Exhibit 99.2
------------
ENTERA, INC.
2000 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered
into as of the date of grant set forth below (the "Date of Grant") by and
between Entera, Inc., a Delaware corporation (the "Company"), and the
participant named below (the "Participant"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 2000 Equity
Incentive Plan (the "Plan").
Participant
________________________________________
Social Security Number:
________________________________________
Address:
________________________________________
Total Option Shares:
________________________________________
Exercise Price Per Share:
________________________________________
Date of Grant:
________________________________________
First Vesting Date:
________________________________________
Expiration Date:
________________________________________
(unless earlier terminated under Section
5.6 of the Plan)
Type of Stock Option
(Check one): [_] Incentive Stock Option
[X] Nonqualified Stock Option
Item 27. Grant of Option. The Company hereby grants to Participant an option
---------------
(this "Option") to purchase the total number of shares of Common Stock, $0.001
par value, of the Company set forth above as Total Option Shares (the "Shares")
at the Exercise Price Per Share set forth above (the "Exercise Price"), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, the Option is intended to qualify as an
"incentive stock option" (the "ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
Item 28. Exercise Period.
(a) Exercise Period of Option. This Option is immediately exercisable
-------------------------
although the Shares issued upon exercise of the Option will be
subject to the restrictions on transfer and Repurchase Options set
forth in Sections 7, 8 and 9 below. Provided Participant continues
to provide services to the Company or to any Parent or Subsidiary
of the Company, the Shares issuable upon exercise of this Option
will become vested with respect to twenty-five percent (25%) of
the Shares on the First Vesting Date as listed above, and
thereafter at the end of each full succeeding month after the
First Vesting Date an additional 2.0833% of the Shares will become
vested until the Shares are vested with respect to one hundred
percent (100%) of the Shares. If application of the vesting
percentage causes a fractional share, such share shall be rounded
down to the nearest whole share for each month except for the last
month in such vesting period, at the end of which last month this
Option shall become exercisable for the full remainder of the
Shares. Unvested Shares may not be sold or
otherwise transferred by Participant without the Company's prior
written consent. Notwithstanding any provision in the Plan or this
Agreement to the contrary, Options for Unvested Shares (as defined
in Section 2.2 of this Agreement) will not be exercisable on or
after Participant's Termination Date.
(b) Vesting of Options. Shares that are vested pursuant to the
------------------
schedule set forth in Section 2.1 are "Vested Shares." Shares that
are not vested pursuant to the schedule set forth in Section 2.1
are "Unvested Shares."
(c) Expiration. The Option shall expire on the Expiration Date set
----------
forth above or earlier as provided in Section 3 below or pursuant
to Section 5.6 of the Plan.
Item 29. Termination.
-----------
(a) Termination for Any Reason Except Death, Disability or Cause. If
------------------------------------------------------------
Participant is Terminated for any reason, except death, Disability
or for Cause, the Option, to the extent (and only to the extent)
that it would have been exercisable by Participant on the
Termination Date, may be exercised by Participant no later than
three (3) months after the Termination Date, but in any event no
later than the Expiration Date.
(b) Termination Because of Death or Disability. If Participant is
------------------------------------------
Terminated because of death or Disability of Participant (or
Participant dies within three (3) months of Termination when
Termination is for any reason other than Participant's Disability
or for Cause), the Option, to the extent that it is exercisable by
Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) no later than
twelve (12) months after the Termination Date, but in any event no
later than the Expiration Date. Any exercise beyond (i) three (3)
months after the Termination Date when the Termination is for any
reason other than the Participant's death or disability, within
the meaning of Section 22(e)(3) of the Code; or (ii) twelve (12)
months after the Termination Date when the termination is for
Participant's disability, within the meaning of Section 22(e)(3)
of the Code, is deemed to be an NQSO.
(c) Termination for Cause. If Participant is Terminated for Cause,
---------------------
then the Option will expire on Participant's Termination Date, or
at such later time and on such conditions as are determined by the
Committee.
(d) No Obligation to Employ. Nothing in the Plan or this Agreement
-----------------------
shall confer on Participant any right to continue in the employ
of, or other relationship with, the Company or any Parent or
Subsidiary of the Company, or limit in any way the right of the
Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with
or without Cause.
Item 30. Manner of Exercise.
------------------
(a) Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
Participant (or in the case of exercise after Participant's death
or incapacity, Participant's executor, administrator, heir or
legatee, as the case may be) must deliver to the Company an
executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by
the Committee from time to time (the "Exercise Agreement"), which
shall set forth, inter alia, (i) Participant's election to
exercise the Option, (ii) the number of Shares being purchased,
(iii) any restrictions imposed on the Shares and (iv) any
representations, warranties and agreements regarding Participant's
investment intent and access to information as may be required by
the Company to comply with applicable securities laws. If someone
other than Participant exercises the Option, then such person must
submit documentation reasonably acceptable to the Company
verifying that such person has the legal right to exercise the
Option.
(b) Limitations on Exercise. The Option may not be exercised unless
-----------------------
such exercise is in compliance with all applicable federal and
state securities laws, as they are in effect on the date of
exercise.
10
The Option may not be exercised as to fewer than one hundred
(100) Shares unless it is exercised as to all Shares as to which
the Option is then exercisable.
(c) Payment. The Exercise Agreement shall be accompanied by full
-------
payment of the Exercise Price for the shares being purchased in
cash (by check), or where permitted by law:
A. by cancellation of indebtedness of the Company to the
Participant;
B. by surrender of shares of the Company's Common Stock that
(i) either (A) have been owned by Participant for more than six (6) months and
have been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been fully
paid with respect to such shares); or (B) were obtained by Participant in the
open public market; and (ii) are clear of all liens, claims, encumbrances or
security interests;
C. by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company shall not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
provided, further, that the portion of the Exercise Price equal to the par value
of the Shares must be paid in cash or other legal consideration permitted by
Delaware General Corporation Law;
D. by waiver of compensation due or accrued to Participant for
services rendered;
E. provided that a public market for the Company's stock
exists: (i) through a "same day sale" commitment from Participant and a broker-
dealer that is a member of the National Association of Securities Dealers (an
"NASD Dealer") whereby Participant irrevocably elects to exercise the Option and
to sell a portion of the Shares so purchased sufficient to pay for the total
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the total Exercise Price directly to the Company, or (ii)
through a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the total
Exercise Price directly to the Company; or
F. by any combination of the foregoing.
(d) Tax Withholding. Prior to the issuance of the Shares upon
---------------
exercise of the Option, Participant must pay or provide for any
applicable federal, state and local withholding obligations of
the Company. If the Committee permits, Participant may provide
for payment of withholding taxes upon exercise of the Option by
requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of
Shares to the Participant by deducting the Shares retained from
the Shares issuable upon exercise.
(e) Issuance of Shares. Provided that the Exercise Agreement and
------------------
payment are in form and substance satisfactory to counsel for the
Company, the Company shall issue the Shares registered in the
name of Participant, Participant's authorized assignee, or
Participant's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends
affixed thereto.
Item 31. Notice of Disqualifying Disposition of ISO Shares. If the Option is an
-------------------------------------------------
ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two (2)
years after the Date of Grant, and (ii) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.
11
Item 32. Compliance with Laws and Regulations. The Plan and this Agreement are
------------------------------------
intended to comply with Section 25102(o) of the California Corporations Code and
any regulations relating thereto. Any provision of this Agreement which is
inconsistent with Section 25102(o) or any regulations relating thereto shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o) and any regulations relating
thereto. The exercise of the Option and the issuance and transfer of Shares
shall be subject to compliance by the Company and Participant with all
applicable requirements of federal and state securities laws and with all
applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer. Participant
understands that the Company is under no obligation to register or qualify the
Shares with the SEC, any state securities commission or any stock exchange to
effect such compliance.
Item 33. Nontransferability of Option. The Option may not be transferred in any
----------------------------
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant or in the event
of Participant's incapacity, by Participant's legal representative. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
Item 34. Company's Repurchase Option for Unvested Shares. The Company, or its
-----------------------------------------------
assignee, shall have the option to repurchase Participant's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in the Exercise Agreement (the "Repurchase Option") if Participant is Terminated
(as defined in the Plan) for any reason, or no reason, including without
limitation Participant's death, Disability (as defined in the Plan), voluntary
resignation or termination by the Company with or without Cause. Notwithstanding
the foregoing, the Company shall retain the Repurchase Option for Unvested
Shares only as to that number of Unvested Shares (whether or not exercised) that
exceeds the number of shares which remain unexercised.
Item 35. Company's Right of First Refusal. Unvested Shares may not be sold or
--------------------------------
otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of such
Vested Shares may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares to
be sold or transferred on the terms and conditions set forth in the Exercise
Agreement (the "Right of First Refusal"). The Company's Right of First Refusal
will terminate when the Company's securities become publicly traded.
Item 36. Tax Consequences. Set forth below is a brief summary as of the
----------------
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If the Option qualifies as an ISO, there will
---------------
be no regular federal or California income tax liability upon
the exercise of the Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as a tax preference
item for federal alternative minimum tax purposes and may
subject the Participant to the alternative minimum tax in the
year of exercise.
(b) Exercise of Nonqualified Stock Option. If the Option does not
-------------------------------------
qualify as an ISO, there may be a regular federal and
California income tax liability upon the exercise of the
Option. Participant will be treated as having received
compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If
Participant is a current or former employee of the Company,
the Company may be required to withhold from Participant's
compensation or collect from Participant and pay to the
applicable taxing authorities an amount equal to a percentage
of this compensation income at the time of exercise.
(c) Disposition of Shares. The following tax consequences may
---------------------
apply upon disposition of the Shares.
A. Incentive Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years
12
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as long term capital gain for federal and California income tax
purposes. If Shares purchased under an ISO are disposed of within the applicable
one (1) year or two (2) year period, any gain realized on such disposition will
be treated as compensation income (taxable at ordinary income rates) to the
extent of the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price.
B. Nonqualified Stock Options. If the Shares are held for more than
--------------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long term capital gain.
C. Withholding. The Company may be required to withhold from the
-----------
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
(d) Section 83(b) Election for Unvested Shares. With respect to Unvested
------------------------------------------
Shares, which are subject to the Repurchase Option, unless an election
is filed by the Participant with the Internal Revenue Service (and, if
necessary, the proper state taxing authorities), within 30 days of the
--------------
purchase of the Unvested Shares, electing pursuant to Section 83(b) of
the Code (and similar state tax provisions, if applicable) to be taxed
currently on any difference between the Exercise Price of the Unvested
Shares and their Fair Market Value on the date of purchase, there may
be a recognition of taxable income (including, where applicable,
alternative minimum taxable income) to the Participant, measured by
the excess, if any, of the Fair Market Value of the Unvested Shares at
the time they cease to be Unvested Shares, over the Exercise Price of
the Unvested Shares.
Item 37. Privileges of Stock Ownership. Participant shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.
Item 38. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
Item 39. Entire Agreement. The Plan is incorporated herein by reference. This
----------------
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
Item 40. Notices. Any notice required to be given or delivered to the Company
-------
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: (i) personal
delivery; (ii) three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); (iii) one (1) business
day after deposit with any return receipt express courier (prepaid); or (iv) one
(1) business day after transmission by facsimile, rapifax or telecopier.
Item 41. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Agreement including its rights to purchase Shares under the Repurchase
Option and the Right of First Refusal. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
Item 42. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
13
Item 43. Acceptance. Participant hereby acknowledges receipt of a copy of the
----------
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
14
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in triplicate by its duly authorized representative and Participant has
executed this Agreement in triplicate, effective as of the Date of Grant.
ENTERA, INC. PURCHASER
By: _______________________ By: _________________________
___________________________ ____________________________
(Please print name) (Please print name)
___________________________
(Please print title)
