Anadys Pharmaceuticals, Inc. Inducement Stock Option Agreement (Nonstatutory Stock Option)
EXHIBIT 99.7
Anadys Pharmaceuticals, Inc.
Inducement Stock Option Agreement
(Nonstatutory Stock Option)
(Nonstatutory Stock Option)
Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement,
Anadys Pharmaceuticals, Inc. (the “Company”) has granted you an option to purchase the number of
shares of the Company’s Common Stock indicated in your Grant Notice at the exercise price indicated
in your Grant Notice. This option is granted as an “inducement grant” under NASDAQ Marketplace
Rule 4350(i)(1)(A)(iv) and is therefore being granted outside the Company’s 2004 Equity Incentive
Plan (the “Plan”). However, this option is subject to all of the terms and conditions in the Plan
and this Stock Option Agreement, as though the option was issued
pursuant to the Plan.
Defined terms not otherwise defined in this Stock Option Agreement but defined in the Plan shall
have the same meanings as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that 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 referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.
3. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:
(a) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, 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.
(b) Provided that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either
that you have held for the period required to avoid a charge to the Company’s reported earnings
(generally six (6) months) or that you did not acquire, directly or indirectly from the Company,
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,
1.
shall include delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not
exercise your option by tender to the Company of Common Stock to the extent such tender would
violate the provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.
4. Whole Shares. You may exercise your option only for whole shares of Common Stock.
5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with 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.
6. Term. You may not exercise your option before the commencement of its term or
after its term expires. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:
(a) immediately upon the termination of your Continuous Service for Cause (as defined in the
Plan);
(b) three (3) months after the termination of your Continuous Service for any reason other
than Cause, Disability or death, provided that if during any part of such three (3) month period
you may not exercise your option solely because of the condition set forth in the preceding
paragraph relating to “Securities Law Compliance,” your option shall not expire until the earlier
of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3)
months after the termination of your Continuous Service;
(c) twelve (12) months after the termination of your Continuous Service due to your
Disability;
(d) eighteen (18) 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 Grant Notice; or
(f) the day before the tenth (10th) anniversary of the Date of Grant.
7. Exercise.
2.
(a) You may exercise the vested portion of your option (and the unvested portion of your
option if your Grant Notice so permits) during its term by delivering a Notice of Exercise (in a
form designated by the Company) together with the exercise price to the Secretary of the Company,
or to such other person as the Company may designate, during regular business hours, 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 (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.
8. Transferability.
(a) Your Nonstatutory Stock Option is not transferable, except (i) by will or by the laws of
descent and distribution, (ii) with the prior written approval of the Company, by instrument to an
inter vivos or testamentary trust, in a form accepted by the Company, in which the option is to be
passed to beneficiaries upon the death of the trustor (settlor) and (iii) with the prior written
approval of the Company, by gift, in a form accepted by the Company, to a permitted transferee
under Rule 701 of the Securities Act.
9. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall 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 shall 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.
10. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or 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
“cashless exercise” 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) Upon your request and subject to approval by the Company, in its sole discretion, 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 minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b)
3.
of the Code, covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of your option.
Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from
fully vested shares of Common Stock determined as of the date of exercise of your option that are
otherwise issuable to you upon such exercise. Any adverse consequences to you arising in
connection with such share withholding procedure shall 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 shall 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 unless such obligations are satisfied.
11. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall 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.
12. 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. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.
4.
