Exhibit 10.2

 

CARA THERAPEUTICS, INC.

STOCK OPTION GRANT NOTICE

(2019 INDUCEMENT PLAN)

 

Cara Therapeutics, Inc. (the “Company”), pursuant to its 2019 Inducement Plan
(the “Plan”), hereby grants to Optionholder an option to purchase the number of
shares of the Company’s Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth in this notice, in the Option
Agreement and in the Plan, both of which are attached hereto and incorporated
herein in their entirety. Capitalized terms not explicitly defined herein but
defined in the Plan or the Option Agreement will have the same definitions as in
the Plan or the Option Agreement. If there is any conflict between the terms in
this notice and the Plan, the terms of the Plan will control.

 

Optionholder:

 

Date of Grant:

 

Vesting Commencement Date:

 

Number of Shares Subject to Option:

 

Exercise Price (Per Share):

 

Total Exercise Price:

 

Expiration Date:

 

 

Type of Grant:

Nonstatutory Stock Option

 

 

Exercise Schedule:

Same as Vesting Schedule

 

 

Vesting Schedule:

[                                          ]

 

 

Payment:

By one or a combination of the following items (described in the Option
Agreement):

 

 

 

x                                  By cash, check, bank draft or money order
payable to the Company

 

x                                  Pursuant to a Regulation T Program if the
shares are publicly traded

 

o                                    By delivery of already-owned shares if the
shares are publicly traded

 

o                                    Subject to the Company’s consent at the
time of exercise, by a “net exercise” arrangement

 

Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and
understands and agrees to, this Stock Option Grant Notice, the Option Agreement,
the Plan and the stock plan prospectus for this Plan. As of the Date of Grant,
this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the
entire understanding between Optionholder and the Company regarding the option
and supersede all prior oral and written agreements on the option, with the
exception, if applicable, of (i) the written employment agreement or offer
letter agreement between the Company and Optionholder specifying the terms that
should govern the option and (ii) any compensation recovery policy that is
adopted by the Company or is otherwise required by applicable law. By accepting
the option, Optionholder consents to receive documents governing the option by
electronic delivery and to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

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CARA THERAPEUTICS, INC.

 

OPTIONHOLDER:

 

 

 

 

By:

 

 

 

 

Signature

 

Signature

 

 

 

 

 

Title:

 

 

Date:

 

 

 

 

 

 

Date:

 

 

 

 

 

ATTACHMENTS:  Option Agreement, 2019 Inducement Plan

 

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ATTACHMENT I

 

OPTION AGREEMENT

 

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CARA THERAPEUTICS, INC.

2019 INDUCEMENT PLAN

 

OPTION AGREEMENT

(NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option
Agreement, Cara Therapeutics, Inc. (the “Company”) has granted you an option
under its 2019 Inducement Plan (the “Plan”) 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. The option is granted to you effective as of the
date of grant set forth in the Grant Notice (the “Date of Grant”). The option is
granted in compliance with NASDAQ Listing Rule 5635(c)(4) as a material
inducement to you entering into employment with the Company. If there is any
conflict between the terms in this Option Agreement and the Plan, the terms of
the Plan will control. Capitalized terms not explicitly defined in this Option
Agreement or in the Grant Notice but defined in the Plan will have the same
definitions as in the Plan.

 

The details of your option, in addition to those set forth in the Grant Notice
and the Plan, are as follows:

 

1.                                      VESTING.  Your option will vest as
provided in your Grant Notice. 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 the exercise
price per share in your Grant Notice will be adjusted for Capitalization
Adjustments as provided in the Plan.

 

3.                                      EXERCISE RESTRICTION FOR NON-EXEMPT
EMPLOYEES.  If you are an Employee eligible for overtime compensation under the
Fair Labor Standards Act of 1938, as amended (that is, a “Non-Exempt Employee”),
and except as otherwise provided in the Plan, you may not exercise your option
until you have completed at least six (6) months of Continuous Service measured
from the Date of Grant, even if you have already been an employee for more than
six (6) months. Consistent with the provisions of the Worker Economic
Opportunity Act, you may exercise your option as to any vested portion prior to
such six (6) month anniversary in the case of (i) your death or disability,
(ii) a Corporate Transaction in which your option is not assumed, continued or
substituted, (iii) a Change in Control or (iv) your termination of Continuous
Service on your “retirement” (as defined in the Company’s benefit plans).

 

4.                                      EXERCISE PRIOR TO VESTING (“EARLY
EXERCISE”).  You may not exercise your option prior to vesting.

 

5.                                      METHOD OF PAYMENT.  You must pay the
full amount of the exercise price for the shares you wish to exercise. You may
pay the exercise price in cash or by check, bank draft or money order payable to
the Company or in any other manner permitted by your Grant Notice, which may
include one or more of the following:

 

(a)                                 Provided that at the time of exercise the
Common Stock is publicly traded, 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. This manner of payment is
also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

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(b)                                 Provided that at the time of exercise the
Common Stock is publicly traded, by delivery to the Company (either by actual
delivery or attestation) of already-owned shares of Common Stock 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, will include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company. You
may not exercise your option by delivery to the Company of Common Stock if doing
so would violate the provisions of any law, regulation or agreement restricting
the redemption of the Company’s stock.

 

(c)                                  Subject to the consent of the Company at
the time of exercise, by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Common Stock issued upon exercise of
your option by the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate exercise price. You must pay any remaining balance
of the aggregate exercise price not satisfied by the “net exercise” in cash or
other permitted form of payment. Shares of Common Stock will no longer be
outstanding under your option and will not be exercisable thereafter if those
shares (i) are used to pay the exercise price pursuant to the “net exercise,”
(ii) are delivered to you as a result of such exercise, and (iii) are withheld
to satisfy your tax withholding obligations.

 

6.                                      WHOLE SHARES.  You may exercise your
option only for whole shares of Common Stock.

 

7.                                      SECURITIES LAW COMPLIANCE.  In no event
may you exercise your option unless the shares of Common Stock issuable upon
exercise are then registered under the Securities Act or, if not registered, the
Company has determined that your exercise and the issuance of the shares would
be exempt from the registration requirements of the Securities Act. The exercise
of your option also must comply with all 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 (including any restrictions on exercise required for compliance
with Treas. Reg. 1.401(k)-1(d)(3), if applicable).

 

8.                                      TERM.  You may not exercise your option
before the Date of Grant or after the expiration of the option’s term. The term
of your option expires, subject to the provisions of Section 5(g) of the Plan,
upon the earliest of the following:

 

(a)                                 immediately upon the termination of your
Continuous Service for Cause;

 

(b)                                 three (3) months after the termination of
your Continuous Service for any reason other than Cause, your Disability or your
death (except as otherwise provided in Section 8(d) below); provided, however,
that if during any part of such three (3) month period your option is not
exercisable solely because doing so would violate the registration requirements
under the Securities Act, your option will not expire until the earlier of the
Expiration Date or until it has been exercisable for an aggregate period of
three (3) months after the termination of your Continuous Service; provided
further, if during any part of such three (3) month period, the sale of any
Common Stock received upon exercise of your option would violate the Company’s
insider trading policy, then your option will not expire until the earlier of
the Expiration Date or until it has been exercisable for an aggregate period of
three (3) months after the termination of your Continuous Service during which
the sale of the Common Stock received upon exercise of your option would not be
in violation of the Company’s insider trading policy. Notwithstanding the
foregoing, if (i) you are a Non-Exempt Employee, (ii) your Continuous Service
terminates within six (6) months after the Date of Grant, and (iii) you have
vested in a portion of your option at the time of your termination of Continuous
Service, your option will not expire until the earlier

 

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of (x) the later of (A) the date that is seven (7) months after the Date of
Grant, and (B) the date that is three (3) months after the termination of your
Continuous Service, and (y) the Expiration Date;

 

(c)                                  twelve (12) months after the termination of
your Continuous Service due to your Disability (except as otherwise provided in
Section 8(d)) below;

 

(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.

 

9.                                      EXERCISE.

 

(a)                                 You may exercise the vested portion of your
option during its term by (i) delivering a Notice of Exercise (in a form
designated by the Company), or making the required electronic election with the
Company’s designated broker, and (ii) paying the exercise price and any
applicable withholding taxes to the Company, stock plan administrator, or such
other person as the Company may designate, 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 (i) the exercise of
your option, (ii) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (iii) the
disposition of shares of Common Stock acquired upon such exercise.

 

10.                               TRANSFERABILITY.  Except as otherwise provided
in this Section 10, your option is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you.

 

(a)                                 Certain Trusts.  Upon receiving written
permission from the Board or its duly authorized designee, you may transfer your
option to a trust if you are considered to be the sole beneficial owner
(determined under Section 671 of the Code and applicable state law) while the
option is held in the trust. You and the trustee must enter into transfer and
other agreements required by the Company.

 

(b)                                 Domestic Relations Orders.  Upon receiving
written permission from the Board or its duly authorized designee, and provided
that you and the designated transferee enter into transfer and other agreements
required by the Company, you may transfer your option pursuant to the terms of a
domestic relations order, official marital settlement agreement or other divorce
or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that
contains the information required by the Company to effectuate the transfer. You
are encouraged to discuss the proposed terms of any division of this option with
the Company prior to finalizing the domestic relations order or marital
settlement agreement to help ensure the required information is contained within
the domestic relations order or marital settlement agreement.

 

(c)                                  Beneficiary Designation.  Upon receiving
written permission from the Board or its duly authorized designee, you may, by
delivering written notice to the Company, in a form approved by the Company and
any broker designated by the Company to handle option exercises, designate a
third party who, on your death, will thereafter be entitled to exercise this
option and receive the Common Stock

 

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or other consideration resulting from such exercise. In the absence of such a
designation, your executor or administrator of your estate will be entitled to
exercise this option and receive, on behalf of your estate, the Common Stock or
other consideration resulting from such exercise.

 

11.                               OPTION NOT A SERVICE CONTRACT.

 

(a)                                 Nothing in this Option Agreement (including,
but not limited to, the vesting of your option or the issuance of shares of
Common Stock upon exercise of your option), the Plan or any covenant of good
faith and fair dealing that may be found implicit in this Option Agreement or
the Plan shall: (i) confer upon you any right to continue in the employ of, or
affiliation with, the Company or an Affiliate; (ii) constitute any promise or
commitment by the Company or an Affiliate regarding the fact or nature of future
positions, future work assignments, future compensation or any other term or
condition of employment or affiliation; (iii) confer any right or benefit under
this Option Agreement or the Plan unless such right or benefit has specifically
accrued under the terms of this Option Agreement or Plan; or (iv) deprive the
Company of the right to terminate you at will and without regard to any future
vesting opportunity that you may have.

 

(b)                                 The Company has the right to reorganize,
sell, spin-out or otherwise restructure one or more of its businesses or
Affiliates at any time or from time to time, as it deems appropriate (a
“reorganization”). Such a reorganization could result in the termination of your
Continuous Service, or the termination of Affiliate status of your employer and
the loss of benefits available to you under this Option Agreement, including but
not limited to, the termination of the right to continue vesting in your option.
This Option Agreement, the Plan, the transactions contemplated hereunder and the
vesting schedule set forth herein or any covenant of good faith and fair dealing
that may be found implicit in any of them do not constitute an express or
implied promise of continued engagement as an employee or consultant for the
term of this Option Agreement, for any period, or at all, and shall not
interfere in any way with the Company’s right to conduct a reorganization.

 

12.                               WITHHOLDING OBLIGATIONS.

 

(a)                                 At the time you exercise your option, in
whole or in part, and at any time thereafter as the Company requests, 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 “same
day sale” 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 any Affiliate that arise in connection with the
exercise of your option.

 

(b)                                 Upon your request and subject to approval by
the Company, 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
classification of your option as a liability for financial accounting purposes).

 

(c)                                  You may not exercise your option unless the
tax withholding obligations of the Company and 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 will have no obligation to issue a
certificate for shares of Common Stock or release such shares of Common Stock
from any escrow provided for herein, if applicable, unless such obligations are
satisfied.

 

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13.                               TAX CONSEQUENCES.  You hereby agree that the
Company does not have a duty to design or administer the Plan or its other
compensation programs in a manner that minimizes your tax liabilities. You will
not make any claim against the Company, or any of its Officers, Directors,
Employees or Affiliates related to tax liabilities arising from your option or
your other compensation. In particular, you acknowledge that your option is
exempt from Section 409A of the Code only if the exercise price per share
specified in the Grant Notice is at least equal to the “fair market value” per
share of the Common Stock on the Date of Grant and there is no other
impermissible deferral of compensation associated with the option.

 

14.                               NOTICES.  Any notices provided for in your
option or the Plan will be given in writing (including electronically) and will
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 U.S. mail,
postage prepaid, addressed to you at the last address you provided to the
Company. The Company may, in its sole discretion, decide to deliver any
documents related to participation in the Plan and your option by electronic
means or to request your consent to participate in the Plan by electronic means.
By accepting your option, you consent to receive such documents by electronic
delivery and to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company.

 

15.                               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. If there is any conflict between the
provisions of your option and those of the Plan, the provisions of the Plan will
control. In addition, your option (and any compensation paid or shares issued
under your option) is subject to recoupment in accordance with The Dodd—Frank
Wall Street Reform and Consumer Protection Act and any implementing regulations
thereunder, any clawback policy adopted by the Company and any compensation
recovery policy otherwise required by applicable law. No recovery of
compensation under such a clawback policy will be an event giving rise to a
right to resign for “good reason” or for a “constructive termination” (or
similar term) under any agreement with the Company.

 

16.                               OTHER DOCUMENTS.  You hereby acknowledge
receipt of and the right to receive a document providing the information
required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Plan prospectus. In addition, you acknowledge receipt of the Company’s
policy permitting certain individuals to sell shares only during certain
“window” periods and the Company’s insider trading policy, in effect from time
to time.

 

17.                               EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The
value of your option will not be included as compensation, earnings, salaries,
or other similar terms used when calculating your benefits under any employee
benefit plan sponsored by the Company or any Affiliate, except as such plan
otherwise expressly provides. The Company expressly reserves its rights to
amend, modify, or terminate any of the Company’s or any Affiliate’s employee
benefit plans.

 

18.                               VOTING RIGHTS.  You will not have voting or
any other rights as a stockholder of the Company with respect to the shares to
be issued pursuant to your option until such shares are issued to you. Upon such
issuance, you will obtain full voting and other rights as a stockholder of the
Company. Nothing contained in your option, and no action taken pursuant to its
provisions, will create or be construed to create a trust of any kind or a
fiduciary relationship between you and the Company or any other person.

 

19.                               SEVERABILITY.  If all or any part of this
Option Agreement or the Plan is declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity will not

 

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invalidate any portion of this Option Agreement or the Plan not declared to be
unlawful or invalid. Any Section of this Option Agreement (or part of such a
Section) so declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such Section or part of a
Section to the fullest extent possible while remaining lawful and valid.

 

20.                               MISCELLANEOUS.

 

(a)                                 The rights and obligations of the Company
under your option will be transferable to any one or more persons or entities,
and all covenants and agreements hereunder will inure to the benefit of, and be
enforceable by the Company’s successors and assigns.

 

(b)                                 You agree upon request to execute any
further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of your option.

 

(c)                                  You acknowledge and agree that you have
reviewed your option in its entirety, have had an opportunity to obtain the
advice of counsel prior to executing and accepting your option, and fully
understand all provisions of your option.

 

(d)                                 This Option Agreement will be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

(e)                                  All obligations of the Company under the
Plan and this Option Agreement will be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

 

*        *        *

 

This Option Agreement will be deemed to be signed by you upon the signing by you
of the Stock Option Grant Notice to which it is attached.

 

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ATTACHMENT II

 

2019 INDUCEMENT PLAN

 

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