Exhibit 10.10

 

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INCENTIVE STOCK OPTION AGREEMENT

 

SHARES OF COMMON STOCK,
$.0001 PAR VALUE PER SHARE

 

MADRIGAL PHARMACEUTICALS, INC.

 

, 20

 

As of         , 20   (the “Grant Date”), Madrigal Pharmaceuticals, Inc. (the
“Company”), a Delaware corporation, grants to         (the “Employee”) the right
and option (the “Option”) to purchase up to        shares of the Common Stock,
$.0001 par value per share, of the Company (the “Shares”), at a purchase price
of $       per share (the “Purchase Price”) and on the terms and subject to the
conditions set forth in the Company’s 2015 Stock Plan (the “Plan”), United
States securities and tax laws and this Agreement.  For the purpose of this
Agreement, the initial vesting date shall be                     , 20  (“Initial
Vesting Date”).

 

This Agreement, which includes the terms and conditions attached hereto, does
not set forth all of the terms and conditions of the Plan, which is hereby
incorporated into and made a part of this Agreement by reference.  Any terms
used and not defined herein have the same meanings as in the Plan. The Employee
acknowledges that he or she has received a copy of the Plan from the Company and
has carefully read the terms and conditions of the Plan and the attached terms
and conditions which make up a part of this Agreement.

 

MADRIGAL PHARMACEUTICALS, INC.

 

 

 

 

Paul A. Friedman, M.D.

Chief Executive Officer

 

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1.                                      GRANT OF OPTION.

 

The Company hereby grants to the Employee, as of the Grant Date, the right and
option to purchase all or any part of the aggregate number of Shares set forth
on the signed cover page of this Agreement, on the terms and conditions and
subject to all the limitations set forth herein, under United States securities
and tax laws, and in the Plan, which is incorporated herein by reference.  The
Employee acknowledges receipt of a copy of the Plan. The Option is intended to
qualify for special federal tax treatment as an “incentive stock option”
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).

 

2.                                      PURCHASE PRICE.

 

The purchase price of the Shares covered by the Option shall be the Purchase
Price set forth on the cover page of this Agreement, subject to adjustment, as
provided in the Plan, in the event of a stock split, reverse stock split or
other events affecting the holders of Shares.  Payment shall be made in
accordance with Section 10 of the Plan.

 

3.                                      EXERCISABILITY OF OPTION.

 

Subject to the terms and conditions set forth in this Agreement and the Plan,
the Option granted hereby shall become exercisable [insert vesting schedule]. 
Notwithstanding the foregoing, the Option shall become vested and exercisable in
accordance with the terms and conditions set forth in Sections 25B and G of the
Plan.

 

4.                                      TERM OF OPTION.

 

The Option shall terminate ten years from the date of this Agreement or, if the
Employee owns as of the date hereof more than 10% of the total combined voting
power of all classes of capital stock of the Company or of an Affiliate, five
years from the date of this Agreement, but shall be subject to earlier
termination as provided herein or in the Plan.

 

If the Employee ceases to be an employee of the Company or of an Affiliate (for
any reason other than the death or Disability of the Employee or termination of
the Employee’s employment for “cause” as defined in the Plan, the Option may be
exercised, if it has not previously terminated, within three months after the
date the Employee ceases to be an employee of the Company or of an Affiliate, or
within the originally prescribed term of the Option, whichever is earlier, but
may not be exercised thereafter except as set forth below.  In such event, the
Option shall be exercisable only to the extent that the Option has become
exercisable and is in effect at the date of such cessation of employment.

 

If the Employee ceases to be an employee of the Company or of an Affiliate but
continues after termination of employment to provide service to the Company or
an Affiliate as a consultant, this Option shall continue to vest in accordance
with Section 3 above as if this Option had not terminated until the Employee is
no longer providing services to the Company.  In such case, this Option shall
automatically convert and be deemed a Non-Qualified Option as of the date that
is three months from termination of the Employee’s employment and this Option
shall continue on the same terms and conditions set forth herein until such
Employee is no longer providing service to the Company or an Affiliate.

 

Notwithstanding the foregoing, in the event of the Employee’s Disability or
death within three months after the termination of employment, the Employee or
the Employee’s Survivors may exercise the Option within one year after the date
of the Employee’s termination of employment, but in no event after the date of
expiration of the term of the Option.

 

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In the event the Employee’s employment is terminated by the Employee’s employer
for “cause” as defined in the Plan, the Employee’s right to exercise any
unexercised portion of this Option shall cease immediately as of the time the
Employee is notified his or her employment is terminated for “cause,” and this
Option shall thereupon terminate.  Notwithstanding anything herein to the
contrary, if subsequent to the Employee’s termination as an employee, but prior
to the exercise of the Option, the Board of Directors of the Company determines
that, either prior or subsequent to the Employee’s termination, the Employee
engaged in conduct which would constitute “cause,” then the Employee shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.

 

In the event of the Disability of the Employee, as determined in accordance with
the Plan, the Option shall be exercisable within one year after the Employee’s
termination of employment or, if earlier, within the term originally prescribed
by the Option.  In such event, the Option shall be exercisable:

 

(a)                                 to the extent that the Option has become
exercisable but has not been exercised as of the date of Disability; and

 

(b)                                 in the event rights to exercise the Option
accrue periodically, to the extent of a pro rata portion through the date of
Disability of any additional vesting rights that would have accrued on the next
vesting date had the Employee not become Disabled.  The proration shall be based
upon the number of days accrued in the current vesting period prior to the date
of Disability.

 

In the event of the death of the Employee while an employee of the Company or of
an Affiliate, the Option shall be exercisable by the Employee’s Survivors within
one year after the date of death of the Employee or, if earlier, within the
originally prescribed term of the Option.  In such event, the Option shall be
exercisable:

 

(x)                                 to the extent that the Option has become
exercisable but has not been exercised as of the date of death; and

 

(y)                                 in the event rights to exercise the Option
accrue periodically, to the extent of a pro rata portion through the date of
death of any additional vesting rights that would have accrued on the next
vesting date had the Employee not died.  The proration shall be based upon the
number of days accrued in the current vesting period prior to the Employee’s
date of death.

 

5.                                      METHOD OF EXERCISING OPTION.

 

Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company or its designee, in substantially the
form prescribed by the Company or its designee.  Such notice shall state the
number of Shares with respect to which the Option is being exercised and shall
be signed by the person exercising the Option.  Payment of the purchase price
for such Shares shall be made in accordance with Section 10 of the Plan.  The
Company shall deliver such Shares as soon as practicable after the notice shall
be received, provided, however, that the Company may delay issuance of such
Shares until completion of any action or obtaining of any consent, which the
Company deems necessary under any applicable law (including, without limitation,
state securities or “blue sky” laws).  The Shares as to which the Option shall
have been so exercised shall be registered in the Company’s share register in
the name of the person so exercising the Option (or, if the Option shall be
exercised by the Employee and if the Employee shall so request in the notice
exercising the Option, shall be registered in the Company’s share register in
the name of the Employee and another person jointly, with right of survivorship)
and shall be delivered as provided above to or upon the written order of the
person exercising the Option.  In the event the Option shall be exercised,
pursuant to Section 4 hereof, by

 

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any person other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the Option.  All
Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.

 

6.                                      PARTIAL EXERCISE.

 

Exercise of this Option to the extent above stated may be made in part at any
time and from time to time within the above limits, except that no fractional
share shall be issued pursuant to this Option.

 

7.                                      NON-ASSIGNABILITY.

 

The Option shall not be transferable by the Employee otherwise than by will or
by the laws of descent and distribution.  The Option shall be exercisable,
during the Employee’s lifetime, only by the Employee (or, in the event of legal
incapacity or incompetency, by the Employee’s guardian or representative) and
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process.  Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 7, or the levy of any attachment or similar
process upon the Option shall be null and void.

 

8.                                      NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

 

The Employee shall have no rights as a stockholder with respect to Shares
subject to this Agreement until registration of the Shares in the Company’s
share register in the name of the Employee.  Except as is expressly provided in
the Plan with respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for which the record
date is prior to the date of such registration.

 

9.                                      ADJUSTMENTS.

 

The Plan contains provisions covering the treatment of Options in a number of
contingencies such as stock splits and mergers.  Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.

 

10.                               TAXES.

 

The Employee acknowledges that any income or other taxes due from him or her
with respect to this Option or the Shares issuable pursuant to this Option shall
be the Employee’s responsibility.

 

In the event of a Disqualifying Disposition (as defined in Section 15 below) or
if the Option is converted into a Non-Qualified Option and such Non-Qualified
Option is exercised, the Company may withhold from the Employee’s remuneration,
if any, the minimum statutory amount of federal, state and local withholding
taxes attributable to such amount that is considered compensation includable in
such person’s gross income.  At the Company’s discretion, the amount required to
be withheld may be withheld in cash from such remuneration, or in kind from the
Shares otherwise deliverable to the Employee on exercise of the Option.  The
Employee further agrees that, if the Company does not withhold an amount from
the Employee’s remuneration sufficient to satisfy the Company’s income tax
withholding obligation, the Employee will reimburse the Company on demand, in
cash, for the amount under-withheld.

 

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11.                               PURCHASE FOR INVESTMENT.

 

Unless the offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

 

(a)                                 The person(s) who exercise the Option shall
warrant to the Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for investment, and not
with a view to, or for sale in connection with, the distribution of any such
Shares, in which event the person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing the Shares issued pursuant to such exercise:

 

“The shares represented by this certificate have been taken for investment and
they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as amended, or
(b) the Company shall have received an opinion of counsel satisfactory to it
that an exemption from registration under such Act is then available, and
(2) there shall have been compliance with all applicable state securities laws;”
and

 

(b)                                 If the Company so requires, the Company
shall have received an opinion of its counsel that the Shares may be issued upon
such particular exercise in compliance with the 1933 Act without registration
thereunder.  Without limiting the generality of the foregoing, the Company may
delay issuance of the Shares until completion of any action or obtaining of any
consent, which the Company deems necessary under any applicable law (including
without limitation state securities or “blue sky” laws).

 

12.                               RESTRICTIONS ON TRANSFER OF SHARES.

 

12.1                        The Shares acquired by the Employee pursuant to the
exercise of the Option granted hereby shall not be transferred by the Employee
except as permitted herein.

 

12.2                        If, in connection with a registration statement
filed by the Company pursuant to the 1933 Act, the Company or its underwriter so
requests, the Employee will agree not to sell any Shares for a period not to
exceed 210 days following the effectiveness of such registration.

 

12.3                        The Employee acknowledges and agrees that neither
the Company, its shareholders nor its directors and officers, has any duty or
obligation to disclose to the Employee any material information regarding the
business of the Company or affecting the value of the Shares before, at the time
of, or following a termination of the employment of the Employee by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.

 

13.                               NO OBLIGATION TO EMPLOY.

 

The Company is not by the Plan or this Option obligated to continue the Employee
as an employee of the Company or of an Affiliate.  The Employee acknowledges: 
(i) that the Plan is discretionary in nature and may be suspended or terminated
by the Company at any time; (ii) that the grant of the Option is a one-time
benefit which does not create any contractual or other right to receive future
grants of options, or benefits in lieu of options; (iii) that all determinations
with respect to any such

 

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future grants, including, but not limited to, the times when options shall be
granted, the number of shares subject to each option, the option price, and the
time or times when each option shall be exercisable, will be at the sole
discretion of the Company; (iv) that the Employee’s participation in the Plan is
voluntary; (v) that the value of the Option is an extraordinary item of
compensation which is outside the scope of the Employee’s employment contract,
if any; and (vi) that the Option is not part of normal or expected compensation
for purposes of calculating any severance, resignation, redundancy, end of
service payments, bonuses, long-service awards, pension or retirement benefits
or similar payments.

 

14.                               OPTION IS INTENDED TO BE AN ISO.

 

The parties each intend that the Option be an ISO so that the Employee (or the
Employee’s Survivors) may qualify for the favorable tax treatment provided to
holders of Options that meet the standards of Section 422 of the Code.  Any
provision of this Agreement or the Plan which conflicts with the Code so that
this Option would not be deemed an ISO is null and void and any ambiguities
shall be resolved so that the Option qualifies as an ISO.  Nonetheless, if the
Option is determined not to be an ISO, the Employee understands that neither the
Company nor any Affiliate is responsible to compensate him or her or otherwise
make up for the treatment of the Option as a Non-qualified Option and not as an
ISO.  The Employee should consult with the Employee’s own tax advisors regarding
the tax effects of the Option and the requirements necessary to obtain favorable
tax treatment under Section 422 of the Code, including, but not limited to,
holding period requirements.

 

15.                               NOTICE TO COMPANY OF DISQUALIFYING
DISPOSITION.

 

The Employee agrees to notify the Company in writing immediately after the
Employee makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the Option.  A Disqualifying Disposition is defined
in Section 424(c) of the Code and includes any disposition (including any sale)
of such Shares before the later of (a) two years after the date the Employee was
granted the Option or (b) one year after the date the Employee acquired Shares
by exercising the Option, except as otherwise provided in Section 424(c) of the
Code.  If the Employee has died before the Shares are sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

16.                               NOTICES.

 

Any notices required or permitted by the terms of this Agreement or the Plan
shall be given by recognized courier service, facsimile, registered or certified
mail, return receipt requested, addressed as follows:

 

If to the Company:

 

Madrigal Pharmaceuticals, Inc.

200 Barr Harbor Drive, Suite 400

West Conshohocken, PA 19428

Attention: Stock Plan Administrator

 

If to the Employee, the Employee’s Company email address or the mailing address
provided to the Company on the Employee’s employment application or resume, or
to such other address or addresses of which notice in the same manner has
previously been given.  Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.

 

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17.                               GOVERNING LAW.

 

This Agreement shall be construed and enforced in accordance with the law of the
State of Delaware, without giving effect to the conflict of law principles
thereof.  For the purpose of litigating any dispute that arises under this
Agreement, the parties hereby consent to exclusive jurisdiction in the
Commonwealth of Pennsylvania and agree that such litigation shall be conducted
in the courts of Montgomery County, Pennsylvania or the federal courts of the
United States for the Eastern District of Pennsylvania.

 

18.                               BENEFIT OF AGREEMENT.

 

Subject to the provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.

 

19.                               ENTIRE AGREEMENT.

 

This Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof.  No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.

 

20.                               MODIFICATIONS AND AMENDMENTS.

 

The terms and provisions of this Agreement may be modified or amended as
provided in the Plan.

 

21.                               WAIVERS AND CONSENTS.

 

Except as provided in the Plan, the terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions.  No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar.  Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

 

22.                               DATA PRIVACY.

 

By entering into this Agreement, the Employee:  (i) authorizes the Company and
each Affiliate, and any agent of the Company or any Affiliate administering the
Plan or providing Plan recordkeeping services, to disclose to the Company or any
of its Affiliates such information and data as the Company or any such Affiliate
shall request in order to facilitate the grant of options and the administration
of the Plan; and (ii) authorizes the Company and each Affiliate to store and
transmit such information in electronic form for the purposes set forth in this
Agreement.

 

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EXHIBIT A

 

NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION

 

TO:                           Madrigal Pharmaceuticals Inc.

 

Ladies and Gentlemen:

 

I hereby exercise my Incentive Stock Option to purchase           shares (the
“Shares”) of the common stock, $.0001 par value, of Madrigal
Pharmaceuticals, Inc. (the “Company”), at the exercise price of $     per share,
pursuant to and subject to the terms of that certain Incentive Stock Option
Agreement between the undersigned and the Company dated                 , 20  .

 

I understand the nature of the investment I am making and the financial risks
thereof.  I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.

 

I am paying the option exercise price for the Shares as follows:

 

Please issue the Shares (check one):  to me; or to me and [name] , as joint
tenants with right of survivorship, at the following address:

 

 

 

My mailing address for shareholder communications, if different from the address
listed above, is:

 

 

 

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Very truly yours,

 

 

 

 

 

Employee (signature)

 

 

 

 

 

Print Name

 

 

 

 

 

Date

 

 

 

 

 

Social Security Number

 

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