Exhibit 10.3
INSPIRE PHARMACEUTICALS,
INC.
AMENDED AND
RESTATED
2005 EQUITY COMPENSATION
PLAN
The purpose of the Inspire
Pharmaceuticals, Inc. Amended and Restated 2005 Equity Compensation
Plan (the “Plan”) is to provide (i) designated
employees of Inspire Pharmaceuticals, Inc. (the
“Company”) and its parents and subsidiaries,
(ii) certain consultants and advisors who perform services for
the Company or its parents or subsidiaries, and
(iii) non-employee members of the Board of Directors of the
Company (the “Board”) with the opportunity to receive
grants of incentive stock options, nonqualified stock options,
stock awards, and stock appreciation rights. The Company believes
that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefiting the
Company’s stockholders, and will align the economic interests
of the participants with those of the stockholders. The Plan is
effective as of the date it is ratified and approved by the
Company’s stockholders.
1.
Administration
(a) Committee . The Plan
shall be administered and interpreted by the members of the
Compensation Committee of the Board (the “Committee”),
which consists of “outside directors” as defined under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), and related Treasury regulations,
and “non-employee directors” as defined under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). However, the Board may ratify or
approve any grants as it deems appropriate, and the Board shall
approve and administer all grants made to non-employee directors.
The Committee may delegate authority to one (1) or more
delegates as it deems appropriate.
(b) Committee Authority . The
Committee or its delegate shall have the sole authority to
(i) determine the individuals to whom grants shall be made
under the Plan; (ii) determine the type, size, and terms of
the grants to be made to each such individual; (iii) determine
the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria
for exercisability and the acceleration of exercisability;
(iv) amend the terms of any previously issued grant; and
(v) deal with any other matters arising under the Plan. Any
delegation of any or all of the aforementioned authority with
respect to the Inspire Pharmaceuticals, Inc. Amended and Restated
1995 Stock Plan, as amended (the “1995 Plan”), shall be
effective with respect to this Plan. Notwithstanding anything in
this Plan to the contrary, but subject to adjustments as described
in Section 3(d) below, in no event may the Board, the
Committee or its or their delegate (A) amend or modify an
Option (as defined below) in a manner that would reduce the
Exercise Price (as defined below) of such Option;
(B) substitute an Option for another Option with a lower
Exercise Price; (C) cancel an Option and issue a new Option
with a lower Exercise Price to the holder of the cancelled Option
within six (6) months following the date of the cancellation
of the cancelled Option; or (D) cancel an outstanding Option
that is under water (i.e., for which the Fair Market Value, as
defined below, of the underlying Shares are less than the
Option’s Exercise Price) for the purpose of granting
a
replacement Grant (as defined below) of a
different type within six (6) months following the date of
cancellation of the cancelled Option.
(c) Committee Determinations
. The Committee shall have full power and authority to administer
and interpret the Plan, to make factual determinations and to adopt
or amend such rules, regulations, agreements, and instruments for
implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The
Committee’s interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons
having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need
not be uniform as to similarly situated individuals.
(d) Other Equity Awards . The
terms of this Plan shall not impact or govern the administration by
the Company or the rights of any holders of an option or stock
award granted pursuant to the 1995 Plan. Unless otherwise provided
by the Company and agreed to by the recipient of an award under the
1995 Plan, all awards granted pursuant to the 1995 Plan shall
continue to be governed by the terms of the 1995 Plan.
2. Grants . Awards
under the Plan may consist of grants of incentive stock options as
described in Section 5 below (“Incentive Stock
Options”), nonqualified stock options as described in
Section 5 below (“Nonqualified Stock Options”)
(Incentive Stock Options and Nonqualified Stock Options are
collectively referred to as “Options”), stock awards as
described in Section 6 below (“Stock Awards”) and
stock appreciation rights described in Section 7 below
(“SARs”) (hereinafter collectively referred to as
“Grants”). All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions
consistent with this Plan and as specified in the individual grant
instrument or an amendment to the grant instrument (the
“Grant Instrument”). All Grants shall be made
conditional upon the Grantee’s (as defined below)
acknowledgement, in writing or by acceptance of the Grant, that all
decisions and determination of the Company shall be final and
binding on the Grantee, his or her beneficiaries and any other
person having or claiming an interest under such Grant. Grants
under a particular Section of the Plan need not be uniform as among
the Grantees.
3. Shares Subject to the
Plan
(a) Shares Authorized .
Subject to adjustment as described in Section 3(d) below, the
maximum aggregate number of shares of common stock of the Company
(“Company Stock”) that may be issued or transferred
under any form of Grant under the Plan is eight million
(8,000,000) shares (the “Total Share Pool”, which
is comprised of the “Original Share Pool”, and the
“New Share Pool”, as described in Sections 3(b) and
3(c) below). The maximum aggregate number of shares of Company
Stock that may be granted as Incentive Stock Options under the Plan
is eight million (8,000,000) shares, and the maximum aggregate
number of shares of Company Stock that shall be subject to Grants
made under the Plan to any individual during any calendar year
shall be three hundred thousand (300,000) shares, subject to
adjustment as described in Section 3(d) below. The shares may
be authorized but unissued shares of Company Stock or reacquired
shares of Company Stock, including shares purchased by the Company
on the open market for purposes of the Plan. Any shares of Company
Stock issued in connection
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with Grants shall reduce the Total Share Pool by
one (1) for each Option or SAR and two (2) for each Stock
Award or Restricted Unit (as defined in Section 6(h)) issued
in connection with such Grant or by which the Grant is valued by
reference. Shares of Company Stock issued in connection with Grants
shall be issued from the Original Share Pool, and upon its
depletion, shall be issued from the New Share Pool, in the manner
described in Sections 3(b) and 3(c) below.
(b) Original Share Pool . The
Original Share Pool contains a number of shares of Company Stock
equal to all shares of Company Stock issued in connection with
Grants that are outstanding as of the date of ratification and
approval of the Plan by the Company’s stockholders, to the
extent those shares of Company Stock have not become available for
reissuance under the Original Share Pool, as described below. If
and to the extent Grants originating from the Original Share Pool
terminate, expire, or are canceled, forfeited, exchanged, or
surrendered without having been exercised or if any Stock Awards
(including restricted Stock Awards received upon the exercise of
Options) or Restricted Units are forfeited, the shares subject to
such Grants shall be available for Grants from the New Share Pool,
and shall increase the New Share Pool (and consequently, the amount
of shares that are available under the Total Share Pool) by one
(1) share of Company stock for each share of Company Stock
issued in connection with such Grant or by which the Grant is
valued by reference.
(c) New Share Pool . The New
Share Pool contains the shares of Company Stock in the Total Share
Pool which are not in the Original Share Pool. If and to the extent
Options or SARs originating from the New Share Pool terminate,
expire, or are canceled, forfeited, exchanged, or surrendered
without having been exercised or if any Stock Awards (including
restricted Stock Awards received upon the exercise of Options) or
Restricted Units are forfeited, the shares subject to such Grants
shall again be available for Grants under the New Share Pool, and
shall increase the New Share Pool (and consequently, the amount of
shares that are available under the Total Share Pool) by one
(1) for each Option or SAR and two (2) for each Stock
Award or Restricted Unit issued in connection with such Grant or by
which the Grant is valued by reference.
(d) Adjustments . If there is
any change in the number or kind of shares of Company Stock
outstanding (i) by reason of a stock dividend, spin-off,
recapitalization, stock split, or combination or exchange of
shares; (ii) by reason of a merger, reorganization, or
consolidation; (iii) by reason of a reclassification or change
in par value; or (iv) by reason of any other extraordinary or
unusual event affecting the outstanding Company Stock as a class
without the Company’s receipt of consideration, or if the
value of outstanding shares of Company Stock is substantially
reduced as a result of a spin-off or the Company’s payment of
an extraordinary dividend or distribution, the maximum number of
shares of Company Stock available for Grants under both the
Original Share Pool or the New Share Pool, the maximum number of
shares of Company Stock that any individual participating in the
Plan may be granted in any year, the number of shares covered by
outstanding Grants, the kind of shares issued under the Plan, and
the price per share of such Grants shall be appropriately adjusted
by the Company to reflect any increase or decrease in the number
of, or change in the kind or value of, issued shares of Company
Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under such Grants; provided,
however, that any fractional shares resulting from such
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adjustment shall be rounded down to the nearest
whole share. Any adjustments determined by the Company shall be
final, binding, and conclusive.
4. Eligibility for
Participation
(a) Eligible Persons . All
employees of the Company and its parents or subsidiaries
(“Employees”), including Employees who are officers or
members of the Board, and members of the Board who are not
Employees (“Non-Employee Directors”) shall be eligible
to participate in the Plan. Consultants and advisors who perform
services for the Company or any of its parents or subsidiaries
(“Key Advisors”) shall be eligible to participate in
the Plan if the Key Advisors render bona fide services to the
Company or its parents or subsidiaries, the services are not in
connection with the offer and sale of securities in a
capital-raising transaction, and the Key Advisors do not directly
or indirectly promote or maintain a market for the Company’s
securities.
(b) Selection of Grantees .
The Company shall select the Employees, Non-Employee Directors, and
Key Advisors to receive Grants and shall determine the number of
shares of Company Stock subject to a particular Grant. Employees,
Non-Employee Directors, and Key Advisors who receive Grants under
this Plan shall hereinafter be referred to as
“Grantees.”
5. Granting of
Options
The Company may grant an Option to
an Employee, Non-Employee Director, or Key Advisor. The following
provisions are applicable to Options.
(a) Number of Shares . The
Company shall determine the number of shares of Company Stock that
will be subject to each Grant of Options to Employees, Non-Employee
Directors, and Key Advisors.
(b) Type of Option and Price
.
(i) Incentive Stock Options are
intended to satisfy the requirements of Section 422 of the
Code. Nonqualified Stock Options are not intended to so qualify.
Incentive Stock Options may be granted only to employees of the
Company or its parents or subsidiaries, as defined in
Section 424 of the Code. Nonqualified Stock Options may be
granted to Employees, Non-Employee Directors, and Key
Advisors.
(ii) The purchase price (the
“Exercise Price”) of Company Stock subject to an Option
may be equal to or greater than the Fair Market Value of a share of
Company Stock on the date the Option is granted; provided, however,
that (A) the Exercise Price of an Incentive Stock Option shall
be equal to, or greater than, the Fair Market Value of a share of
Company Stock on the date the Incentive Stock Option is granted and
(B) an Incentive Stock Option may not be granted to an
Employee who, at the time of grant, owns or beneficially owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any parent
or subsidiary of the Company, unless the Exercise Price per share
is not less than one hundred ten percent (110%) of the Fair
Market Value of Company Stock on the date of grant.
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(iii) So long as the Company Stock
is publicly traded, the Fair Market Value per share shall be
determined as follows: (A) if the principal trading market for
the Company Stock is a national securities exchange or the Nasdaq
National Market, the last reported sale price thereof on the
relevant date or (if there were no trades on that date) the latest
preceding date upon which a sale was reported, or (B) if the
Company Stock is not principally traded on such exchange or market,
the mean between the last reported “bid” and
“asked” prices of Company Stock on the relevant date,
as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Company
determines. If the Company Stock is not publicly traded or, if
publicly traded, is not subject to reported transactions or
“bid” or “asked” quotations as set forth
above, the Fair Market Value per share shall be as determined by
the Company.
(c) Option Term . The term of
any Option shall not exceed seven (7) years from the date of
grant. However, an Incentive Stock Option that is granted to an
Employee who, at the time of grant, owns or beneficially owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or any parent
or subsidiary of the Company, may not have a term that exceeds five
(5) years from the date of grant.
(d) Exercisability of Options
.
(i) Options shall become exercisable
in accordance with such terms and conditions of the Plan and
specified in the Grant Instrument. The Company may accelerate the
exercisability of any or all outstanding Options at any time for
any reason.
(ii) The Company may provide in a
Grant Instrument that the Grantee may elect to exercise part or all
of an Option before it otherwise has become exercisable. Any shares
so purchased shall be restricted shares and shall be subject to a
repurchase right in favor of the Company during a specified
restriction period, with the repurchase price equal to the lesser
of (A) the Exercise Price or (B) the Fair Market Value of
such shares at the time of repurchase, and (C) any other
restrictions determined by the Company.
(e) Grants to Non-Exempt
Employees . Options granted to persons who are non-exempt
employees under the Fair Labor Standards Act of 1938, as amended,
shall not be exercisable for at least six (6) months after the
date of grant (except that such Options may become exercisable upon
the Grantee’s death, Disability (as defined below) or
retirement, or upon a Change in Control (as defined below) or other
circumstances permitted by applicable regulations). The prior
sentence notwithstanding, Options granted to a non-exempt employee
after July 8, 2009, shall not be exercisable for at least six
(6) months after the date of grant (except that such Options
may become exercisable upon the Grantee’s death, Disability
or retirement, upon the Grantee’s Termination Due to Change
in Control (as defined in Section 10(f) below), or other
circumstances permitted by applicable regulations).
(f) Termination of Employment,
Disability, or Death .
(i) Except as provided below, an
Option may only be exercised while the Grantee is Employed by, or
Providing Service to, the Employer (as defined below) as an
Employee, Key Advisor or member of the Board. In the event that a
Grantee ceases to be
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Employed by, or Provide Service to,
the Employer for any reason other than Disability, death,
termination for Misconduct (as defined below), or as set forth in
Section 5(f)(v) of this Plan, any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within
ninety (90) days after the date on which the Grantee ceases to
be Employed by, or Provide Service to, the Employer (or within such
other period of time as may be specified by the Company), but in
any event no later than the date of expiration of the Option term.
Except as otherwise provided, any of the Grantee’s Options
that are not otherwise exercisable as of the date on which the
Grantee ceases to be Employed by, or Provide Service to, the
Employer shall terminate as of such date.
(ii) In the event the Grantee ceases
to be Employed by, or Provide Service to, the Employer on account
of a termination by the Employer for Misconduct, any Option held by
the Grantee shall terminate as of the thirtieth (30
th ) day after the date on which the Grantee
ceases to be Employed by, or Provide Service to, the Employer or
the date on which such Option would otherwise expire, if earlier.
In addition, notwithstanding any other provisions of this
Section 5, if the Company determines that the Grantee has
engaged in conduct that constitutes Misconduct at any time while
the Grantee is Employed by, or Providing Service to, the Employer
or after the Grantee’s termination of employment or service,
any Option held by the Grantee shall terminate as of the thirtieth
(30 th
) day after the date on which
such Misconduct first occurred, or the date on which such Option
would otherwise expire, if earlier. Upon any exercise of an Option,
the Company may withhold delivery of share certificates pending
resolution of an inquiry that could lead to a finding resulting in
a forfeiture.
(iii) In the event the Grantee
ceases to be Employed by, or Provide Service to, the Employer
because the Grantee is Disabled, any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within
one (1) year after the date on which the Grantee ceases to be
Employed by, or Provide Service to, the Employer (or within such
other period of time as may be specified by the Company), but in
any event no later than the date of expiration of the Option term.
Except as otherwise provided, any of the Grantee’s Options
that are not otherwise exercisable as of the date on which the
Grantee ceases to be Employed by, or Provide Service to, the
Employer shall terminate as of such date.
(iv) If the Grantee dies while
Employed by, or Providing Service to, the Employer, all of the
unexercised outstanding Options of Grantee shall become immediately
exercisable and remain exercisable for a period of one
(1) year from his or her date of death, but in no event later
than the date of expiration of the Option term. If the Grantee dies
within ninety (90) days after the date on which the Grantee
ceases to be employed or provide service on account of a
termination specified in Section 5(f)(i) above (or within such
other period of time as may be specified by the Company), any
Option that is otherwise exercisable by the Grantee shall terminate
unless exercised within one (1) year after the date on which
the Grantee ceases to be Employed by, or Provide Service to, the
Employer (or within such other period of time as may be specified),
but in any event no later than the date of expiration of the Option
term. Except as otherwise provided, any of the Grantee’s
Options that are not otherwise exercisable as of the date on which
the Grantee ceases to be Employed by, or Provide Service to, the
Employer shall terminate as of such date.
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(v) Notwithstanding anything herein
to the contrary, to the extent that any Company-sponsored plan,
policy or arrangement, or any agreement to which the Company is a
party provides for a longer exercise period for a Grantee’s
Options under applicable circumstances than the exercise period
that is provided for in this Section 5(f) under those
circumstances, then the exercise period set forth in such plan,
policy, arrangement or agreement applicable to such circumstances
shall apply in lieu of the exercise period provided for in this
Section 5(f).
(vi) For purposes of this
Section 5(f) and Section 6 below:
(A) “Employer” shall
mean the Company and its parent and subsidiary corporations or
other entities, as determined by the Board.
(B) “Employed by, or Provide
Service to, the Employer” shall mean employment or service as
an Employee, Key Advisor or member of the Board (so that, for
purposes of exercising Options or SARs and satisfying conditions
with respect to Stock Awards, a Grantee shall not be considered to
have terminated employment or service until the Grantee ceases to
be an Employee, Key Advisor or member of the Board).
(C) “Disability” shall
mean a Grantee’s becoming disabled within the meaning of the
Employer’s long-term disability plan applicable to the
Grantee, as determined in the sole discretion of the Committee or
its delegate.
(D) “Misconduct” means
(i) willful and continued failure by the Grantee to
substantially perform the Grantee’s duties with the Company
(other than any such failure resulting from the Grantee’s
incapacity due to physical or mental illness) or (ii) the
willful engaging by the Grantee in conduct which is demonstrably
injurious to the Company, monetarily or otherwi
