Full Press Release Details
Kala Pharmaceuticals, Inc.
2017 EQUITY INCENTIVE PLAN
The purpose of this 2017 Equity Incentive
Plan (the "Plan") of Kala Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the
Company's stockholders. Except where the context otherwise requires, the term "Company" shall
include any of the Company's present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of
the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the "Code") and any other
business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling
interest, as determined by the Board of Directors of the Company (the "Board").
All of the Company's employees, officers
and directors, as well as consultants and advisors to the Company (as such terms consultants and advisors are defined and interpreted
for purposes of Form S-8 under the Securities Act of 1933, as amended (the "Securities Act"), or
any successor form) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan
is deemed a "Participant." "Award" means Options (as defined in Section 5),
SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), Restricted Stock Units (as defined in Section 7)
and Other Stock-Based Awards (as defined in Section 8).
(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority
to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the
Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. All decisions
by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming
any interest in the Plan or in any Award.
(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers
under the Plan to one or more committees or subcommittees of the Board (a "Committee"). All references
in the Plan to the "Board" shall mean the Board or a Committee of the Board or the officers referred
to in Section 3(c) to the extent that the Board's powers or authority under the Plan have been delegated to such
Committee or officers.
(c) Delegation to Officers. Subject to any requirements of applicable law (including as applicable Sections 152 and 157(c) of
the General Corporation Law of the State of Delaware), the Board may delegate to one or more officers of the Company the power
to grant Awards (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other
powers under the Plan as the Board may determine, provided that the Board shall fix the terms of Awards to be granted by
such officers, the maximum number of shares subject to Awards that the officers may grant, and the time period in which such Awards
may be granted; and provided further, that no officer shall be authorized to grant Awards to any "executive officer"
of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
or to any "officer" of the Company (as defined by Rule 16a-1(f) under the Exchange Act).
Available for Awards
(a) Number of Shares; Share Counting.
(1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or
all of which Awards may be in the form of Incentive Stock Options, as defined in Section 5(b)) for up to such number of shares
of common stock, $0.001 par value per share, of the Company (the "Common Stock") as is equal to the sum
(A) 1,786,883 shares of Common Stock; plus
(B) such additional number of shares of Common Stock (up to 3,533,757 shares) as is equal to the sum of (x) the number of shares
of Common Stock reserved for issuance under the Company's 2009 Employee, Director and Consultant Equity Incentive Plan, as
amended (the "Existing Plan") that remain available for grant under the Existing Plan immediately prior
to the effectiveness of the registration statement for the Company's initial public offering and (y) the number of shares
of Common Stock subject to awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered,
canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject,
however, in the case of Incentive Stock Options to any limitations of the Code); plus
(C) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2018
and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027, equal to the least of
(i) 3,573,766 shares of Common Stock, (ii) 4% of the outstanding shares on such date and (iii) an amount determined
Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares or treasury shares.
(2) Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan:
(A) all shares of Common Stock covered by SARs shall be counted against the number of shares available for the grant of Awards under
the Plan; provided, however, that (i) SARs that may be settled only in cash shall not be so counted and (ii) if
the Company grants an SAR in tandem with an Option for the same number of shares of Common Stock and provides that only one such
Award may be exercised (a "Tandem SAR"), only the shares covered by the Option, and not the shares covered
by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other's exercise will not restore
(B) if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in
whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the
original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued (including
as a result of an SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered
by such Award shall again be available for the grant of Awards; provided, however, that (1) in the case of Incentive
Stock Options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR,
the number of shares counted against the shares available under the Plan shall be the full number of shares subject to the SAR
multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR
upon exercise and (3) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or
termination of such Tandem SAR; and
(C) shares of Common Stock delivered (by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase
shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations with respect to Awards (including
shares retained from the Award creating the tax obligation) shall be added back to the number of shares available for the future
Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as
the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1), except as may be
required by reason of Section 422 and related provisions of the Code.
(a) General. The Board may grant options to purchase Common Stock (each, an "Option") and determine
the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations
applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable.
(b) Incentive Stock Options. An Option that the Board intends to be an "incentive stock option" as defined
in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of Kala
Pharmaceuticals, Inc., any of Kala Pharmaceuticals, Inc.'s present or future parent or subsidiary corporations
as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive
Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422
of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a "Non-Qualified
Option." The Company shall have no liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive
Stock Option to a Non-Qualified Option.
(c) Exercise Price. The Board shall establish the exercise price of each Option or the formula by which such exercise
price will be determined. The exercise price shall be specified in the applicable Option agreement. The exercise price shall be
not less than 100% of the Grant Date Fair Market Value (as defined below) of the Common Stock on the date the Option is granted;
provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the
exercise price shall be not less than 100% of the Grant Date Fair Market Value on such future date. "Grant Date Fair