Exhibit 10.2

 

Vericel Corporation 2019 Omnibus Incentive Plan
Incentive Stock Option Award Agreement

 

AWARD AGREEMENT (the “Agreement”), effective as of [[GRANTDATE]] (the “Grant
Date”), is entered into by and between Vericel Corporation, a Michigan
corporation (the “Company”), and [[FIRSTNAME]] [[LASTNAME]] (the “Participant”).

 

1.                                      Grant of Option.  The Company hereby
grants to the Participant a stock option (the “Option”) to purchase
[[SHARESGRANTED]] shares of common stock of the Company, no par value (the
“Shares”), at the exercise price of [[GRANTPRICE]] per Share (the “Exercise
Price”).

 

2.                                      Subject to the Plan.  This Agreement is
subject to and governed by the terms and provisions of the Vericel Corporation
2019 Omnibus Incentive Plan (the “Plan”), and, unless the context requires
otherwise, terms used herein shall have the same meaning as in the Plan.  In the
event of a conflict between the provisions of the Plan and this Agreement, the
Plan shall control.

 

3.                                      Term of Option. Unless the Option
terminates earlier pursuant to the provisions of this Agreement, the Option
shall expire on the tenth anniversary of the Grant Date.

 

4.                                      Vesting.  Subject to the discretion of
the Committee to accelerate the exercisability of the Option, the Option shall
become vested and exercisable in equal quarterly installments over four years
commencing on the Grant Date, provided that the Participant is employed by the
Company or an Affiliate on the applicable date.

 

5.                                      Exercise of Option.

 

(a)                                 Manner of Exercise. To the extent vested,
the Option may be exercised, in whole or in part, by delivering written notice
to the Company in such form as the Company may require from time to time. Such
notice shall specify the number of Shares subject to the Option as to which the
Option is being exercised, and shall be accompanied by full payment of the
Exercise Price of such Shares in a manner permitted under the terms of
Section 5.5 of the Plan.  The Option may be exercised only in multiples of whole
Shares and no fractional Shares shall be issued.

 

(b)                                 Status of the Option.  This Stock is
intended to qualify as an “incentive stock option” under Section 422 of Code,
but the Company does not represent or warrant that this Option qualifies as
such.  The Participant should consult with his or her own tax advisors regarding
the tax effects of this Option and the requirements necessary to obtain
favorable income tax treatment under Section 422 of the Code, including, but not
limited to, holding period requirements.  To the extent any portion of this
Option does not so qualify as an “incentive stock option,” such portion shall be
deemed to be a non-qualified stock option.

 

(c)                                  Issuance of Shares.  As soon as practicable
following the exercise of the Option, payment of the Exercise Price for the
Shares as to which the Option is exercised and compliance to the satisfaction of
the Committee with all requirements under applicable laws or

 

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regulations in connection with such transfer and with the requirements hereof
and of the Plan, the Company shall issue to the Participant the applicable
number of Shares in the form of fully paid and nonassessable Shares.  The
determination of the Committee as to such compliance shall be final and binding
on the Participant.

 

(d)                                 Capitalization Adjustments.  The number of
Shares subject to the Option and the Exercise Price shall be equitably and
appropriately adjusted, if applicable, as provided in Section 11.2 of the Plan.

 

(e)                                  Notice of Disposition.  The Participant
agrees to notify the Company in writing within fifteen (15) days after the date
of any disposition of any of the Shares issued upon exercise of the Option that
occurs before the later of two (2) years after the Grant Date or one (1) year
after such Shares are transferred to the Participant.

 

(f)                                   Withholding.  The provisions of this
paragraph will apply only to the extent that the Option is not treated as an
incentive stock option pursuant to paragraph (b) of this Section.  No Shares
will be issued on exercise of the Option unless and until the Participant pays
to the Company, or makes satisfactory arrangements with the Company for payment
of, any federal, state or local taxes required by law to be withheld in respect
of the exercise of the Option.  The Participant hereby agrees that the Company
may withhold from the Participant’s wages or other remuneration the applicable
taxes.  At the discretion of the Company, the applicable taxes may be withheld
from the Shares otherwise deliverable to the Participant on exercise of the
Option, up to the Participant’s minimum required withholding rate or such other
rate that will not trigger a negative accounting impact.

 

6.                                      Termination of Option.  To the extent
that an Option is vested, it may be exercised at any time specified in this
Agreement, provided that, except as set forth in the following provisions of
this Section 6, the Participant is still employed by the Company at the time of
exercise.  In all other cases, the Option shall terminate as set forth in the
following subsections.  Except as provided herein and subject to the discretion
of the Committee to permit continued vesting of the Option, any portion of this
Option that has not vested as of the date of termination of employment shall
immediately terminate and be of no further force or effect.

 

(a)                                 Death.  Upon the death of an Optionee while
employed by the Company or an Affiliate, the unexercised, vested portion of this
Option shall be exercisable by the person or persons entitled to do so under the
will of the Participant, or, if the Participant shall fail to make testamentary
disposition of the Option, or if the Participant shall die intestate, by the
Participant’s executor or personal representative, at any time prior to the
expiration date of this Option or within one (1) year of the Participant’s date
of death, whichever is the shorter period.

 

(b)                                 Disabled Participant.  Upon the termination
of employment by the Company or an Affiliate of a Disabled Participant for
reasons other than Cause, the unexercised, vested portion of this Option shall
be exercisable by the Participant at any time prior to the expiration date of
such Option or within one year of the Participant’s date of termination of
employment, whichever is the shorter period.  For purposes of this Agreement, a
“Disabled Participant” shall mean the Participant is disabled within the meaning
of Section 22(e)(3) of the Code, or as otherwise determined by the Committee in
its discretion.  The Committee may

 

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require such proof of disability as the Committee in its sole and absolute
discretion deems appropriate and the Committee’s determination as to whether the
Participant is a Disabled Participant shall be final and binding on all parties
concerned.

 

(c)                                  Termination without Cause.  Upon the
termination of employment by the Company or an Affiliate of a Participant other
than a Disabled Participant, for reasons other than death or Cause, the
unexercised, vested portion of this Option shall be exercisable by the
Participant at any time prior to the expiration date of such Option or within
three (3) months of the Participant’s date of termination of employment,
whichever is the shorter period.

 

(d)                                 Termination for Cause.  Upon the termination
of the Participant’s employment with the Company or an Affiliate for Cause,
unless the Option has earlier terminated, the Option shall immediately terminate
in its entirety and shall thereafter not be exercisable to any extent
whatsoever.  For purposes of this Agreement, except as otherwise provided in a
written employment or severance agreement between the Participant and the
Company or an Affiliate or a severance plan of the Company or an Affiliate
covering the Participant, “Cause” shall mean a determination by the Committee
that the Participant has (i) materially breached his or her employment or
service contract with the Company, (ii) been engaged in disloyalty to the
Company or an Affiliate, including, without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his or her
employment or service, which will materially harm the interests of the Company
or the Affiliate, (iii) disclosed trade secrets or confidential information of
the Company to persons not entitled to receive such information, (iv) breached
any written noncompetition or nonsolicitation agreement between the Participant
and the Company or an Affiliate in a manner which the Committee determines will
cause material harm to the interests of the Company or an Affiliate, or
(v) engaged in such other behavior materially detrimental to the interests of
the Company, in each case as the Committee determines.

 

The Committee’s determination of the reason for termination of the Participant’s
employment shall be conclusive and binding on the Participant and his or her
representatives or legatees.

 

(e)                                  Extension of Exercise Period. 
Notwithstanding any provisions of paragraphs (a), (b), (c) or (d) of this
Section to the contrary, if exercise of the Option following termination of
employment during the time period set forth in the applicable paragraph or sale
during such period of the Shares acquired on exercise would violate any of the
provisions of the federal securities laws (or any Company policy related
thereto), the time period to exercise the Option shall be extended until the
later of (i) forty-five (45) days after the date that the exercise of the Option
or sale of the Shares acquired on exercise would not be a violation of the
federal securities laws (or a related Company policy), or (ii) the end of the
time period set forth in the applicable paragraph.

 

7.                                      Change in Control.

 

(a)                                 Effect on Option.  In the event of a Change
in Control, to the extent the successor company (or a subsidiary or parent
thereof) does not assume or substitute for the Option on substantially the same
terms and conditions, the Option shall (i) vest and become

 

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exercisable on the day prior to the date of the Change in Control if the
Participant is then employed by the Company or an Affiliate and (ii) terminate
on the date of the Change in Control.  In the event of a Change in Control, to
the extent the successor company (or a subsidiary or parent thereof) assumes or
substitutes for the Option on substantially the same terms and conditions (which
may include providing for settlement in the common stock of the successor
company (or a subsidiary or parent thereof)), if within twelve (12) months
following the date of the Change in Control the Participant’s employment is
terminated by the Company or an Affiliate (or the successor company or a
subsidiary or parent thereof) without Cause or by the Participant for Good
Reason, the Option shall become fully vested and exercisable, and may be
exercised by the Participant at any time prior to the expiration date of such
Option or within three months of the Participant’s date of termination of
employment, whichever is the shorter period.

 

Notwithstanding the foregoing, if on the date of the Change in Control the Fair
Market Value of one Share is less than the Exercise Price, then the Option shall
terminate as of the date of the Change in Control, except as otherwise
determined by the Committee.

 

(b)                                 Good Reason.  For purposes of this
Agreement, except as otherwise provided in paragraph (c) of this Section, “Good
Reason” shall mean (i) a reduction by the Company or an Affiliate or a successor
company (or a subsidiary or parent thereof) of more than 10% in Participant’s
rate of annual base salary as in effect immediately prior to such Change in
Control; (ii) a reduction by the Company or an Affiliate or a successor company
(or a subsidiary or parent thereof) of more than 10% of the Participant’s
individual annual target or bonus opportunity, except under circumstances where
the Company or an Affiliate or a successor company (or a subsidiary or parent
thereof) implement changes to the bonus structure of similarly situated
employees, including but not limited to changes to the bonus structure designed
to integrate the Company’s or Affiliate’s personnel with other personnel of the
successor company (or an subsidiary or parent thereof); (iii) a significant and
substantial reduction by the Company or an Affiliate or a successor company (or
a subsidiary or parent thereof) of the Participant’s responsibilities and
authority, as compared with the Participant’s responsibilities and authority in
effect immediately preceding the Change in Control; or (iv) any requirement of
the Company or an Affiliate or a successor company (or a subsidiary or parent
thereof) that Participant be based anywhere more than fifty (50) miles from
Participant’s primary office location at the time of the Change in Control.

 

(c)                                  Other Agreement or Plan.  The provisions of
this Section (including the definitions of Cause and Good Reason), shall be
superseded by the specific provisions, if any, of a written employment or
severance agreement between the Participant and the Company or a severance plan
of the Company covering the Participant, including a change in control severance
agreement or plan, to the extent such a provision provides a greater benefit to
the Participant.

 

8.                                      Miscellaneous.

 

(a)                                 No Rights of Stockholder. The Participant
shall not have any of the rights of a stockholder with respect to the Shares
subject to this Option until such Shares have been issued to him or her upon the
due exercise of the Option.

 

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(b)                                 Nontransferability of Option.  The Option
shall be nontransferable otherwise than by will or the laws of descent and
distribution, and during the lifetime of the Participant, the Option may be
exercised only by the Participant or, during the period the Participant is under
a legal disability, by the Participant’s guardian or legal representative. 
Notwithstanding the foregoing, the Participant may, by delivering written notice
to the Company, in a form provided by or otherwise satisfactory to the Company,
designate a third party who, in the event of the Participant’s death, shall
thereafter be entitled to exercise the Option.

 

(c)                                  Severability.  If any provision of this
Agreement shall be held unlawful or otherwise invalid or unenforceable in whole
or in part by a court of competent jurisdiction, such provision shall (i) be
deemed limited to the extent that such court of competent jurisdiction deems it
lawful, valid and/or enforceable and as so limited shall remain in full force
and effect, and (ii) not affect any other provision of this Agreement or part
thereof, each of which shall remain in full force and effect.

 

(d)                                 Governing Law. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
Michigan, other than its conflict of laws principles.

 

(e)                                  Headings. The headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

 

(f)                                   Notices.  All notices required or
permitted under this Agreement shall be in writing and shall be sufficiently
made or given if hand delivered or mailed by registered or certified mail,
postage prepaid.  Notice by mail shall be deemed delivered on the date on which
it is postmarked.

 

Notices to the Company should be addressed to:

 

Vericel Corporation

64 Sidney Street

Cambridge, MA 02139

Attention: Chief Financial Officer

 

Notice to the Participant should be addressed to the Participant at the
Participant’s address as it appears on the Company’s records.

 

The Company or the Participant may by writing to the other party, designate a
different address for notices.  If the receiving party consents in advance,
notice may be transmitted and received via telecopy or via such other electronic
transmission mechanism as may be available to the parties.  Such notices shall
be deemed delivered when received.

 

(g)                                  No Obligation to Continue Employment. 
Neither the Company nor any subsidiary is obligated by or as a result of the
Plan or this Agreement to continue the Participant in employment and neither the
Plan nor this Agreement shall interfere in any way with the right of the Company
or any subsidiary to terminate the employment of the Participant at any time.

 

(h)                                 Data Privacy Consent.  In order to
administer the Plan and this Agreement

 

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and to implement or structure future equity grants, the Company, its
subsidiaries and Affiliates and certain agents thereof (together, the “Relevant
Companies”) may process any and all personal or professional data, including but
not limited to Social Security or other identification number, home address and
telephone number, date of birth and other information that is necessary or
desirable for the administration of the Plan and/or this Agreement (the
“Relevant Information”).  By entering into this Agreement, the Participant
(i) authorizes the Company to collect, process, register and transfer to the
Relevant Companies all Relevant Information; (ii) waives any privacy rights the
Participant may have with respect to the Relevant Information; (iii) authorizes
the Relevant Companies to store and transmit such information in electronic
form; and (iv) authorizes the transfer of the Relevant Information to any
jurisdiction in which the Relevant Companies consider appropriate.  The
Participant shall have access to, and the right to change, the Relevant
Information.  Relevant Information will only be used in accordance with
applicable law.

 

(i)                                     Entire Agreement; Modification. The
Agreement contains the entire agreement between the parties with respect to the
subject matter contained herein and may not be modified, except as provided in
the Plan or in a written document signed by each of the parties hereto, and may
be rescinded only by a written agreement signed by both parties.

 

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