Exhibit 10.2

 

CONATUS PHARMACEUTICALS INC.

NON-QUALIFIED INDUCEMENT STOCK OPTION GRANT NOTICE

AND STOCK OPTION AGREEMENT

 

As an inducement material to the decision by the individual listed below
(“Optionee”) to accept employment with Conatus Pharmaceuticals Inc., a Delaware
corporation, (the “Company”), and pursuant to that certain employment agreement
entered into by and between Optionee and the Company, dated as of August 31,
2017, the Company hereby grants to Optionee a nonqualified option to purchase
the number of shares of the common stock of the Company (“Stock”) set forth
below (the “Option”). This Option is subject to the terms and conditions set
forth in this Non-Qualified Inducement Stock Option Grant Notice (the “Grant
Notice”) and the Stock Option Agreement attached hereto as Exhibit A (the
“Agreement”), which is incorporated herein by reference. This Option is made and
granted as a stand-alone award and is not granted under or pursuant to the
Conatus Pharmaceuticals Inc. 2013 Incentive Award Plan (the “Plan”). However,
for convenience purposes, unless otherwise defined herein, the terms defined in
the Plan shall have the same defined meanings in the Grant Notice and the
Agreement.

 

Optionee: Keith W. Marshall, Ph.D., M.B.A. Grant Date: August 31, 2017 Vesting
Commencement Date: August 31, 2017 Exercise Price per Share: $5.74 Total
Exercise Price: $3,013,500 Total Number of Shares Subject to the Option: 525,000
Expiration Date: August 30, 2027 Vesting Schedule:

(a)    Twenty-five percent (25%) of the Shares of Stock subject to the Option
(rounded down to the next whole number of Shares) shall vest one year after the
Vesting Commencement Date, and 1/48 of the Shares of Stock subject to the Option
(rounded down to the next whole number of Shares) shall vest on the last day of
each one-month period of Optionee’s service thereafter, so that all of the
Shares of Stock subject to the Option shall be vested on the fourth (4th)
anniversary of the Vesting Commencement Date.

 

(b)    In addition, fifty percent (50%) of the then-unvested Shares subject to
the Option (rounded down to the next whole number of Shares) shall vest on the
date of a Change in Control (as defined in the Plan), and the remaining Shares
subject to the Option shall vest on the first anniversary of the Change in
Control, subject to earlier acceleration as provided below.

 

(c)    In addition, in the event of the Optionee’s Termination of Service (as
defined in the Plan) by the Company without Cause (as defined in the Optionee’s
employment agreement with the Company) or by the Optionee for Good Reason (as
defined in the Optionee’s employment agreement with the Company) more than
ninety (90) days prior to the occurrence of a Change in Control, the vesting of
the Option shall be automatically accelerated on the date of such Termination of
Service as to the number of Shares subject to the Option (rounded down to the
next whole number of Shares) that would have vested over the twelve (12) month
period following the date of the Optionee’s Termination of Service had the
Optionee remained continuously employed by the Company during such period.

 

(d)    In addition, in the event of the Optionee’s Termination of Service by the
Company without Cause or by the Optionee for Good Reason during (i) the ninety
(90) day period preceding the occurrence of a Change in Control or (ii)
following the occurrence of a Change in Control, all of the Shares subject to
the Option shall vest upon the later of (x) the date of the Optionee’s
Termination of Service or (y) the occurrence of such Change in Control.

 

Type of Option: ý   Non-Qualified Stock Option

 

 

 

By Optionee’s signature below, Optionee agrees to be bound by the terms and
conditions of the Agreement and the Grant Notice. Optionee has reviewed the
Agreement and the Grant Notice in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing the Grant Notice and fully
understands all provisions of the Grant Notice and the Agreement. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Grant
Notice or the Agreement.

 

CONATUS PHARMACEUTICALS Inc.

OPTIONEE

 

By: /s Steven J. Mento, Ph.D. By: /s/ Keith W. Marshall, Ph.D., M.B.A. Print
Name: Steven J. Mento, Ph.D. Print Name:   Keith W. Marshall, Ph.D., M.B.A.
Title: President and CEO             

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

TO NON-QUALIFIED INDUCEMENT STOCK OPTION GRANT NOTICE

STOCK OPTION AGREEMENT

 

Pursuant to the Grant Notice to which this Agreement is attached, the Company
has granted to Optionee an Option to purchase the number of shares of Stock set
forth in the Grant Notice.

 

ARTICLE 1.
GENERAL

 

1.1              Non-Plan Grant; Incorporation of Terms of Plan. The Option is
made and granted as a stand-alone award, separate and apart from, and outside
of, the Plan, and shall not constitute an award granted under or pursuant to the
Plan. Notwithstanding the foregoing, the terms, conditions and definitions set
forth in the Plan shall apply to the Option (including but not limited to the
adjustment provisions contained in Section 13.2 of the Plan), and the Option
shall be subject to such terms, conditions and definitions, which are hereby
incorporated into this Agreement by reference. For the avoidance of doubt, the
Option shall not be counted for purposes of calculating the aggregate number of
Shares that may be issued or transferred pursuant to Awards under the Plan as
set forth in Section 3.1(a) of the Plan. In the event of any inconsistency
between the Plan and this Agreement, the terms of this Agreement shall control.

 

1.2              Employment Inducement Grant. The Option is intended to
constitute an “employment inducement grant” under NASDAQ Listing Rule
5635(c)(4), and consequently is intended to be exempt from the NASDAQ rules
regarding stockholder approval of stock option and stock purchase plans. This
Agreement and the terms and conditions of the Option shall be interpreted in
accordance and consistent with such exemption.

 

ARTICLE 2.
GRANT OF OPTION

 

2.1              Grant of Option. In consideration of Optionee’s agreement to
commence employment with and remain in the employ of the Company or a Subsidiary
and for other good and valuable consideration, effective as of the grant date
set forth in the Grant Notice (the “Grant Date”), the Company has granted to
Optionee the Option to purchase any part or all of an aggregate of the number of
shares of Stock set forth in the Grant Notice, upon the terms and conditions set
forth in the Grant Notice and this Agreement.

 

2.2              Exercise Price. The exercise price per share of the shares of
Stock subject to the Option (the “Exercise Price”) shall be as set forth in the
Grant Notice.

 

2.3              Consideration to the Company. In consideration of the grant of
the Option by the Company, Optionee agrees to render faithful and efficient
services to the Company or any Subsidiary. Nothing in the Grant Notice or this
Agreement shall confer upon Optionee any right to continue in the employ or
service of the Company or any Subsidiary or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries, which rights are hereby
expressly reserved, to discharge or terminate the services of Optionee at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written agreement between the Company or a
Subsidiary and Optionee.

 

 

 

ARTICLE 3.
PERIOD OF EXERCISABILITY

 

3.1              Commencement of Exercisability.

 

(a)                Subject to Sections 3.2, 3.3, 5.10 and 5.15 hereof, the
Option shall become vested and exercisable in such amounts and at such times as
are set forth in the Grant Notice.

 

(b)               No portion of the Option which has not become vested and
exercisable at the date of Optionee’s Termination of Service shall thereafter
become vested and exercisable, except as may be otherwise provided by the
Administrator or as set forth in a written agreement between the Company and
Optionee.

 

3.2              Duration of Exercisability. The installments provided for in
the vesting schedule set forth in the Grant Notice are cumulative. Each such
installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in the Grant Notice shall remain vested and exercisable until
it becomes unexercisable under Section 3.3 hereof.

 

3.3              Expiration of Option. The Option may not be exercised to any
extent by anyone after the first to occur of the following events:

 

(a)                The expiration date set forth in the Grant Notice;

 

(b)               Except as the Administrator may otherwise approve, in the
event of Optionee’s Termination of Service other than for Cause or by reason of
Optionee’s death or Disability, the expiration of three (3) months from the date
of Optionee’s Termination of Service; provided, however, that in the event
Optionee’s Termination of Service occurs by reason of Optionee’s termination by
the Company other than for Cause or by Optionee for Good Reason, in each case
during the ninety (90) day period preceding a Change in Control, then any
portion of the Option that becomes exercisable on the date of the Change in
Control pursuant to clause (d) of the Vesting Schedule set forth in the Grant
Notice may be exercised until the expiration of three (3) months after the date
of the Change in Control;

 

(c)                Except as the Administrator may otherwise approve, the
expiration of one (1) year from the date of Optionee’s Termination of Service by
reason of Optionee’s death or Disability; or

 

(d)               Except as the Administrator may otherwise approve, upon
Optionee’s Termination of Service for Cause.

 

Except as otherwise provided in this Agreement, with respect to any unvested
portion of the Option, the Option will expire on the date that is 30 days
following Optionee’s Termination of Service other than for Cause, or such
shorter period as may be determined by the Administrator.

 

3.4              Tax Withholding. Notwithstanding any other provision of this
Agreement:

 

(a)                The Company and its Subsidiaries have the authority to deduct
or withhold, or require Optionee to remit to the Company or the applicable
Subsidiary, an amount sufficient to satisfy applicable federal, state, local and
foreign taxes (including the employee portion of any FICA obligation) required
by law to be withheld with respect to any taxable event arising pursuant to this
Agreement. The Company and its Subsidiaries may withhold or Optionee may make
such payment in one or more of the forms specified below:

 

 A-2 

 

(i)                 by cash or check made payable to the Company or the
Subsidiary with respect to which the withholding obligation arises;

 

(ii)               by the deduction of such amount from other compensation
payable to Optionee;

 

(iii)             with respect to any withholding taxes arising in connection
with the exercise of the Option, with the consent of the Administrator, by
requesting that the Company withhold a net number of shares of Stock issuable
upon the exercise of the Option having a then current Fair Market Value not
exceeding the amount necessary to satisfy the withholding obligation of the
Company and its Subsidiaries based on the minimum applicable statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes;

 

(iv)             with respect to any withholding taxes arising in connection
with the exercise of the Option, with the consent of the Administrator, by
tendering to the Company shares of Stock having a then current Fair Market Value
not exceeding the amount necessary to satisfy the withholding obligation of the
Company and its Subsidiaries based on the minimum applicable statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes;

 

(v)               with respect to any withholding taxes arising in connection
with the exercise of the Option, through the delivery of a notice that Optionee
has placed a market sell order with a broker acceptable to the Company with
respect to shares of Stock then issuable upon exercise of the Option, and that
the broker has been directed to pay a sufficient portion of the net proceeds of
the sale to the Company or the Subsidiary with respect to which the withholding
obligation arises in satisfaction of such withholding taxes; provided that
payment of such proceeds is then made to the Company or the applicable
Subsidiary at such time as may be required by the Administrator, but in any
event not later than the settlement of such sale; or

 

(vi)             in any combination of the foregoing.

 

(b)               With respect to any withholding taxes arising in connection
with the Option, in the event Optionee fails to provide timely payment of all
sums required pursuant to Section 3.4(a), the Company shall have the right and
option, but not the obligation, to treat such failure as an election by Optionee
to satisfy all or any portion of Optionee’s required payment obligation pursuant
to Section 3.4(a)(ii) or Section 3.4(a)(iii) above, or any combination of the
foregoing as the Company may determine to be appropriate. The Company shall not
be obligated to deliver any certificate representing shares of Stock issuable
with respect to the exercise of the Option to Optionee or his or her legal
representative unless and until Optionee or his or her legal representative
shall have paid or otherwise satisfied in full the amount of all federal, state,
local and foreign taxes applicable with respect to the taxable income of
Optionee resulting from the exercise of the Option or any other taxable event
related to the Option.

 

(c)                In the event any tax withholding obligation arising in
connection with the Option will be satisfied under Section 3.4(a)(iii) above,
then the Company may elect to instruct any brokerage firm determined acceptable
to the Company for such purpose to sell on Optionee’s behalf a whole number of
shares from those shares of Stock that are issuable upon exercise of the Option
as the Company determines to be appropriate to generate cash proceeds sufficient
to satisfy the tax withholding obligation and to remit the proceeds of such sale
to the Company or the Subsidiary with respect to which the withholding
obligation arises. Optionee’s acceptance of this Award constitutes Optionee’s
instruction and authorization to the Company and such brokerage firm to complete
the transactions described in this Section 3.4(c), including the transactions
described in the previous sentence, as applicable. The Company may refuse to
issue any shares of Stock to Optionee until the foregoing tax withholding
obligations are satisfied.

 

 A-3 

 

(d)               Optionee is ultimately liable and responsible for all taxes
owed in connection with the Option, regardless of any action the Company or any
Subsidiary takes with respect to any tax withholding obligations that arise in
connection with the Option. Neither the Company nor any Subsidiary makes any
representation or undertaking regarding the treatment of any tax withholding in
connection with the awarding, vesting or exercise of the Option or the
subsequent sale of Stock. The Company and the Subsidiaries do not commit and are
under no obligation to structure the Option to reduce or eliminate Optionee’s
tax liability.

 

ARTICLE 4.
EXERCISE OF OPTION

 

4.1              Person Eligible to Exercise. Except as provided in Section 5.3,
during the lifetime of Optionee, only Optionee may exercise the Option or any
portion thereof, unless it has been disposed of, with the consent of the
Administrator, pursuant to a DRO. After the death of Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3 hereof, be exercised by Optionee’s personal
representative or by any person empowered to do so under the deceased Optionee’s
will or under the then applicable laws of descent and distribution.

 

4.2              Partial Exercise. Subject to Section 5.2, any exercisable
portion of the Option or the entire Option, if then wholly exercisable, may be
exercised in whole or in part at any time prior to the time when the Option or
portion thereof becomes unexercisable under Section 3.3 hereof.

 

4.3              Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company (or
any third party administrator or other person or entity designated by the
Company), during regular business hours, of all of the following prior to the
time when the Option or such portion thereof becomes unexercisable under Section
3.3 hereof.

 

(a)                An exercise notice in a form specified by the Administrator,
stating that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Administrator;

 

(b)               The receipt by the Company of full payment for the shares of
Stock with respect to which the Option or portion thereof is exercised, in such
form of consideration permitted under Section 4.3 hereof that is acceptable to
the Administrator;

 

(c)                The payment of any applicable withholding tax in accordance
with Section 3.4;

 

(d)               Any other written representations or documents as may be
required in the Administrator’s sole discretion to effect compliance with
Applicable Law; and

 

 A-4 

 

(e)                In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 hereof by any person or persons other than Optionee,
appropriate proof of the right of such person or persons to exercise the Option.

 

Notwithstanding any of the foregoing, the Administrator shall have the right to
specify all conditions of the manner of exercise, which conditions may vary by
country and which may be subject to change from time to time.

 

4.4              Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of Optionee:

 

(a)                by cash or check made payable to the Company;

 

(b)               by the deduction of such amount from other compensation
payable to Optionee;

 

(c)                With the consent of the Administrator, surrender of shares of
Stock (including, without limitation, shares of Stock otherwise issuable upon
exercise of the Option) held for such period of time as may be required by the
Administrator in order to avoid adverse accounting consequences and having a
Fair Market Value on the date of delivery equal to the aggregate exercise price
of the Option or exercised portion thereof;

 

(d)               Through the delivery of a notice that Optionee has placed a
market sell order with a broker acceptable to the Company with respect to shares
of Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; provided that payment of
such proceeds is then made to the Company at such time as may be required by the
Administrator, but in any event not later than the settlement of such sale; or

 

(e)                Any other form of legal consideration acceptable to the
Administrator.

 

4.5              Conditions to Issuance of Stock. The Company shall not be
required to issue or deliver any shares of Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions: (a) the admission of such shares of Stock to listing on all stock
exchanges on which such Stock is then listed, (b) the completion of any
registration or other qualification of such shares of Stock under any state or
federal law or under rulings or regulations of the Securities and Exchange
Commission or other governmental regulatory body, which the Administrator shall,
in its absolute discretion, deem necessary or advisable, (c) the obtaining of
any approval or other clearance from any state or federal governmental agency
which the Administrator shall, in its absolute discretion, determine to be
necessary or advisable, (d) the lapse of such reasonable period of time
following the exercise of the Option as the Administrator may from time to time
establish for reasons of administrative convenience; (e) the receipt by the
Company of full payment for such shares of Stock in accordance with Section 4.3
hereof, and (f) the receipt of full payment of any applicable withholding tax in
accordance with Section 3.4 by the Company or its Subsidiary with respect to
which the applicable withholding obligation arises.

 

4.6              Rights as Stockholder. Neither Optionee nor any person claiming
under or through Optionee will have any of the rights or privileges of a
stockholder of the Company in respect of any shares of Stock purchasable upon
the exercise of any part of the Option unless and until certificates
representing such shares of Stock (which may be in book-entry form) will have
been issued and recorded on the records of the Company or its transfer agents or
registrars and delivered to Optionee (including through electronic delivery to a
brokerage account). No adjustment will be made for a dividend or other right for
which the record date is prior to the date of such issuance, recordation and
delivery, except as provided in Section 13.2 of the Plan. Except as otherwise
provided herein, after such issuance, recordation and delivery, Optionee will
have all the rights of a stockholder of the Company with respect to such shares
of Stock, including, without limitation, the right to receipt of dividends and
distributions on such shares.

 

 A-5 

 

ARTICLE 5.
OTHER PROVISIONS

 

5.1        Administration. For purposes of this Option, the Grant Notice and
this Agreement, the “Administrator” shall mean (a) the Company’s Compensation
Committee comprised of Independent Directors (as defined below), each of whom is
also a Non-Employee Director (as defined below), or (b) a majority of the
Company’s Independent Directors. The Administrator shall have the power to
interpret the Grant Notice and this Agreement and to adopt such rules for the
administration, interpretation and application of the Grant Notice and this
Agreement as are consistent therewith and to interpret, amend or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Administrator will be final and binding upon Optionee, the Company and all other
interested persons. To the extent allowable pursuant to Applicable Law, no
member of the Committee or the Board will be personally liable for any action,
determination or interpretation made with respect to the Grant Notice or this
Agreement. For purposes of this Option, the Grant Notice and this Agreement,
“Independent Director” shall mean a Director of the Company who is not an
Employee of the Company and who qualifies as “independent” within the meaning of
NASDAQ Stock Market Rule 5605(a)(2), or any successor rule, if the Company’s
securities are traded on the NASDAQ Stock Market, and/or the applicable
requirements of any other established stock exchange on which the Company’s
securities are traded, as applicable, as such rules and requirements may be
amended from time to time. “Non-Employee Director” shall mean a Director of the
Company who qualifies as a “Non-Employee Director” as defined in Rule
16b-3(b)(3) of the Exchange Act, or any successor definition.

 

5.2              Whole Shares. The Option may only be exercised for whole shares
of Stock.

 

5.3              Option Not Transferable.

 

(a)          Subject to Section 5.3(b) hereof, the Option may not be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution, or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until the shares of Stock underlying the Option
have been issued, and all restrictions applicable to such shares of Stock have
lapsed. Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of Optionee or his or
her successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

 

(b)         Notwithstanding any other provision in this Agreement, with the
consent of the Administrator, the Option may be transferred to, exercised by and
paid to one or more Permitted Transferees, subject to the terms and conditions
set forth in Section 11.3 of the Plan. Subject to such conditions and procedures
as the Administrator may require, a Permitted Transferee may exercise the Option
or any portion therefor during the Optionee’s lifetime.

 

 A-6 

 

5.4              Adjustments. The Administrator may accelerate the vesting of
all or a portion of the Option in such circumstances as it, in its sole
discretion, may determine. In addition, upon the occurrence of certain events
relating to the Stock contemplated by Section 13.2 of the Plan (including,
without limitation, an extraordinary cash dividend on such Stock), the
Administrator may make such adjustments as the Administrator deems appropriate
in the number of shares of Stock subject to the Option, the exercise price of
the Option and the kind of securities that may be issued upon exercise of the
Option. Optionee acknowledges that the Option is subject to adjustment,
modification and termination in certain events as provided in this Agreement and
the Plan, including Section 13.2 of the Plan.

 

5.5              Notices. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of the
Secretary of the Company at the Company’s principal office, and any notice to be
given to Optionee shall be addressed to Optionee (or, if Optionee is then
deceased, to the person entitled to exercise the Option pursuant to Section 4.1)
at Optionee’s last address reflected on the Company’s records. By a notice given
pursuant to this Section 5.5, either party may hereafter designate a different
address for notices to be given to that party. Any notice shall be deemed duly
given when sent via email or when sent by certified mail (return receipt
requested) and deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.

 

5.6              Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.

 

5.7              Governing Law. The laws of the State of Delaware shall govern
the interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.

 

5.8              Conformity to Securities Laws. Optionee acknowledges that the
Grant Notice and this Agreement are intended to conform to the extent necessary
with all Applicable Laws, including, without limitation, the provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated thereunder by the Securities and Exchange Commission and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, this Agreement shall be administered, and the Option is granted and
may be exercised, only in such a manner as to conform to Applicable Law. To the
extent permitted by Applicable Law, this Agreement shall be deemed amended to
the extent necessary to conform to Applicable Law.

 

5.9              Tax Representations. Optionee has reviewed with Optionee’s own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by the Grant Notice and this
Agreement. Optionee is relying solely on such advisors and not on any statements
or representations of the Company or any of its agents. Optionee understands
that Optionee (and not the Company) shall be responsible for Optionee’s own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Agreement.

 

5.10          Amendment, Suspension and Termination. This Agreement may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Administrator or the Board, provided that
no amendment, modification, suspension or termination of this Agreement shall
adversely affect the Option in any material way without the prior written
consent of Optionee.

 

5.11          Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth in Section 5.3 and the Plan, this
Agreement shall be binding upon and inure to the benefit of the heirs, legatees,
legal representatives, successors and assigns of the parties hereto.

 

5.12          Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of this Agreement, if Optionee is subject to Section 16 of the
Exchange Act, the Option, the Grant Notice and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by Applicable Law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

 

 A-7 

 

5.13          Not a Contract of Employment. Nothing in this Agreement shall
confer upon Optionee any right to continue to serve as an employee or other
service provider of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and its Subsidiaries, which rights
are hereby expressly reserved, to discharge or terminate the services of
Optionee at any time for any reason whatsoever, with or without cause, except to
the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and Optionee.

 

5.14          Entire Agreement. The Grant Notice and this Agreement (including
any exhibit hereto) constitute the entire agreement of the parties and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, including without
limitation, the provisions of any employment agreement or offer letter regarding
equity awards to be awarded to Optionee by the Company, or any other oral,
implied or written promises, statements, understandings, undertakings or
agreements by the Company or any of its representatives regarding equity awards
to be awarded to Optionee by the Company.

 

5.15          Section 409A. This Award is not intended to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code (together with any Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the date hereof, “Section
409A”). However, notwithstanding any other provision of the Grant Notice or this
Agreement, if at any time the Administrator determines that this Award (or any
portion thereof) may be subject to Section 409A, the Administrator shall have
the right in its sole discretion (without any obligation to do so or to
indemnify Optionee or any other person for failure to do so) to adopt such
amendments to the Grant Notice or this Agreement, or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, as the Administrator determines are
necessary or appropriate for this Award either to be exempt from the application
of Section 409A or to comply with the requirements of Section 409A.

 

5.16          Agreement Severable. In the event that any provision of the Grant
Notice or this Agreement is held invalid or unenforceable, such provision will
be severable from, and such invalidity or unenforceability will not be construed
to have any effect on, the remaining provisions of the Grant Notice or this
Agreement.

 

5.17          Limitation on Optionee’s Rights. The grant of the Option confers
no rights or interests other than as herein provided. This Agreement creates
only a contractual obligation on the part of the Company as to amounts payable
and shall not be construed as creating a trust. Optionee shall have only the
rights of a general unsecured creditor of the Company with respect to amounts
credited and benefits payable, if any, with respect to the Option, and rights no
greater than the right to receive the Stock as a general unsecured creditor with
respect to options, as and when exercised pursuant to the terms hereof.

 

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5.18          Counterparts. The Grant Notice may be executed in one or more
counterparts, including by way of any electronic signature, subject to
Applicable Law, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

5.19          Broker-Assisted Sales. In the event of any broker-assisted sale of
shares of Stock in connection with the payment of withholding taxes as provided
in Section 3.4(a)(v) or Section 3.4(c) or the payment of the exercise price as
provided in Section 4.4(d): (a) any shares of Stock to be sold through a
broker-assisted sale will be sold on the day the tax withholding obligation or
exercise of the Option, as applicable, occurs or arises, or as soon thereafter
as practicable; (b) such shares of Stock may be sold as part of a block trade
with other equity award holders in which all Optionees receive an average price;
(c) Optionee will be responsible for all broker’s fees and other costs of sale,
and Optionee agrees to indemnify and hold the Company harmless from any losses,
costs, damages, or expenses relating to any such sale; (d) to the extent the
proceeds of such sale exceed the applicable tax withholding obligation or
exercise price, the Company agrees to pay such excess in cash to Optionee as
soon as reasonably practicable; (e) Optionee acknowledges that the Company or
its designee is under no obligation to arrange for such sale at any particular
price, and that the proceeds of any such sale may not be sufficient to satisfy
the applicable tax withholding obligation or exercise price; and (f) in the
event the proceeds of such sale are insufficient to satisfy the applicable tax
withholding obligation, Optionee agrees to pay immediately upon demand to the
Company or its Subsidiary with respect to which the withholding obligation
arises, an amount sufficient to satisfy any remaining portion of the Company’s
or the applicable Subsidiary’s withholding obligation.

 

* * * * *

 

 

 

 

 

 

 

 

 

 

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