public accounting firm of internationally recognized standing, selected by 3-V and reasonably acceptable to Ascletis, to examine the relevant books and records of Ascletis as may be reasonably necessary to verify the payments due under this ARTICLE 7. An examination by 3-V under this Section 7.6(d) will occur not more than [***]. The accounting firm will be provided access to such books and records at Ascletis’ facility or facilities where such books and records are normally kept and such examination will be conducted during Ascletis’ normal business hours. Ascletis may require the accounting firm to sign a standard non-disclosure agreement before providing the accounting firm access to Ascletis’ facilities or records. Upon completion of the audit, the accounting firm will provide both Parties a written report disclosing whether the reports submitted or payments made by Ascletis are correct or incorrect and the specific details concerning any discrepancies. No other information will be provided to 3-V. If the accountant determines that the report submitted or payments made by Ascletis understated the amount due to 3-V, then Ascletis will promptly pay such understated amount, and, if, during any year, the understated amount is more than [***] of the amount that was owed to 3-V, Ascletis shall reimburse 3-V for the reasonable expenses incurred by 3-V in connection with the audit; otherwise, 3-V shall bear the cost of such audit. Any overpayment discovered by such audit shall be credited against future payments owed by Ascletis (or reimbursed to Ascletis if no future payment are expected). Ascletis shall include in its sublicense agreements with its applicable Sublicensees an audit provision no less stringent than this provision and that permits 3-V to verify the accuracy of the amounts paid by Ascletis under this Article 7.

 

 

ARTICLE 8.
INTELLECTUAL PROPERTY

 

8.1           Ownership.

 

(a)             Existing IP. Each Party shall remain the sole owner of, and have sole and exclusive title to, any and all intellectual property rights owned by it as of the Effective Date.

 

(b)             Ownership of Inventions. As among the Parties, (i) Ascletis shall own all Inventions discovered, developed, reduced to practice or otherwise made solely by or on behalf of Ascletis (or its Affiliates or Sublicensees) in the course of conducting Ascletis' activities under this Agreement; and (ii) 3-V shall own all Inventions discovered, developed, reduced to practice or otherwise made solely by or on behalf of 3-V (or its Affiliates) in the course of conducting its activities under this Agreement (collectively, "Sole Inventions"), and any and all Patent rights and other intellectual property rights thereto. As between the Parties, each of Ascletis and 3-V shall own an equal, undivided interest in all Inventions that are discovered, developed, reduced to practice or otherwise made jointly by or on behalf of Ascletis and 3-V, as applicable (or their respective Affiliates, Sublicensees or 3-V Collaborators) in the course of performing activities under this Agreement ("Joint Inventions"), whether or not patentable, and all Patents ("Joint Patents") and other intellectual property rights thereto. Each of 3-V and Ascletis shall have full rights to license, assign and exploit such Joint Inventions (and any Joint Patents arising therefrom) anywhere in the world, without any requirement of gaining the consent of, or accounting to, the other Party, subject to the licenses granted herein and subject to any other intellectual property held by such other Party.

 

(c)             Disclosure. Each Party shall promptly disclose to the other Party all Sole Inventions and all Joint Inventions, in each case including all invention disclosures or other similar documents submitted to such Party by its, or its Sublicensees’ or 3-V Collaborators, directors, officers, employees, representatives or agents describing such Sole Inventions or Joint Inventions, as applicable.

 

(d)             Patent Assignment. The Parties agree to execute the patent assignment agreement set forth in Exhibit A after [***], and [***]. To facilitate the assignment back to 3-V pursuant to Section 4 of such assignment agreement in the event of the early termination of this Agreement for any reason other than in the event that Ascletis maintains its license in accordance with Section 12.5(b) of this Agreement, if applicable, the Parties shall, upon the assignment of the Assigned Patents to Ascletis, agree upon, and place in escrow, a signed assignment back to 3-V. The escrow agent to be appointed by the Parties may not release the assignment without the written consent of both Parties.

 

8.2           Inventorship.

 

(a)             The determination of whether any Invention is conceived or developed by a Person for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

 

(b)             In the event that, notwithstanding the provisions of Section 8.2(a), United States law does not apply to allocate proprietary rights in a particular Invention, each Party shall, and does hereby, assign, and shall cause its Affiliates and licensees and sublicensees to so assign, to the other Party, without additional compensation, such right, title and interest in and to any such Invention, as well as any intellectual property rights with respect thereto, as is necessary to fully effect ownership of such Invention as contemplated by Section 8.1 following the application of Section 8.2(a).

 

8.3           Patent Prosecution.

 

(a)             3-V shall be responsible for the preparation, filing, prosecution, and maintenance of the 3-V Patents anywhere in the world, Patents claiming 3-V Sole Inventions (“3-V Sole Invention Patents”) anywhere in the world, and Joint Patents outside the Territory, in each case at 3-V’s cost except that Ascletis shall be responsible for and shall reimburse 3-V for the cost incurred for the preparation, filing, prosecution, and maintenance of the 3-V Patents and 3-V Sole Invention Patents in the Territory as long as such cost is reasonable for the Territory. If 3-V proposes to abandon any 3-V Patents or 3-V Sole Invention Patents in any Region in the Territory or any Joint Patents in any country outside the Territory or this Agreement is terminated pursuant to Section 12.2(a) or Section 12.3 so long as Ascletis maintains its license in accordance with Section 12.5(b), 3-V shall allow Ascletis a reasonable time to take over prosecution and maintenance of those Patents in such Region or country at Ascletis’ cost.

 

(b)             Ascletis shall be solely responsible for the preparation, filing, prosecution, and maintenance of Patents claiming Ascletis Sole Inventions anywhere in the world, and Joint Patents in the Territory, in each case at Ascletis’ cost. If Ascletis proposes to abandon any Joint Patents in the Territory, Ascletis shall allow 3-V a reasonable time to take over prosecution and maintenance of those Patents in the Territory at 3-V’s cost.

 

(c)             The Parties shall work in good faith to develop and execute a prosecution strategy for the 3-V Patents, Joint Patents, and 3-V Sole Invention Patents worldwide. The Party prosecuting Patents pursuant to this Section 8.3 (the “Prosecuting Party”) shall keep the other Party informed of progress with regard to the Prosecuting Party’s activities related to the preparation, filing, prosecution, and maintenance of such Patents, and shall consider comments provided by the other Party regarding the same in good faith. The Prosecuting Party shall provide the other Party with a reasonable amount of time prior to each filing for the other Party to review and comment on each such filing.

 

8.4           Infringement Claims by Third Parties. If any Product becomes the subject of a Third Party’s claim or assertion of infringement of any Patents with respect to the manufacture, use, sale, offer for sale or importation of a Product in the Territory in the Field, the Party first having notice of the claim or assertion shall promptly notify the other Party, and the Parties shall promptly confer to consider the claim or assertion and the appropriate course of action. Each Party shall have the first right to defend against any such infringement claims asserted against such Party at its own cost and expense subject, however, to either Party’s indemnification obligations set forth in Section 11. Neither Party shall enter into any settlement of any claim described in this Section 8.4 without such other Party’s written consent, which consent shall not be unreasonably conditioned, withheld or delayed. In any event, each Party shall reasonably assist the other Party and cooperate in any such litigation at the first Party’s request and expense, subject, however, to any indemnification obligations set forth in Section 11.

 

 

8.5           Enforcement. Ascletis, at its sole expense, shall have the first right to determine the appropriate course of action to enforce any 3-V Patents with respect to the Exploitation of a Product in the Field in the Territory. In furtherance of the foregoing, Ascletis shall have the right (i) to take (or refrain from taking) appropriate action to enforce such Patent(s), (ii) to defend any declaratory judgments seeking to invalidate or hold such Patents unenforceable or not infringed, (iii) to control any litigation or other enforcement action set forth above and to enter into, or permit, the settlement of any such litigation, declaratory judgments or other enforcement action with respect to such Patents, in each case in Ascletis’ own name and, if necessary for standing purposes, in the name of 3-V. Ascletis shall provide prior written notice to 3-V in advance of instituting any formal legal action under this Section 8.5, and shall consider in good faith 3-V’s comments with respect to any such legal action. All monies recovered upon the final judgment or settlement of any such suit shall be shall be first applied against payment of each Party’s cost and expense in connection with such enforcement action, and any excess amount shall be [***]. If Ascletis does not to bring a legal action to enforce the 3-V Patent within [***] days after becoming aware of any infringement of such Patents, 3-V shall have the right (but not the obligation) to bring and control any enforcement action in connection with such infringement at its own expense as it reasonably determines appropriate and any recoveries therefrom shall be first applied against payment of each Party’s cost and expense in connection with such enforcement action, and any excess amount shall be [***]. 3-V shall have the exclusive right to bring and control any legal action to enforce the 3-V Patents against any infringement outside the Field or outside the Territory, at its own expense and as it reasonably determines appropriate, and to retain all recoveries therefrom.

 

8.6           Trademarks.

 

(a)             Ascletis shall have the right to select, and shall register and maintain, at its expense, such Product Trademark(s) as shall be used for the promotion, marketing and sale of the Product in the Territory. Ascletis shall own such Product Trademark(s) and all goodwill associated therewith.

 

(b)             Upon Ascletis’ request, Ascletis and 3-V shall discuss in good faith the terms upon which 3-V would license a trademark used by 3-V for a Product outside the Territory for Ascletis’ use in the Territory; provided, however, that such terms shall not include any requirement to make any additional payment for the use of such trademark(s). Ascletis may submit a request to 3-V as to whether it can license a 3-V Collaborator’s trademark for a Product in the Territory, and 3-V shall facilitate a conversation between such 3-V Collaborator and Ascletis with regard to such trademark license.

 

8.7           Trademark Registrations. 3-V shall not file any registrations or other filings in respect of any such Product Trademark(s) in the Territory without Ascletis' prior written consent.

 

8.8           Unauthorized Third-Party Use of Trademarks. 3-V agrees to notify Ascletis of any unauthorized use of the Product Trademarks by Third Parties promptly as such use comes to their attention. Ascletis will have the sole right and discretion to bring infringement or unfair competition proceedings involving the Product Trademarks at Ascletis' expense.

 

 

ARTICLE 9.
REPRESENTATIONS AND WARRANTIES

 

9.1           Mutual Representations. Each of the Parties represents and warrants to the other Parties that, as of the Effective Date:

 

(a)             It is duly organized and validly existing under the Applicable Law of its jurisdiction of incorporation, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

 

(b)             It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person(s) executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

 

(c)             This Agreement is legally binding upon it and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound;

 

(d)             It is aware of no action, suit or inquiry or investigation instituted by any Applicable Law or Regulatory Authority that questions or threatens the validity of this Agreement; and

 

(e)             None of the execution and delivery of this Agreement, the consummation of the transactions provided for herein or contemplated hereby, or the fulfillment by it of the terms hereof or thereof, will (with or without notice or passage of time or both) (i) conflict with or result in a breach of any provision of the certificate or articles of incorporation or formation, by-laws, statutes, operating agreement or other governing documents of it, (ii) result in a default, constitute a default under, give rise to any right of termination, cancellation or acceleration, or require any consent or approval (other than approvals that have heretofore been obtained) of any governmental authority or under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, loan, arrangement, license, agreement, lease or other instrument or obligation to which it is a party or by which its assets may be bound, or (iii) violate any Applicable Law.

 

9.2           3-V Representations. 3-V represents and warrants to Ascletis that, as of the Effective Date:

 

(a)             3-V is the sole owner of the entire right, title, and interest in and to, or otherwise Controls, all 3-V Patents, the 3-V Know-How and other intellectual property rights within the 3-V IP, free and clear from any mortgages, pledges, liens, security interests, conditional and installment sale agreements, encumbrances, charges, or claims of any kind, other than the Existing Lien;

 

 

(b)             Schedule 1.6 is an accurate listing of all 3-V Patents owned or Controlled by 3-V or its Affiliate as of the Effective Date;

 

(c)             None of the issued Patents in the 3-V Patents is invalid or unenforceable;

 

(d)             to 3-V’s knowledge, (i) the Exploitation of Products does not infringe or misappropriate any intellectual property rights of a Third Party, and (ii) there are no pending Third-Party patent applications that, if issued would be infringed by the Exploitation of Products;

 

(e)             to 3-V’s knowledge, no Third Party is infringing or has infringed any 3-V Patents or has misappropriated any 3-V Know-How;

 

(f)           There are no pending, and to 3-V’s knowledge, no threatened adverse actions, suits, or proceedings (including interferences, reissues, reexaminations, cancellations, oppositions, nullity actions, invalidation actions, or post-grant reviews) against 3-V, its Affiliates or 3-V Collaborators involving the 3-V IP, Compounds or Products;

 

(g)             all Development activities conducted by or on behalf of 3-V, its Affiliates or 3-V Collaborators prior to the Effective Date have been conducted in accordance with all Applicable Laws;

 

(h)          neither 3-V, its Affiliates nor 3-V Collaborators, have ever been and none of their respective employees, agents or contractors have been (i) threatened by any Regulatory Authority to be debarred, or (ii) to 3-V’s knowledge, indicted for a crime or otherwise engaged in conduct for which a Person can be debarred, under any Applicable Laws;

 

(i)              3-V has disclosed to Ascletis all material written information in the possession or Control of 3-V or its Affiliates as of the Effective Date relating to efficacy and safety of Compounds and Products, and all such information disclosed by 3-V, its Affiliates and 3-V Collaborators is true and correct;

 

(j)           The Exploitation of the Compound or Product in the Territory by or on behalf of Ascletis and/or its Affiliates or sublicensees as contemplated by the Effective Date does not require a sublicense under any agreements entered into by 3-V or its Affiliates prior to the Effective Date under which 3-V or its Affiliates have obtained a license under any Patents or Know-How of such Third Party, provided that, in the event such sublicense is required after the Effective Date, 3-V shall grant such sublicense to Ascletis at no additional cost to Ascletis and 3-V shall be deemed to have cured any breach of this Section 9.2(j) by granting such sublicense.

 

(k)            3-V does not engage in the design, fabrication, development, testing, production or manufacture of critical technologies within the meaning of the Defense Production Act of 1950, as amended, including all implementing regulations thereof (the “DPA”) and has no current intention of engaging in such activities in the future.

 

9.3           Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT IS MADE OR GIVEN BY OR ON BEHALF OF A PARTY.

 

 

ARTICLE 10.
CONFIDENTIALITY

 

10.1         Nondisclosure and Non-Use. Each Party agrees that it will keep confidential and not disclose, and will cause its employees, agent, consultants and licensees to keep confidential and not disclose, all Confidential Information of the disclosing Party that is disclosed to or observed by it, or to or by any of its employees, agents, consultants or licensees pursuant to or in connection with this Agreement, whether before or after the Effective Date, except to the extent that disclosure or use is required or permitted in accordance with the performance of this Agreement. None of the Parties or any of their respective employees, agents, consultants or licensees shall use Confidential Information of any of the other Party for any purpose except as expressly permitted in this Agreement or except as expressly authorized by the disclosing Party. Each Party represents that each of its employees and any consultants and licensees to such Party, who shall have access to Confidential Information of either Party are bound by obligations to maintain such information in confidence and not to disclose or use such information except as expressly permitted herein.

 

10.2         Permitted Disclosures. The confidentiality, nondisclosure and nonuse obligations set forth in Section 10.1 above shall not apply to the extent that any receiving Party is required to disclose the information by Applicable Law or by a court of competent jurisdiction; provided that, in each such case, the receiving Party shall give written notice thereof to the disclosing Party and sufficient opportunity to prevent or limit any such disclosure or to request confidential treatment thereof; and provided, further, that the receiving Party shall give reasonable assistance to the disclosing Party, at the disclosing Party’s expense, to preserve the information as confidential.

 

10.3         Terms of this Agreement. Except as otherwise specifically set forth in this Article 10, without the prior consent of the other Party, no Party shall disclose any terms or conditions of this Agreement (including any Schedule) to any Third Party nor make any statement to the public regarding the execution or any other aspect of the subject matter of this Agreement, except: (a) to the extent such disclosure is required by Applicable Law or stock exchange rules or regulations and, to the extent practical, the other Party is provided with the opportunity sufficiently in advance of disclosure to review such information and seek confidential treatment therefor; (b) for customary discussions and other disclosures with and to shareholders, current or prospective investors, potential acquirers, potential licensees, merger partners or potential providers of financing and their advisors; or (c) either Party may use the text of a statement previously approved by the other Party. With respect to any disclosures made pursuant to subsection (b) above, each such Third-Party recipient of Confidential Information shall be subject to obligations of confidentiality, nondisclosure and non-use with respect to such Confidential Information substantially similar, and no less stringent, to the obligations of confidentiality, nondisclosure and non-use of the receiving Party pursuant to this ARTICLE 10.

 

 

10.4         Press Releases. The Parties shall agree upon a press release to be issued upon the First Closing. All additional press releases or other similar public communication by a Party relating to this Agreement, including upon expiration or termination of this Agreement under Article 12, shall be approved in advance by the other Parties, which approval shall not be unreasonably withheld or delayed beyond 48 hours, except for those communications required by Applicable Law (provided that the other Parties are given a reasonable opportunity to review and comment on any such press release or public communication in advance thereof), disclosures of information for which consent has previously been obtained, disclosures of achievement of major development or regulatory progress, information that has been previously disclosed publicly or as otherwise set forth in this Agreement.

 

10.5         The rights and obligations of the Parties under this Article 10 shall survive the expiration or earlier termination of the Term for a period of [***] years.

 

ARTICLE 11.
INDEMNIFICATION

 

11.1         Indemnification of 3-V by Ascletis. Ascletis, at its own cost and expense, shall defend, indemnify and hold harmless 3-V, its Affiliates and 3-V Collaborators and their respective directors, officers, employees, agents and representatives (collectively, the “3-V Indemnitees”) from and against any and all liabilities, losses, costs, damages, penalties, fees or expenses (including reasonable legal expenses and attorney’s fees) incurred or claimed by a Third Party (collectively, “Losses”) arising out of any claim, action, lawsuit, or other proceeding (collectively, “Claims”) against any 3-V Indemnitee by a Third Party to the extent resulting directly or indirectly from:

 

(a)           the negligence, recklessness or willful misconduct of Ascletis or its Affiliates or Sublicensees, or their respective directors, officers, employees, agents or representatives, in performing any activities in connection with this Agreement;

 

(b)             any breach by Ascletis of any representation, warranty or covenant set forth in this Agreement;

 

(c)          the Exploitation of any Compounds or Products in the Territory by or on behalf of Ascletis and/or its Affiliates or Sublicensees; and

 

(d)             any violation of Applicable Law by Ascletis or its Affiliates or Sublicensees;

 

except, in each case ((a)-(d) above), for those Losses for which 3-V has an obligation to indemnify Ascletis pursuant to Section 11.2 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective responsibility for the Losses.

 

 

11.2         Indemnification of Ascletis by 3-V. 3-V, at its own cost and expense, shall defend, hold harmless and indemnify Ascletis and Ascletis’ Affiliates and Sublicensees and their respective directors, officers, employees, agents and representatives (collectively, the “Ascletis Indemnitees”) from and against any and all Losses arising out of any Claims against any Ascletis Indemnitee by a Third Party to the extent resulting directly or indirectly from:

 

(a)             the negligence, recklessness or willful misconduct of 3-V, 3-V Affiliates, 3-V Collaborators, or their respective directors, officers, employees, agents or representatives in performing any activities in connection with this Agreement;

 

(b)             any breach by 3-V of any representation, warranty or covenant set forth in this Agreement;

 

(c)             the Exploitation of any Compounds or Products outside the Territory by or on behalf of 3-V, its Affiliates or 3-V Collaborators; and

 

(d)             any violation of Applicable Law by 3-V, its Affiliates or 3-V Collaborators;

 

except, in each case ((a)) - (d) above), for those Losses for which Ascletis has an obligation to indemnify 3-V pursuant to Section 11.1 hereof, as to which Losses each of 3-V and Ascletis shall indemnify the other to the extent of their respective responsibility for the Losses.

 

11.3         Indemnification Procedure.

 

(a)             Notice. An Indemnitee shall promptly notify the indemnifying Party (the “Indemnitor”) in writing of any Claim in respect of which the Indemnitee intends to seek such indemnification. No delay on the part of the Indemnitee in notifying the Indemnitor shall relieve the Indemnitor from any obligation hereunder unless (and then only to the extent that) the Indemnitor is prejudiced thereby.

 

(b)            Control of Proceedings. The Indemnitor shall have the right, exercisable by notice to the Indemnitee within [***] business days of receipt of notice from the Indemnitee of the commencement of or assertion of any Claim, to assume direction and control of the defense, litigation, appeal or other disposition of the Claim with counsel selected by the Indemnitor and reasonably acceptable to the Indemnitee. During such time as the Indemnitor is controlling the defense of such Claim, the 3-V Indemnitees or the Ascletis Indemnitees, as applicable, shall cooperate upon request of the Indemnitor, at the Indemnitor’s expense, in the defense or prosecution of the Claim, including by furnishing such records, information and testimony and attending such conferences, discovery proceedings, hearings, trials or appeals as may reasonably be requested by the Indemnitor. If the Indemnitor does not notify the Indemnitee of the Indemnitor’s intent to defend any Claim within [***] business days after notice thereof, the Indemnitee may undertake the defense thereof with counsel of its choice upon notice to the Indemnitor and at the Indemnitor’s reasonable expense (including reasonable, out-of-pocket attorneys’ fees and costs and expenses of enforcement or defense). The Indemnitor or the Indemnitee, as the case may be, shall have the right to join in at its own expense (including the right to conduct discovery, interview and examine witnesses and participate in all settlement conferences), but not control, at its own expense, the defense of any Claim that the other Party is defending as provided in this Agreement.

 

(c)             Settlement. The Indemnitor shall obtain the prior written consent of any Indemnitee as to any settlement that would materially diminish or materially adversely affect the scope, exclusivity or duration of any Patents licensed under this Agreement, would require any payment by such Indemnitee, would require an admission of legal wrongdoing in any way on the part of an Indemnitee or would require an amendment of this Agreement. The Indemnitor may settle a Claim without the Indemnitee’s consent if the settlement is solely monetary and the Indemnitor agrees in writing to pay such settlement. In no event may an Indemnitee settle or compromise any Claim for which it intends to seek indemnification from the Indemnitor hereunder and for which the Indemnitor is actively defending without the prior written consent of the Indemnitor (not to be unreasonably withheld or delayed), or the indemnification rights provided for under such this ARTICLE 11 as to such Claim shall be null and void.

 

 

 

(d)              Exclusive Remedies. Except as otherwise expressly provided under this Agreement, the rights and remedies provided pursuant to this ARTICLE 11 are the sole and exclusive remedies of the Parties hereto with respect to the Losses subject to indemnification under this ARTICLE 11.

 

11.4             Insurance. Each Party shall procure and maintain insurance, including product liability insurance which are consistent with normal business practices of prudent companies similarly situated at all times during which any Compound or Product is being clinically tested in human subjects or commercially distributed or sold. It is understood that such insurance shall not be construed to create a limit a Party’s liability with respect to its indemnification obligations under this Agreement. Ascletis shall provide 3-V with written evidence of such insurance upon request.

 

11.5             No Consequential Damages. NO PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS, SUFFERED BY THE OTHER PARTY, EXCEPT TO THE EXTENT ANY SUCH DAMAGES ARE (A) REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS ARTICLE 11 OR (B) RESULTED FROM ANY BREACH OF SECTION 8 (INTELLECTUAL PROPERTY) OR SECTION 10 (CONFIDENTIALITY).

 

ARTICLE 12.
TERM; TERMINATION

 

12.1             Term. This Agreement shall take effect as of the Effective Date and, unless earlier terminated earlier pursuant to this Article 12, shall expire upon the last to expire Royalty Term (the “Term”). For clarity, this Agreement shall not be effective unless and until the First Closing of the Series E Financing is completed.

 

 

12.2             Termination for Cause.

 

(a)               If 3-V materially breaches any of its obligations under this Agreement and has not remedied such breach within [***] days (or, in the case of a payment breach, [***] days) (the “Cure Period”) after receipt of notice thereof from Ascletis (the “Notice of Breach”), Ascletis may terminate this Agreement in its entirety immediately upon expiration of such Cure Period; provided that such Notice of Breach shall specifically identify the provisions under this Agreement that Ascletis believes to have been breached and state the intent of the other Party to terminate this Agreement upon expiration of the Cure Period.

 

(b)              If Ascletis materially breaches any of its obligations under this Agreement to 3-V and has not remedied such breach within the Cure Period after receipt of notice thereof from 3-V, as applicable, 3-V may terminate this Agreement in its entirety immediately upon expiration of such Cure Period; provided that such Notice of Breach shall specifically identify the provisions under this Agreement that 3-V believes to have been breached and state the intent of 3-V to terminate this Agreement upon expiration of the Cure Period. Notwithstanding the foregoing, if [***] and [***], then [***] the right under this Section 12.2(b) to terminate this Agreement for Ascletis material breach of this Agreement, [***] (i) [***]; (ii) [***], or (iii) [***].

 

12.3             Termination for Insolvency or Bankruptcy. Either 3-V or Ascletis may terminate this Agreement effective on written notice to the other Party (a) upon the liquidation, dissolution, winding up, insolvency, bankruptcy, or filing of any petition therefor, assignment for the benefit of its creditors, appointment of a receiver, custodian or trustee, or any other similar proceeding, by or of such other Party, where such petition, assignment or similar proceeding is not dismissed or vacated within [***] days, (b) if such other Party shall propose a written agreement of composition or extension of its debts outside the ordinary course of its business or (c) if such other Party shall admit in writing its inability generally to pay its debts as they fall due in the general course.

 

12.4             Termination by Ascletis. Ascletis may terminate this Agreement for any reason, or no reason at all, upon ninety (90) days written notice to 3-V.

 

12.5             Effects of Termination.

 

(a)               Termination of Licenses. Upon early termination of this Agreement for any reason, all licenses granted by 3-V to Ascletis pursuant to this Agreement shall terminate except to the extent such license granted to Ascletis has become irrevocable pursuant to Section 7.4(g) or as set forth in Section 12.5(b).

 

(b)              Termination by Ascletis for Cause. Upon termination of this Agreement by Ascletis in accordance with Section 12.2(a) or Section 12.3, [***]; provided that: (i) [***] if Ascletis terminates this Agreement for the uncured material breach by 3-V of [***]; and (ii) [***] if Ascletis terminates this Agreement for the uncured material breach by 3-V of [***]. In such event, Sections [***] shall survive.

 

(c)               License to 3-V outside the Territory. The license granted by Ascletis to 3-V under Section 2.5 shall survive any termination of this Agreement, provided that, in the event Ascletis terminates this Agreement for the uncured material breach by 3-V of [***], then 3-V shall pay Ascletis royalties equal to [***] of the Net Sales of any Product outside the Territory if, but for such license, the Exploitation of such Product would infringe any Patent included in the Ascletis IP under the license granted to 3-V under Section 2.5, and Section 7.4, 7.5 and 7.6 (other than the royalty rate in 7.4(a)) and related definitions shall apply mutatis mutandis with respect to such royalty payment to Ascletis.

 

 

(d)              Product Reversion. This Section 12.5(d) shall apply for any early termination of this Agreement other than in the event Ascletis maintains its license in accordance with Section 12.5(b).

 

(i)               License to 3-V in the Territory. Ascletis hereby grants to 3-V and its Affiliates, effective only upon early termination of this Agreement, a sole and exclusive (even as to Ascletis, its Affiliates and Sublicensees and successors should Ascletis be sold), sub-licensable, license under the Ascletis IP to Develop, Manufacture, Commercialize and otherwise Exploit the Compounds and the Products in the Territory.

 

(ii)              Regulatory Materials; Data. Ascletis shall promptly transfer and assign to 3-V, at no cost to 3-V, all regulatory materials and Regulatory Approvals for the Product. Ascletis shall also transfer and assign to 3-V all Data generated by or on behalf of Ascletis, its Affiliates and Sublicensees in their Exploitation of the Compound and Product.

 

(iii)            Product Trademarks. Ascletis shall transfer and assign to 3-V, at no cost to 3-V, all Product Trademarks that have been used, or were intended to be used, in connection with any Product (excluding any such marks that include, in whole or part, any corporate name or logos of Ascletis or its Affiliates or Sublicensees).

 

(iv)             Inventory. 3-V shall have the right to purchase from Ascletis any or all of the inventory of the Compound and Product held by Ascletis or its Affiliates as of the date of termination at a price equal to Ascletis’ manufacturing costs, provided that such inventory complies with the applicable specifications.

 

(v)             Transition Assistance. Ascletis shall reasonably cooperate with 3-V to facilitate orderly transition of the Exploitation of the Product in the Territory to 3-V, including (i) assigning or amending as appropriate, upon request of 3-V, any agreements or arrangements with Third Party vendors to Exploit the Product or, to the extent any such Third Party agreement or arrangement is not assignable to 3-V, reasonably cooperating with 3-V to arrange to continue to provide such services for a reasonable time after termination; (ii) to the extent that Ascletis or its Affiliate is performing any activities described above in (i), reasonably cooperating with 3-V to transfer such activities to 3-V and continuing to perform such activities on 3-V’s behalf for a reasonable time after termination until such transfer is completed.

 

(vi)             Ongoing Clinical Trial. If at the time of such termination, Ascletis is conducting any clinical trials for the Product, then, at 3-V’s election on a trial-by-trial basis: (i) Ascletis shall fully cooperate with 3-V to transfer the conduct of all such clinical trials to 3-V and 3-V then assumes all future expense of such trial from the effective date of termination or the date of transfer, whichever is later; or (ii) Ascletis shall, at its expense, orderly wind down the conduct of any such clinical trial which is not assumed by Licensor under clause (i).

 

(e)               3-V Royalty. In consideration for Ascletis granting the license pursuant to Section 2.5(d)(i) and the transfer of assets pursuant to Section 2.5(d)(ii) and (iii), 3-V shall pay Ascletis a royalty of [***] (if such termination becomes effective after [***] but before [***]) or [***] (if such termination becomes effective after [***]) on the Net Sales of the Products sold by 3-V, its Affiliates and 3-V Collaborators in the Territory (Section 7.4, 7.5 and 7.6 (other than the royalty rate in 7.4(a)) and related definitions shall apply mutatis mutandis with respect to such royalty payment to Ascletis).

 

 

(f)                Return of Confidential Information. Each Party shall promptly return to the other Party all Confidential Information of such other Party.

 

(g)               Accrued Obligations. Termination or expiration of this Agreement for any reason shall not release any Party hereto from any payment or other liability which, at the time of such termination, has already accrued to another Party or which is attributable to a period prior to such termination nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.

 

12.6             Surviving Provisions. The following Articles and Sections of this Agreement shall survive any expiration or termination of this Agreement for any reason: [***].

 

ARTICLE 13.
MISCELLANEOUS

 

13.1             Force Majeure. No Party shall be liable to the other Parties for any failure or delay in performing any obligation under this Agreement (other than any payment or confidentiality obligations) when such failure or delay is caused by events beyond its reasonable control, including fire, flood, other natural disasters, acts of God, war, labor disturbances, interruption of transit, accident, explosion and civil commotion; provided that the Party so affected shall give prompt notice thereof to the other Parties and shall use reasonable efforts to mitigate the adverse consequences thereof. No such failure or delay shall terminate this Agreement, and each Party shall complete its obligations hereunder as promptly as reasonably practicable following cessation of the cause or circumstances of such failure or delay.

 

13.2             Agency. No Party is, nor will be deemed to be, an employee, agent or legal representative of another Party for any purpose. No Party will be entitled to enter into any contracts in the name of, or on behalf of the other Parties, nor will a Party be entitled to pledge the credit of the other Parties in any way or hold itself out as having authority to do so.

 

13.3             Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of [***], without giving effect to its conflicts of law provisions. The Agreement of the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

13.4             Notices. All notices, requests, demands, waivers, consents, approvals or other communications to any Party hereunder shall be in writing and shall be deemed to have been duly given if delivered personally to such Party or sent to such Party by email transmission (receipt confirmed) or by registered or certified mail, postage prepaid, or by internationally recognized commercial overnight delivery service to the addresses listed below, or to such other address as the addressee may have specified in notice duly given to the sender as provided herein.

 

 

If to Ascletis:

 

Ascletis BioScience Co., Ltd.

198 Qidi Road, HIPARK, Buildg D, Room 1102

Xiaoshan District, Hangzhou, China

Attention: Jinzi J. Wu

Email: jinzi.wu@ascletis.com

 

with copies (which will not constitute notice) to:

 

Hutchison PLLC

3110 Edwards Mill Road, Suite 300

Raleigh, NC 27612

Attention: Dan L. O’Korn

Email: dokorn@hutchlaw.com

 

and

 

If to 3-V

 

3-V Biosciences
3715 Haven Avenue, Suite 220
Menlo Park, CA 94025
Attention: George Kemble
Email: george.kemble@3vbio.com

 

with copies (which will not constitute notice) to:

 

Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304-1130
Attention: Lila Hope, Ph.D.
Email: lhope@cooley.com

 

Such notice, request, demand, waiver, consent, approval or other communications will be deemed to have been given as of the date so delivered personally, on the next business day if sent by email transmission or by internationally recognized commercial overnight delivery service, or five (5) days after so mailed. This Section 13.4 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under this Agreement.

 

13.5             Severability. In the event that any provision of this Agreement shall be found in any jurisdiction to be in violation of public policy or illegal or unenforceable in law or equity, such finding shall not invalidate any other provision of this Agreement in that jurisdiction. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdictions then, to the fullest extent permitted by Applicable Law:

 

 

(a)               all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible;

 

(b)              such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction; and

 

(c)               the Parties shall promptly negotiate in good faith a replacement provision to carry out the intention of the invalid, illegal or unenforceable provision to the fullest extent permitted by Applicable Law.

 

To the extent permitted by Applicable Law, each Party hereby waives any provision of Applicable Law that would render any provision hereof prohibited or unenforceable in any aspect.

 

13.6             Entire Agreement. This Agreement, along with any Schedules, states the entire agreement reached among the Parties hereto with respect to the transactions contemplated hereby. This Agreement replaces and supersedes any and all previous agreements and understandings between the Parties regarding the subject matter hereof, whether written or oral.

 

13.7             Modifications; No Waiver. No amendment, modification, release, waiver or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties. The failure of a Party hereto to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver of such provision or of the right of such Party thereafter to enforce each and every provision.

 

13.8             Cumulative Remedies. Except to the extent expressly stated in this Agreement, no remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under equity or law.

 

13.9             Assignment; Binding Effect.

 

(a)               Without the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld, conditioned, or delayed, no Party shall sell, transfer, assign, pledge or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that a Party hereto may assign or transfer this Agreement or any of its rights or obligations hereunder without the consent of the other Party (i) to any Affiliate; or (ii) to any Third Party with which it merges or consolidates, or to which it transfers all or substantially all of its stock, assets or business relating to this Agreement.

 

(b)              This Agreement shall be binding upon and inure to the benefit of the Parties and each of their successors and permitted assigns.

 

13.10         Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

 

 

13.11         Executive Mediation. If any dispute arises out of, in connection with, or relating to this Agreement, including any question regarding its existence, validity or termination (any such dispute, a “Dispute”), a Party shall first, by written notice to the other Party, have such Dispute referred to their respective chief executive officers for attempted resolution by good faith negotiations within [***] days after such notice is received. Such negotiations shall not be admissible in any subsequent dispute resolution proceeding. No Party may initiate an arbitration proceeding in accordance with Section 13.12 until the Parties have followed the procedures set forth in this Section 13.11.

 

13.12         Arbitration. If the Parties are unable to resolve such Dispute pursuant to Section 13.11, such Dispute shall be resolved through binding arbitration, which arbitration may be initiated by either Party at any time after the conclusion of such period, on the following basis:

 

(a)               Any Dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration administered by [***] in accordance with its Arbitration Rules, which rules are deemed to be incorporated by reference in this clause.

 

(b)              The seat of the arbitration shall be [***].

 

(c)               The Tribunal shall consist of three arbitrator(s), with each Party selecting one arbitrator, and the two selected arbitrators choosing the third arbitrator.

 

(d)              The language of the arbitration shall be English.

 

(e)               Judgment upon the award rendered by such arbitrator shall be binding on the Parties and may be entered by any court or forum having jurisdiction.

 

13.13         Equitable Relief; Confidentiality and other Limitations. Nothing in this Agreement shall limit the right of either Party to apply to any court of competent jurisdiction for any equitable or interim relief or provisional remedy, including a temporary restraining order, declaratory judgment, preliminary injunction or other interim or conservatory relief.

 

13.14         Interpretation. The paragraph and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. All references in this Agreement to an Article, Section, or Schedule shall refer to an Article, Section, or Schedule in or to this Agreement, unless otherwise stated. The word “including” and similar words shall mean “including without limitation” and “including, but not limited to,” The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, section or other subdivision. References in this Agreement to “provisions of this Agreement” refer to the terms, conditions and promises contained in this Agreement taken as a whole. All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters, or calendar years, unless otherwise stated. References to the singular include the plural and to the plural include the singular.

 

13.15         Further Assurances. Each Party shall execute and deliver, or cause to be executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as another Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

 

 

13.16         Export Control. This Agreement is made subject to any restrictions concerning the export of products or Know-How from the United States or other countries that may be imposed upon or related to 3-V or Ascletis from time to time. Each Party agrees that it will not export, directly or indirectly, any Know-How acquired from the other Parties under this Agreement or any products using such Know-How to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.

 

13.17         No Benefit to Third Parties. The representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and, with the exception of the provisions of Sections 11.1 through 11.3, they shall not be construed as conferring any rights on any other parties.

 

{Signatures appear on next page.}

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered.

 

3-V Biosciences, Inc.			Ascletis BioScience Co. Ltd.
By:	/s/ George Kemble		By:	/s/ Jinzi Wu
Name: George Kemble			Name: Jinzi Wu
Title: CEO			Title: CEO and President

 

 

Schedule 1.6 – 3-V Patents Existing as of the Effective Date

 

[***]

 

 

Schedule 1.25 – Compound Structure

 

[***]

 

Remainder of page intentionally left blank

 

 

Exhibit A

 

Patent Assignment Agreement

 

This Patent Assignment Agreement (this “Agreement”), effective as of [_______________], 20[__], is signed by and between 3-V Biosciences, Inc., a corporation organized under the laws of Delaware, having a principal place of business at 3715 Haven Ave. Suite 220, Menlo Park, CA 94025 (hereinafter referred as "Assignor''); and Ascletis BioScience Co. Ltd., a corporation under the laws of China having a registered office at Room 1102，Building D，198 Qidi Road, HIPARK, Xiaoshan District, Hangzhou, China (hereinafter referred to as "Assignee").

 

WHEREAS, Assignors own all right, title and interest in and to the patent listed in Schedule A hereto (hereinafter referred to as the “Assigned Patent”).

 

WHEREAS, Assignors and Assignees are parties to that certain Exclusive License and Development Agreement, dated January 18, 2019 (the “License Agreement”), pursuant to which Assignor would grant to Assignee certain exclusive license under 3-V IP, including the Assigned Patent, in the Territory;

 

WHEREAS, in order to facilitate Assignee’s activities under the License Agreement, Assignee desires to acquire Assigned Patent from Assignor, and Assignor is willing to assign the Assigned Patent to Assignee in accordance with this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

 

1.      Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement. “Assigned Patents” shall mean the patents and patent applications listed on Schedule A, together with all continuations and divisionals of such applications and the patents issuing therefrom, and reexaminations, reissues and foreign counterparts of the patents listed on Appendix A and/or issued as described above.

 

2.      Subject to the terms and conditions of this Agreement, Assignors hereby sell, assign and transfer to Assignee, its successors and assigns, Assignors' and its Affiliates’ entire right, title and interest in and to the Assigned Patent in the Territory. Assignee agrees that the Assigned Patents shall remain included in the definition of 3-V Patents for the purpose of the License Agreement, notwithstanding the assignment of the Assigned Patents to Assignee. Without limiting the foregoing:

 

(a)               the assignment of the Assigned Patents shall not change any economic terms of the License Agreement, including without limitation the Royalty Term;

 

(b)               Assignee shall not use or practice the Assigned Patents for any purpose other than to Develop, Manufacture, Commercialize and otherwise Exploit the Compounds and the Products in the Field in the Territory as permitted under the license granted to Assignee as of the effective date of the License Agreement;

 

 

(c)               Assignor retains the right to use and practice the Assigned Patents for the purposes set forth in Sections 2.1(a) and (b) of the License Agreement;

 

(d)               Except as set forth in Section 2.3(a) of the License Agreement, Assignee shall not grant any licenses under the Assigned Patents to Third Parties without prior written consent of 3-V, such consent not to be unreasonably withheld. For the avoidance of doubt, Assignee may grant licenses to its Affiliates without the consent of 3-V. Each license granted by Assignee under the Assigned Patents shall be deemed a sublicense granted under the License Agreement, and Assignee shall comply the requirements of Sections 2.3(b)(i), (ii), (iii) and (iv) of the License Agreement for any license granted under the Assigned Patents; and

 

(e)               Assignor shall retain the first right to prosecute and maintain, and the backup right to enforce, the Assigned Patents in accordance with Sections 8.3 and 8.5 of the License Agreement during the Term of the License Agreement, even though Assignor no longer owns the Assigned Patents.

 

Assignor shall perform such further action (including by executing any and all necessary documents or revising this Agreement) for Assignee to record such transfer with the patent offices in the Territory.

 

3.      During the remaining Term of the License Agreement, Assignee shall maintain its ownership of the Assigned Patents free and clear of all liens and encumbrances of any kind and shall not sell, assign or transfer the Assigned Patents to any other person or entity.

 

4.      Upon any early termination of the License Agreement for any reason other than in the event that Assignor maintains its license in accordance with Section 12.5(b) of the License Agreement, in addition to complying with Section 12.5(d) of the License Agreement, Assignee shall (and hereby does, but effective only upon such early termination of the License Agreement) sell, assign and transfer back to Assignor, its successors and assigns, Assignee’s and its Affiliates’ entire right, title and interest in and to the Assigned Patent, and Assignee shall perform such further action (including by executing any and all necessary documents) for Assignor to record such transfer with the patent office.

 

5.      The validity, performance, construction, and effect of this Agreement shall be governed by and construed under the substantive laws of Hong Kong, without giving effect to its conflicts of law provisions. This Agreement may be executed in counterparts, all of which taken together shall be regarded as one and the same instrument.

 

 

IN WITNESS WHEREOF, each party has caused its authorized representative to execute this Agreement.

 

 

3-V Biosciences, Inc.			Ascletis BioScience Co., Ltd.
By:			By:

Name:

Name:

Title:

Title:

Date:

Date:

 

 

Schedule A of the Patent Assignment Agreement

 

[***]

 

 

Exhibit 10.15

 

CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

 

Patent Assignment Agreement

 

This Patent Assignment Agreement (this “Agreement”), effective as of October 25, 2019, is signed by and between Sagimet Biosciences Inc. (formerly known as 3-V Biosciences, Inc.), a corporation organized under the laws of Delaware, having a principal place of business at 155 Bovet Road Suite 303, San Mateo, CA 94402 (hereinafter referred as “Assignor” or “Sagimet”); and Gannex Pharma Co., Ltd. ( 甘莱制药有限公司), an affiliate of Ascletis BioScience Co., Ltd. (both wholly-owned subsidiaries of Ascletis Pharma Inc.) and a corporation under the laws of China having a registered office at No. 665 Zhangjiang Road, 3rd Floor, Shanghai Pilot Free Trade Zone, Shanghai, China (hereinafter referred to as "Assignee").

 

WHEREAS, Assignors own all right, title and interest in and to the patent listed in Schedule A hereto (hereinafter referred to as the “Assigned Patent”).

 

WHEREAS, Assignor and Assignee’s affiliate Ascletis BioScience Co. Ltd. are parties to that certain Exclusive License and Development Agreement, dated January 18, 2019 (the “License Agreement”), pursuant to which Assignor would grant to Assignee certain exclusive license under Sagimet IP, including the Assigned Patent, in the Territory;

 

WHEREAS, in order to facilitate Assignee’s activities under the License Agreement, Assignee desires to acquire Assigned Patent from Assignor, and Assignor is willing to assign the Assigned Patent to Assignee in accordance with this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

 

1.  Capitalized terms used but not defined herein shall have the meanings set forth in the License Agreement. “Assigned Patents” shall mean the patents and patent applications listed on Schedule A, together with all continuations and divisionals of such applications and the patents issuing therefrom, and reexaminations, reissues and foreign counterparts of the patents listed on Appendix A and/or issued as described above.

 

2.  Subject to the terms and conditions of this Agreement, Assignors hereby sell, assign and transfer to Assignee, its successors and assigns, Assignors' and its Affiliates’ entire right, title and interest in and to the Assigned Patent in the Territory. Assignee agrees that the Assigned Patents shall remain included in the definition of Sagimet Patents for the purpose of the License Agreement, notwithstanding the assignment of the Assigned Patents to Assignee. Without limiting the foregoing:

 

(a)  the assignment of the Assigned Patents shall not change any economic terms of the License Agreement, including without limitation the Royalty Term;

 

 

(b)  Assignee shall not use or practice the Assigned Patents for any purpose other than to Develop, Manufacture, Commercialize and otherwise Exploit the Compounds and the Products in the Field in the Territory as permitted under the license granted to Assignee as of the effective date of the License Agreement;

 

(c)  Assignor retains the right to use and practice the Assigned Patents for the purposes set forth in Sections 2.1(a) and (b) of the License Agreement;

 

(d)  Except as set forth in Section 2.3(a) of the License Agreement, Assignee shall not grant any licenses under the Assigned Patents to Third Parties without prior written consent of Sagimet, such consent not to be unreasonably withheld. For the avoidance of doubt, Assignee may grant licenses to its Affiliates without the consent of Sagimet. Each license granted by Assignee under the Assigned Patents shall be deemed a sublicense granted under the License Agreement, and Assignee shall comply the requirements of Sections 2.3(b)(i), (ii), (iii) and (iv) of the License Agreement for any license granted under the Assigned Patents; and

 

(e)  Assignor shall retain the first right to prosecute and maintain, and the backup right to enforce, the Assigned Patents in accordance with Sections 8.3 and 8.5 of the License Agreement during the Term of the License Agreement, even though Assignor no longer owns the Assigned Patents.

 

Assignor shall perform such further action (including by executing any and all necessary documents or revising this Agreement) for Assignee to record such transfer with the patent offices in the Territory.

 

3.  During the remaining Term of the License Agreement, Assignee shall maintain its ownership of the Assigned Patents free and clear of all liens and encumbrances of any kind and shall not sell, assign or transfer the Assigned Patents to any other person or entity.

 

4.  Upon any early termination of the License Agreement for any reason other than in the event that Assignor maintains its license in accordance with Section 12.5(b) of the License Agreement, in addition to complying with Section 12.5(d) of the License Agreement, Assignee shall (and hereby does, but effective only upon such early termination of the License Agreement) sell, assign and transfer back to Assignor, its successors and assigns, Assignee’s and its Affiliates’ entire right, title and interest in and to the Assigned Patent, and Assignee shall perform such further action (including by executing any and all necessary documents) for Assignor to record such transfer with the patent office.

 

5.  The validity, performance, construction, and effect of this Agreement shall be governed by and construed under the substantive laws of Hong Kong, without giving effect to its conflicts of law provisions. This Agreement may be executed in counterparts, all of which taken together shall be regarded as one and the same instrument.

 

 

 

IN WITNESS WHEREOF, each party has caused its authorized representative to execute this Agreement.

 

Sagimet Biosciences Inc.			Gannex Pharma, Co.,Ltd.
By:	/s/ George Kemble		By:	/s/ Jinzi J. Wu
Name: George Kemble			Name: Jinzi J. Wu
Title: CEO			Title: President and CEO
Date: 10/28/2019			Date: 10/30/2019

 

 

Schedule A / Patent list

 

[***]

 

Remainder of page intentionally left blank

 

 

 

Exhibit 10.16

 

LEASE AGREEMENT

 

between

 

Casiopea Bovet, LLC

 

“Landlord”

 

and

 

3-V Biosciences, Inc., a Delaware corporation

 

“Tenant”

 

 

TABLE OF CONTENTS

SECTION

PAGE

 

1.	PREMISES	4
2.	TERM; POSSESSION	4
3.	RENT       SECURITY DEPOSIT	4 8
5.	USE AND COMPLIANCE WITH LAWS	8
6.	TENANT IMPROVEMENTS & ALTERATIONS	11
7.	MAINTENANCE AND REPAIRS	12
8.	TENANT’S TAXES	13
9.	UTILITIES AND SERVICES	14
10.	EXCULPATION AND INDEMNIFICATION	15
11.	INSURANCE	15
12.	DAMAGE OR DESTRUCTION	18
13.	CONDEMNATION	19
14.	ASSIGNMENT AND SUBLETTING	21
15.	DEFAULT AND REMEDIES	23
16.	LATE CHARGE AND INTEREST	25
17.	WAIVER	26
18.	ENTRY, INSPECTION AND CLOSURE	26
19.	SURRENDER AND HOLDING OVER	27
20.	ENCUMBRANCES	28
21.	ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS	28
22.	NOTICES	29
23.	ATTORNEYS’ FEES	29
24.	QUIET POSSESSION	29
25.	SECURITY MEASURES	30
26.	FORCE MAJEURE	30
27.	RULES AND REGULATIONS	30
28.	LANDLORD’S LIABILITY	30
29.	CONSENTS AND APPROVALS	31
30.	WAIVER OF RIGHT TO JURY TRIAL	31
31.	BROKERS	31
32.	RELOCATION OF PREMISES	31
33.	ENTIRE AGREEMENT	32
34.	MISCELLANEOUS	32
35.	AUTHORITY	32
36.	SIGNAGE	35

EXHIBIT A – THE PREMISES

EXHIBIT B – CONSTRUCTION RIDER

EXHIBIT C – BUILDING RULES

EXHIBIT D – ADDITIONAL PROVISIONS

EXHIBIT E – ASBESTOS NOTIFICATION

EXHIBIT F – ACKNOWLEDGEMENT OF LEASE COMMENCEMENT

 

 

BASIC LEASE INFORMATION

 

Lease Date:	For identification purposes only, the date of this Lease is March 1, 2019
Landlord:	Casiopea Bovet, LLC
Tenant:	3-V Biosciences, Inc., a Delaware corporation
Project:	Bovet Office Centre
Building Address:	155 Bovet Road San Mateo, CA 94402
Rentable Area of Building:	131,532 square feet

 

Premises:	Floor:	Third
	Suite Number:	303
	Rentable Area:	3,030 square feet

 

Commencement Date:	The Lease shall commence upon the later of substantial completion of the Tenant Improvements by Landlord or April 1, 2019.
Lease Term:	The term of the Lease shall be thirty-six (38) months. In the event the Commencement Date is not the first day of a month, the termination date shall be on the last day of the month following the 38th month anniversary of the Commencement Date. Rent for any partial month shall be prorated.
Early Access:	For the purpose of Tenant’s installation of furniture and communication equipment, Landlord shall allow Tenant access to the Premises immediately upon Landlord’s substantial completion of Landlord’s work for a period of five (5) full business days prior to the Lease Commencement Date subject to all terms and conditions contained in the Lease including evidence of insurance. No rent shall be charged during this early access period.
Base Rent:

 

Months 1 – 2			ABATED
Months 3 – 12		$	12,423.00
Months 13 – 24		$	12,795.69
Months 25 – 36		$	13,179.56
Months 37 – 38		$	13,574.95

 

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Base Year:	Base Operating Expense Year – 2019
	Base Tax Year - Fiscal Year 2018/2019
Tenant’s Share:	2.3036%
Security Deposit:	Upon Lease execution, Tenant shall pay the first month’s Base Monthly Rent and an additional amount of $27,149.90 as Security Deposit.
Tenant Improvements:	Landlord, at its sole cost, shall improve the Premises utilizing building standard materials, based upon a mutually acceptable space plan.
	Improvements shall include the following:
	Paint throughout including one accent wall
	Install new flooring (carpet throughout with VCT in kitchen)
	Install new building standard light fixtures
Use of Premises:	Tenant shall use and occupy the Premises for general office purposes only. Tenant shall not permit the occupancy of the Premises to exceed one person per one hundred seventy-five (175) square feet.
Landlord’s Address for Payment of Rent:	Casiopea Bovet, LLC
	P.O. Box 740411
	Los Angeles, CA 90074-0411
Business Hours:	8:00 a.m. to 6:00 p.m. Monday through Friday, excluding Holidays.
After Hours HVAC:	After hours HVAC is available through contacting the onsite management office. The current charge for this service is $81.00 per hour with a 2-hour minimum. Landlord reserves the right to adjust the charge for this service.
Dedicated HVAC:	Tenant shall be responsible for the maintenance of any dedicated HVAC units in the Premises. Any such units shall be metered and tenant shall pay for the above-standard electrical use required to operate the unit(s).
Landlord’s Address
for Notices:	Casiopea Bovet, LLC
	c/o Access Property Services, Inc.
	155 Bovet Road, Suite 460
	San Mateo, CA 94402
	Attn: Property Manager

 

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Tenant’s Address For Notices:	3-V Biosciences, Inc. Attn: Chief Financial Officer
	155 Bovet Road, Suite 303
	San Mateo, CA 94402
With a copy to:	Dalsin Law
	1655 N. Main Street, Suite 270
	Walnut Creek, CA 94596
Broker(s):	Kidder Mathews representing the Landlord and the Tenant
Property Manager:	Access Property Services, Inc.
Additional Provisions:	EXHIBIT D - Additional Provisions

 

Exhibits:
Exhibit A:	The Premises
Exhibit B:	Construction Rider
Exhibit C:	Building Rules
Exhibit D:	Additional Provisions Rider
Exhibit E:	Asbestos Notification
Exhibit F:	Acknowledgement of Lease Commencement

 

The Basic Lease Information set forth above is part of the Lease. In the event of any conflict between any provision in the Basic Lease Information and the Lease, the Lease shall control.

 

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THIS LEASE is made as of the Lease Date set forth in the Basic Lease Information, by and between the Landlord identified in the Basic Lease Information (“Landlord”), and the Tenant identified in the Basic Lease Information (“Tenant”). Landlord and Tenant hereby agree as follows:

 

1.             PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon the terms and subject to the conditions of this Lease, the office space identified in the Basic Lease Information as the Premises (the “Premises”), in the Building located at the address specified in the Basic Lease Information (the “Building”). The approximate configuration and location of the Premises is shown on Exhibit A. Landlord and Tenant agree that the rentable area of the Premises for all purposes under this Lease shall be the Rentable Area specified in the Basic Lease Information. The Building, together with the parking facilities serving the Building (the “Parking Facility”), and the parcel(s) of land on which the Building and the Parking Facility are situated (collectively, the “Property”), is part of the Project identified in the Basic Lease Information (the “Project”).

 

2.             TERM; POSSESSION. The term of this Lease (the “Term”) shall commence on the Commencement Date as described below and, unless sooner terminated, shall expire on the Expiration Date set forth in the Basic Lease Information (the “Expiration Date”). The “Commencement Date” shall be the date set forth in the Basic Lease Information. The parties anticipate that the Commencement Date will occur on or about the Scheduled Commencement Date set forth in the Basic Lease Information (the “Scheduled Commencement Date”); provided, however, that Landlord shall not be liable for any claims, damages or liabilities if the Premises are not ready for occupancy by the Scheduled Commencement Date. When the Commencement Date has been established, Landlord and Tenant shall at the request of either party confirm the Commencement Date and Expiration Date in writing. Notwithstanding the foregoing, except as resulting from any Tenant-caused delay, in the event Landlord does not deliver possession of the Premises to Tenant by May 1, 2019, Tenant shall have the right to terminate this Lease by written notice to Landlord and Landlord shall return all funds paid by Tenant in respect of the Lease.

 

3.             RENT.

 

3.1         Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth in the Basic Lease Information, without prior notice or demand, on the first day of each and every calendar month during the Term, except that Base Rent for the first full calendar month in which Base Rent is payable shall be paid upon Tenant’s execution of this Lease and Base Rent for any partial month at the beginning of the Term shall be paid on the Commencement Date. Base Rent for any partial month at the beginning or end of the Term shall be prorated based on the actual number of days in the month. Any increases in Base Rent will take effect on the first day of the month; if any increase in Base Rent is due to occur on an anniversary of the Commencement Date and the Commencement Date is not the first day of a month, then the increase will take effect on the first day of the month after the month in which the anniversary occurs.

 

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3.2          Additional Rent: Increases in Operating Costs and Taxes.

 

(a)       Definitions.

 

(1)       “Base Operating Costs” means Operating Costs for the calendar year specified as the Base Year in the Basic Lease Information (excluding therefrom, however, any Operating Costs of a nature that would not ordinarily be incurred on an annual, recurring basis).

 

(2)      “Base Taxes” means Taxes for the fiscal year specified as the Base Year in the Basic Lease Information.

 

(3)       “Operating Costs” means all costs of managing, operating, maintaining and repairing the Property, including all costs, expenditures, fees and charges for: (A) operation, maintenance and repair of the Property (including maintenance, repair and replacement of glass, the roof covering or membrane, and landscaping); (B) utilities and services (including telecommunications facilities and equipment, recycling programs and trash removal), and associated supplies and materials; (C) compensation (including employment taxes and fringe benefits) not to exceed commercially reasonable rates for persons who perform duties in connection with the operation, management, maintenance and repair of the Building, such compensation to be appropriately allocated for persons who also perform duties unrelated to the Building; (D) property (including coverage for earthquake and flood if carried by Landlord), liability, rental income and other insurance relating to the Property, and expenditures for deductible amounts paid under such insurance; (E) licenses, permits and inspections; (F) complying with the requirements of any law, statute, ordinance or governmental rule or regulation or any orders pursuant thereto (collectively “Laws”); (G) amortization of capital improvements required to comply with Laws, or which are intended to reduce Operating Costs or improve the utility, efficiency or capacity of any Building System, with interest on the unamortized balance at the rate paid by Landlord on funds borrowed to finance such capital improvements (or, if Landlord finances such improvements out of Landlord’s funds without borrowing, the rate that Landlord would have paid to borrow such funds, as reasonably determined by Landlord), over such useful life as Landlord shall reasonably determine; (H) an office in the Project for the management of the Property, including expenses of furnishing and equipping such office and rental value of any space occupied for such purposes, not to exceed fair market value; (I) property management fees not to exceed commercially reasonable rates; (J) reasonable accounting, legal and other professional services incurred in connection with the operation of the Property and the calculation of Operating Costs and Taxes; (K) a reasonable allowance for depreciation on machinery and equipment used to maintain the Property and on other personal property owned by Landlord in the Property (including window coverings and carpeting in common areas); (L) contesting the validity or applicability of any Laws that may affect the Property; (M) the Building’s share of any shared or common area maintenance fees and expenses (including costs and expenses of operating, managing, owning and maintaining the Parking Facility and the common areas of the Project and any fitness center or conference center in the Project); and (N) any other costs, expenditure, fee or charge, whether or not hereinbefore described, which in accordance with generally accepted property management practices would be considered an expense of managing, operating, maintaining and repairing the Property. Operating Costs for any calendar year during which average occupancy of the Building is less than one hundred percent (100%) shall be calculated based upon the Operating Costs that would have been incurred if the Building had an average occupancy of one hundred percent (100%) during the entire calendar year.

 

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Operating Costs shall not include (i) capital improvements (except as otherwise provided above), (ii) costs of special services rendered to individual tenants (including Tenant) for which a special charge is made; (iii) interest and principal payments on loans or indebtedness secured by the Building; (iv) costs of improvements for Tenant or other tenants of the Building; (v) costs of services or other benefits of a type which are not available to Tenant but which are available to other tenants or occupants, and costs for which Landlord has a right to be reimbursed by other tenants of the Building other than through payment of tenants’ shares of increases in Operating Costs and Taxes; (vi) leasing commissions, attorneys’ fees and other expenses incurred in connection with leasing space in the Building or enforcing such leases; (vii) depreciation or amortization, other than as specifically enumerated in the definition of Operating Costs above; and (viii) costs, fines or penalties incurred due to Landlord’s default of any terms or conditions of this Lease or Landlord’s violation of leases for other premises in the Project, or Landlord’s violation of any Law; (ix) costs incurred by Landlord to remove asbestos and asbestos-containing materials from the Building that are in the Building on the date of this Lease, (x) any depreciation on the Building or Project and any fixed assets thereon excluding any amortization of capital improvements as referenced in (G) above, or (xi) costs for which Landlord is entitled to reimbursement under warranties or by insurance companies, other tenants or other third parties.

 

(4)       “Taxes” means: all real property taxes and general, special or district assessments or other governmental impositions, of whatever kind, nature or origin, imposed on or by reason of the ownership or use of the Property; governmental charges, fees or assessments for transit or traffic mitigation (including area-wide traffic improvement assessments and transportation system management fees), housing, police, fire or other governmental service or purported benefits to the Property; personal property taxes assessed on the personal property of Landlord used in the operation of the Property; service payments in lieu of taxes and taxes and assessments of every kind and nature whatsoever levied or assessed in addition to, in lieu of or in substitution for existing or additional real or personal property taxes on the Property or the personal property described above; any increases in the foregoing caused by changes in assessed valuation, tax rate or other factors or circumstances; and the reasonable cost of contesting by appropriate proceedings the amount or validity of any taxes, assessments or charges described above. To the extent paid by Tenant or other tenants as “Tenant’s Taxes” (as defined in Section 8 - Tenant’s Taxes), “Tenant’s Taxes” shall be excluded from Taxes.

 

“Taxes” shall not include (i) any franchise, rental, income, inheritance or profit tax, capital levy or excise tax payable by Landlord (ii) any tax levy, assessment, charge or surcharge resulting from the contamination of real property by hazardous materials except unless caused by the acts or omissions by the Tenant, its agents or contractors (iii) interest or penalties for the late payment or failure to pay any real property taxes (iv) any estate inheritance taxes; or (v) any City or County transfer taxes.

 

(5)       “Tenant’s Share” means the Rentable Area of the Premises divided by the total Rentable Area of the Building, as set forth in the Basic Lease Information. If the Rentable Area of the Building is changed or the Rentable Area of the Premises is changed by Tenant’s leasing of additional space hereunder or for any other reason, Tenant’s Share shall be adjusted accordingly.

 

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(b)       Additional Rent.

 

(1)        Tenant shall pay Landlord as “Additional Rent” for each calendar year or portion thereof during the Term Tenant’s Share of the sum of (x) the amount (if any) by which Operating Costs for such period exceed Base Operating Costs, and (y) the amount (if any) by which Taxes for such period exceed Base Taxes.

 

(2)       Within ninety (90) days following the end of the Base Year and each calendar year thereafter, Landlord shall notify Tenant of Landlord's estimate of Operating Costs, Taxes and Tenant's Additional Rent for the following twelve (12) month period. Commencing on the first day of April of each calendar year and continuing on the first day of every month thereafter in such twelve (12) month period, Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent. If Landlord thereafter estimates that Operating Costs or Taxes for such twelve (12) month period will vary from Landlord's prior estimate, Landlord may, by notice to Tenant, revise the estimate for such twelve (12) month period (and Additional Rent shall thereafter be payable based on the revised estimate).

 

(3)       As soon as reasonably practicable after the end of the Base Year and each calendar year thereafter, Landlord shall furnish Tenant a statement with respect to such year, showing Operating Costs, Taxes and Additional Rent for the year, and the total payments made by Tenant with respect thereto. Unless Tenant raises any objections to Landlord’s statement within one hundred twenty (120) days after receipt of the same, such statement shall conclusively be deemed correct and Tenant shall have no right thereafter to dispute such statement or any item therein or the computation of Additional Rent based thereon. If Tenant does object to such statement, then Landlord shall provide Tenant or its designated agent with reasonable verification of the figures shown on the statement and the parties shall negotiate in good faith to resolve any disputes. In the event such dispute cannot be resolved by the parties, then Tenant shall have the right to retain an independent certified public accountant which is not paid on a contingency basis and which is mutually approved by Landlord and Tenant (the "Accountant") to complete an audit of Landlord's books and records to determine the proper amount of the Operating Costs, Taxes and Additional Rent incurred and amounts payable by Tenant for the year which is the subject of such dispute. Such audit by the Accountant shall be final and binding upon Landlord and Tenant. If Landlord and Tenant cannot mutually agree as to the identity of the Accountant within thirty (30) days after Tenant notifies Landlord that Tenant desires an audit to be performed, then the Accountant shall be one of the "Big 4" accounting firms selected by Tenant, which is not paid on a contingency basis. If such audit reveals that Landlord has over-charged Tenant, then within thirty (30) days after the results of such audit are made available to Landlord, Landlord shall reimburse to Tenant the amount of such over-charge. If the audit reveals that the Tenant was under-charged, then within thirty (30) days after the results of such audit are made available to Tenant, Tenant shall reimburse to Landlord the amount of such under-charge. Tenant agrees to pay the cost of such audit unless it is subsequently determined that Landlord's original statement which was the subject of such audit was in error to Tenant's disadvantage by ten percent (10%) or more of the total Operating Costs, Taxes and Additional Rent which was the subject of such audit. Any objection of Tenant to Landlord’s statement and resolution of any dispute shall not postpone the time for payment of any amounts due Tenant or Landlord based on Landlord’s statement, nor shall any failure of Landlord to deliver Landlord’s statement in a timely manner relieve Tenant of Tenant’s obligation to pay any amounts due Landlord based on Landlord’s statement.

 

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(4)       If Tenant’s Additional Rent as finally determined for any calendar year exceeds the total payments made by Tenant on account thereof, Tenant shall pay Landlord the deficiency within ten (10) business days of Tenant’s receipt of Landlord’s statement. If the total payments made by Tenant on account thereof exceed Tenant’s Additional Rent as finally determined for such year, Tenant’s excess payment shall be credited toward the rent next due from Tenant under this lease. For any partial calendar year at the beginning or end of the Term, Additional Rent shall be prorated on the basis of a 365-day year by computing Tenant’s Share of the increases in Operating Costs and Taxes for the entire year and then prorating such amount for the number of days during such year included in the Term. Notwithstanding the termination of this Lease, Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the case may be, within ten (10) days after Tenant’s receipt of Landlord’s final statement for the calendar year in which this Lease terminates, the difference between Tenant’s Additional Rent for that year, as finally determined by Landlord, and the total amount previously paid by Tenant on account thereof.

 

If for any reason Base Taxes or Taxes for any year during the Term are reduced, refunded or otherwise changed, Tenant’s Additional Rent shall be adjusted accordingly. If Taxes are temporarily reduced as a result of space in the Building being leased to a tenant that is entitled to an exemption from property taxes or other taxes, then for purposes of determining Additional Rent for each year in which Taxes are reduced by any such exemption, Taxes for such year shall be calculated on the basis of the amount the Taxes for the year would have been in the absence of the exemption. The obligations of Landlord to refund any overpayment of Additional Rent and of Tenant to pay any Additional Rent not previously paid shall survive the expiration of the Term. Notwithstanding anything to the contrary in this Lease, if there is at any time a decrease in Taxes below the amount of the Taxes for the Base Year, then for purposes of calculating Additional Rent for the year in which such decrease occurs and all subsequent periods, Base Taxes shall be reduced to equal the Taxes for the year in which the decrease occurs.

 

3.3       Payment of Rent. All amounts payable or reimbursable by Tenant under this Lease, including late charges and interest (collectively, “Rent”), shall constitute rent and shall be payable and recoverable as rent in the manner provided in the Lease. All sums payable to Landlord on demand under the terms of this Lease shall be payable within ten (10) days after notice from Landlord of the amounts due. All rent shall be paid without offset, recoupment or deduction in lawful money of the United States of America to Landlord at Landlord’s Address for Payment of Rent as set forth in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate.

 

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4.             SECURITY DEPOSIT. On execution of this Lease, Tenant shall deposit with Landlord the Security Deposit (the “Security Deposit”), as security for the performance of Tenant’s obligations under this Lease. Landlord may (but shall have no obligation to) use the Security Deposit or any portion thereof to cure any breach or default by Tenant under this Lease, to fulfill any of Tenant’s obligations under the Lease, or to compensate Landlord for any damage it incurs as a result of Tenant’s failure to perform any of Tenant’s obligations hereunder. In such event, Tenant shall pay to Landlord on demand an amount sufficient to replenish the Security Deposit. If at the expiration or termination of this Lease, Tenant is not in default, has otherwise fully performed all of Tenant’s obligations under this Lease, and there are no outstanding Claims (defined in Section 10.1 below, and including all existing and potential Claims) for which Tenant is responsible, Landlord shall return to Tenant the Security Deposit or the balance thereof then held by Landlord and not applied as provided above. Landlord may commingle the Security Deposit with Landlord’s general and other funds. Landlord shall not be required to pay interest on the Security Deposit to Tenant.

 

5.             USE AND COMPLIANCE WITH LAWS.

 

5.1       Use. The Premises shall be used and occupied for general business office purposes in connection with its operations and for no other use or purpose. Tenant shall comply with all present and future Laws relating to Tenant’s use or occupancy of the Premises (and make any repairs, alterations or improvements as required to comply with all such Laws), and shall observe the “Building Rules” (as defined in Section 27 - Rules and Regulations). Tenant shall not do, bring, keep or sell anything in or about the Premises that is prohibited by, or that will cause a cancellation of or an increase in the existing premium for, any insurance policy covering the Property or any part thereof. Tenant shall not permit the Premises to be occupied or used in any manner that will constitute waste or a nuisance, or disturb the quiet enjoyment of or otherwise annoy other tenants in the Building. Without limiting the foregoing, the Premises shall not be used for educational activities, practice of medicine or any of the healing arts, providing social services, for any governmental use (including embassy or consulate use), or for personnel agency, customer service office, studios for radio, television or other media, travel agency or reservation center operations or uses. Tenant shall not permit the occupancy of the Premises to exceed one person (including Visitors) per one hundred seventy-five (175) square feet. Tenant shall not, without the prior consent of Landlord (i) bring into the Building or the Premises anything that may cause substantial noise, odor or vibration, overload the floors in the Premises or the Building or any of the heating, ventilating and air-conditioning (“HVAC”), mechanical, elevator, plumbing, electrical, fire protection, life safety, security or other systems in the Building (“Building System”), or jeopardize the structural integrity of the Building or any part thereof; (ii) connect to the utility systems of the Building any apparatus, machinery or other than typical office equipment; or (iii) connect to any electrical circuit in the Premises any equipment or other load that either (A) imposes aggregate electrical power requirements in excess of 80% of the rated capacity of the circuit or (B) in the aggregate, on a monthly basis, has an electrical load in excess of four (4) watts per square foot of the Premises.

 

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5.2       Hazardous Materials.

 

(a)       Definitions.

 

(1)       “Hazardous Materials” shall mean any substance: (A) that now or in the future is regulated or governed by, requires investigation or remediation under, or is defined as a hazardous waste, hazardous substance, pollutant or contaminant under any governmental statute, code, ordinance, regulation, rule or order, and any amendment thereto, including the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §9601 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., or (B) that is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline, diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radon and urea formaldehyde foam insulation.

 

(2)       “Environmental Requirements” shall mean all present and future Laws, orders, permits, licenses, approvals, authorizations and other requirements of any kind applicable to Hazardous Materials.

 

(3)       “Handled by Tenant” and “Handling by Tenant” shall mean and refer to any installation, handling, generation, storage, use, disposal, discharge, release, abatement, removal, transportation, or any other activity of any type by Tenant or its agents employees, contractors, licensees, assignees, sublessees, transferees or representatives (collectively, “Representative”) or its guests, customers, invitees, or visitors (collectively, “Visitors”), at or about the Premises in connection with or involving Hazardous Materials.

 

(4)       “Environmental Losses” shall mean all costs and expenses of any kind, damages, including foreseeable and unforeseeable consequential damages, fines and penalties incurred in connection with any violation of and compliance with Environmental Requirements and all losses of any kind attributable to the diminution of value, loss of use or adverse effects on marketability or use of any portion of the Premises or Property.

 

(b)       Tenant’s Covenants. No Hazardous Materials shall be Handled by Tenant at or about the Premises or Property without Landlord’s prior written consent, which consent may be granted, denied, or conditioned upon compliance with Landlord’s requirements, all in Landlord’s absolute discretion. Notwithstanding the foregoing, normal quantities and use of those Hazardous Materials customarily used in the conduct of general office activities, such as copier fluids and cleaning supplies (“Permitted Hazardous Materials”), may be used and stored at the Premises without Landlord’s prior written consent, provided that Tenant’s activities at or about the Premises and Property and the Handling by Tenant of all Hazardous Materials shall comply at all times with all Environmental Requirements. At the expiration or termination of the Lease, Tenant shall promptly remove from the Premises and property all Hazardous Materials Handled by Tenant at the Premises or the Property. Tenant shall keep Landlord fully and promptly informed of all Handling by Tenant of Hazardous Materials other than Permitted Hazardous Materials. Tenant shall be responsible and liable for the compliance with all of the provisions of this Section by all of Tenant’s Representatives and Visitors, and all of Tenant’s obligations under this Section (including its indemnification obligations under paragraph (e) below) shall survive the expiration or termination of this Lease.

 

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(c)       Compliance. Tenant shall at Tenant’s expense promptly take all actions required by any governmental agency or entity in connection with or as a result of the Handling by Tenant of Hazardous Materials at or about the Premises or Property, including inspection and testing, performing all cleanup, removal and remediation work required with respect to those Hazardous Materials, complying with all closure requirements and post-closure monitoring, and filing all required reports or plans. All of the foregoing work and all Handling by Tenant of all Hazardous Materials shall be performed in a good, safe and workmanlike manner by consultants qualified and licensed to undertake such work and in a manner that will not interfere with any other tenant’s quiet enjoyment of the Property or Landlord’s use, operation, leasing and sale of the Property. Tenant shall deliver to Landlord prior to delivery to any governmental agency, or promptly after receipt from any such agency, copies of all permits, manifests, closure or remedial action plans, notices, and all other documents relating to the Handling by Tenant of Hazardous Materials at or about the Premises or Property. If any lien attaches to the Premises or the Property in connection with or as a result of the Handling by Tenant of Hazardous Materials, and Tenant does not cause the same to be released, by payment, bonding or otherwise, within ten (10) days after the attachment thereof, Landlord shall have the right but not the obligation to cause the same to be released and any sums expended by Landlord (plus Landlord’s administrative costs) in connection therewith shall be payable by Tenant on demand.

 

(d)       Landlord’s Rights. Landlord shall have the right, but not the obligation, to enter the Premises at any reasonable time after giving oral notice to the Tenant, absent an emergency, (i) to confirm Tenant’s compliance with the provisions of this Section 5.2, and (ii) to perform Tenant’s obligations under this Section if Tenant has failed to do so after reasonable notice to Tenant. Landlord shall also have the right to engage qualified Hazardous Materials consultants to inspect the Premises and review the Handling by Tenant of Hazardous Materials, including review of all permits, reports, plans, and other documents regarding same. Tenant shall pay to Landlord on demand the costs of Landlord’s consultants’ fees and all costs incurred by Landlord in performing Tenant’s obligations under this Section. Landlord shall use reasonable efforts to minimize any interference with Tenant’s business caused by Landlord’s entry into the Premises, but Landlord shall not be responsible for any interference caused thereby.

 

(e)       Tenant’s Indemnification. Tenant agrees to indemnify, defend, protect and hold harmless Landlord and its partners or members and its or their partners, members, directors, officers, shareholders, employees and agents from all Environmental Losses and all other claims, actions, losses, damages, liabilities, costs and expenses of every kind, including reasonable attorneys’, experts’ and consultants’ fees and costs, incurred at any time and arising from or in connection with the Handling by Tenant of Hazardous Materials at or about the Property or Tenant’s failure to comply in full with all Environmental Requirements with respect to the Premises.

 

(f)       Asbestos. Tenant acknowledges that Tenant has received the asbestos notification letter attached as Exhibit E hereto pursuant to California Health and Safety Code Sections 25915 et seq. (as amended from time to time, the “Connelly Act”), disclosing the existence of asbestos in the Building. As part of Tenant’s obligations under paragraph (c) of this Section, Tenant agrees to comply with the Connelly Act, including providing copies of Landlord’s asbestos notification letter to all of Tenant’s “employees” and “owners,” as those terms are defined in the Connelly Act.

 

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6.             TENANT IMPROVEMENTS & ALTERATIONS.

 

6.1         Landlord and Tenant shall perform their respective obligations with respect to design and construction of any improvements to be constructed and installed in the Premises (the “Tenant Improvements”), as provided in the Construction Rider. Except for any Tenant Improvements to be constructed by Tenant as provided in the Construction Rider, Tenant shall not make any alterations, improvements or changes to the Premises, including installation of any security system or telephone or data communication wiring (“Alterations”), without Landlord’s prior written consent. Any such Alterations shall be completed by Tenant at Tenant’s sole cost and expense: (i) with due diligence, in a good and workmanlike manner, using new materials; (ii) in compliance with plans and specifications approved by Landlord; (iii) in compliance with the construction rules and regulations promulgated by Landlord from time to time; (iv) in accordance with all applicable Laws (including all work, whether structural or non-structural, inside or outside the Premises, required to comply fully with all applicable Laws and necessitated by Tenant’s work); and (v) subject to all reasonable conditions which Landlord may in Landlord’s discretion impose. Such conditions may include requirements for Tenant to: (i) provide payment or performance bonds or additional insurance (from Tenant or Tenant’s contractors, subcontractors or design professionals); (ii) use contractors or subcontractors designated by Landlord; and (iii) remove all or part of the Alterations prior to or upon expiration or termination of the Term, as designated by Landlord, and Landlord shall make such designation at the time of approval. If any work outside the Premises or any work on or adjustment to any of the Building Systems, is required in connection with or as a result of Tenant’s work, such work shall be performed at Tenant’s expense by contractors designated by Landlord. Landlord’s right to review and approve (or withhold approval of) Tenant’s plans, drawings, specifications, contractor(s) and other aspects of construction work proposed by Tenant is intended solely to protect Landlord, the Property and Landlord’s interests. No approval or consent by Landlord shall be deemed or construed to be a representation or warranty by Landlord as to the adequacy, sufficiency, fitness or suitability thereof or compliance thereof with applicable Laws or other requirements. Except as otherwise provided in Landlord’s consent, all Alterations shall upon installation become part of the realty and be the property of Landlord.

 

6.2         Before making any Alteration, Tenant shall submit to Landlord, in writing, for Landlord’s prior approval reasonably detailed final plans and specifications prepared by a licensed architect or engineer, a copy of the construction contract, including the name of the contractor and all subcontractors proposed by Tenant to make the Alterations and a copy of the contractor’s license. Tenant shall reimburse Landlord upon demand for any expenses incurred by Landlord in connection with any Alterations made by Tenant, including reasonable fees charged by Landlord’s contractors or consultants to review plans and specifications prepared by Tenant and to update the existing as-built plans and specifications of the Building to reflect the Alterations. Tenant shall obtain all applicable permits, authorizations and governmental approvals and deliver copies of the same to Landlord before commencement of any Alterations Notwithstanding anything above to the contrary, Tenant may from time to time during the Lease Term, at its own expense and after giving Landlord written notice of its intention to do so, make cosmetic alterations, additions and changes in and to the non-structural, non-mechanical portions of the interior of the Premises (except those of a structural nature) as it may find necessary or convenient for its purposes with Landlord’s prior written approval, which shall not be unreasonably withheld.

 

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6.3         Tenant shall keep the Premises and the Property free and clear of all liens arising out of any work performed, materials furnished or obligations incurred by Tenant. If any such lien attaches to the Premises or the Property, and Tenant does not cause the same to be released by payment, bonding or otherwise within ten (10) days after the attachment thereof, Landlord shall have the right but not the obligation to cause the same to be released, and any sums expended by Landlord (plus Landlord’s administrative costs) in connection therewith shall be payable by Tenant on demand with interest thereon from the date of expenditure by Landlord at the Interest Rate (as defined in Section 16.2 - Interest). Tenant shall give Landlord at least ten (10) days’ notice prior to the commencement of any Alterations and cooperate with Landlord in posting and maintaining notices of non-responsibility in connection therewith.

 

6.4         Subject to the provisions of Section 5 - Use and Compliance with Laws and the foregoing provisions of this Section, Tenant may install and maintain furnishings, equipment, movable partitions, business equipment and other trade fixtures (“Trade Fixtures”) in the Premises, provided that the Trade Fixtures do not become an integral part of the Premises or the Building. Tenant shall promptly repair any damage to the Premises or the Building caused by any installation or removal of such Trade Fixtures.

 

7.             MAINTENANCE AND REPAIRS

 

7.1          By taking possession of the Premises Tenant agrees that the Premises are then in a good and tenantable condition. To Landlord’s knowledge, the Premises have not undergone inspection by a Certified Access Specialist. During the Term, Tenant at Tenant’s expense but under the direction of Landlord, shall repair and maintain the Premises, including the interior walls, floor coverings, ceiling (excluding ceiling tiles and grid), Tenant Improvements, Alterations, fire extinguishers, outlets and fixtures, and any appliances (including dishwashers, hot water heaters and garbage disposers) in the Premises, in a first-class condition, and keep the Premises in a clean, safe and orderly condition.

 

7.2          Landlord shall maintain or cause to be maintained in reasonably good order, condition and repair, the structural portions of the roof, foundations, floors and exterior walls of the Building, the Building Systems, and the public and common areas of the Property, such as elevators, stairs, corridors and restrooms; provided, however, that Tenant shall pay the cost of repairs for any damage occasioned by Tenant’s use of the Premises or the Property or any act or omission of Tenant or Tenant’s Representatives or Visitors, to the extent (if any) not covered by Landlord’s property insurance. Landlord shall be under no obligation to inspect the Premises. Tenant shall promptly report in writing to Landlord any defective condition known to Tenant that Landlord is required to repair. As a material part of the consideration for the Lease, Tenant hereby waives any benefits of any applicable existing or future Law, including the provisions of California Civil Code Sections 1932(1), 1941 and 1942, that allows a tenant to make repairs at its landlord’s expense.

 

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7.3          Landlord hereby reserves the right, at any time and from time to time, without liability to Tenant, and without constituting an eviction, constructive or otherwise, or entitling Tenant to any abatement of rent or to terminate this Lease or otherwise releasing Tenant from any of Tenant’s obligations under this Lease, to perform any of the acts set forth in subparagraphs (a) through (d), below.

 

(a)       To make alterations, additions, repairs, improvements to or in or to decrease the size of area of, all or any part of the Project and property adjacent to the Project, the Building, the fixtures and equipment therein, and the Building Systems; provided that in doing so, Landlord shall use commercially reasonable efforts to minimize disruption to Tenant’s business. Tenant acknowledges that such alterations, additions, repairs and improvements may generate noise and vibrations and may temporarily interfere with access to the Premises, although they will not prevent access;

 

(b)       To change the Building’s name or street address;

 

(c)       To install and maintain any and all signs on the exterior and interior of the Building;

 

(d)       To reduce, increase, enclose or otherwise change at any time and from time to time the size, number, location, lay-out and nature of the common areas (including the Parking Facility) and other tenancies and premises in the Property and to create additional rentable areas through use or enclosure of common areas; and

 

(e)       If any governmental authority promulgates or revises any Law or imposes mandatory or voluntary controls or guidelines on Landlord or the Property relating to the use or conservation of energy or utilities or the reduction of automobile or other emissions or reduction or management of traffic or parking on the Property (collectively “Controls”), to comply with such Controls, whether mandatory or voluntary, or make any alterations to the Property related thereto.

 

8.             TENANT’S TAXES. “Tenant’s Taxes” shall mean (a) all taxes, assessments, license fees and other governmental charges or impositions levied or assessed against or with respect to Tenant’s personal property or Trade Fixtures in the Premises, whether any such imposition is levied directly against Tenant or levied against Landlord or the Property, (b) all rental, excise, sales or transaction privilege taxes arising out of this Lease (excluding, however, state and federal personal or corporate income taxes measured by the income of Landlord from all sources) imposed by any taxing authority upon Landlord or upon Landlord’s receipt of any rent payable by Tenant pursuant to the terms of this Lease (“Rental Tax”), and (c) any increase in Taxes attributable to inclusion of a value placed on Tenant’s personal property, Trade Fixtures or Alterations. Tenant shall pay any Rental Tax to Landlord in addition to and at the same time as Base Rent is payable under this Lease, and shall pay all other Tenant’s Taxes before delinquency (and, at Landlord’s request, shall furnish Landlord satisfactory evidence thereof). If Landlord pays Tenant’s Taxes or any portion thereof, Tenant shall reimburse Landlord upon demand for the amount of such payment, together with interest at the Interest Rate from the date of Landlord’s payment to the date of Tenant’s reimbursement.

 

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9.             UTILITIES AND SERVICES.

 

9.1          Description of Services. Landlord shall furnish to the Premises: reasonable amounts of heat, ventilation and air-conditioning during the Business Hours specified in the Basic Lease Information (“Business Hours”) on weekdays except public holidays (“Business Days”); reasonable amounts of electricity; and janitorial services five days a week (except public holidays). Landlord shall also provide the Building with normal fluorescent tube replacement, window washing, elevator service, and common area toilet room supplies. Any additional utilities or services that Landlord may agree to provide (including lamp or tube replacement for other than Building Standard lighting fixtures) shall be at Tenant’s sole expense.

 

9.2          Payment for Additional Utilities and Services.

 

(a)       Upon request by Tenant in accordance with the procedures established by Landlord from time to time for furnishing HVAC service at times other than Business Hours on Business Days, Landlord shall furnish such service to Tenant and Tenant shall pay for such services on an hourly basis at the then prevailing rate established for the Building by Landlord.

 

(b)       If the temperature otherwise maintained in any portion of the Premises by the HVAC systems of the Building is affected as a result of (i) any lights, machines or equipment used by Tenant in the Premises, or (ii) the occupancy of the Premises by more than one person per 175 square feet of rentable area, then Landlord shall have the right to install any machinery or equipment reasonably necessary to restore the temperature, including modifications to the standard air-conditioning equipment. The cost of any such equipment and modifications, including the cost of installation and any additional cost of operation and maintenance of the same, shall be paid by Tenant to Landlord upon demand.

 

(c)       If Tenant’s usage of electricity, water or any other utility service exceeds the use of such utility Landlord determines to be typical, normal and customary for the Building (which amount is not in excess of four (4) watts per month per square foot of the Premises), Landlord may determine the amount of such excess use by any reasonable means (including the installation at Landlord’s request but at Tenant’s expense of a separate meter or other measuring device) and charge Tenant for the cost of such excess usage. In addition, Landlord may impose a reasonable charge for the use of any additional or unusual janitorial services required by Tenant because of any unusual Tenant Improvements or Alterations, the carelessness of Tenant or the nature of Tenant’s business (including hours of operations).

 

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9.3         Interruption of Services. In the event of an interruption in or failure or inability to provide any services or utilities to the Premises or Building for any reason (a “Service Failure”), such Service Failure shall not, regardless of its duration, impose upon Landlord any liability whatsoever, constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to an abatement of rent or to terminate this Lease or otherwise release Tenant from any of Tenant’s obligations under this Lease. Notwithstanding anything to the contrary herein, except as occasioned by events outside the reasonable control of Landlord, in the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, for five (5) consecutive business days (the "Eligibility Period") as a result of (i) any repair, maintenance or alteration performed by Landlord after the Lease Commencement Date, or (ii) any failure by Landlord to provide to the Premises any of the facilities for essential utilities and services required to be provided under this Lease, or (iii) any failure by Landlord to provide access to the Premises, then Tenant's obligation to pay base Rent shall be abated or reduced, as the case may be, from and after the first (1st) day following the Eligibility Period and continuing until such time that Tenant continues to be so prevented from using, and does not use, the Premises or a portion thereof, in the proportion that the rentable square feet of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable square feet of the Premises. To the extent Tenant shall be entitled to abatement of Rent because of a damage or destruction pursuant to Article 12 or a Condemnation pursuant to Article 13, then the Eligibility Period shall not be applicable. Tenant hereby waives any benefits of any applicable existing or future Law, including the provisions of California Civil Code Section 1932(1), permitting the termination of this Lease due to such interruption, failure or inability.

 

10.            EXCULPATION AND INDEMNIFICATION

 

10.1        Landlord’s Indemnification of Tenant. Landlord shall indemnify, protect, defend and hold Tenant harmless from and against any claims, actions, liabilities, damages, costs or expenses, including reasonable attorneys’ fees and costs incurred in defending against the same (“Claims”) asserted by any third party against Tenant for loss, injury or damage, to the extent such loss, injury or damage is caused by (a) the willful misconduct or negligent acts or omissions of Landlord or its authorized representatives, or (b) any breach or default under this Lease by Landlord.

 

10.2        Tenant’s Indemnification of Landlord. Tenant shall indemnify, protect, defend and hold Landlord and Landlord’s authorized representatives harmless from and against Claims arising from (a) the acts or omissions of Tenant or Tenant’s Representatives or Visitors in or about the Property, or (b) any construction or other work undertaken by Tenant on the Premises (including any design defects), or (c) any breach or default under this Lease by Tenant, or (d) any loss, injury or damage, howsoever and by whomsoever caused, to any person or property, occurring in or about the Premises during the Term, excepting only Claims described in this clause (d) to the extent they are caused by the willful misconduct or negligent acts or omissions of Landlord or its authorized representatives.

 

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10.3         Damage to Tenant and Tenant’s Property. Landlord shall not be liable to Tenant for any loss, injury or other damage to Tenant or to Tenant’s property in or about the Premises or the Property from any cause (including defects in the Property or in any equipment in the Property; fire, explosion or other casualty; bursting, rupture, leakage or overflow of any plumbing or other pipes or lines, sprinklers, tanks, drains, drinking fountains or washstands in, above the Premises or Property; or acts of other tenants in the Property). Tenant hereby waives all claims against Landlord for any such loss, injury or damage caused by Landlord’s negligence (active or passive) or willful misconduct. Notwithstanding any other provision of this Lease to the contrary, in no event shall Landlord be liable to Tenant for any punitive or consequential damages or damages for loss of business by Tenant.

 

10.4         Survival. The obligations of the parties under this Section 10 shall survive the expiration or termination of this Lease.

 

11.           INSURANCE

 

11.1         Tenant’s Insurance.

 

(a) Liability Insurance. Tenant shall maintain in full force throughout the Term, commercial general liability insurance providing coverage on an occurrence form basis with limits of not less than Two Million Dollars ($2,000,000.00) each occurrence for bodily injury and property damage combined, Two Million Dollars ($2,000,000.00) annual general aggregate, such limits may be met though any combination of primary and excess liability policies. At such time, if any, that Tenant has a product liability risk to ensure, then tenant shall maintain in force throughout the term products and completed operations insurance coverage with the aforementioned annual aggregate. Tenant’s liability insurance policy or policies shall: (i) include premises and operations liability coverage, products and completed operations liability coverage, broad form property damage coverage including completed operations, blanket contractual liability coverage including, to the maximum extent possible, coverage for the indemnification obligations of Tenant under this Lease, and personal and advertising injury coverage; (ii) provide that the insurance company has the duty to defend all insureds under the policy; (iii) except with respect to any product liability coverage, provide that defense costs are paid in addition to and to not deplete any of the policy limits; (iv) cover liabilities arising out of or incurred in connection with Tenant’s use or occupancy of the Premises or the Property; (v) extend coverage to cover Tenant’s liability for the actions of Tenant’s representatives and Visitors; and (vi) designate separate limits for the Property. Each policy of liability insurance required by this Section shall: (1) contain a cross liability endorsement or separation of insureds clause; (2) provide that any waiver of subrogation rights or release prior to a loss does not void coverage; (3) provide that it is primary to and not contributing with, any policy of insurance carried by Landlord covering the same loss; and (4) except with respect to product /completed operations liability policies , name Casiopea Bovet, LLC and Access Property Services, Inc., as additional insureds. Such additional insureds shall be provided at least the same extent of coverage as is provided to Tenant under such policies with respect to liability arising out of the ownership maintenance or use of the Premises by Tenant. All endorsements effecting such additional insured status shall be on policy forms reasonably acceptable to Landlord.

 

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(b)       Property Insurance. Tenant shall at all times maintain in effect with respect to any Alterations and Tenant’s trade Fixtures and personal property, commercial property insurance providing coverage, on an “all risk” or “special form” basis, in an amount equal to at least 90% of the full replacement cost of the covered property. Tenant may carry such insurance under a blanket policy, provided that such policy provides coverage equivalent to a separate policy. During the Term, the proceeds from any such policies of insurance shall be used for the repair or replacement of the Alterations, Trade Fixtures and personal property so insured. Landlord shall be provided coverage under such insurance to the extent of its insurable interest and, if requested by Landlord, both landlord and Tenants shall sign all documents reasonably necessary or proper in connection with the settlement of any claim or loss under such insurance. Landlord will have no obligation to carry insurance on any Alterations or on Tenant’s Trade Fixtures or personal property.

 

(c)       Worker’s Compensation Insurance. Tenant shall carry and maintain Workers Compensation and Employer’s Liability Insurance as required by applicable Laws.

 

(d)       Requirements For All Policies. Each policy of insurance required under this Section 11.1 shall: (i) be in a form, and written by an insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant’s sole cost and expense, and (iii) in the event Tenant receives notice of cancellation from the insurer of any of the insurance required under this Lease, Tenant will provide Landlord written notice of such pending cancellation within five (5) business days of receipt of such notice from the insurer. Tenant shall use all reasonable efforts to remedy the cause of such cancellation notice, or will find replacement insurance meeting the requirements of this Lease, and shall provide Landlord with written notice that such cancellation has been rescinded, or shall provide a new Certificate of Insurance evidencing the replacement insurance, prior to the date the pending cancellation was to become effective, such that no lapse in the required insurance shall occur. Insurance companies issuing such policies shall have rating classifications of “A” or better and financial size category ratings of “VII” or better according to the latest edition of the A.M. Best Key Rating Guide. All insurance companies issuing such policies shall be authorized to do business in the state where the property is located. Any deductible amount under such insurance, other than Products Liability and Completed Operations coverage, shall not exceed $5,000. Tenant shall provide to Landlord, upon request, evidence that the insurance required to be carried by Tenant pursuant to this Section, including any endorsement affecting the additional insured status, is in full force and effect.

 

(e)       Updating Coverage. Tenant shall increase the amounts of insurance as required by any Mortgagee, and, not more frequently than once every three (3) years, as recommended by Landlord’s insurance broker, if, in the reasonable opinion of either of them, the amount of insurance then required under this Lease is not adequate. Any limits set forth in this Lease on the amount or type of coverage required by Tenant’s insurance shall not limit the liability of Tenant under this Lease.

 

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(f)        Certificates of Insurance. Prior to occupancy of the Premises by tenant, and not less than thirty (30) days prior to expiration of any policy thereafter, Tenant shall furnish to Landlord a certificate of insurance reflecting that the insurance required by this Section is in force, accompanied by an endorsement showing the required additional insureds satisfactory to Landlord in substance and form. Notwithstanding the requirements of this paragraph, Tenant shall at Landlord’s request provide to Landlord a certified copy of each insurance policy required to be in force at any time pursuant to the requirements of this Lease or its Exhibits. If (i) Tenant fails to provide a certified copy of its insurance policies then in force or (ii) if the policies or certificates of insurance provided by Tenant pursuant to this paragraph (e) or pursuant to paragraph (c) indicate that the insurance coverage maintained by Tenant does not satisfy the requirements of this Article 11, then Landlord, at its option and in addition to its other remedies, but without obligation so to do, many procure such insurance, and any sums expended by it to procure any such insurance shall be repaid upon demand, with interest as provided in Section 16.2. Nothing in this paragraph is intended to relieve Tenant of its obligation to maintain insurance or to impose any obligation on Landlord to obtain insurance for the benefit of Tenant or to notify Tenant that Tenant is not complying with the provisions of this Article 11.

 

11.2        Landlord’s Insurance. During the Term, to the extent such coverages are available at a commercially reasonable cost, Landlord shall maintain in effect insurance on the Building with responsible insurers, on an “all risk” or “special form” basis, insuring the Building and the Tenant Improvements in an amount equal to at least 90% of the replacement cost thereof, excluding land, foundations, footings and underground installations. Landlord may, but shall not be obligated to, carry insurance against additional perils and/or in greater amounts.

 

11.3        Mutual Waiver of Right of Recovery and Waiver of Subrogation. Landlord and Tenant each hereby waive any right of recovery against each other and the partners, managers, members shareholders, officers, directors and authorized representatives of each other for any loss or damage that is covered by any policy of property insurance maintained by either party (or required by this Lease to be maintained) with respect to the Premises or the Property or any operation therein, regardless of cause, including negligence (active or passive) of the party benefiting from the waiver. If any such policy of insurance relating to this Lease or to the Premises or the Property does not permit the foregoing waiver or if the coverage under any such policy would be invalidated as a result of such waiver, the party maintaining such policy shall obtain from the insurer under such policy a waiver of all right of recovery by way of subrogation against either party in connection with any claim, loss or damage covered by such policy.

 

12.           DAMAGE OR DESTRUCTION.

 

12.1        Landlord’s Duty to Repair.

 

(a)       If all or a substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Property from fire or other casualty then, unless either party is entitled to and elects to terminate this Lease pursuant to Sections 12.2 - Landlord’s Right to Terminate and 12.3 - Tenant’s Right to Terminate, Landlord shall, at its expense, use reasonable efforts to repair and restore the Premises and/or the Property, as the case may be, to substantially their former condition to the extent permitted by then applicable Laws; provided, however, that in no event shall Landlord have any obligation for repair or restoration beyond the extent of insurance proceeds received by Landlord for such repair or restoration, or for any of Tenant’s personal property, Trade Fixture or Alterations.

 

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(b)       If Landlord is required or elects to repair damage to the Premises and/or the Property, this Lease shall continue in effect, but Tenant’s base Rent and Additional Rent shall be abated with regard to any portion of the Premises that Tenant is prevented from using by reason of such damage or its repair from the date of the casualty until substantial completion of Landlord’s repair of the affected portion of the Premises as required under this Lease. In no event shall Landlord be liable to Tenant by reason of any injury to or interference with Tenant’s business or property arising from fire or other casualty or by reason of any repairs to any part of the Property necessitated by such casualty.

 

12.2         Landlord’s Right to Terminate. Landlord may elect to terminate this Lease following damage by fire or other casualty under the following circumstances:

 

(a)       If, in the reasonable judgment of Landlord, the Premises and the Property cannot be substantially repaired and restored under applicable Laws within one (1) year from the date of the casualty;

 

(b)       If, in the reasonable judgment of Landlord, adequate proceeds are not, for any reason, made available to Landlord from Landlord’s insurance policies (and/or from Landlord’s funds made available for such purpose, at Landlord’s sole option) to make the required repairs;

 

(c)       If the Building is damaged or destroyed to the extent that, in the reasonable judgment of Landlord, the cost to repair and restore the Building would exceed twenty-five percent (25%) of the full replacement cost of the Building, whether or not the Premises are at all damaged or destroyed; or

 

(d)       If the fire or other casualty occurs during the last year of the Term.

 

If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of this Section 12.2 occur or arise, Landlord shall give Tenant notice within one hundred and twenty (120) days after the date of the casualty, specifying whether Landlord elects to terminate this Lease as provided above and, if not, Landlord’s estimate of the time required to complete Landlord’s repair obligations under this Lease.

 

12.3         Tenant’s Right to Terminate. If all or a substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Property from fire or other casualty, and Landlord does not elect to terminate as provided above, then Tenant may elect to terminate this Lease if Landlord’s reasonable estimate of the time required to complete Landlord’s repair obligations under this Lease is greater than one (1) year, in which event Tenant may elect to terminate this Lease by giving Landlord notice of such election to terminate within thirty (30) days after Landlord’s notice to Tenant pursuant to Section 12.2 - Landlord’s Right to Terminate.

 

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12.4         Waiver. Landlord and Tenant each hereby waive the provisions of California Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future Law permitting the termination of a lease agreement in the event of damage or destruction under any circumstances other than as provided in Sections 12.2 - Landlord’s Right to Terminate and 12.3 - Tenant’s Right to Terminate.

 

13.           CONDEMNATION.

 

13.1         Definitions.

 

(a)       “Award” shall mean all compensation, sum, or anything of value awarded, paid or received on a total or partial Condemnation.

 

(b)     “Condemnation” shall mean (i) a permanent taking (or a temporary taking for a period extending beyond the end of the Term) pursuant to the exercise of the power of condemnation or eminent domain by any public or quasi-public authority, private corporation or individual having such power (“Condemnor”), whether by legal proceedings or otherwise, or (ii) a voluntary sale or transfer by Landlord to any such authority, either under threat of condemnation or while legal proceedings for condemnation are pending.

 

(c)       “Date of Condemnation” shall mean the earlier of the date that title to the property taken is vested in the Condemnor or the date the Condemnor has the right to possession of the property being condemned.

 

13.2         Effect on Lease.

 

(a)       If the Premises are totally taken by Condemnation, this Lease shall terminate as of the Date of Condemnation. If a portion but not all of the Premises is taken by Condemnation, this Lease shall remain in effect; provided, however, that if the portion of the Premises remaining after the Condemnation will be unsuitable for Tenant’s continued use, then upon notice to Landlord within thirty (30) days after Landlord notifies Tenant of the Condemnation, Tenant may terminate this Lease effective as of the Date of Condemnation.

 

(b)       If twenty-five percent (25%) or more of the Project or of the parcel(s) of land on which the Building is situated or of the Parking Facility or of the floor area of the Building is taken by Condemnation, or if as a result of any Condemnation the Building is no longer reasonably suited for use as an office building, whether or not any portion of the Premises is taken, Landlord may elect to terminate this Lease, effective as of the Date of Condemnation, by notice to Tenant within thirty (30) days after the Date of Condemnation.

 

(c)       If all or a portion of the Premises is temporarily taken by a Condemnor for al period not extending beyond the end of the Term, this Lease shall remain in full force and effect.

 

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13.3       Restoration. If this Lease is not terminated as provided in Section 13.2 - Effect on Lease, Landlord, at its expense, shall diligently proceed to repair and restore the Premises to substantially its former condition (to the extent permitted by then applicable Laws) and/or repair and restore the Building to an architecturally complete office building; provided, however, that Landlord’s obligations to so repair and restore shall be limited to the amount of any Award received by Landlord and not required to be paid to any Mortgagee (as defined in Section 20.2 below). In no event shall Landlord have any obligation to repair or replace any improvements in the Premises beyond the amount of any Award received by Landlord for such repair or to repair or replace any of Tenant’s personal property, Trade Fixtures, or Alterations.

 

13.4       Abatement and Reduction of Rent. If any portion of the Premises is taken in a Condemnation or is rendered permanently untenantable by repairs necessitated by the Condemnation, and this Lease is not terminated, the Base Rent and Additional Rent payable under this Lease shall be proportionately reduced as of the Date of Condemnation based upon the percentage of rentable square feet in the Premises so taken or rendered permanently untenantable. In addition, if this Lease remains in effect following a Condemnation, and Landlord proceeds to repair and restore the Premises, the Base Rent and Additional Rent payable under this Lease shall be abated during the period of such repair or restoration to the extent such repairs prevent Tenant’s use of the Premises.

 

13.5       Awards. Any Award made shall be paid to Landlord, and Tenant hereby assigns to Landlord, and waives all interest in or claim to, any such Award, including any claim for the value of the unexpired Term; provided, however, that Tenant shall be entitled to receive, or to prosecute a separate claim for, an Award for a temporary taking of the Premises or a portion thereof by a Condemnor where this Lease is not terminated (to the extent such Award relates to the unexpired Term), or an Award or portion thereof separately designated for relocation expenses or the interruption of or damage to Tenant’s business or as compensation for Tenant’s personal property, Trade Fixtures or Alterations.

 

13.6       Waiver. Landlord and Tenant each hereby waive the provisions of California Code of Civil Procedure Section 1265.130 and any other applicable existing or future Law allowing either party to petition for a termination of this Lease upon a partial taking of the Premises and/or the Property.

 

14.            ASSIGNMENT AND SUBLETTING

 

14.1       Landlord’s Consent Required. Tenant shall not assign this Lease or any interest therein, or sublet or license or permit the use or occupancy of the Premises or any part thereof by or for the benefit of anyone other than Tenant, or in any other manner transfer all or any part of Tenant’s interest under this Lease (each and all a “Transfer”), without the prior written consent of Landlord, which consent (subject to the other provisions of this Section 14) shall not be unreasonably withheld, conditioned or delayed. If Tenant is a business entity, any direct or indirect transfer of fifty percent (50%) or more of the ownership interest of the entity (whether in a single transaction or in the aggregate through more than one transaction) shall be deemed a Transfer provided however, a private equity financing of the Tenant in which more than an aggregate of fifty (50%) of the voting shares of Tenant or a transfer between or among current shareholders of Tenant of more than an aggregate of fifty percent (50%) of the voting shares of Tenant shall not be deemed a transfer under this Article 14 provided that any such sale or transfer was not consummated as a subterfuge to avoid the obligations of this Article 14. Notwithstanding any provision in this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or otherwise encumber this Lease or all or any part of Tenant’s interest under this Lease.

 

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Notwithstanding anything to the contrary in this Section, Tenant may assign this Lease or sublease the Premises to an affiliate of Tenant (as defined below) provided that Landlord determines in its reasonable discretion that, at the time of the assignment or sublease, the affiliate has a net worth no less than Five Million Dollars ($5,000,000). Tenant will provide to Landlord information to enable Landlord to make the determination of the net worth of Tenant and the affiliate. For purposes of this paragraph, an "affiliate" is an entity that (a) is majority owned by Tenant, owns a majority of Tenant or is majority owned by an entity that owns all the outstanding capital stock of Tenant; (b) is an entity that merges with Tenant to create a new entity or that results from a consolidation or non-bankruptcy reorganization; (c) acquires all or substantially all the assets or stock of Tenant; or (d) Tenant is merged into, with the result that Tenant ceases to exist after the merger.

 

14.2        Reasonable Consent.

 

(a)       Prior to any proposed Transfer, Tenant shall submit in writing to Landlord (i) the name and legal composition of the proposed assignee, subtenant, user or other transferee (each a “Proposed Transferee”); (ii) the nature of the business proposed to be carried on in the Premises; (iii) a current balance sheet, income statements for the last two years and such other reasonable financial and other information concerning the Proposed Transferee as Landlord may request; and (iv) a copy of the proposed assignment, sublease or other agreement governing the proposed Transfer. Within fifteen (15) Business Days after Landlord receives all such information it shall notify Tenant whether it approves or disapproves such Transfer or if it elects to proceed under Section 14.7 - Landlord’s Right to Space.

 

(b)       Tenant acknowledges and agrees that, among other circumstances for which Landlord could reasonably withhold consent to a proposed Transfer, it shall be reasonable for Landlord to withhold consent where (i) the Proposed Transferee does not intend itself to occupy the entire portion of the Premises assigned or sublet, (ii) Landlord reasonably disapproves of the Proposed Transferee’s business operating ability or history, reputation and creditworthiness or the character of the business to be conducted by the Proposed Transferee at the Premises is not consistent with the character and nature of other tenants and uses in the Building or is prohibited by this Lease or any laws, covenants, or restrictions applicable to the Building, (iii) the Proposed Transferee is a governmental agency or unit or an existing tenant in the Project, (iv) the proposed transfer would violate any “exclusive” rights of any tenants in the Project, (v) Landlord or Landlord’s agent has shown space in the Building to the Proposed Transferee or responded to any written inquiries from the Proposed Transferee or the Proposed Transferee’s agent concerning availability of space in the Building, at any time within the preceding nine months, or (vi) Landlord otherwise determines that the proposed Transfer would have the effect of decreasing the value of the Building or increasing the expenses associated with operating, maintaining and repairing the Property.

 

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14.3       Excess Consideration. If Landlord consents to the Transfer, Tenant shall pay to Landlord as additional rent, within ten (10) days after receipt by Tenant, fifty percent (50%) of any consideration paid by any transfer (the “Transferee”) for the Transfer, including, in the case of a sublease, the excess of the rent and other consideration payable by the subtenant over the amount of Base Rent and Additional Rent payable hereunder applicable to the subleased space, after first deducting Tenant’s actual out-of-pocket costs incurred in subleasing or assigning such space including without limitation, rent concessions, attorney fees, brokerage commissions and tenant improvements.

 

14.4       No Release of Tenant. No consent by Landlord to any Transfer shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether occurring before or after such consent, assignment, subletting or other Transfer. Each Transferee shall be jointly and severally liable with Tenant (and Tenant shall be jointly and severally liable with each Transferee) for the payment of rent (or, in the case of a sublease, rent in the amount set forth in the sublease) and for the performance of all other terms and provisions of this Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any such Transferee from the obligation to obtain Landlord’s express prior written consent to any subsequent Transfer by Tenant or any Transferee. The acceptance of rent by Landlord from any other person (whether or not such person is an occupant of the Premises) shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer.

 

14.5       Expenses and Attorneys’ Fees. Tenant shall pay to Landlord on demand all costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in connection with reviewing or consenting to any proposed Transfer (including any request for consent to, or any waiver of Landlord’s rights in connection with, any security interest in any of Tenant’s property at the Premises).

 

14.6       Effectiveness of Transfer. Prior to the date on which any permitted Transfer (whether or not requiring Landlord’s consent) becomes effective, Tenant shall deliver to Landlord a counterpart of the fully executed Transfer document and Landlord’s standard form of Consent to Assignment or Consent to Sublease executed by Tenant and the Transferee in which each of Tenant and the Transferee confirms its obligations pursuant to this Lease. Failure or refusal of a Transferee to execute any such instrument shall not release or discharge the Transferee from liability as provided herein. The voluntary, involuntary or other surrender of this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not work a merger, and any such surrender or cancellation shall, at the option of the Landlord, either terminate all or any existing subleases or operate as an assignment to Landlord of any or all of such subleases.

 

14.7       Landlord’s Right to Space. Notwithstanding any of the above provisions of this Section to the contrary, if Tenant notifies Landlord that it desires to enter into a Transfer, Landlord, in lieu of consenting to such Transfer, may elect (x) in the case of an assignment or a sublease of the entire Premises, to terminate this Lease, or (y) in the case of a sublease of 50% or more of the entire Premises, to terminate this Lease as it relates to the space proposed to be subleased by Tenant. In such event, this Lease will terminate (or the space proposed to be subleased will be removed from the Premises subject to this Lease and the Base Rent and Tenant’s Share under this Lease shall be proportionately reduced) on the date the Transfer was proposed to be effective, and Landlord may lease such space to any party, including the prospective Transferee identified by Tenant.

 

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14.8        Assignment of Sublease Rents. Tenant hereby absolutely and irrevocably assigns to Landlord any and all rights to receive rent and other consideration from any sublease and agrees that Landlord, as assignee or as attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant appointed on Landlord’s application may (but shall not be obligated to) collect such rents and other consideration and apply the same toward Tenant’s obligations to Landlord under this Lease; provided, however, that Landlord grants to Tenant at all times prior to occurrence of any breach or default by Tenant a revocable license to collect such rents (which license shall automatically and without notice be and be deemed to have been revoked and terminated immediately upon any Event of Default).

 

15.           DEFAULT AND REMEDIES.

 

15.1        Events of Default. The occurrence of any of the following shall constitute an “Event of Default” by Tenant:

 

(a)       Tenant fails to make any payment of rent when due, or any amount required to replenish the security deposit as provided in Section 4 above, if payment in full is not received by Landlord within three (3) business days after written notice that it is due.

 

(b)       Tenant abandons the Premises.

 

(c)       Tenant fails timely to deliver any subordination document, estoppel certificate or financial statement requested by Landlord within the applicable time period specified in Sections 20 - Encumbrances - and 21 - Estoppel Certificates and Financial Statements - below.

 

(d)       Tenant violates the restrictions on Transfer set forth in Section 14 - Assignment and Subletting.

 

(e)       Tenant ceases doing business as a going concern; makes an assignment for the benefit of creditors; is adjudicated an insolvent, files a petition (or files an answer admitting the material allegations of a petition) seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors’ rights; all or substantially all of Tenant’s assets are subject to judicial seizure or attachment and are not released within 30 days, or Tenant consents to or acquiesces in the appointment of a trustee, receiver or liquidator for Tenant or for all or any substantial part of Tenant’s assets.

 

(f)       Tenant fails, within ninety (90) days after the commencement of any proceedings against Tenant seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors’ rights, to have such proceedings dismissed, or Tenant fails, within ninety (90) days after an appointment, without Tenant’s consent or acquiescence, of any trustee, receiver or liquidator for Tenant or for all or any substantial part of Tenant’s assets, to have such appointment vacated.

 

(g)       Tenant fails to perform or comply with any provisions of this Lease other than those described in (a) through (f) above, and does not fully cure such failure within thirty (30) days after notice to Tenant or, if such failure cannot be cured within such thirty (30)-day period, Tenant fails within such thirty (30)-day period to commence, and thereafter diligently proceed with, all actions necessary to cure such failure as soon as reasonably possible but in all events within ninety (90) days of such notice; provided, however, that if Landlord in Landlord’s reasonable judgment determines that such failure cannot or will not be cured by Tenant within such ninety (90) days, then such failure shall constitute an Event of Default immediately upon such notice to Tenant.

 

(h)       The occurrence of any Event of Default under any other lease agreement between Tenant and Landlord [if there are any related entities who lease property to Tenant, they should be listed here as well].

 

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15.2        Remedies. Upon the occurrence of an Event of Default, Landlord shall have the following remedies, which shall not be exclusive but shall be cumulative and shall be in addition to any other remedies now or hereafter allowed by law:

 

(a)       Landlord may terminate Tenant’s rights to possession of the Premises at any time by written notice to Tenant. Tenant expressly acknowledges that in the absence of such written notice from Landlord, no other act of Landlord, including re-entry into the Premises, efforts to relet the Premises, reletting of the Premises for Tenant’s account, storage of Tenant’s personal property and Trade Fixtures, acceptance of keys to the Premises from Tenant or exercise of any other rights and remedies under this Section, shall constitute an acceptance of Tenant’s surrender of the Premises or constitute a termination of this Lease or of Tenant’s right to possession of the Premises. Upon such termination in writing of Tenant’s right to possession of the Premises, as herein provided, this Lease shall terminate and Landlord shall be entitled to recover damages from Tenant as provided in California Civil Code Section 1951.2 and any other applicable existing or future Law providing for recovery of damages for such breach, including the worth at the time of award of the amount by which the rent which would be payable by Tenant hereunder for the remainder of the Term after the date of the award of damages, including Additional Rent as reasonably estimated by Landlord, exceeds the amount of such rental loss as Tenant proves could have been reasonably avoided, discounted at the discount rate published by the Federal Reserve Bank of San Francisco for member banks at the time of the award plus one percent (1%).

 

(b)       Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations).

 

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(c)       Landlord may cure the Event of Default at Tenant’s expense. If Landlord pays any sum or incurs any expense in curing the Event of Default, Tenant shall reimburse Landlord upon demand for the amount of such payment or expense with interest at the Interest Rate from the date the sum is paid or the expense is incurred until Landlord is reimbursed by Tenant.

 

(d)       Landlord may remove all Tenant’s property from the Premises, and such property may be stored by Landlord in a public warehouse or elsewhere at the sole cost and for the account of Tenant. If Landlord does not elect to store any or all of Tenant’s property left in the Premises, Landlord may consider such property to be abandoned by Tenant, and landlord may thereupon dispose of such property in any manner deemed appropriate by Landlord. Any proceeds realized by Landlord on the disposal of any such property shall be applied first to offset all expenses of storage and sale, and then credited against Tenant’s outstanding obligations to Landlord under this Lease, and any balance remaining after satisfaction of all obligations of Tenant under this Lease shall be delivered to Tenant.

 

16.           LATE CHARGE AND INTEREST.

 

16.1        Late Charge. If more than once per Lease Year, any payment of rent is not received by Landlord when due, Tenant shall pay to Landlord on demand as a late charge an additional amount equal to ten percent (10%) of the overdue payment. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to the Project. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 16.1 represents a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant’s default with respect to overdue rental or other amounts, nor shall such acceptance prevent Landlord from exercising any other rights and remedies available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at the time of such acceptance of rent or other payments. A late charge shall not be imposed more than once on any particular installment not paid when due, but imposition of a late charge on any payment not made when due does not eliminate or supersede late charges imposed on other (prior) payments not made when due or preclude imposition of a late charge on other installments or payments not made when due.

 

16.2        Interest. In addition to the late charges referred to above, which are intended to defray Landlord’s costs resulting from late payments, any payment from Tenant to Landlord not paid when due shall at Landlord’s option bear interest from the date due until paid to Landlord by Tenant at the rate of fifteen percent (15%) per annum or the maximum lawful rate that Landlord may charge to Tenant under applicable laws, whichever is less (the “Interest Rate”). Acceptance of any late charge and/or interest shall not constitute a waiver of Tenant’s default with respect to the overdue sum of prevent Landlord from exercising any of its other rights and remedies under this Lease.

 

17.            WAIVER. No provisions of this Lease shall be deemed waived by Landlord unless such waiver is in a writing signed by Landlord. The waiver by Landlord of any breach of any provision of this Lease shall not be deemed a waiver of such provision or of any subsequent breach of the same or any other provision of this Lease. No delay or omission in the exercise of any right or remedy of Landlord upon any default by Tenant shall impair such right or remedy or be construed as a waiver. Landlord’s acceptance of any payments of rent due under this Lease shall not be deemed a waiver of any default by Tenant under this Lease (including Tenant’s recurrent failure to timely pay rent) other than Tenant’s nonpayment of the accepted sums, and no endorsement or statement on any check or payment or in any letter or document accompanying any check or payment shall be deemed an accord and satisfaction. Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant.

 

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18.            ENTRY, INSPECTION AND CLOSURE. Upon reasonable oral or written notice to Tenant of not less than 24 hours (and without notice in emergencies), Landlord and its authorized representatives may enter the Premises during the Building’s business hours to: (a) determine whether the Premises are in good condition, (b) determine whether Tenant is complying with its obligations under this Lease, (c) perform any maintenance or repair of the Premises or the Building that Landlord has the right or obligation to perform, (d) install or repair improvements for other tenants where access to the Premises is required for such installation or repair, (e) serve, post or keep posted any noticed required or allowed under the provisions of this Lease, (f) show the Premises to prospective brokers, agents, buyers, transferees, Mortgagees or tenants during the last 6 months of the Term, or (g) do any other act or thing necessary for the safety or preservation of the Premises or the Building. When reasonably necessary Landlord may temporarily close entrances, doors, corridors, elevators or other facilities in the Building without liability to Tenant by reason of such closure. Landlord shall conduct its activities under this Section in a manner that will minimize inconvenience to Tenant without incurring additional expense to Landlord. Except as otherwise specifically stated in this Lease, in no event shall Tenant be entitled to an abatement of rent on account of any entry by Landlord, and Landlord shall not be liable in any manner for any inconvenience, loss of business or other damage to Tenant or other persons arising out of Landlord’s entry on the Premises in accordance with this Section. No action by Landlord pursuant to this paragraph shall constitute an eviction of Tenant, constructive otherwise, entitle Tenant to an abatement of rent or to terminate this Lease or otherwise release Tenant from any of Tenant’s obligations under this Lease.

 

19.            SURRENDER AND HOLDING OVER.

 

19.1        Surrender. Upon the expiration or termination of this Lease, Tenant shall surrender the Premises and all Tenant Improvements and Alterations to Landlord broom-clean and in their original condition, except for reasonable wear and tear, damage from casualty or condemnation and any changes resulting from approved Alterations; provided, however, that prior to the expiration or termination of this Lease Tenant shall remove all telephone and other cabling installed in the Building by Tenant and remove from the Premises all Tenant’s personal property and any Trade Fixtures and all Alterations that Landlord has elected to require Tenant to remove as provided in Section 6.1 - Tenant Improvements & Alterations, and repair any damage caused by such removal. If such removal is not completed before the expiration or termination of the Term, Landlord shall have the right (but no obligation) to remove the same, and Tenant shall pay Landlord on demand for all costs of removal and storage thereof and for the rental value of the Premises for the period from the end of the Term through the end of the time reasonably required for such removal. Landlord shall also have the right to retain or dispose of all or any portion of such property if Tenant does not pay all such costs and retrieve the property within ten (10) days after notice from Landlord (in which event title to all such property described in Landlord’s notice shall be transferred and vest in Landlord). Tenant waives all Claims against Landlord for any damage or loss to Tenant resulting from Landlord’s removal,storage, retention, or disposition of any such property. Upon expiration or termination of this Lease or of Tenant’s possession, whichever is earliest, Tenant shall surrender all keys to the Premises or any other part of the Building and shall deliver to Landlord all keys for or make known to Landlord the combination of locks on all safes, cabinets, and vaults that may be located in the Premises. Tenant’s obligations under this Section shall survive the expiration or termination of this Lease.

 

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19.2        Holding Over. If Tenant (directly or through any Transferee or other successor-in-interest of Tenant) remains in possession of the Premises after the expiration or termination of this Lease, Tenant’s continued possession shall be on the basis of a tenancy at the sufferance of Landlord. No act or omission by Landlord, other than its specific written consent, shall constitute permission for Tenant to continue in possession of the Premises, and if such consent is given or declared to have been given by a court judgment, Landlord may terminate Tenant’s holdover tenancy at any time upon seven (7) days written notice. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease, except that the monthly Base Rent during Tenant’s holding over shall be 150% of the Base Rent payable in the last full month prior to the termination hereof. Acceptance by Landlord of rent after such termination shall not constitute a renewal or extension of this Lease; and nothing contained in this provision shall be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law. Tenant shall indemnify, defend and hold Landlord harmless from and against all Claims arising or resulting directly or indirectly from Tenant’s failure to timely surrender the Premises, including (i) any rent payable by or any loss, cost, or damages claimed by any prospective tenant of the Premises, and (ii) Landlord’s damages as a result of such prospective tenant rescinding or refusing to enter into the prospective lease of the Premises by reason of such failure to timely surrender the Premises.

 

20.            ENCUMBRANCES.

 

20.1        Subordination. This Lease is expressly made subject and subordinate to any mortgage lien, deed of trust, ground lease, underlying lease or like encumbrance affecting any part of the Property or any interest of Landlord therein which is now existing or hereafter executed or recorded (“Encumbrance”); provided, however, that such subordination shall only be effective, as to future Encumbrances, if the holder of the Encumbrance agrees that this Lease shall survive the termination of the Encumbrance by lapse of time, foreclosure or otherwise so long as Tenant is not in default under this Lease. Provided the conditions of the preceding sentence are satisfied, Tenant shall execute and deliver to Landlord, within ten (10) days after written request therefore by Landlord and in a form reasonably requested by Landlord, any additional documents evidencing the subordination of this Lease with respect to any such Encumbrance and the nondisturbance agreement of the holder of any such Encumbrance. If the interest of Landlord in the Property is transferred pursuant to or in lieu of proceedings for enforcement of any Encumbrance, Tenant shall immediately and automatically attorn to the new owner, and this Lease shall continue in full force and effect as a direct lease between the transferee and Tenant on the terms and conditions set forth in this Lease

 

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20.2        Mortgagee Protection. Tenant agrees to give any holder of any Encumbrance covering any part of the Property (“Mortgagee”), by registered mail, a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of notice of assignment of rents and leases, or otherwise) of the address of such Mortgagee. If Landlord shall have failed to cure such default within thirty (30) days from the effective date of such notice of default, the Mortgagee shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured within that time, then such additional time as may be necessary to cure such default (including the time necessary to foreclose or otherwise terminate its Encumbrance, if necessary to effect such cure), and this Lease shall not be terminated so long as such remedies are being diligently pursued.

 

21.            ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

 

21.1        Estoppel Certificates. Within ten (10) days after written request therefor, Tenant shall execute and deliver to Landlord, in a form provided by or satisfactory to Landlord, a certificate stating that this Lease is in full force and effect, describing any amendments or modifications hereto, acknowledging that this Lease is subordinate or prior, as the case may be, to any Encumbrance and stating any other information Landlord may reasonably request, including the Term, the monthly Base Rent, the date to which Rent has been paid, the amount of any security deposit or prepaid rent, whether either party hereto is in default under the terms of the Lease, and whether Landlord has completed its construction obligations hereunder (if any). Tenant irrevocably constitutes, appoints and authorizes Landlord as Tenant’s special attorney-in-fact for such purpose to complete, execute and deliver such certificate if Tenant fails timely to execute and delivery such certificate as provided above. Any person or entity purchasing, acquiring an interest in or extending financing with respect to the Property shall be entitled to rely upon any such certificate. If Tenant fails to deliver such certificate within the time period noted above, Landlord shall sent a second written request therefore, with a copy to Tenant’s counsel as noted in the notice section of this Lease. If Tenant fails to deliver such certificate within ten (10) days after Landlord’s second written request therefor, Tenant shall be liable to Landlord for any damages incurred by Landlord including any profits or other benefits from any financing of the Property or any interest therein which are lost or made unavailable as a result, directly or indirectly, of Tenant’s failure or refusal to timely execute or deliver such estoppel certificate.

 

21.2        Financial Statements. Within twenty (20) days after written request therefore, but not more than once a year, Tenant shall deliver to Landlord a copy of the financial statements (including at least a year end balance sheet and a statement of profit and loss) of Tenant (and of each guarantor of Tenant’s obligations under this Lease) for each of the three most recently completed years, prepared in accordance with generally accepted accounting principles (and, if such is Tenant’s normal practice, audited by an independent certified public accountant), all then available subsequent interim statements, and such other financial information as may reasonably be requested by Landlord or required by any Mortgagee. Landlord shall use good faith efforts to keep such information received from Tenant confidential, except that Landlord may disclose such financial information received from Tenant to any Government Agency, any Mortgagee, lender or prospective lender for, or purchaser or prospective purchaser of, the Building, as necessary in the course of any litigation arising out of or concerning this Lease, or as required by applicable law, and provided however that the foregoing confidentiality requirement shall be inapplicable in the event the subject financial information is made publicly available by the Securities and Exchange Commission or any other governmental body.

 

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22.           NOTICES. Any notice, demand, request, consent or approval that either party desires or is required to give to the other party under this Lease shall be in writing and shall be served personally, delivered by messenger or courier service, or sent by U.S. certified mail, return receipt requested, postage prepaid, addressed to the other party at the party’s address for notices set forth in the Basic Lease Information. Any notice required pursuant to any Laws may be incorporated into, given concurrently with or given separately from any notice required under this Lease. Notices shall be deemed to have been given and be effective on the earlier of (a) receipt (or refusal of delivery or receipt); or (b) one (1) day after acceptance by the independent service for delivery, if sent by independent messenger or courier service, or three (3) days after mailing if sent by mail in accordance with this Section. Either party may change its address for notices hereunder, effective fifteen (15) days after notice to the other party complying with this Section. If Tenant sublets the Premises, notices from Landlord shall be effective on the subtenant when given to Tenant pursuant to this Section.

 

23.           ATTORNEYS’ FEES. In the event of any dispute between Landlord and Tenant in any way related to this Lease, and whether involving contract and/or tort claims, the non-prevailing party shall pay to the prevailing party all reasonable attorneys’ fees and costs and expenses of any type, without restriction by statute, court rule or otherwise, incurred by the prevailing party in connection with any action or proceeding (including any appeal and the enforcement of any judgment or award), whether or not the dispute is litigated or prosecuted to final judgment (collectively, “Fees”). The “prevailing party” shall be determined based upon an assessment of which party’s major arguments or positions taken in the action or proceeding could fairly be said to have prevailed (whether by compromise, settlement, abandonment by the other party of its claim or defense, final decision, after any appeals, or otherwise) over the other party’s major arguments or positions on major disputed issues. Any Fees incurred in enforcing a judgment shall be recoverable separately from any other amount included in the judgment and shall survive and not be merged in the judgment. The Fees shall be deemed an “actual pecuniary loss” within the meaning of the Bankruptcy Code Section 365(b)(1)(B), and notwithstanding the foregoing, all Fees incurred by either party in any bankruptcy case filed by or against the other party, from and after the order for relief until this Lease is rejected or assumed in such bankruptcy case, will be “obligations of the debtor” as that phrase is used in Bankruptcy Code Section 365(d)(3).

 

24.           QUIET POSSESSION. Subject to Tenant’s full and timely performance of all of Tenant’s obligations under this Lease and subject to the terms of this Lease, including Section 20 - Encumbrances, Tenant shall have the quiet possession of the Premises throughout the Term as against any persons or entities lawfully claiming by, through or under Landlord.

 

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25.          SECURITY MEASURES. Landlord may, but shall be under no obligation to, implement security measures for the Property, such as the registration or search of all persons entering or leaving the Building, requiring identification for access to the Building, evacuation of the Building for cause, suspected cause, or for drill purposes, the issuance of magnetic pass cards or keys for Building or elevator access and other actions that Landlord deems necessary or appropriate to prevent any threat of property loss or damage, bodily injury or business interruption; provided, however, that such measures shall be implemented in a way as not to inconvenience tenants of the Building unreasonably. If Landlord uses an access card system, Landlord may require Tenant to pay Landlord a deposit for each after-hours Building access card issued to Tenant, in an amount specified by Landlord. Tenant shall be responsible for any loss, theft or breakage of any such cards, which must be returned by Tenant to Landlord upon expiration or earlier termination of the Lease. Landlord may retain the deposit for any card not so returned. Landlord shall at all times have the right to change, alter or reduce any such security services or measures. Tenant shall cooperate and comply with, and cause Tenant’s Representatives and Visitors to cooperate and comply with, such security measures. Landlord, its agents and employees shall have no liability to Tenant or its Representatives or Visitors for the implementation or exercise of, or the failure to implement or exercise, any such security measures or for any resulting disturbance of Tenant’s use or enjoyment of the Premises.

 

26.           FORCE MAJEURE. If Landlord is delayed, interrupted or prevented from performing any of its obligations under this Lease, including its obligations under the Construction Rider (if any), and such delay, interruption or prevention is due to fire, act of God, governmental act or failure to act, labor dispute unavailability of materials or any cause outside the reasonable control of Landlord, then the time for performance of the affected obligations of Landlord shall be extended for a period equivalent to the period of such delay, interruption or prevention.

 

27.           RULES AND REGULATIONS. Tenant shall be bound and shall comply with the rules and regulations attached to and made a part of this Lease as Exhibit C to the extent those rules and regulations are not in conflict with the terms of this Lease, as well as any reasonable rules and regulations hereafter adopted by Landlord for all tenants of the Building, upon notice to Tenant thereof (collectively, the “Building Rules”). Landlord shall not be responsible to Tenant or to any other person for any violation, or failure to observe, the Building Rules by any other tenant or other person. The Rules and Regulations shall be enforced and changed by Landlord in a reasonable and in a non-discriminatory manner.

 

28.           LANDLORD’S LIABILITY. The term “Landlord,” as used in this Lease, shall mean only the owner or owners of the Building at the time in question. In the event of any conveyance of title to the Building, then from and after the date of such conveyance, the transferor Landlord shall be relieved of all liability with respect to Landlord’s obligations to be performed under this Lease after the date of such conveyance. Notwithstanding any other term or provision of this Lease, the liability of Landlord for its obligations under this Lease is limited solely to Landlord’s interest in the Building as the same may from time to time be encumbered, and no personal liability shall at any time be asserted or enforceable against any other assets of Landlord or against Landlord’s partners or members or its or their respective partners, shareholders, members, directors, officers or managers on account of any of Landlord’s obligation or actions under this Lease.

 

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29.           CONSENTS AND APPROVALS. 

 

29.1        Determination in Good Faith. Wherever the consent, approval, judgment or determination of Landlord is required or permitted under this Lease, Landlord may exercise its good faith business judgment in granting or withholding such consent or approval or in making such judgment or determination without reference to any extrinsic standard of reasonableness, unless the specific provision contained in this Lease providing for such consent, approval, judgment or determination specifies that Landlord’s consent or approval is not to be unreasonably withheld, or that such judgment or determination is to be reasonable, or otherwise specifies the standards under which Landlord may withhold its consent. If it is determined that Landlord failed to give its consent where it was required to do so under this Lease, Tenant shall be entitled to injunctive relief but shall not to be entitled to monetary damages or to terminate this Lease for such failure.

 

29.2        No Liability Imposed on Landlord. The review and/or approval by Landlord of any item or matter to be reviewed or approved by Landlord under the terms of this Lease or any Exhibits or Addenda hereto shall not impose upon Landlord any liability for the accuracy of sufficiency of any such item or matter or the quality or suitability of such item for its intended use. Any such review or approval is for the sole purpose of protecting Landlord’s interest in the Property, and no third parties, including Tenant or the Representatives and Visitors of Tenant or any person or entity claiming by, through or under Tenant, shall have any rights as a consequence thereof.

 

30.            WAIVER OF RIGHT TO JURY TRIAL. Landlord and Tenant waive their respective rights to trial by jury of an contract or tort claim, counterclaim, cross-complaint, or cause of action in any action, proceeding, or hearing brought by either party against the other on any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, or Tenant’s use or occupancy of the Premises, including any claim of injury or damage or the enforcement of any remedy under any current or future law, statute, regulation, code, or ordinance.

 

31.           BROKERS. Landlord shall pay the fee or commission of the broker or brokers identified in the Basic Lease Information (the “Broker”) in accordance with Landlord’s separate written agreement with the Broker, if any. Tenant warrants and represents to Landlord that in the negotiating or making of this Lease neither Tenant nor anyone acting on Tenant’s behalf has dealt with any broker or finder who might be entitled to a fee or commission for this Lease other than the Broker. Tenant shall indemnify and hold Landlord harmless from any claim or claims, including costs, expenses and attorney’s fees incurred by Landlord asserted by any other broker or finder for a fee or commission based upon any dealings with or statements made by Tenant or Tenant’s Representatives.

 

32.            RELOCATION OF PREMISES. Intentionally Omitted.

 

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33.            ENTIRE AGREEMENT. This Lease, including the Exhibits and any Addenda attached hereto, and the documents referred to herein, if any, constitutes the entire agreement between Landlord and Tenant with respect to the leasing of space by Tenant in the Building, and supersedes all prior or contemporaneous agreements, understandings, proposals and other representations by or between Landlord and Tenant, whether written or oral, all of which are merged herein. Neither Landlord nor Landlord’s agents have made any representations or warranties with respect to the Premises, the Building, the Project or this Lease except as expressly set forth herein, and no rights, easements or licenses shall be acquired by Tenant by implication or otherwise unless expressly set forth herein. The submission of this Lease for examination does not constitute an option for the Premises and this Lease shall become effective as a binding agreement only upon execution and delivery thereof by Landlord to Tenant.

 

34.           MISCELLANEOUS. This Lease may not be amended or modified except by a writing signed by Landlord and Tenant. Subject to Section 14 - Assignment and Subletting and Section 28 - Landlord’s Liability, this Lease shall be binding on and shall inure to the benefit of the parties and their respective successors, assigns and legal representatives. The determination that any provisions hereof may be void, invalid, illegal or unenforceable shall not impair any other provisions hereof and all such other provisions of this Lease shall remain in full force and effect. The unenforceability, invalidity or illegality of any provision of this Lease under particular circumstances shall not render unenforceable, invalid or illegal other provisions of this Lease, or the same provisions under other circumstances. This Lease shall be construed and interpreted in accordance with the laws (excluding conflict of laws principles) of the State in which the Building is located. The provisions of this Lease shall be construed in accordance with the fair meaning of the language used and shall not be strictly construed against either party, even if such party drafted the provision in question. When required by the context of this Lease, the singular includes the plural. Wherever the term “including” is used in this Lease, it shall be interpreted as meaning “including, but not limited to” the matter or matters thereafter enumerated. The captions contained in this Lease are for purposes of convenience only and are not to be used to interpret or construe this Lease. If more than one person or entity is identified as Tenant hereunder, the obligations of each and all of them under this Lease shall be joint and several. Time is of the essence with respect to this Lease, except as to the conditions relating to the delivery of possession of the Premises to Tenant. Neither Landlord nor Tenant shall record this Lease.

 

35.           AUTHORITY. If Tenant is a corporation, partnership, limited liability company or other form of business entity, each of the persons executing this Lease on behalf of Tenant warrants and represents that Tenant is a duly organized and validly existing entity, that Tenant has full right and authority to enter into this Lease and that the persons signing on behalf of Tenant are authorized to do so and have the power to bind Tenant to this Lease. Tenant shall provide Landlord upon request with evidence reasonably satisfactory to Landlord confirming the foregoing representations.

 

36.            SIGNAGE. Landlord will provide building-standard “Signage” for Tenant on the building directory located in the lobby of the building. Landlord will also provide a building standard corridor suite sign and elevator lobby strip at no cost to Tenant.

 

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the date first above written.

 

LANDLORD			TENANT
CASIOPEA BOVET, LLC			3-V BIOSCIENCES, INC., a Delaware corporation
By:	Access Property Services, Inc.		By:	DENNIS HOM
Its:	Authorized Agent		Its:	CFO
	/s/ Daniel T. Gray			/s/ Dennis Hom
By:	Daniel T. Gray
Its:	Senior Vice President		Date:	MARCH 11, 2019
Date:	3-12-19

 

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EXHIBIT A

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF MARCH 1, 2019

BETWEEN

CASIOPEA BOVET, LLC, AS LANDLORD,

AND

3-V BIOSCIENCES, INC., AS TENANT

(“LEASE”)

 

THE PREMISES

 

 

  

 

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EXHIBIT B

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF MARCH 1, 2019

BETWEEN

CASIOPEA BOVET, LLC, AS LANDLORD,

AND

3-V BIOSCIENCES, INC., AS TENANT

(“LEASE”)

 

CONSTRUCTION RIDER

 

1.        Tenant’s Election to Lease Premises “AS IS”. Tenant has thoroughly examined and inspected the Premises and has elected to lease the Premises on the terms set forth in the Lease on a strictly “AS IS”, WHERE IS and WITH ALL FAULTS subject to Landlord’s obligation to perform or to contribute toward the cost of any renovation or refurbishment or other work to prepare the Premises for use or occupancy by Tenant under this Lease.

 

Landlord, at its sole cost, shall improve the Premises utilizing building standard materials, based upon a mutually acceptable space plan attached hereto as Exhibit B-1. Said Improvements to consist of the following:

 

Paint throughout including one accent wall

Install new flooring (carpet throughout with VCT in kitchen)

Install new building standard light fixtures

 

2.        Ownership of Tenant Improvements. All Tenant Improvements, whether installed by Landlord or Tenant, shall become a part of the Premises, shall be the property of Landlord and, subject to the provisions of the Lease, shall be surrendered by Tenant with the Premises, without any compensation to Tenant, at the expiration or termination of the Lease in accordance with the provisions of the Lease. At Landlord’s request, Tenant will remove such Tenant Improvements designated by Landlord and restore the portion of the Premises affected by such removal to their condition before such Tenant Improvements were made.

 

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EXHIBIT C

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF MARCH 1, 2019

BETWEEN

CASIOPEA BOVET, LLC, AS LANDLORD,

AND

3-V BIOSCIENCES, INC., AS TENANT

(“LEASE”)

 

BUILDING RULES

 

The following Building Rules are additional provisions of the foregoing Lease to which they are attached. The capitalized terms used herein have the same meaning as these terms are given in the Lease.

 

1)

Building HVAC Hours. Normal hours for the operation of building HVAC systems shall be 7:30 AM to 6:00 PM, Monday through Friday, excluding generally observed holidays and the Friday following Thanksgiving. HVAC service for additional hours shall be available at Landlord's then standard hourly rates (two-hour minimum).

 

2)

Use of Common Areas. Tenant will not obstruct the sidewalks, halls, passages, exits, entrances, elevators or stairways of the Building (“Common Areas”), and Tenant will not use the Common Areas for any purpose other than ingress and egress to and from the Premises. The Common Area, except for the sidewalks, are not open to the general public and Landlord reserves the right to control and prevent access to the Common Areas of any person whose presence, in Landlord’s opinion, would be prejudicial to the safety, reputation and interests of the Building and its tenants.

 

3)

After-Hours Access. On weekends and holidays observed by the Bovet Office Centre, and between the hours of 6:00 PM and 7:30 AM, Monday through Friday, access to any building may be refused unless the person seeking access has the building security code or is properly identified by the person charged with responsibility for the safety and protection of such building. In no case shall Landlord be liable for any loss or damage for any error with respect to any person's admission to or exclusion from any building. Landlord reserves the right to lock the building entry doors on weekends and holidays and from 6:00 PM until 7:00 AM on business days and during such other hours as Landlord deems necessary for the safety and protection of the building or its tenants or contents. Further, in case of invasion, mob, riot, public excitement, or other commotion and at such times as Landlord deems necessary for the safety and protection of any building, its tenants, or the property located therein, Landlord may prohibit and prevent access to such building by all persons by any reasonable means Landlord deems appropriate.

 

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4)

Securing the Premises. Each tenant shall see that the exterior doors of its premises are closed and securely locked when not in use and at all times described in the first sentence of Rule and Regulation No. 2 above. Each tenant shall keep its corridor doors closed except for normal ingress and egress to and from its premises. Each tenant shall exercise extraordinary care and caution that all water faucets or water apparatus (if available) are entirely shut off each day before its premises are left unoccupied and that all electricity or gas shall likewise be carefully shut off so as to prevent waste of such utility or possible property damage or injury to Landlord's janitor or other employees or representatives or to other occupants of the building. Tenant will be liable for all damage or injuries sustained by other tenants or occupants of the Building or Landlord resulting from Tenant’s carelessness in this regard or violation of this rule. Tenant will keep the doors to the Building corridors closed at all times except for ingress and egress.

 

5)

Responsibility for Theft. Tenant assumes any and all responsibility for protecting the premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

 

6)

Temperature Controls. No tenant shall tamper with or adjust temperature control thermostats in its premises or elsewhere in any building. Landlord shall adjust thermostats as required to maintain the building standard temperatures.

 

7)

Signs. Except as provided or required by Landlord in accordance with Bovet Office Centre's building standards, no tenant shall inscribe, display, print, paint, or affix any sign, notice, placard, picture, advertisement, or name on or to any part of the building or exterior of such tenant's premises or to door thereof without the prior written consent of Landlord. Landlord shall have the right, without notice and at the expense of any tenant who violates the foregoing restriction, to remove any such sign, notice, placard, picture, advertisement, or name that does not comply herewith. All approved signage will be inscribed, painted or affixed at Tenant’s expense by a person approved by Landlord, which approval will not be unreasonably withheld.

 

8)

Use of Bovet Office Centre's Name. No tenant shall, without Landlord's prior written consent, use the name of the Bovet Office Centre in connection with any promotion or advertising of the tenant's business, except as such tenant's address.

 

9)

Building Directories. The building directories shall be used primarily for display of the name and location of tenants. Landlord reserves the right to exclude any other names there from, to limit the number of names associated with tenants to be placed thereon, and to charge for names associated with tenants to be placed thereon at rates generally applicable to all tenants.

 

10)

Building Address. Landlord, without notice and without liability to any tenant, may at any time change the name or the street address of any building or any premises therein.

 

11)

Window Coverings. Except as provided or required by Landlord in accordance with Bovet Office Centre's building standards, no draperies, curtains, blinds, shades, screens, awnings, hangings, decorations, or other devices shall be attached to, hung at, placed in, or used in connection with any window or exterior door of any tenant's premises. Any articles placed or kept on the windowsills or next to the sills so as to be visible from the exterior of the building shall be immediately and permanently removed upon Landlord's written request. No doors, windows, light fixtures, or any lights or skylights that reflect or admit light into halls or other places or any building shall be covered or obstructed. Landlord shall have the right to control all lighting within the Premises that may be visible from the exterior the Building.

 

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12)

Wall Decorations. Except as expressly approved in writing by Landlord, no tenant shall mark, drive nails, screw, or drill into any brick or masonry walls or in any way deface any building or any premises for any purpose whatsoever, except that tenant may drive nails or screws into sheetrock or plaster walls as necessary for supporting pictures, paintings, and other similar decorative items, provided that the weight thereof does not exceed fifteen (15) pounds.

 

13)

Ceiling Clearance. No tenant shall stock, pile, store, or place any objects closer than 18 inches to the ceiling of its premises. All costs or relocation or adding sprinkler heads (if any) due to walls or objects in a tenant area that project closer than 18 inches to the ceiling shall be at such tenant's cost. EXTREME CARE MUST BE TAKEN TO AVOID ANY AND ALL CONTACT WITH SPRINKLER HEADS.

 

14)

Floor Coverings. Tenant will not lay or otherwise affix linoleum, tile, carpet or any other floor covering to the floor of the Premises in any manner except as approved in writing by Landlord. Tenant will be liable for the cost of repair of any damage resulting from the violation of this rule or the removal of any floor covering by Tenant or its contractors, employees or invitees.

 

15)

Corrosion Damage; Chair Mats. Each tenant shall be responsible for any damage to carpeting and flooring as a result of rust or corrosion of such tenant's file cabinets, potholders, roller chairs, or other metal objects. Chair mats shall be placed under all non-stationary chairs.

 

16)

Telecommunication Devices. No tenant shall install any radio or television antenna, loudspeaker, earth station, or any other device on the exterior walls or the roof of any building without Landlord's prior written approval. No tenant shall interfere with radio or television broadcasting or reception from or in any building in the Bovet Office Centre.

 

17)

Telephone and Electric Wires. No boring or cutting for telephone or electric wires shall be allowed without the written consent of the Landlord and any such wires shall be introduced at the place and in the manner required by Landlord. The location of each tenant's call boxes, telephones, speakers, and all other office equipment affixes to it premises shall be subject to the approval of the Landlord. Each tenant shall pay all expenses incurred in connection with the installation of its equipment, including any telephone and electricity distribution equipment.

 

18)

Burglar Alarms. No burglar alarm system may be installed without Landlord's prior written approval of such system, which approval shall not be unreasonably withheld.

 

19)

Extension Cords. Landlord reserves the right to restrict the use of any electrical extension cords. At no time shall more that two electrical devices be connected to any one duplex outlet. Multiple adapters are prohibited. Any extension cord used shall be a two-wire cord with ground and shall be sized according to the power draw on the circuit.

 

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20)

Use of the Passageways and Roof. No tenant shall obstruct, or sweep or throw dirt or any other substance into, or temporarily or permanently store or dispose of any trash, garbage, waste, or refuse in, any hall, passage, exit, entrance, elevator, or stairway or on the sidewalk of any building or other area of the Bovet Office Centre or use the same for any purpose other than for ingress to and egress from such tenant's premises. The halls, passages, exits, entrances, elevators, and stairways of each building in the Bovet Office Centre are not for the use of the general public, and Landlord in all cases reserves the right to control the same and prevent access thereto by any person whose presence, in the judgment of Landlord, is or may be prejudicial to the safety, character, reputation, or interests of such building or its tenants; provided however, that Landlord shall not prevent such access to persons with whom tenants deal in the ordinary course of business unless such persons are engaged in illegal or disruptive activities. No person shall go up on or use the roof of any building unless expressly so authorized by Landlord.

 

21)

Deliveries and Use of Elevators. No mail, furniture, packages, supplies, equipment, merchandise, or deliveries of any kind shall be received in any building or carried up or down in the elevators except between such hours and in such elevators as shall be designated by Landlord. All routine deliveries to any tenant's premises shall be made through the elevators designated for freight usage. Passenger elevators shall be used only for the movement of persons, except as otherwise approved in writing by Landlord.

 

22)

Moving and Installation of Equipment. Furniture, freight, and equipment of every kind shall be moved into or out of buildings only at such times and in such manner, as Landlord shall designate. All hand-trucks used anywhere in any building shall be equipped with rubber tires and side guards. Landlord may prescribe and limit the weight, size, or position of any office equipment to be used by tenants, other than standard office desks, chairs, table, and portable office machines. Safes and other heavy equipment, if any, approved by Landlord shall stand on wood strips of such thickness, as Landlord deems necessary to distribute properly the weight thereof. If moving or maintaining any property of a tenant causes any damage to the premises or any other portion of the building, the damage shall be repaired at such tenant's expense. All removals, or the carrying in or out of any building or moving within any building, of any safe, freight, furniture, fixtures, or bulky matter of any description shall only take place during such hours as Landlord may determine from time to time. The moving of all such items shall only be made upon previous written notice to Landlord and under its supervision, and the persons employed by any tenant for such work must be acceptable to Landlord. Landlord reserves the right to inspect all safes, furniture, fixtures, freight, and other bulky matter to be brought into any building and to exclude there from any such item that violates any of these rules and regulations or the lease of the tenant responsible for such item.

 

23)

Trash Disposal. No trash, garbage, waste, or refuse shall be stored or disposed of in any common area of the Bovet Office Centre, except in the dumpsters or trash containers provided by Landlord for that purpose. All cardboard and wooden boxes shall be broken down and flattened before they may be disposed of in such dumpsters and trash containers. Tenants shall only use such dumpsters and trash containers for disposal on non-hazardous trash or waste generated at the Bovet Office Centre in connection with the ordinary conduct of such tenants' business at the Bovet Office Centre in accordance with the terms and conditions of their respective leases. Any tenant desiring Landlord's services for removal or disposal of additional quantities of non-hazardous trash or waste generated by such tenant at the Bovet Office Centre shall so notify Landlord, and Landlord shall endeavor to provide such service at its then standard charges.

 

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24)

Tenant's Authorized Representative. Each tenant, by written notice to Landlord, shall appoint a person to act as such tenant's Authorized Representative. All tenant requests to Landlord or its management for services shall be made through the Authorized Representatives. Each tenant's Authorized Representative shall also serve as the tenant contact in the event of building emergencies, interruptions of services, or security problems.

 

25)

Services. Except as may otherwise be agreed to in writing by Landlord, no tenant shall hire, employ, or contract with any person or firm for spring water, ice, towel, janitorial, maintenance, or other like service to be provided to such tenant's premises, and no person shall be permitted to enter any building for such purpose. Tenants shall not cause any unnecessary labor by carelessness or indifference to the preservation of good order and cleanliness in their premises or any other area of their building or the Bovet Office Centre. Landlord shall not be responsible to any tenant for loss of property in its premises or elsewhere in the Bovet Office Centre, however occurring, or for any damage to the property of any tenant caused by the employees or independent contractors of Landlord or by any other person. Regular janitor service provided by Landlord shall include ordinary dusting and cleaning, but shall not include cleaning of carpets or rugs (except normal vacuuming) or moving of furniture, file cabinets, or equipment. Window cleaning shall be done only at the times determined by Landlord, in accordance with its normal business practice, for such services.

 

26)

Landlord's Employees. Special requirements of tenants shall be attended to only upon application to Landlord at its office in the Bovet Office Centre. Employees of Landlord shall not move any furniture or in any case perform any work for tenants outside such employees' regular duties unless under special instructions from Landlord, and no employee of Landlord shall be required to admit any person (tenant or otherwise) to any premises in any building.

 

27)

Preparation for Maintenance/Repairs/Alterations. In the event Landlord shall elect, or be required, to perform any maintenance, repairs, alterations, improvements, or installations on a tenant's premises, such tenant shall, upon Landlord's request, move any file cabinets, furniture, or equipment as required by Landlord's workers in order for them to obtain full, unobstructed access to the area where their work is to be performed.

 

28)

Lock and Keys Furnished by Landlord. Landlord shall at its expense provide a lock set and two keys for each corridor door entering the tenant's premises. No tenant shall make or cause to be made any copies of such keys, except through Landlord, who shall make additional keys available upon request at Landlord's then standard charges. Landlord shall endeavor to provide such additional keys within five (5) working days after the tenant's request. Upon a tenant's written request, Landlord shall re-key any lock sets, or install additional lock sets, on corridor or interior doors of such tenant's premises, and such tenant shall pay Landlord for such service at Landlord's then standard charge therefore. In emergencies only, a temporary lockset may be installed, and the same shall be replaced as soon as the permanent lockset is available. No tenant shall re-key or install, or cause to be re-keyed or installed, any lock set on any door except in the foregoing manner. All such locksets and keys shall be keyed to the building master lock system. Notwithstanding the foregoing, no tenant shall be required to provide Landlord with keys to such tenant's safes or vaults or to those areas of its premises appropriately designated by such tenant in writing to Landlord as "Restricted Areas".

 

Landlord’s initials

Tenant’s initials

 

 

29)

Return of Keys. All door keys and locksets furnished to any tenant shall remain the property of Landlord. Upon termination of occupancy of it premises, each tenant shall deliver to Landlord all keys furnished by Landlord, and any reproductions thereof made by or at the direction of such tenant. In the event of loss of any keys so furnished, the affected tenant shall immediately report the loss to Landlord and such tenant shall reimburse Landlord, at Landlord's then standard rates, for (a) the cost of replacing such keys or (b) should Landlord decide that re-keying the locks is necessary for the security of such premises, the cost (including labor and materials) of re-keying all locks keyed to such lost keys. Upon termination of occupancy of its premises, each tenant shall also deliver to Landlord all keys to any other locks remaining in the premises and shall give Landlord written notice of the combinations of any locks to any safes, cabinets, vaults, or doors to "Restricted Areas", if the same are not removed by such tenant.

 

30)

Hazardous Substances. The following rule concerns "Hazardous Substances", which term shall mean any kerosene, gasoline, oils, solvents, paint thinner, acids, caustics, insecticides, pesticides, herbicides, corrosives, flammable explosives, asbestos, PCB vinyl chloride, cyanide solutions, urea formaldehyde, waste chemicals, sludge, radioactive materials, infectious or medical waste, or other substance or material that, after release into the environment and upon exposure, ingestion, inhalation, or assimilation, either directly from the environment or indirectly by ingestion through food chains, will or may reasonably be anticipated to cause death, disease, behavior abnormalities, cancer, reproductive harm, or genetic abnormalities. No tenant shall cause or permit any Hazardous Substance to be brought upon or kept, used, or generated in or about its premises or any other area of its building or the Bovet Office Centre unless (a) such Hazardous Substance is necessary for the tenant's business (and business is a permitted use under its lease) and (b) the tenant first obtains the written consent of Landlord if such Hazardous Substance is other than an ordinary consumer product that is used at the premises in the same manner as an ordinary consumer use and is present in quantities that are not substantially greater quantities than may be present in an ordinary household and that would not require reporting under any federal, state, or local law or regulation if such quantities were released into the environment. Any tenant who at any time becomes aware, or has reasonable cause to believe, that any Hazardous Substance, other than those permitted under these rules and regulations, has come to be located in, on, or beneath its premises or any other area of its building or the Bovet Office Centre, such tenant shall, immediately upon discovering such presence or suspected presence of such Hazardous Substance, give Landlord written notice, in reasonable detail, of such condition.

 

Landlord’s initials

Tenant’s initials

 

 

31)

Nuisance. No tenant shall, in or about its premises, (a) use or keep or permit to be used or kept any foul or noxious gas or substance, (b) engage in or permit any activities or uses offensive or objectionable to Landlord or other tenants or occupants by reason of noise, odors, or vibrations, (c) interfere in any way with other tenants or persons conducting business in any building in the Bovet Office Centre, or (d) without Landlord's prior written consent, bring or keep, or permit to be brought or kept, any pets or animal life form, other than human, except seeing eye dogs when in the company of their masters.

 

32)

Certain Other Prohibited Uses. No cooking shall be done or permitted by tenants in their premises or elsewhere in the building or on the grounds of the Bovet Office Centre, except as otherwise specifically consented to in writing by Landlord. No premises shall be used for the storage of merchandise (except storage incidental to a use expressly permitted under tenant's lease), washing clothes, lodging, sleeping or any improper, objectionable, or immoral purpose. No tenant shall, without Landlord's prior written consent, use any method of heating or air-conditioning other than that supplied by Landlord.

 

33)

No Smoking. Smoking of cigarettes, cigars, and pipes is prohibited in building lobbies, stairways, corridors, elevators, restrooms and other common areas in the buildings. All cigarettes, cigars, and pipes shall be extinguished before entering any building.

 

34)

Intoxication. Landlord may exclude or expel from the Bovet Office Centre 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 material violation of any of the rules or regulations of the Bovet Office Centre.

 

35)

No Soliciting. Canvassing, soliciting, peddling, and distribution of written material in any building or in the parking lots or grounds of the Bovet Office Centre are prohibited, and each tenant shall cooperate to prevent the same.

 

36)

No Loitering. No one shall loiter in any entrances, exits, stairways, elevators, or corridors, or, except as otherwise consented to in writing by Landlord, in any way obstruct any sidewalk, driveway, lobby, stairway, or elevator.

 

37)

No Shopping Carts. No shopping carts may be brought onto the grounds of the Bovet Office Centre or into any building.

 

38)

No Vehicles in Premises. No bicycles or vehicles of any kind shall be brought into or kept in or about any tenant's premises or other area of any building.

 

39)

Christmas Trees. Live/Cut Christmas trees, electrical decorative lights, candles, and open flames are strictly prohibited.

 

40)

Vending Machines. No vending, arcade, game, or food or beverage dispensing machine of any description shall be installed, maintained, or operated in any tenant's premises or elsewhere in any building without the prior written consent of Landlord.

 

41)

Toilet Fixtures. No toilet room, toilet, urinal, washbowl, or other apparatus shall be used for any purpose other than that for which it was constructed and no foreign substance of any kind whatsoever shall be thrown or placed therein. The expense of any breakage, stoppage, or damage resulting from the violation of this rule shall be borne by the tenants who, or whose employees or visitors, cause such breakage, stoppage, or damage.

 

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Tenant’s initials

 

 

42)

Parking Rules and Regulations:

 

a)

Landlord reserves the right to designate the use of parking spaces at the Bovet Office Centre, and parking shall be prohibited except in areas specifically marked for parking. All parked vehicles shall be parked within (and never across) the striped lanes designated or such purpose, and no portion of any marked vehicle may block any driveway.

 

b)

Areas marked “visitor parking” shall be used solely for tenant’s clients and visitors. Tenant’s employees parking in “visitor parking” will be immediately towed, without notice and without warning, at owner’s expense.

 

c)

Areas marked as "loading" zones shall be used solely for purposes of loading and unloading of equipment, personal property, or materials used at the Bovet Office Centre. Any vehicle being loaded or unloaded shall be properly parked in a parking space or stopped in such a marked "loading" zone. No vehicle stopped in a "loading" zone may be left unattended.

 

d)

Only passenger vehicles may be parked at the Bovet Office Centre. The parking of trucks, trailers, recreational vehicles, and boats is specifically prohibited. Landlord may, in its sole discretion, designate separate areas for bicycles and motorcycles.

 

e)

No "For Sale" or other advertising signs or signs referring to the Bovet Office Centre may be placed on or about any vehicle parked at the Bovet Office Centre.

 

f)

No vehicles may be parked overnight at the Bovet Office Centre without Landlord's prior written consent.

 

g)

No vehicle that exceeds thirty (30) feet in length may enter the Bovet Office Centre for any purpose.

 

h)

While driving in the driveways and parking lots, drivers shall comply with all directional signs and arrows and shall not exceed the speed limit of 5 miles per hour.

 

i)

Washing, waxing, cleaning, and servicing of vehicles in the Bovet Office Centre is prohibited

 

j)

Upon Landlord's request to any tenant, such tenant shall provide Landlord with a list of license plate numbers of all automobiles used by its employees and agents who are authorized to park at the Bovet Office Centre.

 

k)

Landlord reserves the right to have any vehicle that violates any provision of these parking rules and regulations towed at the vehicle owner's expense.

 

l)

Parking stickers or any other device or form of identification supplied by Landlord shall remain the property of Landlord. Such parking identification device shall be displayed as requested and may not be mutilated in any manner. There shall be a replacement charge to the tenant, at Landlord's then standard rates, for loss of any such device. Loss or theft of any such device shall be reported to Landlord immediately. Any parking identification devices found on or used for an unauthorized car may be confiscated and the illegal holder shall be subject to prosecution. Lost or stolen devices previously reported and then found shall be reported found to the Landlord immediately

 

43)

Responsibility for Employees and Guests. Each tenant shall be responsible for the observance of all the rules and regulations by such tenant's employees, agents, clients, customers, contractors, invites, visitors, and guests.

 

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44)

Sales and Auctions. Tenant will not conduct or permit to be conducted any sale by auction in, upon or from the Premises or elsewhere in the Property, whether said auction be voluntary, involuntary, pursuant to any assignment for the payment of creditors or pursuant to any bankruptcy or other insolvency proceeding.

 

45)

Enforcement of Rules. Each tenant shall be liable to Landlord and to each other tenant of the Bovet Office Centre for any loss, cost, expense, damage, or liability, including attorneys' fees, caused or occasioned by the failure of such first named tenant to comply with these rules and regulations, but Landlord shall have no liability for such failure or for failing or being unable to enforce compliance therewith by any tenant and such failure by Landlord or non-compliance by any other tenant shall not be a ground for abatement of rent or termination of any lease.

 

46)

Collection of Charges. Landlord's right to charge particular tenants for certain costs and expenses pursuant to these rules and regulations shall not impose any obligation upon Landlord to impose or collect such charges from any such particular tenant, and in the event Landlord, for whatever reason, is not reimbursed by any tenant for such costs and expenses, the same may be included in the calculation of building operating expenses for purposes of determining each tenant's percentage share of increases therein in accordance with the provisions of its lease.

 

47)

Waivers. Landlord may waive any one or more of these rules and regulation for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall constitute a waiver of such rule or regulation in favor of any other tenant.

 

48)

Plumbing Facilities. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be disposed of therein. Tenant will be liable for any breakage, stoppage or damage resulting from the violation of this rule by Tenant, its employees or invitees.

 

49)

Changes to Rules. Landlord reserves the right to rescind any of these rules and regulations and to make such changes therein, and add such other and further rules and regulations as Landlord in its reasonable judgment shall, from time to time, deem appropriate. Such changed or additional rules and regulations shall be binding upon each tenant upon Landlord’s giving such tenant written notice thereof.

 

50)

Non-Discriminatory Enforcement. Subject to the provisions of the Lease (and the provision of other leases with respect to other tenants), Landlord shall use reasonable efforts to enforce these Building Rules in a non-discriminatory manner, but in no event shall Landlord have any liability for any failure or refusal to do so (and Tenant’s sole and exclusive remedy for any such failure or refusal shall be injunctive relief preventing Landlord from enforcing any of the Building Rules against Tenant in a manner that discriminates against Tenant).

 

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EXHIBIT D

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF MARCH 1, 2019

BETWEEN

CASIOPEA BOVET, LLC, AS LANDLORD,

AND

3-V BIOSCIENCES, INC., AS TENANT

(“LEASE”)

 

ADDITIONAL PROVISIONS RIDER

 

37.

PARKING.

 

(a)       Tenant’s Parking Rights. Landlord shall provide Tenant, on an unassigned and non-exclusive basis, for use by Tenant and Tenant’s Representatives and Visitors, at the users’ sole risk, ten (10) parking spaces in the Parking Facility. The parking spaces to be made available to Tenant hereunder may contain a reasonable mix of spaces for compact cars and up to ten percent (10%) of the unassigned spaces may also be designated by Landlord as Building visitors’ parking.

 

(b)       Availability of Parking Spaces. Landlord shall take reasonable actions to ensure the availability of the parking spaces leased by Tenant, but Landlord does not guarantee the availability of those spaces at all times against the actions of other tenants of the Building and user of the Parking Facility. Access to the Parking Facility may, at Landlord’s option, be regulated by card, pass, bumper sticker, decal or other appropriate identification issued by Landlord. Landlord retains the right to revoke the parking privileges of any user of the Parking Facility who violates the rules and regulations governing use of the Parking Facility (and Tenant shall be responsible for causing any employee of Tenant or other person using parking spaces allocated to Tenant to comply with all parking rules and regulations).

 

(c)       Assignment and Subletting. Notwithstanding any other provision of the Lease to the contrary, Tenant shall not assign its rights to the parking spaces or any interest therein, or sublease or otherwise allow the use of all or any part of the parking spaces to or by any other person, except with Landlord’s prior written consent, which may be granted or withheld by Landlord in its sole discretion. In the event of any separate assignment or sublease of parking space rights that is approved by Landlord, Landlord shall be entitled to receive, as additional Rent hereunder, one hundred percent (100%) of any profit received by Tenant in connection with such assignment or sublease.

 

(d)       Condemnation, Damage or Destruction. In the event the Parking Facility is the subject of a Condemnation, or is damaged or destroyed, and this Lease is not terminated, and if in such event the available number of parking spaces in the Parking Facility is permanently reduced, then Tenant’s rights to use parking spaces hereunder may, at the election of the Landlord, thereafter be reduced in proportion to the reduction of the total number of parking spaces in the Parking Facility, and the Monthly Parking Rental payable hereunder shall be reduced proportionately. In such event, Landlord reserves the right to reduce the number of parking spaces to which Tenant is entitled or to relocate some or all of the parking spaces to which Tenant is entitled to other areas of the Parking Facility.

 

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EXHIBIT E

 

ATTACHED TO AND FORMING A PART OF

LEASE AGREEMENT

DATED AS OF MARCH 1, 2019

BETWEEN

CASIOPEA BOVET, LLC, AS LANDLORD,

AND

3-V BIOSCIENCES, INC., AS TENANT

(“LEASE”)

 

ASBESTOS NOTIFICATION

 

In accordance with California law, we are providing you with information concerning the presence of asbestos containing materials (ACM's) and certain chemicals in Bovet Office Centre. California law also requires Tenants and Contractors to give their respective employees, contractors, subcontractors, agents, lessors and subtenants written notification regarding the presence of ACM's in the buildings within 15 days after receipt of such information.

 

Many building construction materials and furnishings, when new, tend to emit small amounts of gases, such as formaldehyde or urethane that the State of California has determined to be carcinogens and/or reproductive toxins. We have implemented a policy of requiring all contractors to minimize the use of hazardous chemicals in connection with work performed in the buildings. Nevertheless, detectable amounts of such gases may be present in the building air from time to time.

 

Accordingly, we are providing the following warning in accordance with Proposition 65 (Health and Safety Code Sections 25249.6 et seq.):

 

WARNING: This building may contain chemicals known to the State of California to cause cancer or reproductive harm.

 

ACM's pose no health risks unless they are broken up or disturbed so that asbestos fiber may become airborne and are inhaled. Inhalation of asbestos fibers has been associated with increased incidence of lung cancer, mesothelioma, and respiratory disease. Therefore, any activity that could disturb these materials must be taken with care and in accordance with applicable laws, lease provisions, and the rules and regulations of Bovet Office Centre.

 

EnviroGroup performed asbestos surveys of both buildings in the Bovet Office Centre in 1988-89, and in 1993 by H+GCL, both firms being highly regarded environmental consultants.

 

The 1988-89 surveys included inspections and samplings in certain areas believed to be representative. Samples were analyzed by a polarized light microscopy in accordance with procedures approved by the Environmental Protection Agency. The only ACM identified was vinyl flooring and the adhesive used to attach it to the floor. These materials are located throughout both buildings (sometimes under carpets). The asbestos fibers in these materials are believed to be fully bonded and encapsulated, so they are not likely to become airborne unless they are sanded, sawed, cored or broken up.

 

The 1993 asbestos survey included a review of the 1988-89 survey reports and inspections of representative areas, but no testing. The 1993 report states that additional asbestos testing of roofing materials, pipe elbow packing, acoustical ceiling tiles, gypsum board, and joint tape and joint compound may be advisable prior to engaging in renovation, maintenance or demolition activities affecting such materials. Accordingly, we require that any area scheduled for construction activities affecting such materials be evaluated for potential ACM's and that all-suspect material are tested for asbestos content. Only certified asbestos consultants or EPA-accredited asbestos inspectors are permitted to perform such evaluations.

 

Only properly trained and equipped personnel are permitted to disturb ACM in connection with repairs or remodeling. If more than 100 square feet of ACM will be removed or disturbed, the work must be performed by a contractor registered with Cal OSHA to perform asbestos-related work.

 

In 1991, JMC Environmental & Occupational Health Services performed air monitoring on the fourth floor of 177 Bovet Road in connection with floor renovation activities. The results of JMC's testing demonstrated consistency with our current building standard for airborne asbestos, which is <0.005 asbestos structures per cubic centimeter of air (s/cc), as measured by the state of the art technology known as Transmission Electron Microscopy (TEM). The concentration level identified as involving "no significant risk" under regulations implementing Proposition 65 is not readily measurable. However, our building standard is much more stringent than the current OSHA action level of 0.1 asbestos fibers per cubic centimeter (f/cc), as measured by Phase Contrast Microscopy (a less accurate technique than TEM), and significantly lower than the EPA clearance level of approximately 0.01 s/cc (by TEM) currently required for schools.

 

Copies of all asbestos survey and monitoring reports and test results from air monitoring and bulk samplings of materials are available for your inspection and photocopying at the building management office.

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EXHIBIT F

 

ACKNOWLEDGEMENT OF LEASE COMMENCEMENT

By and Between

Casiopea Bovet, LLC, as Landlord

And

3-V Biosciences, Inc., as Tenant

 

 

This Acknowledgement of Lease Commencement (“Acknowledgement”) is made as of              ,        , by and between Casiopea Bovet, LLC, as (Landlord) and 3-V Biosciences, Inc., as (Tenant).

 

RECITALS

 

A.

WHEREAS, pursuant to a written lease dated as of ________,___ (the “Lease”), Tenant leases from Landlord certain premises commonly known as Suite 303 of the eight (8) story building located at 155 Bovet Road in the City of San Mateo, State of California (the “Premises”), as more particularly described in the Lease;

 

B.

WHEREAS, subject to and upon the terms and conditions set forth in this Acknowledgement, the parties desire to confirm the term of the Lease.

 

ACCORDINGLY, the parties agree as follows:

 

AGREEMENT

 

1.

The parties to this Acknowledgement hereby agree to confirm the establishment of the commencement and expiration dates of the term of the Lease, and the rental commencement date as follows:

 

a)

The date of              , shall be the commencement date of the term of the Lease;

 

b)

The date of _______, shall be the scheduled expiration date of the term of the Lease;

 

c)

The period commencing on ______, and ending on ______, shall be the period to which Tenant’s rent payment of $                  made pursuant to Page 1, Basic Lease Information, Base Rent and Section 3.1, Base Rent of the Lease (receipt of which amount is hereby acknowledged by Landlord) shall be applied;

 

d)

The date of                 is the next date on which scheduled monthly rent shall be paid by Tenant, which payment shall be in the amount of $                  and shall cover the period commencing _________, and ending on                 ,       . Thereafter, scheduled monthly rent shall be payable on the first of the month as provided in the Lease.

 

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2.

Tenant hereby confirms the following:

 

a)

That it has accepted possession of the Premises pursuant to the terms of the Lease;

 

b)

That the improvements and space required to be furnished by Landlord according to the Lease have been furnished;

 

c)

That other than this Acknowledgement there has been no modification, alteration, or amendment to the Lease, except as follows: None

 

d)

That there are no offsets or credits against rentals, nor has any security deposit been paid, except as provided by the Lease;

 

e)

That Tenant has not made any assignment of the Lease or any sublease of all or any portion of the Premises; and

 

f)

That the Lease, as confirmed, modified and amended by this Acknowledgement, is in full force and effect and represents the entire agreement between Landlord and Tenant concerning the Premises and the matters covered by the Lease.

 

3.

This Acknowledgement, and each and all of the provisions hereof, shall inure to the benefit of, or bind, as the case may require, the parties hereto, and their respective heirs, successors, and assigns subject to the restrictions upon assignment and subletting contained in the Lease.

 

IN WITNESS WHEREOF, the parties hereby execute this Acknowledgement of Lease Commencement as of the date first set forth above.

 

LANDLORD	TENANT
CASIOPEA BOVET, LLC	3-V BIOSCIENCES, INC.

 

By:	Access Property Services, Inc.	By:
Its:	Authorized Agent	Its:

 

By:	Daniel T. Gray
Its:	Senior Vice President	Date:

 

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FIRST AMENDMENT TO LEASE AGREEMENT

 

This First Amendment to Lease Agreement (the “First Amendment”) between Casiopea Bovet Properties, LLC (“Landlord”) and Sagimet Biosciences, Inc. (“Tenant”) is made as of this 14^th day of December, 2021.

 

RECITALS

 

A.

Casiopea Bovet, LLC and 3-V Biosciences, Inc. entered into that certain Lease Agreement dated March 1, 2019 (the “Lease”), under which Casiopea Bovet, LLC leased the premises known as the Bovet Office Centre, 155 Bovet Road, Suite 303, San Mateo, CA (the “Premises”) to 3-V Biosciences, Inc.

 

B.

Casiopea Bovet, LLC subsequently transferred the Property and the Lease to Casiopea Bovet Properties, LLC (“Landlord”).

 

C.

3-V Biosciences, Inc. subsequently changed their name to Sagimet Biosciences, Inc.

 

D.

Total rentable square footage of the Premises is 3,030 square feet.

 

E.

The current Lease expires on May 31, 2022.

 

F.

Landlord and Tenant desire to amend the Lease in certain respects.

 

COVENANTS

 

Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below will be deemed to be part of the Lease and shall supersede, to the extent appropriate, any contrary provision in the Lease. All references in the Lease shall be construed to mean the Lease as amended. All terms used in the First Amendment shall have the same meanings as the terms contained in the Lease.

 

NOW THEREFORE, IN CONSIDERATION of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree to amend the Lease as follows:

 

COMMENCEMENT DATE:	The lease renewal term shall commence June 1, 2022.
RENEWAL LEASE TERM:	The term of the Lease renewal shall be twenty-five (25) months.
RENTAL RATE SCHEDULE:	The base monthly full-service rent shall be as follows:

 

	Month 1	ABATED
	Months 2 – 12	$ 12,877.50
	Months 13 – 25	$ 13,263.83

 

OPERATING EXPENSES:

The Premises shall be leased on a full service, gross basis. The Base Operating Costs as referred to on Page 2 of the Basic Lease Information shall be changed to: Base Operating Expense Year - 2022. The Base Tax Year shall be changed to: Fiscal Year 2021/2022.

 

 

First Amendment to Lease dated December 14, 2021

Sagimet Biosciences, Inc.

 

TENANT IMPROVEMENTS:	Landlord, at Landlord’s sole cost, shall repair or replace the dishwasher.
REPRESENTATION:	Landlord and Tenant represent that no commissions or finder’s fee is due any broker other than Kidder Mathews representing the Landlord and Newmark Knight Frank representing Tenant. Landlord shall be responsible for all commissions due, pursuant to a separate agreement.

 

Except as expressly set forth in this First Amendment to Lease Agreement, all other terms, agreements, covenants and conditions of the Lease shall remain unchanged and in full force and effect.

 

IN WITNESS HEREOF, the parties hereto have executed this First Amendment to Lease Agreement as of the date written above.

 

LANDLORD:			TENANT:
CASIOPEA BOVET PROPERTIES, LLC			SAGIMET BIOSCIENCES, INC.
By:        Access Property Services, Inc.
Its:        Authorized Agent
By:	/s/ Daniel T. Gray		By:	/s/ Dennis Hom
Its:	Senior Vice President		Its:	Chief Financial Officer
Date: 12/20/2021			Date: 12/17/2021

 

 

 

Exhibit 10.17

 

AMENDED AND RESTATED NOMINATING AGREEMENT

 

THIS AMENDED AND RESTATED NOMINATING AGREEMENT (this “Agreement”), dated as of April 15, 2021, by and among Sagimet Biosciences Inc., a Delaware corporation (the “Company”), Baker Brothers Life Sciences, L.P. (“BBLS”) and 667, L.P. (“667,” together with BBLS, the “Investor”).

 

WHEREAS, the Company and the Investor are parties to that certain Nominating Agreement dated December 21, 2020 (the “Original Agreement”);

 

WHEREAS, the Company and the Investor desire to amend and restate the Original Agreement pursuant to the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree that the Original Agreement shall be amended and restated by this Agreement, which shall supersede and replace the Original Agreement, and further agree as follows:

 

1.             Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 

(a)               “Affiliate” has the meaning given to that term in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

 

(b)               “Board of Directors” means the Board of Directors of the Company.

 

(c)               “Bylaws” means the Bylaws of the Company, as may be amended, restated or otherwise modified from time to time.

 

(d)               “Common Stock” means shares of the Company’s Common Stock, par value $0.0001 per share.

 

(e)               “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act of 1933, as amended.

 

(f)               “Purchase Agreement” means that certain Series F Preferred Stock Purchase Agreement, dated December 21, 2020, by and among the Company, the Investor and the other parties thereto.

 

(g)               “Required Shares” means at least 75% of the shares of the Series F Preferred purchased by the Investor pursuant to the Purchase Agreement, or such number of shares of Common Stock (whether voting or non-voting) issued upon conversion of such number of shares of Series F Preferred.

 

(h)               “Series F Preferred” means shares of the Company’s Series F Preferred Stock, par value $0.0001 per share.

 

 

2.             Board Representation.

 

(a)              Subject to Sections 2(b) and 3(n) below, beginning on the ninety first (91^st) day following the date of effectiveness of the Company’s registration statement on Form S-1 related to the IPO, at any time at which the Investor and its Affiliates, collectively, beneficially own (i) the Required Shares and (ii) at least 4.9% of the Company’s then-outstanding voting Common Stock, the Company shall support the nomination of, and cause the Board of Directors to include in the slate of nominees recommended to the Company’s stockholders for election as directors of the Company, one (1) person designated at any time and from time to time by the Investor (the “Investor Designee”). In the event that the Investor Designee resigns his or her seat on the Board of Directors or is removed or otherwise fails to become or ceases to be a director for any reason, the Company shall cause the vacancy to be filled by the election or appointment of another director nominated by the Investor as soon as reasonably practicable in compliance with applicable laws, rules and regulations. Investor will provide the Company, in writing, the information about the Investor Designee that is reasonably required by applicable law for inclusion in the Company’s proxy materials for meetings of stockholders promptly after the Company requests such information from the Investor, and will cause the Investor Designee to submit on a timely basis to the Company a completed and executed questionnaire in the form that the Company provides to its outside directors generally.

 

(b)               Notwithstanding the provisions of Section 2(a), the Investor shall not designate a particular individual as a nominee to the Board of Directors if a majority of the disinterested members of the Board of Directors reasonably and in good faith determines, after consultation with the Company’s outside legal counsel and upon written advice of such counsel, that such person would not be qualified to serve as a director of the Company under applicable law, rule or regulation, rule of the stock exchange on which the Company’s shares are listed or the Bylaws. The Company shall notify the Investor of any objection to an Investor Designee pursuant to this Section 2(b) sufficiently in advance of the date on which the proxy materials related to any such designee are to be mailed by the Company in connection with such election of directors, and in no event less than the first business day after such determination by the Board of Directors, so as to enable the Investor to propose a replacement Investor Designee in accordance with the terms of this Agreement.

 

(c)               Subject at all times to Section 3(n) below and the other limitations set forth in this Section 2(c), during the period beginning at the closing of the IPO until such time as the Investor and its Affiliates, collectively, no longer beneficially own the Required Shares, the Company shall invite a designee of the Investor (the “Observer”) to attend all meetings of the Board of Directors and each committee thereof in a nonvoting observer capacity. In this respect, the Company shall give the Observer 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 Observer shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to information so provided; and provided, further, that the Company reserves the right to withhold any information and to exclude the Observer from any meeting or portion thereof that the (A) Board of Directors determines based upon the advice of outside counsel that (i) access to such information or attendance at such meeting would adversely affect the attorney-client privilege between the Company and its counsel or (ii) such information or attendance at such meeting would result in a conflict of interest or (B) (i) the Board of Directors reasonably determines in good faith that the Observer or an Affiliate of the Observer is a competitor of the Company, or (ii) to protect trade secrets. With respect to the Observer, the Company’s obligations under this Section 2(c) are contingent upon such Observer’s (x) entering into a confidentiality agreement with the Company in a form that is reasonably acceptable to the Company and the Investor and (y) agreeing to be bound by the Company’s insider trading and window policies then in effect and applicable to members of the Board of Directors. Additionally, the rights set forth in this Section 2(c) may only be exercised by the Investor at such time or times when no Investor Designee is on the Board of Directors.

 

 

3.             Miscellaneous.

 

(a)               Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflicts of laws.

 

(b)               Certain Adjustments. Subject to Section 3(n) below, the provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution for the shares of Common Stock, by combination, recapitalization, reclassification, merger, consolidation or otherwise and the term “Common Stock” shall include all such other securities. In the event of any change in the capitalization of the Company, as a result of any stock split, stock dividend or stock combination or otherwise, the provisions of this Agreement shall be appropriately adjusted.

 

(c)               Enforcement. The parties expressly agree that the provisions of this Agreement may be specifically enforced against each of the parties hereto in any court of competent jurisdiction.

 

(d)               Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.

 

(e)               Entire Agreement. This Agreement, the Bylaws and for so long as they remain in force, the Voting Agreement (as defined in the Purchase Agreement) and that certain letter agreement, dated December 21, 2020, by and among the Company and the Investor, constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes all prior oral or written (and all contemporaneous oral) agreements or understandings with respect to the subject matter hereof.

 

(f)               Notice. All notices required or permitted under this Agreement must be in writing and sent to the address or email address (and with such copies, which shall not constitute notice) as identified below. Notices must be given: (a) by personal delivery, with receipt acknowledged; (b) by email followed by hard copy delivered by the methods under clause (c) or (d); (c) by prepaid certified or registered mail, return receipt requested; or (d) by prepaid reputable overnight delivery service. Notices shall be effective upon receipt. Either party may change its notice address by providing the other party written notice of such change. Notices shall be delivered as follows:

 

If to the Investor:

Baker Brothers Investments 860 Washington St., 3rd Floor New York, NY 10014 Attention: Scott Lessing, President Email: slessing@bbinvestments.com

 

 

with a copy (which copy shall not constitute notice) to:	Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Jason Kropp Email: Jason.Kropp@wilmerhale.com
If to the Company:	Sagimet Biosciences Inc. 155 Bovet Road, Suite 303 San Mateo, CA 94402 Attention: Chief Executive Officer Email: George.Kemble@sagimet.com
with a copy (which copy shall not constitute notice) to:	Cooley LLP 3175 Hanover Street Palo Alto, CA 94304 Attention: Carlton Fleming Email: cfleming@cooley.com Fax: (650) 849-7400

 

(g)               Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to the Investor hereto upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of the Investor nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of the Investor of any breach or default of the Company under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, in each case, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

(h)               Counterparts. This Agreement may be executed in any number of counterparts (including by facsimile or other electronic means), each of which may be executed by less than all of the parties hereto, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

 

(i)               Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

(j)               Amendments and Waivers. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived or modified, with and only with an agreement or consent in writing signed by the Company and the Investor.

 

 

(k)               Jurisdiction. The parties hereto irrevocably submit, in any legal action or proceeding relating to this Agreement, to the jurisdiction of the courts of the United States located in the State of Delaware or in any Delaware state court and consent that any such action or proceeding may be brought in such courts and waive any objection that they may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient forum.

 

(l)               Further Assurances. The parties agree to use their best efforts and act in good faith in carrying out their obligations under this Agreement. The parties also agree, without further consideration, to execute such further instruments and to take such further actions as may be necessary or desirable to carry out the purposes and intent of this Agreement.

 

(m)               Enforcement. The parties expressly agree that the provisions of this Agreement may be specifically enforced against each of the parties hereto in any court of competent jurisdiction.

 

(n)               Termination. This Agreement shall automatically terminate upon the earliest of (i) such time as the Investor and its Affiliates, collectively, no longer beneficially own the Required Shares, (ii) the third (3rd) anniversary of the closing of the IPO, and (iii) the consummation of a Liquidation (as defined in the Company’s Amended and Restated Certificate of Incorporation, as in effect on the date hereof).

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Amended and Restated Nominating Agreement as of the date first above written.

 

	SAGIMET BIOSCIENCES INC.
	By:	/s/ George Kemble
	Name: George Kemble
	Title: Chief Executive Officer
	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 Lessing
	Name: Scott Lessing
	Title: President
	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 Lessing
	Name: Scott Lessing
	Title: President

 

[Signature Page to Sagimet Biosciences AMENDED and Restated Nominating Agreement]

 

 

 

 

 

 

Exhibit 10.18

 

Execution Version 

 

Sagimet Biosciences Inc.

 

AMENDED AND RESTATED

investors’ rights agreement

 

This Amended and Restated Investors’ Rights Agreement (this “Agreement”) is made as of December 21, 2020, by and among Sagimet Biosciences Inc., a Delaware corporation (the “Company”), and the investors listed on the Schedule of Investors attached as Exhibit A hereto (each, an “Investor,” and collectively, the “Investors”).

 

Whereas, the Company and the certain Investors are purchasing shares of the Company’s Series F Preferred Stock (the “Series F Preferred”) pursuant to that certain Series F Preferred Stock Purchase Agreement (the “Purchase Agreement”) dated on or about the date hereof, as amended from time to time (the “Financing”);

 

Whereas, certain of the Investors (the “Prior Investors”) are holders of the Company’s Series A Preferred Stock (“Series A Preferred”), Series A’ Preferred Stock (“Series A’ Preferred”), Series B Preferred Stock (“Series B Preferred”), Series B’ Preferred Stock (“Series B’ Preferred”), Series B-1 Preferred Stock (“Series B-1 Preferred”), Series B-1’ Preferred Stock (“Series B-1’ Preferred”), Series C Preferred Stock (“Series C Preferred”), Series C’ Preferred Stock (“Series C’ Preferred”), Series D Preferred Stock (“Series D Preferred”), Series D’ Preferred Stock (“Series D’ Preferred”), Series D-1 Preferred Stock (“Series D-1 Preferred”) and Series E Preferred Stock (the “Series E Preferred”);

 

Whereas, the Prior Investors and the Company are parties to that certain Amended and Restated Investors’ Rights Agreement dated February 12, 2019 (the “Prior Agreement”);

 

Whereas, in order to induce the Company to enter into the Purchase Agreement and to induce certain Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of the Company’s Common Stock (“Common Stock”) issuable to the Investors upon the conversion of the Preferred Stock and certain other matters as set forth herein;

 

Whereas, the parties to the Prior Agreement desire to amend and restate the Prior Agreement and accept the rights and covenants hereof in lieu of their rights and covenants under the Prior Agreement, and the undersigned parties constitute the parties necessary to amend and restate the Prior Agreement in its entirety; and

 

Whereas, in connection with the consummation of the Financing, the Company and the Investors have agreed to the registration rights, information rights, and other rights as set forth below.

 

Now, Therefore, the parties hereto hereby agree that, effective as of the Initial Closing (as defined in the Purchase Agreement), the Prior Agreement shall be amended and restated in its entirety by this Agreement, which shall supersede and replace the Prior Agreement, and further agree as follows:

 

1.             Restrictions on Transferability; Registration Rights. The Company covenants and agrees as follows:

 

1.1           Definitions. For purposes of this Agreement:

 

(a)                “Change of Control” means each of the following events: (i) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganizations, provided that the applicable transaction shall not be deemed a Change of Control unless the Company’s stockholders constituted immediately prior to such transaction do not hold more than fifty percent (50%) of the voting power of the surviving or acquiring entity (or its parent) immediately following such transaction (taking into account only voting power resulting from stock of the Company held by such stockholders prior to such transaction); (ii) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power outstanding before such transaction is transferred; or (iii) a sale, conveyance or other disposition by the Company or any subsidiary of the Company, in a single transaction or series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries taken as a whole (including without limitation a license by the Company or any subsidiary of the Company of all or substantially all of the Company’s or such subsidiary’s, as the case may be, intellectual property that is either exclusive or otherwise structured in a manner that constitutes a license of all or substantially all of the assets of the Company and its subsidiaries taken as a whole) or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company 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 Company; provided that a Change of Control shall not include (x) a merger or consolidation with a wholly-owned subsidiary of the Company, (y) a merger effected exclusively for the purpose of changing the domicile of the Company or (z) any transaction or series of related transactions principally for bona fide equity financing purposes in which the Company is the surviving corporation.

 

 

(b)                “Common Warrants” means those certain warrants to purchase Common Stock issued pursuant to that certain Series C Preferred Stock Purchase Agreement dated June 14, 2013 by and among the Company and the purchasers listed on Exhibit A thereto.

 

(c)                “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute, and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

(d)                “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 inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

(e)                “GAAP” shall have the meaning set forth in Section 3.1(a) hereto.

 

(f)                 “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.12 of this Agreement.

 

(g)                “IPO” means the first public offering of the Common Stock of the Company to the general public that is effected pursuant to a registration statement filed with, and declared effective by, the SEC under the Securities Act.

 

(h)                “Preferred Stock” means collectively the Series A Preferred, the Series A’ Preferred, the Series B Preferred, the Series B’ Preferred, the Series B-1 Preferred, the Series B-1’ Preferred, the Series C Preferred, the Series C’ Preferred, the Series D Preferred, the Series D’ Preferred, the Series E Preferred and the Series F Preferred. For the avoidance of doubt, Preferred Stock shall not include the Series D-1 Preferred.

 

(i)                 “Qualified IPO” shall have the meaning given in the Restated Certificate.

 

 

(j)                 The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

 

(k)               “Registrable Securities” means (i) Common Stock of the Company issuable or issued upon conversion of the Preferred Stock of the Company and (ii) 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, including upon exercise of the Common Warrants.

 

(l)                 The number of shares of “Registrable Securities then outstanding” shall be the sum of the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities.

 

(m)              “Restated Certificate” shall mean the Company’s Tenth Amended and Restated Certificate of Incorporation, as may be amended from time to time.

 

(n)               “Restricted Securities” shall mean the securities of the Company required to bear the legend set forth in Section 1.2 hereof.

 

(o)               “SEC” shall mean the Securities and Exchange Commission.

 

(p)               “Securities Act” means the Securities Act of 1933, as amended, or any similar successor federal statute, and the rules and regulations thereunder, all as the same shall be in effect from time to time.

 

(q)               “Shares” shall have the meaning set forth in Section 3.4 hereto.

 

(r)               “Voting Agreement” shall have the meaning given in the Purchase Agreement.

 

1.2          Restrictions on Transferability.

 

(a)                The holder of each certificate representing Shares and Registrable Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 1.2. Each Holder agrees not to make any sale, assignment, transfer, pledge or other disposition of all or any portion of the Restricted Securities, or any beneficial interest therein, unless and until (x) the transferee thereof has agreed in writing for the benefit of the Company to take and hold such Restricted Securities subject to, and to be bound by, the terms and conditions set forth in this Agreement, including, without limitation, this Section 1.2 and Section 2, and (y):

 

(i)                There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

 

(ii)              Such Holder shall have given prior written notice to the Company of such Holder’s intention to make such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition, and, if requested by the Company, such Holder shall have furnished the Company, at its expense, with (i) an opinion of counsel, reasonably satisfactory to the Company, to the effect that such disposition will not require registration of such Restricted Securities under the Securities Act or (ii) a “no action” letter from the SEC to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company. It is agreed that the Company will not require prior written notice, opinions of counsel or “no action” letters from the SEC for transactions made pursuant to Rule 144 of the Securities Act (“Rule 144”).

 

 

(b)                Permitted transfers include (i) transfers not involving a change in beneficial ownership, or (ii) transfers of Restricted Securities by any Holder to (x) a parent, subsidiary or other affiliate of Holder, or (y) any of its partners, members or other equity owners, or retired partners, retired members or other equity owners, or to the estate of any of its partners, members or other equity owners or retired partners, retired members or other equity owners, or (iii) transfers in compliance with Rule 144, as long as the Company is furnished with satisfactory evidence of compliance with such rule, if requested; provided, in each case, that the Holder thereof shall give written notice to the Company of such Holder's intention to effect such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition. For the avoidance of doubt, the Preferred Stock is freely transferable, subject to applicable laws and the transferee executing required joinders.

 

(c)                Each certificate representing Shares or Registrable Securities shall (unless otherwise permitted by the provisions of this Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws):

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, IF REQUESTED, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

“THE SHARES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN INVESTORS’ RIGHTS 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 on its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer established in this Section 1.2.

 

(d)                The first legend referring to federal and state securities laws identified in Section 1.2(c) hereof stamped on a certificate evidencing the Restricted Securities and the stock transfer instructions and record notations with respect to such Restricted Securities shall be removed and the Company shall issue a certificate without such legend to the holder of such Restricted Securities if (i) such securities are registered under the Securities Act, (ii) such holder provides the Company with an opinion of counsel reasonably acceptable to the Company to the effect that a public sale or transfer of such securities may be made without registration under the Securities Act, or (iii) such holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel satisfactory to the Company, that such securities can be sold pursuant to Rule 144 under the Securities Act.

 

 

1.3           Request for Registration.

 

(a)                 Subject to the conditions of this Section 1.3, if the Company shall receive at any time after the earlier of the date that is (i) three (3) years after the date of this Agreement or (ii) six months following the effective date of the registration statement pertaining to the IPO, a written request pursuant to this Section 1.3 from Holders of at least 35% of the Registrable Securities then outstanding (assuming conversion of all Preferred Stock and exercise of the Common Warrants) (the “Initiating Holders”) that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities which would have an aggregate offering price of not less than $5,000,000, the Company shall within twenty (20) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 1.3, use its best efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered in a written request received by the Company within twenty (20) days of the mailing of the Company’s notice pursuant to this Section 1.3(a).

 

(b)                If 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 1.3(a) and the Company shall include such information in the written notice referred to in Section 1.3(a). The underwriter will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include its 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 enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 1.3, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated, first, to the Initiating Holders on a pro rata basis based on the total number of Registrable Securities held by the Initiating Holders; and second, to any Holder on a pro rata basis among all such Holders; provided, however, that if as a result of any such cutback fewer than fifty-percent (50%) of the total number of Registrable Securities that have been requested by Holders of Registrable Securities to be included in such registration statement are actually included, than such registration statement shall not be counted as “effected” for purposes of this Section 1.3 (including for purposes of Section 1.3(d)(i)), notwithstanding the obligation of the Company to proceed with the offering.

 

(c)                Notwithstanding the foregoing, if the Company shall furnish to the Holders requesting a registration statement pursuant to this Section 1.3 a certificate signed by the Chief Executive Officer of the Company (“Chief Executive Officer”) stating that, in the good faith judgment of the Board of Directors of the Company (the “Board of Directors”), it would be materially detrimental to the Company and its stockholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, 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 receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period; and, provided, further, that the Company shall not register any securities for its own account or that of any other stockholders during such ninety (90) day period other than (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, 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.

 

 

(d)            In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 1.3:

 

(i)          after the Company has effected two (2) registrations pursuant to this Section 1.3 and such registrations have been declared or ordered effective;

 

(ii)         during the six-month period following the effective date of the registration statement pertaining to the IPO; or

 

(iii)        if, within thirty (30) days of a registration request by the Initiating Holders, the Company gives notice to the Holders of its intent to file a registration statement for its IPO within ninety (90) days.

 

1.4           Company Registration.

 

(a)                 If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan, any registration statements relating to any corporate reorganization or transaction under Rule 145 of the Securities Act or any registration statements related to the issuance or resale of securities issued in such a transaction or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities which are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within ten (10) days after mailing of such notice by the Company in accordance with Section 5.6, the Company shall, subject to the provisions of Section 1.4(b), cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered. Registrations effected pursuant to this Section 1.4 shall not be counted as demands for registration pursuant to Section 1.3 or registrations pursuant to Section 1.5.

 

(b)                 If the registration statement under which the Company gives notice under this Section 1.4 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 1.4 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 Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any stockholder of the Company (other than a Holder) on a pro rata basis. No such reduction shall reduce the amount of securities of the selling Holders included in the registration below twenty-five percent (25%) of the total amount of securities included in such registration, unless such offering is the IPO and such registration does not include shares of any other selling stockholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. For any Holder which is a partnership or corporation, the partners, retired partners and shareholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “Holder,” and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence.

 

 

(c)                The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.4 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

 

1.5           Form S-3 Registration. In case the Company shall receive from any Holders of a majority of the then outstanding Registrable Securities (assuming conversion of all Preferred Stock and exercise of the Common Warrants) a written request or requests that pursuant to this Section 1.5 the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:

 

(a)               promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and

 

(b)               use its best efforts to effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.5: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $1,000,000; (iii) if, in a given twelve-month period, the Company has already effected two (2) such registrations pursuant to this Section 1.5 in such period; (iv) if the Company shall furnish to the Holders a certificate signed by the President of the Company 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 be filed and it is therefore essential to defer the filing of such registration statement, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 1.5; provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period; or (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance or otherwise subject itself to general taxation. Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Section 1.5 shall not be counted as demands for registration effected pursuant to Section 1.3.

 

1.6           Obligations of the Company. Whenever required under this Section 1 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 best 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 120 days, or if earlier, until the distribution contemplated in the registration statement has been completed.

 

 

(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 provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

 

(c)                Furnish to the Holders of Registrable Securities registered thereunder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

 

(d)                Use its best 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 Holders of Registrable Securities registered thereunder; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process, or subject itself to general taxation, in any such states or jurisdictions.

 

(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 managing underwriter of such offering. Each Holder of Registrable Securities registered thereunder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

 

(f)                Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

 

(g)               Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Company are then listed.

 

(h)               Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

 

(i)                Cooperate in all necessary respects with (A) counsel in preparation of the customary legal opinions and (B) accountants in preparation of the customary comfort letters, copies of which shall be provided to each Holder of Registrable Securities registered thereunder so requesting; provided that such Holders shall not be entitled to rely upon such legal opinions and comfort letters other than in accordance with their own respective terms.

 

(j)                Promptly make available for inspection by the Holders of Registrable Securities registered thereunder, any managing 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 Holders of Registrable Securities registered thereunder, 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.

 

 

1.7           Furnish Information.

 

(a)                 It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 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 shall be required to effect the registration of such Holder’s Registrable Securities.

 

(b)                 The Company shall have no obligation with respect to any registration requested pursuant to Section 1.3 or Section 1.5 if, due to the operation of Section 1.7(a), the number of shares of the Registrable Securities to be included in the registration does not equal or exceed the number of shares required to originally trigger the Company’s obligation to initiate such registration as specified in Section 1.3(a) or Section 1.5(b), as the case may be.

 

1.8           Expenses of Registration. All expenses, other than underwriting discounts, transfer taxes and commissions incurred by the selling Holders in connection with registrations, shall be paid or reimbursed by the Company for filings or qualifications pursuant to Section 1.3, Section 1.4 and Section 1.5, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the selling Holders (collectively, the “Registration Expenses”); provided, however, that the Company shall not be required to pay for any Registration Expenses of any registration proceeding begun pursuant to Section 1.3(a) or Section 1.5 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders or Holders, as applicable, were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities to be registered agree to deem such registration to have been effected as of the date of such withdrawal for purposes of determining whether the Company shall be obligated pursuant to Section 1.3 to undertake any subsequent registration, in which event such right shall be forfeited by all Holders. If the Holders are required to pay the Registration Expenses, such expenses shall be borne pro rata based upon the number of Registrable Securities that were to be registered in the withdrawn registration.

 

1.9           Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

 

1.10        Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:

 

(a)                 To the fullest extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers, directors, stockholders and former stockholders of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the 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 Company 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; and the Company will pay to each such Holder, underwriter or controlling person any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information relating to any such Holder and furnished expressly for inclusion in a registration statement in connection with such registration by such Holder, the partners, members, officers, directors and stockholders of such Holder, the underwriter for such Holder or a controlling person of such Holder and; provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Holder, partners, members, officers, directors and stockholders of any Holder, or any underwriter for such Holder, or any person controlling such Holder, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented) was not sent or given by or on behalf of such Holder or underwriter to such person, if required by law so to have been delivered by such Holder, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

 

 

(b)                To the extent permitted by law, each selling Holder, severally, and not jointly, will indemnify and hold harmless the Company, 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, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information relating to such Holder and furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 1.10(b), in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld, provided that in no event shall any indemnity under this Section 1.10(b) exceed the net proceeds from the offering received by such Holder (including net of any underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities).

 

(c)                Promptly after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which 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 proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.10, but the omission to so deliver written 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 1.10.

 

 

(d)                If the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that, in no event shall any contribution under this Section 1.10(d) by a Holder exceed the net proceeds from the offering received by such Holder (including net of any underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities). 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 alleged untrue statement of a material fact or the omission to state 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.

 

(e)                Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution between the Company and underwriter 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)                The obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1.

 

1.11        Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act 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 agrees to:

 

(a)                make and keep public information available, as those terms are understood and defined in Rule 144, at all times after ninety (90) days after the effective date of the IPO;

 

(b)                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; and

 

 

(c)               furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it 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 it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such-securities without registration or pursuant to such form.

 

1.12         Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by (i) a Holder that is a partnership, to any partner, retired partner or affiliated fund of such Holder, (ii) a Holder that is a limited liability company or a corporation, to any member or former member or stockholder of such Holder, (iii) a Holder who is an individual, to such Holder’s family member or trust for the benefit of such Holder or such Holder’s family member, (iv) a Holder that transfers all shares of Registrable Securities held by he, she or it, or (v) to any other person acquiring at least 500,000 shares (or not less than all of such Holder’s Registrable Securities, if such Holder holds less than 500,000 Registrable Securities) (as appropriately adjusted for any stock split, dividend, combination or other recapitalization or like transactions) of Registrable Securities; provided (in all cases) (a) the Company is, promptly after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 2 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act.

 

1.13          Termination of Registration Rights. All registration rights granted under this Section 1 shall terminate and be of no further force and effect upon the earlier of (i) four (4) years after the consummation of the IPO, or (ii) the effective date of a Change of Control pursuant to which the Holders receive cash or securities traded on a nationally recognized securities exchange. In addition, a Holder’s registration rights under this Section 1 shall expire at such time as all Registrable Securities held by such Holder (together with any affiliates of such Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three (3) month period without registration under Rule 144.

 

1.14          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 (assuming conversion of all Preferred Stock and exercise of the Common Warrants) and the approval of a majority of the Board of Directors, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1.3 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of the Holders which is included.

 

 

2.              “Market Stand-Off” Agreement. Each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale of, any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act in connection with the Company’s IPO (such period of time, the “Lockup Period”), provided that all officers and directors of the Company and holders of at least one percent (1%) of the Company’s voting securities (on an as-converted to Common Stock basis) are bound by and have entered into similar agreements. The foregoing provisions of this Section 2 shall apply only to the IPO, and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or any shares purchased in connection with the IPO or on the open market following the IPO. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 2 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. 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.

 

3.             Covenants of the Company.

 

3.1           Delivery of Financial Statements to Investors. So long as an Investor holds at least 20,000,000 shares (as adjusted for stock splits, combinations, reorganizations and the like) of Registrable Securities (a “Major Investor”), the Company shall deliver to such Major Investor:

 

(a)                as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, an income statement for such fiscal year, a balance sheet of the Company and statement of stockholder’s equity as of the end of such fiscal year, and a statement of cash flows for such fiscal year, such year-end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States, and audited and certified by independent public accountants of nationally recognized standing selected by the Board of Directors, and accompanied by a certificate executed by the chief financial officer of the Company (in the event of no Company chief financial officer then by the Chief Executive Officer) certifying that such financial statements fairly present the financial condition of the Company and its results of operations for the periods specified therein; and

 

(b)               as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company, an unaudited income statement, a statement of cash flows and an unaudited balance sheet for such quarter, 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), and accompanied by a certificate executed by the chief financial officer of the Company (in the event of no Company chief financial officer then by the Chief Executive Officer) certifying that such financial statements fairly present the financial condition of the Company and its results of operations for the periods specified therein;

 

(c)                as soon as practicable, but in any event thirty (30) days prior to the beginning of each fiscal year an annual budget and operating plans for such fiscal year, prepared on a monthly basis, and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

 

(d)               upon request, a detailed capitalization table of the Company; and

 

 

(e)                upon the request of a Major Investor, such additional information and materials as the Major Investor may reasonably request, and the Chief Executive Officer may consent to provide, such consent not to be unreasonably withheld, including documents of the Company’s management, reports of operations, reports of adverse developments, copies of any management letters, and stockholder communications.

 

3.2           Inspection. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be convenient to the Company and such 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 considers to be a trade secret or similar confidential information (unless covered by a confidentiality agreement, in form and substance reasonably acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3           Confidentiality of Records. Each Investor agrees to use the same degree of care as such Investor uses to protect its own confidential information but in no event less than a reasonable degree of care, to keep confidential any information furnished to it that the Company identifies as being confidential or proprietary (so long as such information is not in the public domain) and to keep confidential any confidential information, knowledge or data concerning or relating to the business or financial affairs of the Company which such Investor has been or shall become privy by reason of this Agreement, except that such Investor may disclose such proprietary or confidential information (i) to any existing or prospective partner, affiliate (excluding portfolio companies), subsidiary, parent or member of such Investor for the purpose of evaluating its investment in the Company as long as such existing or prospective partner, affiliate (excluding portfolio companies), subsidiary, parent or member is advised of the confidentiality provisions of this Section 3.3 and is directed by such Investor to maintain the confidentiality of such information; (ii) 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, as long as such attorney, accountant, consultant or other professional is bound to the Investor to keep such information confidential by industry standards or ethical rules (such as those applicable to attorney and accountants) or provisions at least as stringent as those contained in this Section 3.3; (iii) 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 3.3; (iii) at such time as it enters the public domain through no fault of such Investor; (iv) that is communicated to it free of any obligation of confidentiality; (v) that is developed by Investor or its agents independently of and without reference to any confidential information communicated by the Company; or (vi) as may otherwise be required by law, provided, however, that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

3.4          Right of First Offer. Subject to the terms and conditions specified in this Section 3.4, the Company hereby grants to each Major Investor a right of first offer with respect to future sales by the Company of its Shares. A Major Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners and affiliates in such proportions as it deems appropriate; provided, that any such partner or affiliate shall, if not already a party, agree to become a party to this Agreement as an “Investor” hereunder.

 

Each time following the date hereof that the Company proposes to offer any shares of, or securities convertible into or exchangeable or exercisable for any shares of, any class of its capital stock (“Shares”), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions.

 

 

(a)              The Company shall deliver a notice in accordance with Section 5.6 to the Major Investors stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms upon which it proposes to offer such Shares.

 

(b)             By written notification received by the Company, within fifteen (15) calendar days after delivery of the notice, the Major Investor may elect to purchase or obtain, at the price and on the terms specified in the notice, up to that portion of such Shares that equals the proportion that the number of shares of Common Stock deemed to be held by such Major Investor (including all shares of Common Stock issuable or issued upon conversion of the Preferred Stock or upon the exercise of outstanding warrants or options) bears to the total number of shares of Common Stock of the Company then outstanding (including all shares of Common Stock issuable or issued upon conversion of the Preferred Stock or upon the exercise of outstanding warrants or options). The Company shall promptly, in writing, inform each Major Investor that elects to purchase all the shares available to it (a “Fully-Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after such information is given, each Fully-Exercising Investor may elect to purchase that portion of the Shares for which Major Investors were entitled to subscribe but which were not subscribed for that is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of Preferred Stock then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held, by all Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.

 

(c)            If all Shares that Major Investors are entitled to obtain pursuant to Section 3.4(b) are not elected to be obtained as provided in Section 3.4(b) hereof, the Company may, during the ninety (90) day period following the expiration of the period provided in Section 3.4(b) hereof, offer the remaining unsubscribed portion of such Shares 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 notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within ninety (90) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith.

 

(d)            The right of first offer in this Section 3.4 shall not be applicable to:

 

(i)                 the issuance of Series F Preferred Stock as part of the Financing;

 

(ii)               the issuance of Common Stock upon the conversion of Convertible Securities (as defined in the Restated Certificate) or shares of Preferred Stock, and capital stock issued pursuant to any such rights or agreements granted after the date of this Agreement, so long as the rights of first offer established by this Section 3.4 were complied with, waived or inapplicable pursuant to any provisions of this section 3.4(d);

 

(iii)             shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 3(f) or Section 3(g) of Article FOURTH, Part C of the Restated Certificate and shares of Common Stock issued or deemed issued as a dividend or Distribution (as defined in the Restated Certificate) on Preferred Stock;

 

(iv)              the issuance of Common Stock and/or options, warrants or other Common Stock purchase rights and the Common Stock issued pursuant to such options, warrants or other rights to employees, officers or directors of, or consultants or advisors to, the Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements, the principal purpose of which is other than the raising of capital through the sale of equity securities of the Company and the terms of which are approved by the Board of Directors;

 

 

(v)                the issuance of shares of Common Stock or Convertible Securities to financial institutions, equipment lessors, landlords, brokers or similar entities in connection with commercial credit arrangements, equipment financings, commercial property lease transactions or similar transactions, the principal purpose of which is other than the raising of capital through the sale of equity securities of the Company and the terms of which are approved by the Board of Directors;

 

(vi)              the issuance of shares of Common Stock or Convertible Securities in connection with bona fide acquisitions, mergers or similar transactions, the terms of which are approved by the Board of Directors;

 

(vii)            shares of Common Stock issued or issuable upon the conversion of the Preferred Stock or the exercise of the Common Warrants;

 

(viii)          shares of Common Stock issued or issuable pursuant to a Qualified Public Offering; or

 

(ix)              shares of Common Stock or Convertible Securities issuable or issued to an entity as a component of any corporate strategic relationship or transaction, the principal purpose of which is other than the raising of capital through the sale of equity securities of the Company and which terms are approved by the Board of Directors.

 

(e)             Notwithstanding the foregoing, the right of first offer in this Section 3.4 shall not be applicable to any Major Investor with respect to any issuance of Shares if (i) at the time the Company issues such Shares, such Major Investor is not an “accredited investor,” as defined in Rule 501(d) of Regulation D promulgated under the Securities Act, and (ii) such issuance of Shares is only being offered by the Company to accredited investors.

 

3.5           Liability Insurance. The Company shall, at all times, maintain a directors’ and officers’ liability insurance policy from a financially sound and reputable insurer with coverage limits reasonably acceptable to the majority of directors appointed by the holders of Preferred Stock serving on the Board of Directors.

 

3.6           Stock Vesting. Unless otherwise approved by the Board of Directors, all stock, stock options and other stock equivalents issued after the date of this Agreement to employees, directors, consultants and other service providers shall be subject to vesting as follows: (a) twenty-five percent (25%) of such stock shall vest at the end of the first year following the earlier of the date of issuance or such person’s services commencement date with the Company, and (b) seventy-five percent (75%) of such stock shall vest in equal monthly installments over the remaining three (3) years. With respect to any shares of stock purchased by any such person still subject to vesting, the Company’s repurchase option shall provide that upon such person’s termination of employment or service with the Company, with or without cause, the Company or its assignee shall have the option to purchase at cost any unvested shares of stock held by such person. No stock option, restricted stock or similar equity grant to officers, employees and consultants shall be transferable until such time as such stock option, restricted stock or similar equity grant is fully vested.

 

3.7           Confidentiality and Inventions Assignment Agreement. The Company shall require all employees to execute and deliver a Confidentiality and Inventions Assignment Agreement substantially in a form approved by the Company’s counsel or Board of Directors and all consultants to execute and deliver a consulting agreement containing reasonable provisions regarding the protection of the Company’s confidential information and assignment of intellectual property created on behalf of the Company.

 

 

3.8           Right of First Refusal. All shares of Common Stock of the Company shall be subject to a right of first refusal on all transfers, which right shall be subject to the exemptions set forth in Article X, Sections 1(e) and 1(f) of the Company’s Amended and Restated Bylaws. In the event the Company elects not to exercise any right of first refusal or right of first offer the Company may have on a proposed transfer of any of the Company’s outstanding capital stock pursuant to the Company’s charter documents, by contract or otherwise, the Company shall, to the extent it may do so, assign such right of first refusal or right of first offer to each Major Investor. In the event of such assignment, each Major Investor shall have a right to purchase its pro rata portion of the capital stock proposed to be transferred. Each Major Investor’s pro rata portion shall be equal to the product obtained by multiplying (i) the aggregate number of shares proposed to be transferred by (ii) a fraction, the numerator of which is the number of shares of Registrable Securities held by such Major Investor at the time of the proposed transfer and the denominator of which is the total number of Registrable Securities owned by all Major Investors at the time of such proposed transfer. If any Major Investors do not exercise in full this right of first refusal, the shares that would otherwise be allocated to such non-fully exercising Major Investors shall be allocated among the fully exercising Major Investors wishing to purchase the remaining shares (the “Over-Allotment”) on a pro-rata basis (calculated in the same manner as above, provided, however, the denominator for purposes of such calculation shall be the total number of shares held by all Major Investors participating in such Over-Allotment) up to the maximum shares specified by each such applicable Major Investor. The Major Investors shall be entitled to apportion shares of Company capital stock purchasable hereunder among their respective partners and affiliates in such proportions as they deem appropriate; provided, that any such partner or affiliate shall, if not already a party, agree to become a party to this Agreement as an “Investor” hereunder.

 

3.9           Market Stand-off Restrictions. All capital stock issued by the Company, including any capital stock issuable or issued upon exercise or conversion of any “Convertible Securities,” as defined in the Restated Certificate, shall be subject to a market stand-off provision substantially similar to Section 2 of this Agreement.

 

3.10         Expenses Relating to Board Meetings. The Company shall promptly reimburse in full, each non-employee director of the Company for all of his or her reasonable out-of-pocket expenses incurred related to attending meetings of the Company’s Board of Directors or any committee thereof.

 

3.11         Board Approval. The Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include the affirmative vote of at least one of the directors appointed by the holders of Preferred Stock:

 

(a)                make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is majority owned by the Company;

 

(b)               make, or permit any subsidiary to make, any loan or advance to any person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors;

 

 

(c)                guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

 

(d)               incur any aggregate indebtedness in excess of $20,000 that is not already included in a budget approved by the Board of Directors, other than trade credit or indebtedness to the Company incurred in the ordinary course of business;

 

(e)                otherwise enter into or be a party to any transaction with any director, officer, or employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such person, except for transactions contemplated by this Agreement or the Financing, or transactions made in the ordinary course of business and pursuant to reasonable requirements of the Company’s business and upon fair and reasonable terms that are approved by a majority of the Board of Directors;

 

(f)                 hire, terminate, or change the compensation of the Chief Executive Officer;

 

(g)                sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business;

 

(h)               enter into any corporate strategic relationship involving the payment, contribution, or assignment by the Company or to the Company of money or assets greater than $250,000; or

 

(i)                 enter into or joinder as a party to any transaction with any director or officer of the Company (other than for the payment of salary and reimbursement of expenses made in the ordinary course of business), unless approved by a majority of the directors who are disinterested in such transaction (with any interested director being required to recuse himself or herself).

 

3.12        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 Amended and Restated Bylaws, its Restated Certificate, or elsewhere, as the case may be.

 

3.13        Investor Form S-3 Registration Agreement. Following the closing of a Qualified IPO (as defined in the Restated Certificate), upon or after the expiration of the Lockup Period, if the Company shall receive a written request from any Investor who may be deemed an “affiliate” (as defined for this purpose in Rule 144), the Company agrees to enter into a Registration Rights Agreement, in substantially the form attached hereto as Exhibit B, with such Investor. In the event any Registration Rights Agreement is entered into, and any demand for registration is made pursuant thereto, it will be deemed to be a demand for registration pursuant to the relevant section(s) of this Agreement for so long as such rights exist pursuant to this Agreement.

 

3.14        Termination of Covenants. Except as set forth below, the covenants set forth in this Section 3 (other than Section 3.12) shall terminate and be of no further force or effect upon the earlier of (a) the closing of a Qualified IPO; or (b) the effective date of a Change of Control pursuant to which the Holders receive cash or securities traded on a nationally recognized securities exchange. The covenants set forth in Sections 3.1 and 3.2 shall also terminate and be of no further force or effect upon the Company becoming subject to the reporting provisions of the Exchange Act. Section 3.13 of this Agreement shall only terminate upon such time that such Investor, as reflected on the Company’s list of stockholders, holds less than 1% of the Company’s outstanding Common Stock (treating all shares of Preferred Stock on an as-converted basis), the Company has completed its IPO and all Registrable Securities of the Company issuable or issued upon conversion of the Shares held by and issuable to such Investor may be sold pursuant to Rule 144 during any ninety (90) day period.

 

 

4.             Additional Covenants of the Parties.

 

4.1                FIRPTA. For so long as New Enterprise Associates 13, Limited Partnership; NEA Ventures 2009, Limited Partnership; KPCB Holdings, Inc.; the Column Group, LP; ABG II-3V Limited; Rock Springs Capital Master Fund LP; Four Pines Master Fund LP; Baker Brothers Life Sciences, L.P. and 667, L.P. (“Baker Brothers,” and each, individually, a “Participant”) holds Preferred Stock of the Company or Registrable Securities, the Company shall provide prompt notice to the Participant, following any “determination date” (as defined in United States Treasury Regulation Section 1.897-2(c)(1)) on which the Company becomes a United States real property holding corporation. In addition, upon a written request by a Participant, the Company shall provide the Participant with a written statement informing the Participant whether such Participant’s interest in the Company constitutes a United States real property interest. The Company’s determination shall comply with the requirements of Treasury Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company shall provide timely notice to the Internal Revenue Service, in accordance with and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any successor regulation, that such statement has been made. The Company’s written statement to the Participant shall be delivered to the Participant within 10 days of the Participant’s written request therefor. The Company’s obligation to furnish such written statement shall continue notwithstanding the fact that a class of the Company’s stock may be regularly traded on an established securities market or the fact that there is no preferred stock then outstanding.

 

4.2                Commerce Department Compliance. The Company may be required to file reports with the Bureau of Economic Analysis (the “BEA”) of the US Commerce Department when a US affiliate of a foreign Investor if such foreign Investor, together with its affiliates, directly or indirectly controls ten percent (10%) or more of the voting securities of the Company. Such foreign Investor that is a foreign individual or entity or a US subsidiary or affiliate of a foreign parent covenants to provide information necessary for the Company to comply with BEA filings required under the International Investment and Trade in Services Act.

 

4.3                Indemnification Agreement. Immediately prior to the election or appointment of the Baker Brothers Director (as defined in the Voting Agreement) to the Board of Directors, the Company shall enter into an Indemnification Agreement with the Baker Brothers Director, in form reasonably approved by Baker Brothers.

 

4.4               Right to Conduct Activities. The Company hereby agrees and acknowledges that SGMT Holdings Limited, Rock Springs Capital Master Fund LP, Four Pines Master Fund LP, PFM Healthcare Master Fund, L.P. and Invus Public Equity, L.P. 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). The Company hereby agrees that, to the extent permitted under applicable law, SGMT Holdings Limited, Rock Springs Capital Master Fund LP, Four Pines Master Fund LP, PFM Healthcare Master Fund, L.P. and Invus Public Equity, L.P. shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by SGMT Holdings Limited, Rock Springs Capital Master Fund LP, Four Pines Master Fund LP, PFM Healthcare Master Fund, L.P. and Invus Public Equity, L.P. in any entity competitive with the Company, or (ii) actions taken by any partner, officer, employee or other representative of SGMT Holdings Limited, Rock Springs Capital Master Fund LP, Four Pines Master Fund LP, PFM Healthcare Master Fund, L.P. and Invus Public Equity, L.P. 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 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.

 

 

4.5               Qualified Small Business Stock. The Company agrees that for so long as any shares of Preferred Stock are held by an Investor (or transferee) in whose hands such shares are eligible to qualify as “qualified small business stock” within the meaning of Section 1202(c) of the Internal Revenue Code (the “Code”) it will (a) use best commercial efforts to comply with any applicable filing and reporting requirements of Section 1202 of the Code and any regulations promulgated thereunder; provided, however, that “best commercial efforts” as used in this section shall not be construed to require the Company to operate its business in a manner which would adversely affect its business, limit its future prospects or alter the timing or resource allocation of its planned operations or financing activities and (b) provide appropriate documentation as to status with respect to “qualified small business stock” to each Investor that makes a request therefor within ten (10) days of any such request.

 

5.             Miscellaneous.

 

5.1               Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

5.2               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.

 

5.3               Venue. Any suit or proceeding relating to, arising out of or arising under this Agreement shall be brought in the Delaware Court of Chancery, which court shall have the sole and exclusive in personal, subject matter and other jurisdiction in connection with such suit or proceedings and venue shall be appropriate for all purposes in such court.

 

5.4               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 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.

 

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

 

5.6               Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail if sent during normal business hours of the recipient, if not, then on the next business day; (c) five business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, freight prepaid, with written verification of receipt. All communications to the Company shall be sent to:

 

 

Sagimet Biosciences Inc.

Attn: George Kemble

155 Bovet Road, Suite 303

San Mateo, CA 94402
George.Kemble@sagimet.com

 

with a copy (which shall not constitute notice) to:

 

Cooley LLP

Attn: Carlton Fleming

3175 Hanover St.

Palo Alto, CA 94304
CFleming@cooley.com

 

All communications to the Investors shall be made to their respective addresses (and with such copies, which shall not constitute notice) set forth in Exhibit A attached hereto, or at such other address as any party may designate by 10 days advance written notice to the other parties hereto.

 

5.7               Amendments and Waivers. Any term of this Agreement may be amended 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, the Holders of a majority of the Registrable Securities then outstanding (assuming conversion of all Preferred Stock and exercise of the Common Warrants) and the approval of a majority of the Board of Directors; provided, that the Schedule of Investors attached as Exhibit A hereto may be amended by the Company without the consent of the Holders to include any additional Holders of additional shares of Series F Preferred Stock sold and issued by the Company in any Additional Closing, as defined in the Purchase Agreement; provided further, that any other section of this Agreement applicable to the Major Investors may be amended, modified, terminated or waived only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding and held by the Major Investors; and provided further, that the consent of Baker Brothers, SGMT Holdings Limited, Invus Public Equity, L.P., PFM Healthcare Master Fund, L.P., New Enterprise Associates 13, Limited Partnership, KPCB Holdings, Inc., AP 11 Limited, Qianhai Ark (Cayman) Investment Co. Limited, Rock Springs Capital Master Fund LP and Four Pines Master Fund LP shall be required to amend, modify, terminate or waive Section 3.1 in a manner that affects such Investor, including, for the avoidance of doubt, the minimum number of shares necessary to be deemed a “Major Investor” thereunder. Sections 3.13 and the last sentence of Section 3.14 may be amended, modified, terminated or waived only with the written consent of the Company and Baker Brothers. Further, this Agreement may not be amended, and no provision hereof may be waived, in each case, in any way that by its terms treats (a) a particular Investor in a disproportionately adverse manner relative to the other Investors without such Investor’s written consent, or (b) a particular Major Investor in a disproportionately adverse manner relative to the other Major Investors without such Major Investor’s written consent it being understood in each instance that an Investor or Major Investor, as applicable, shall not be deemed to be treated differently because of the proportional differences in the amounts of respective issue prices, liquidation preferences and redemption prices that arise out of differences in the original issue price vis-à-vis other existing or future series of Preferred Stock. Notwithstanding the foregoing, the Major Investors agree that a waiver of the provisions of Section 3.4 with respect to a particular transaction shall be deemed to apply to all Major Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Major Investors may nonetheless, by agreement with the Company, purchase securities in such transaction, provided, a Major Investor shall have the right to purchase its pro rata number of securities in such transaction, regardless of the waiver of the provisions of Section 3.4, if any other Major Investor purchases in the same transaction. The Company will give reasonably prompt notice of any amendment or termination hereof or waiver hereunder (other than a waiver by an Investor of only such Investor’s rights hereunder) to any party hereto that did not consent in writing to such amendment, termination or waiver. Any amendment effected in accordance with this Section 5.7 shall be binding upon each Holder of Registrable Securities of the Company.

 

 

5.8               Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible and such invalidity, illegality or unenforceability will not affect any other provision of this Agreement. In such event, the parties shall negotiate, in good faith, a legal, valid and enforceable substitute provision which most nearly effects the intent of the parties in entering into this Agreement.

 

5.9               Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party to this Agreement, upon any breach or default of any party to this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, of or in 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. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

5.10              Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

 

5.11              Aggregation of Stock. All shares of Registrable Securities of the Company held or acquired by a stockholder and its affiliated entities shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

5.12              Advice of Counsel. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

 

[Signature Pages Follow]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	COMPANY:
	Sagimet Biosciences Inc.
	By:	/s/ George Kemble
	Name:	George Kemble
	Title:	Chief Executive Officer

 

SAGIMET BIOSCIENCES INC

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	INVESTORS:
	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 Lessing
	Name:	Scott Lessing
	Title:	President

	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 Lessing
	Name:	Scott Lessing
	Title:	President

 

SAGIMET BIOSCIENCES INC

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	SGMT HOLDINGS LIMITED
	By:	/s/ Colm O'Connell
	Name:	Colm O'Connell
	Title:	Authorized Signatory

 

Sagimet Biosciences Inc.
Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	INVUS PUBLIC EQUITY, L.P.
	By:	/s/ Raymond Debbane
	Name:	Raymond Debbane
	Title:	President of its General Partner

 

Sagimet Biosciences Inc.
Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	PFM HEALTHCARE MASTER FUND, L.P.
	By:	PFM Health Sciences, LP
	By:	/s/ Yuan DuBord
	Name:	Yuan DuBord
	Title:	Chief Financial Officer

 

Sagimet Biosciences Inc.
Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	ALTIUM GROWTH FUND, LP
	By:	/s/ Mark Gottlieb
	Name:	Mark Gottlieb
	Title:	COO

 

Sagimet Biosciences Inc.
Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

  

	INVESTORS:
	New Enterprise Associates 13, Limited Partnership
	By:	NEA Partners 13, Limited Partnership
	Its:	General Partner
	By:	NEA 13 GP, LTD
	Its:	General Partner

 

	By:	/s/ Louis Citron
	Name:	Louis Citron
	Title:	Chief Legal officer

 

NEA Ventures 2009, Limited Partnership

 

	By:	/s/ Louis Citron
	Name:	Louis Citron
	Title:	Chief Legal officer

 

SAGIMET BIOSCIENCES INC.
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	KPCB Holdings, Inc. as nominee
	By:	/s/ Susan Biglieri
	Name:	Susan Biglieri
	Title:	CFO

 

SAGIMET BIOSCIENCES INC.
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTOR:
	AP 11 Limited
	By:	/s/ Jinzi Jason Wu
		Name:	Jinzi Jason Wu
		Title:	CEO and President

 

SAGIMET BIOSCIENCES INC.
INVESTORS’ RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	ROCK SPRINGS CAPITAL MASTER FUND LP
	By:	Rock Springs General Partner LLC
	Its:	General Partner
	By:	/s/ Kris Jenner
	Name:	Kris Jenner
	Title:	Member

 

Sagimet Biosciences Inc.

Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	FOUR PINES MASTER FUND LP
	By:	Four Pines General Partner LLC
	Its:	General Partner
	By:	/s/ Kris Jenner
	Name:	Kris Jenner
	Title:	Member

 

Sagimet Biosciences Inc.

Investor Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTOR:
	Jason Fuller
	By:	/s/ Jason Fuller
		Name:	Jason Fuller

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTORS:
	/s/ Tak Cheung
	Tak Cheung

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	INVESTOR:
	Suzhou Huimei Kangrui Management Consulting Partnership L.P.
	(苏州惠每康瑞企业管理咨询合伙企业（有限合伙))
	By:	/s/ Rushu Luo
		Name: Rushu Luo
		Title: Managing Partner

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

 

 

EXHIBIT A

 

SCHEDULE OF INVESTORS

 

667, L.P. 860 Washington St., 3rd Floor New York, NY 10014

Baker Brothers Life Sciences, L.P. 860 Washington St., 3rd Floor New York, NY 10014

Altium Capital Management, LP 152 W. 57th Street 20th Floor New York, NY 10019

AP11 Limited Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands

SGMT Holdings Limited Walkers Corporate Limited Cayman Corporate Centre 27 Hospital Road, George Town Grand Cayman KY1-9008, Cayman Islands Attn: Michael Yi and Ting Xie Email: myi@hillhousecap.com; txie@hillhousecap.com; legal@hillhousecap.com   Necessarily including copies by email to the following:   Goodwin Procter LLP The New York Times Building 620 Eighth Avenue New York, NY 10018 Attention to: Yash Rana; Chi Pan Email: yrana@goodwinlaw.com; chipan@goodwinlaw.com

Invus Public Equities, L. P. Attn. Raymond Debbane c/o The Invus Group, LLC 750 Lexicon Ave. New York, New York 10022

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

PFM Healthcare Master Fund, L.P. c/o PFM Health Services, LP 4 Embarcadero Center, Suite 3500 San Francisco, CA 94111 Attn: Darin Sadow, General Counsel

Douglas Buckley

Eric Meldrum

GC&H Investments One California Street, 5th Floor San Francisco, CA 94111 Attn: Jim Kindler

G LTP LLC 280 South Mangum Street Suite 210 Durham, NC 27701-3984

G ERP LLC 280 South Mangum Street Suite 210 Durham, NC 27701-3984

G JBD LLC 280 South Mangum Street Suite 210 Durham, NC 27701-3984

G HSP LLC 280 South Mangum Street Suite 210 Durham, NC 27701-3984

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

KPCB Holdings, Inc., as nominee Attn: Jesse King 2750 Sand Hill Road Menlo Park, CA 94025   with copies (which shall not constitute notice) to:   Asher M. Rubin Hogan Lovells US LLP Harbor East 100 International Drive, Suite 2000 Baltimore, MD 21202   Marcia Hatch Gunderson Dettmer LLP 1200 Seaport Blvd Redwood City, CA 94065

Merdad Parsey

Michael C. Venuti

New Enterprise Associates 13, Limited Partnership Attn: Louis Citron 1954 Greenspring Drive 600 Timonium, MD 21093   with a copy (which shall not constitute notice) to:   Asher M. Rubin Hogan Lovells US LLP Harbor East 100 International Drive, Suite 2000 Baltimore, MD 21202

Jason Fuller 700 12th ST NW STE 700 PMB 91438 Washington DC 20005

Tak Cheung

Qianhai Ark (Cayman) Investment Co. Limited

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

Rock Springs Capital Master Fund LP Attn: General Counsel 650 S. Exeter Street, Suite 1070 Baltimore, MD 21202   Send notices to: jill@rockspringscapital.com daphne@rockspringscapital.com ops@rockspringscapital.com

Four Pines Master Fund LP Attn: General Counsel 650 S. Exeter Street, Suite 1070 Baltimore, MD 21202   Send notices to: jill@rockspringscapital.com daphne@rockspringscapital.com ops@rockspringscapital.com

The Mendelson Family Trust Attn: Alan Mendelson 140 Scott Place Menlo Park, CA 94025

TriplePoint Ventures 3, LLC 2755 Sand Hill Road Menlo Park, CA 94025

TriplePoint Ventures, LLC 2755 Sand Hill Road Menlo Park, CA 94025

Urs Greber

VP Company Investments 2004, LLC Attn: Alan Mendelson 140 Scott Place Menlo Park, CA 94025

Suzhou Huimei Kangrui Management Consulting Partnership L.P. Room112-11, Wuliu Building, No.88 Xiandai Avenue, Suzhou Industrial Park, Suzhou, China 215021

 

Sagimet Biosciences Inc.

Investors’ Rights Agreement

 

 

EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT