CONNETICS CORPORATION NON-QUALIFIED STOCK OPTION AGREEMENT
EXHIBIT 10.27
CONNETICS CORPORATION
Connetics Corporation, a Delaware corporation (“Connetics” or the “Corporation”), hereby
grants to Xxxxx Xxxxxxx Xxxxx (the “Optionee”) an option to purchase 30,000 shares of Common Stock
(the “Option”) subject to the following terms and conditions of this Non-Qualified Stock Option
Agreement (the “Option Agreement”):
I. NOTICE OF STOCK OPTION XXXXX
XXXXX XXXXXXX XXXXX |
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0000 Xxxxxx Xxxxx |
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Xxxx Xxxx, XX 00000 |
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Date of Grant
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August 5, 2005 | |
Vesting Commencement Date
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August 1, 2005 | |
Exercise Price per Share
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$17.61 | |
Total Number of Shares of Common |
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Stock Subject to the Option (the “Shares”)
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30,000 Shares | |
Total Exercise Price
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$528,300.00 | |
Type of Option:
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Nonstatutory Stock Option | |
Term/Expiration Date:
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August 5, 2015 |
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with the following schedule:
1/8 of the Shares subject to the Option shall vest six months after the Vesting Commencement
Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to the
Optionee continuing to be a Service Provider on such dates.
This Option may be exercised for (3) three months after the Optionee ceases to be a Service
Provider for any reason other than death or Disability. In the event the Optionee ceases to be a
Service Provider as the result of death or Disability, this Option may be exercised for (12) twelve
months after the Optionee ceases to be a Service Provider. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.
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II. AGREEMENT
This Option is subject to and conditioned upon Optionee’s acceptance of the Option by
returning to the Corporation an executed original of this Option Agreement. This Option shall be
null and void and of no force and effect, unless the Optionee executes and returns to the
Corporation this Option Agreement.
This Option is granted as an inducement material to the Optionee’s entering into service with
the Corporation as an Employee. The Grantee has not previously been a Service Provider of the
Company or any Parent or Subsidiary of the Company.
This Option is not intended to be an incentive stock option under Section 422 of the Code.
No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
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(c) cash; or
(d) check; or
(e) consideration received by Connetics under a cashless exercise program implemented by
Connetics in connection with this Option Agreement; or
(f) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
(g) Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of the Option. The Optionee 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 Exercised Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is an Employee or a former Employee, Connetics will be required to withhold from
his or her compensation or collect from Optionee and pay to the applicable taxing authorities an
amount in cash equal to a percentage of this compensation income at the time of exercise, and may
refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
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(whether stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each Share subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the merger or sale of
assets.
11. Entire Agreement; Governing Law. This Option Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersedes in its entirety
all prior undertakings and agreements of Connetics and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing
signed by Connetics and Optionee. This agreement is governed by the internal substantive laws, but
not the choice of law rules, of California.
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III. DEFINITIONS
A. “Applicable Laws” means the requirements relating to the administration of stock
options 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 the Optionee may be resident.
B. “Board” means the Board of Directors of Connetics.
C. “Code” means the Internal Revenue Code of 1986, as amended.
D. “Common Stock” means the common stock of Connetics.
E. “Corporation” means Connetics Corporation, a Delaware corporation.
F. “Consultant” means any person, including an advisor, engaged by Connetics or a
Parent or Subsidiary to render services to such entity.
G. “Director” means a member of the Board.
H. “Disability” means total and permanent disability as defined in Section 22(e)(3) of
the Code.
I. “Employee” means any person, including Officers and Directors, employed by
Connetics or any Parent or Subsidiary of Connetics. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by Connetics or (ii) transfers between
locations of Connetics or between Connetics, its Parent, any Subsidiary, or any successor. Neither
service as a Director nor payment of a director’s fee by Connetics shall be sufficient to
constitute “employment” by Connetics.
J. “Exchange Act” means the Securities Exchange Act of 1934, as amended.
K. “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:
(i) If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were reported)
as quoted on such exchange or system on the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
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Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the date of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable; or
(iii) In the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.
L. “Officer” means a person who is an officer of Connetics within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated under the Exchange Act.
M. “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
N. “Service Provider” means an Employee, Director or Consultant.
O. “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
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By your signature and the signature of Connetics’ representative below, you and Connetics
agree that this Option is granted under and governed by the terms and conditions of the this Option
Agreement. Optionee has reviewed this Option Agreement in its’ entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully understands all
provisions of this Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions relating to this Option
Agreement. Optionee further agrees to notify Connetics upon any change in the residence address
indicated below.
OPTIONEE:
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CONNETICS CORPORATION | |
/s/ Xxxxx Xxxxxxx Xxxxx
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/s/ Xxxxxx X. Xxxxxxx | |
Xxxxx Xxxxxxx Xxxxx
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Chief Executive Officer | |
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