Exhibit 10.2

AMPIO PHARMACEUTICALS, INC.

2010 STOCK OPTION AND INCENTIVE PLAN

STOCK OPTION CANCELLATION AND GRANT AGREEMENT FOR EXECUTIVE

THIS STOCK OPTION CANCELLATION AND GRANT AGREEMENT FOR EXECUTIVE (“Agreement”)
is made and entered into as of the 20th day of August, 2019 (“Grant Date”) by
and between Ampio Pharmaceuticals, Inc. (the “Company” or “we”) and Daniel
Stokely (the “Grantee”);

WHEREAS, on July 31, 2019,  Grantee was granted the options shown in Exhibit A
which provided the Grantee an option to purchase shares of common stock of the
Company under the terms of the Ampio Pharmaceuticals, Inc. 2010 Stock Option and
Incentive Plan (the “Plan”) (the “2019 Options”);

WHEREAS, the 2019 Options were in violation of Section 3(a) of the Plan that
limits grants to 400,000, which makes the 2019 Options invalid;

WHEREAS, the Company desires to cancel such 2019 Options and issue new options
pursuant to the terms of the Plan; and

NOW,  THEREFORE, for and in consideration of the provisions and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Grantee hereby
agree as follows:

1.         Surrender of Options.  Grantee hereby agrees that the 2019 Options
shall be cancelled.

2.         Return of Outstanding Option Documents.  Immediately upon execution
of this Agreement, Grantee shall deliver to the Company each “Stock Option
Agreement for Executive” between the Company and Grantee.

3.         Option Grant.  You are hereby granted the below Option. Your Option
permits you to purchase, on the terms and conditions set forth in this
Agreement, the number of shares (the “Option Shares”) of the Company’s common
stock (the “Common Stock”), at the exercise price (the “Exercise Price”) set
forth in the following table.

 

 

Number of Option Shares

Exercise Price Per Option Share

400,000

$0.43

 

4.         Option Type.  Your Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”).

5.         Term of Option.  As a general matter, your right to exercise the
Option will expire on the tenth anniversary of the Grant Date (the “Expiration
Date”).  As provided

below, your right to exercise the Option may expire prior to the Expiration
Date, if you die or your employment with the Company terminates.

6.         Vesting.  You may exercise the Option only to the extent that the
Option is vested.  If applicable to you, the Option may vest over time. If so,
your right to exercise the Option will vest over time in accordance with the
following schedule, provided you are employed with the Company or any of its
Subsidiaries (collectively, the “Ampio Companies”) on the applicable date listed
below.

Date

Vested Percentage of Award

Grant Date

50%

July 31, 2022

50%

 

Your Option may also be subject to performance vesting criteria.  If so, the
terms under which your Option will vest are set forth in a schedule attached
hereto and incorporated by reference into this Award. To the extent performance
vesting criteria apply to your Award, the determination of whether subjective
performance vesting criteria have been met is in the sole discretion of the
Compensation Committee of the Company’s Board of Directors (the
“Committee”).  The attaining of the objective performance criteria shall be
determined in accordance with the terms of the attached schedule.  If the
attaining of objective performance criteria is subject to interpretation, you
and we agree that any judgment as to whether the objective performance criteria
have been met shall be in the sole, but reasonably exercised, discretion of the
Committee.

Except as otherwise provided in Section 9 below, if your employment with the
Ampio Companies terminates you will forfeit that portion of the Award that is
not vested on the date of your termination.

7.         Sale Event Vesting.  In the event that a Sale Event occurs with
respect to the Company, any portion of your Option that is not vested shall
vest, and become exercisable, upon such Sale Event.

8.         Exercise.  Prior to the Expiration Date and during your employment
with the Ampio Companies, you may exercise all or a portion of your Option, to
the extent vested, by designation the number of Option Shares to be acquired in
accordance with the exercise procedures established by the Committee from time
to time.  Your right to exercise the Option, to the extent vested, following the
date your employment terminates will depend on the reason for such termination,
as described in Section 9 below.

You must pay to the Company at the time of exercise the sum of (i) the full
amount of the Exercise Price for the number of Option Shares to be acquired and
(ii) an amount equal to the aggregate minimum federal, state and local income
and employment taxes that the Company is required to withhold and deposit on
behalf of you with respect to your exercise (“Tax Obligation”).

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You may elect to pay the Exercise Price or your Tax Obligation by having the
Company reduce the number of Option Shares you receive upon such
exercise.  Alternatively, you may pay the Exercise Price and your Tax
Obligation:

a.         in cash;

b.         by surrendering to the Company previously acquired shares of Common
Stock having a Fair Market Value at the time of exercise equal to the Exercise
Price or Tax Obligation; or

c.         to the extent permitted by applicable law, by delivery of irrevocable
instructions to a broker to (1) promptly deliver to the Company the amount of
sale proceeds from the Option Shares or other proceeds to pay the Exercise Price
or the Tax Obligation, and (2) deliver to you the balance of the Option Share
proceeds in the form of cash or shares of Common Stock.

If you pay the Exercise Price or your Tax Obligation by surrender of shares of
Common Stock, you must also submit proof acceptable to the Company
substantiating your ownership of those shares.  The value of previously acquired
shares of Common Stock used to pay the Exercise Price (either directly or by
attestation) of the Option Shares to be acquired or your Tax Obligation shall be
equal to the aggregate Fair Market Value of such previously acquired shares of
Common Stock on the date of the exercise.  Your Option will be considered
finally exercised on the date on which your payment of the Exercise Price and
Tax Obligation is received by the Company.  By exercising any portion of the
Option, you are accepting all of the terms and conditions specified in this
Agreement.

9.         Impact of Termination of Employment on Option.  Except as otherwise
expressly provided in this Section 9 or otherwise agreed to by the Committee, if
you are an employee and your employment with the Ampio Companies terminates, (i)
you will forfeit that portion of your Option that is not vested on the date of
your termination and (ii) you will have a limited period in which to exercise
such portion of any Option as was vested on the date of your termination.  The
Committee, in its sole discretion, shall be authorized to determine the nature
of any termination of employment and your rights under this Section 9 as a
result of such termination and such determination shall be binding for all
purposes under this Section 9.

a.         Death or Disability.  If you die or if the Company elects to
terminate your employment with the Ampio Companies due to your Disability, (i)
your Option to the extent not previously vested will vest and become
non-forfeitable as of the date of your death or the date your employment
terminates due to your Disability and (ii) your Option may be exercised
thereafter at any time that is both before the Expiration Date and within one
year of the date of your death or termination.  To the extent not previously
exercised, your Option will terminate and may not be exercised after the earlier
of the Expiration Date or the first anniversary of the termination of your
employment due to your death or your permanent Disability.

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Your employment will be considered to have been terminated due to your
Disability if the Committee determines, in its sole discretion, that at the time
your employment terminates you were unable to perform any material portion of
your assigned duties and responsibilities, with or without accommodation, due to
a mental or physical condition that is expected to last indefinitely.  In making
this determination, the Committee may rely upon such information as it deems
necessary or appropriate.

b.         Voluntary Termination other than for Good Reason.  If you voluntarily
terminate your employment with the Ampio Companies other than for Good Reason,
(i) your Option to the extent not previously vested will terminate and be
forfeited as of the date your employment terminates, and (ii) your Option, to
the extent vested, may be exercised during the 90-day period immediately
following the date your employment terminates.  Any vested portion of the Option
which remains unexercised will be forfeited, and your right to exercise that
portion of the Option shall terminate, on the 91st day following the date your
employment terminates.  For purposes of this Award, “Good Reason” shall have the
meaning set forth in the employment agreement between you and any of the Ampio
Companies.  In the event that you are not party to an employment agreement or
your employment agreement does not contain a definition of “Good Reason,” it
shall mean, without your written consent: (i) there is a material reduction of
the level of your compensation (except where there is a general reduction also
applicable to the other members of the senior executive team), or (ii) there is
a material reduction in your overall responsibilities or authority, or scope of
duties (it being understood that the occurrence of a change in control shall
not, by itself, necessarily constitute a reduction in your responsibilities or
authority).  No event shall be deemed to be “Good Reason” if the Company has
cured the event (if susceptible to cure) within thirty (30) days of receipt of
written notice from you specifying the event or events that, absent cure, would
constitute “Good Reason.”

c.         Voluntary Termination for Good Reason.  If you voluntarily terminate
your employment with the Ampio Companies for Good Reason, (i) any portion of
your Option that is not vested shall vest, and become exercisable, upon the date
your employment terminates, and (ii) your Option may be exercised during the
one-year period immediately following the date your employment terminates or
until the Expiration Date, if earlier. Any vested portion of the Option which
remains unexercised will be forfeited, and your right to exercise that portion
of the Option shall terminate, on the earlier of the Expiration Date or the
first day following the one-year anniversary of the date your employment
terminates.

d.         Involuntary Termination.  If your employment with Ampio Companies is
terminated by the Company other than for Cause, (i) any portion of your Option
that is not vested shall vest, and become exercisable, upon the date your
employment terminates, and (ii) your Option may be exercised during

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the one-year period immediately following the date your employment terminates or
until the Expiration Date, if earlier. Any vested portion of the Option which
remains unexercised will be forfeited, and your right to exercise that portion
of the Option shall terminate, on the earlier of the Expiration Date or the
first day following the one-year anniversary of the date your employment
terminates.  For purposes of this Award, “Cause” shall have the meaning set
forth in the employment agreement between you and any of the Ampio
Companies.  In the event that you are not party to an employment agreement or
your employment agreement does not contain a definition of “Cause,” it shall
mean your failure or refusal to substantially perform your duties hereunder;
personal or professional dishonesty that could reasonably be expected to have a
materially adverse impact on the financial interests or business reputation of
the Company; incompetence; willful misconduct; breach of fiduciary duty
(including duties involving personal profit); breach of the Company’s code of
ethics; breach of the Company’s codes of conduct and personnel policies; breach
of the Company’s compliance policies; material violation of the Sarbanes-Oxley
requirements for officers of public companies that in the reasonable opinion of
the Board will likely cause substantial financial harm or substantial injury to
the reputation of the Company; willfully engaging in actions that in the
reasonable opinion of the Board will likely cause substantial financial harm or
substantial injury to the business reputation of the Company; willful violation
of any law, rule, or regulation, or final cease-and-desist order (other than
routine traffic violations or similar offenses); the unauthorized use or
disclosure of any trade secret, proprietary, or confidential information of the
Company (or any other party as to which you owe an obligation of nondisclosure
as a result of your relationship with the Company), including Trade Secret and
Confidential Information (as defined the employment agreement between you and
the Company);  failure to follow the reasonable and lawful directives of the CEO
or the Board pertaining to your duties with the Company; commission of an act of
fraud, embezzlement, or misappropriation by you with respect to your relations
with the Company or any of its employees, customers, agents, or representatives;
or any material breach of any provision of this Agreement.  For purposes hereof,
no act or failure to act, on the part of you, shall be considered “willful”
unless it is done, or omitted to be done, by you in bad faith or without an
objectively reasonable belief that your action or omission was in the best
interests of the Company.  Any act or failure to act, whether based upon the
direction of the Board or based upon the advice of counsel for the Company,
shall be conclusively presumed to be done, or omitted to be done, by you in good
faith and in the best interests of the Company.

 

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e.         Termination for Cause.  If your employment with the Ampio Companies
is terminated for Cause, your Option will be forfeited and your rights to
exercise the Option, whether or not vested, shall terminate as of the date your
employment terminates.

10.       Adjustments In Capitalization.  In the event of any dividend or other
distribution (in whatever form), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar transaction or event that affects
the Common Stock, the Committee shall adjust the terms of the Option, to the
extent necessary, in its sole discretion, in order to prevent dilution or
enlargement of the benefits or potential benefits of the Option.  However, in no
event shall the Committee adjust the terms of the Option in a manner which could
cause the Option to be treated as the grant of a new Option for purposes of
Section 409A of the Code and Treas. Reg. §§ 1.409A-2 through 1.409A-6 or cause
the Company to incur a new compensation charge for financial reporting purposes.

11.       Rights as a Stockholder.  You will have no rights as a stockholder
with respect to any Option Shares until and unless you exercise the Option and
shares of Common Stock have been issued to you.

12.       Public Offer Waiver.  By executing this Agreement, you acknowledge and
confirm your understanding that your rights under the Plan arise strictly from
your status as an employee of or service provider to the Ampio Companies and
that the Company’s grant of the Option to you is not an offer of securities made
to the general public.

13.       Transferability of Option Shares.  You hereby agree not to offer, sell
or otherwise attempt to dispose of any Common Stock covered by the Option Shares
in a way which would: (i) require the Company to file any registration statement
with the Securities and Exchange Commission (or any similar filing under state
law or the laws of any other country) or to amend or supplement any such filing,
or (ii) violate or cause the Company to violate the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, any other state or federal law, or the laws
of any other country.  The Company reserves the right to place restrictions on
any Common Stock you may receive as a result of your exercise of the Option.

14.       Conformity with the Plan.  This Option is intended to conform in all
respects with, and is subject to, all applicable provisions of the Plan.
Inconsistencies between this Agreement and the Plan shall be resolved in
accordance with the terms of the Plan. By accepting your Option, you agree to be
bound by the terms and conditions of this Agreement, the Plan, and any and all
conditions established by the Company in connection with Options issued under
the Plan. You also understand that this Agreement does not give you any legal or
equitable right (other than those rights

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constituting the Agreement itself) against the Ampio Companies directly or
indirectly or give rise to any cause of action at law or in equity against the
Ampio Companies.

15.       Interpretations.  Any dispute, disagreement or question which arises
under, or as a result of, or in any way relates to the interpretation,
construction or application of terms of this Agreement or the Plan will be
determined and resolved by the Committee or its authorized delegate. The
Committee’s determination or resolution will be final, binding and conclusive
for all purposes.

16.       No Rights to Continued Employment or Future Awards.  You hereby
acknowledge and understand that this Option shall not form part of any contract
of employment between you and any of the Ampio Companies.  Nothing in the
Agreement or the Plan confers on you any right to continue in the employ of the
Ampio Companies or in any way affects the Ampio Companies’ right to terminate
your employment without prior notice at any time or for any reason, whether you
have an employment agreement or whether you are an “at-will” employee. You
further acknowledge that the Option is being granted to you in consideration of
your performance of services for the Ampio Companies and is not under any
circumstances to be considered compensation for past services.

You acknowledge and agree that the granting of your Option is at the discretion
of the Committee and that acceptance of your Option is no guarantee that future
Options will be granted under the Plan.  Notwithstanding anything in this
Agreement or the Plan to the contrary, the Company may amend this Agreement or
the Plan, including but not limited to modifications to any of the rights
granted to you under this Agreement, without your consent, at such lime and in
such manner as the Company may consider necessary or desirable, to reflect
changes in law. You also understand that the Company may amend, resubmit, alter,
change, suspend, cancel, or discontinue the Plan at any time without limitation.

17.       Consent to Transfer Personal Data.  You hereby acknowledge and consent
to the collection, use, processing and transfer of your personal data as
described in this Section 17.  You are not obligated to consent to such a
collection, use, processing and transfer of personal data.  However, failure to
provide your consent may affect your ability to participate in the Plan.  As
part of your employment with the Ampio Companies, the Company may maintain
certain personal information about you, that may include your name, home address
and telephone number, fax number, email address, family size, marital status,
sex, beneficiary information, emergency contacts, passport/visa information,
age, language skills, driver’s license information, date of birth, birth
certificate, social security number or other employee identification number,
nationality, C.V. (or resume), wage history, employment references, job title,
employment or severance contract, current wage and benefits information,
personal bank account number, tax related information, plan or benefit
enrollment forms and elections, options or benefit statements, any shares of
stock or directorships in the Company, and details of all options or any other
entitlements to shares of stock awarded, canceled, purchased, vested,

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unvested or outstanding in your favor (the “Data”).  The Company maintains the
Data for the purpose of managing and administering the Plan. The Ampio Companies
may transfer Data amongst themselves as needed to implement, administer and
manage your participation in the Plan, and the Company may also transfer Data to
third parties assisting the Company in the implementation, administration and
management of the Plan.  These third parties may be located throughout the
world, including within the United States.  By voluntarily acknowledging receipt
of the Option Shares, you are authorizing these third parties to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing your participation in the
Plan, including any transfer of the Data that may be required to administer the
Plan and/or to permit a broker, or other third party you have chosen to hold any
shares of Company Common Stock you may acquire pursuant to the Plan.  You may,
at any time, review the Data, require any necessary amendments to it or withdraw
your consent to its collection by contacting the Company in writing; however,
withdrawing your consent may affect your ability to participate in the Plan.

18.       Miscellaneous.

a.         Modification. The Committee (or its authorized delegate) shall make
all determinations regarding the number of Option Shares granted to you and the
conditions set forth in this Agreement.  The Committee shall maintain a copy of
your Agreement in its records.  The Committee may amend or modify this Agreement
in any manner, provided that the Committee would have had the authority to do so
under the Plan.  However, no amendment or modification of this Agreement shall
impair your rights under this Agreement without your express consent. Any such
amendment, modification or supplementation of this Agreement must be in writing
and signed by both you and a representative of the Company.

b.         Governing Law.  This Agreement and the Plan shall be construed in
accordance with the laws of the State of Delaware, without reference to any
conflict of law principals.

c.         Successors and Assigns.  Except as otherwise provided herein, this
Agreement will bind and inure to the benefit of the respective successors and
permitted assigns of you and the Company, whether so expressed or not.

d.        Waiver.  The failure of the Company to enforce at any time any
provision of this Agreement shall in no way be construed to be a waiver of such
provision or any other provision hereof.

e.         Severability.  Whenever feasible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or

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invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invaliding the remainder of
this Agreement.

f.          Terms. Initially capitalized terms used in this Agreement and
defined in the Plan shall have the meanings given to such terms in the Plan.
Copies of the Plan are available upon request to the Company.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the day and year first above written, which constitutes the date upon which the
Committee authorized the issuance of the Option.

 

Company:

 

 

 

AMPIO PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Michael Macaluso

 

 

Michael Macaluso, Chief Executive Officer

 

 

 

 

 

 

 

Grantee:

 

 

 

 

 

/s/ Daniel Stokely

 

Daniel Stokely

 

 

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Exhibit A

Options Previously Granted

 

 

 

Grant Date

Number of Options

Number of Vested Outstanding Options

July 31, 2019

430,000

215,000

 

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