Exhibit 10.2

KINDRED BIOSCIENCES, INC.
2012 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION GRANT
Kindred Biosciences, Inc. (the “Company”) hereby grants you the following Option
to purchase shares of its common stock (“Shares”). The terms and conditions of
this Option are set forth in the Stock Option Agreement and the Kindred
Biosciences, Inc. 2012 Equity Incentive Plan (the “Plan”), both of which are
attached to and made a part of this document.
Date of Grant:
_______________ (Day/Month/Year)
Name of Optionee:
 
Number of Option Shares:
 
Type of Option:
 
Exercise Price per Share:
$__________(The Exercise Price per Share of an Option shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the date of grant.
If Optionee is a Ten-Percent Stockholder, the Exercise Price per Share of an ISO
must be at least one hundred ten percent (110%) of Fair Market Value.)
Vesting Start Date:
_________________(Day/Month/Year)
Vesting Schedule:

By signing this document, you acknowledge receipt of a copy of the related Stock
Option Agreement and the Plan, and agree that: (a) you have carefully read,
fully understand and agree to all of the terms and conditions described in the
attached Stock Option Agreement and the Plan; (b) you understand and agree that
the Stock Option Agreement, including its cover sheet any attachment,
constitutes the entire understanding between you and the Company regarding this
Option, and replaces and supersedes any prior or contemporaneous agreements,
commitments or negotiations concerning this Option; and (c) you have been given
an opportunity to consult your own legal and tax counsel with respect to all
matters relating to this Option prior to signing this document and that you have
either consulted such counsel or voluntarily declined to consult such counsel.

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OPTIONEE:
KINDRED BIOSCIENCES, INC.:
 
 
_____________________
 
 
By:
 
Its:

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Exhibit 10.2

KINDRED BIOSCIENCES, INC.
2012 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
KIND OF OPTION.
This Option is intended to be either an incentive stock option intended to meet
the requirements of Section 422 of the Internal Revenue Code (an “ISO”) or a
non-statutory option (an “NSO”), which is not intended to meet the requirements
of an ISO, as indicated in the Notice of Stock Option Grant. Even if this Option
is designated as an ISO, it shall be deemed to be an NSO to the extent required
by the $100,000 annual limitation under Section 422(d) of the Code.
VESTING.
Subject to the terms and conditions of the Plan and this Stock Option Agreement
(the “Agreement”), your Option and the Shares shall vest in accordance with the
schedule set forth in the Notice of Stock Option Grant. If your Option is
granted in consideration of your Service to the Company as an Employee, a
Consultant, an Advisor, or a Director, and if all of your Service terminates for
any reason, vesting of your Shares subject to your Option immediately stops and
your Option expires immediately as to the number of Shares that are not vested
as of the date your Service as an Employee, a Consultant, an Advisor, or a
Director terminates, unless otherwise specified in the Notice of Stock Option
Grant. Notwithstanding the foregoing, in the event of a Corporate Transaction,
your Option shall be deemed fully vested and exercisable immediately prior to
the consummation of the Corporate Transaction (provided that your Option has not
expired by its terms and that you take all steps necessary to exercise your
Option prior to the Corporate Transaction as provided in this Agreement)
TERM.
Your Option will expire in any event at the close of business at Company
headquarters on the date that is ten (10) years after the Date of Grant;
provided, however, that if your Option is an ISO it will expire five (5) years
after the Date of Grant if you are a Ten-Percent Stockholder of the Company (the
“Expiration Date”). Also, your Option will expire earlier if your Service
terminates, as described below.

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REGULAR TERMINATION.
(b)
If your Service terminates for any reason except death or Disability, the vested
portion of your Option will expire at the close of business at Company
headquarters on the date three (3) months after your termination of Service.
During that three (3) month period, you may exercise the portion of your Option
that was vested on your termination date. Notwithstanding the foregoing, the
Option may not be exercised after the Expiration Date determined under Section 3
above.

(c)
If your Option is an ISO and you exercise it more than three (3) months after
termination of your Service as an Employee for any reason other than death or
Disability expected to result in death or to last for a continuous period of at
least twelve (12) months, your Option will cease to be eligible for ISO tax
treatment.

(d)
Your Option will cease to be eligible for ISO tax treatment if you exercise it
more than three (3) months after the ninetieth (90th) day of a bona fide leave
of absence approved by the Company, unless you return to employment immediately
upon termination of such leave or your right to reemployment after your leave
was guaranteed by statute or contract.

DEATH.
If you die while in Service with the Company, the vested portion of your Option
will expire at the close of business at Company headquarters on the date twelve
(12) months after the date of your death. During that twelve (12) month period,
your estate, legatees or heirs may exercise that portion of your Option that was
vested on the date of your death. Notwithstanding the foregoing, the Option may
not be exercised after the Expiration Date determined under Section 3 above.
DISABILITY.
(e)
If your Service terminates because of a Disability, the vested portion of your
Option will expire at the close of business at Company headquarters on the date
twelve (12) months after your termination date. During that twelve (12) month
period, you may exercise that portion of your Option that was vested on the date
of your Disability. “Disability” means that you are unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment. Notwithstanding the foregoing, the Option may not be
exercised after the Expiration Date determined under Section 3 above.

(f)
If your Option is an ISO and your Disability is not expected to result in death
or to last for a continuous period of at least twelve (12) months, your Option
will be eligible for ISO tax treatment only if it is exercised within three (3)
months following the termination of your Service as an Employee.

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EXERCISING YOUR OPTION.
To exercise your Option, you must execute the Notice of Exercise (the “Exercise
Notice”), attached as Exhibit A. You must submit this form, together with full
payment as provided in Section 8, below, to the Company. Your exercise will be
effective when it is received by the Company. If someone else wants to exercise
your Option after your death, that person must prove to the Company’s
satisfaction that he or she is entitled to do so.
PAYMENT FORMS.
When you exercise your Option, you must include payment of the Exercise Price
for the Shares you are purchasing in cash or cash equivalents. Alternatively,
you may pay all or part of the Exercise Price by surrendering, or attesting to
ownership of, Shares already owned by you, unless such action would cause the
Company to recognize any (or additional) compensation expense with respect to
the Option for financial reporting purposes. Such Shares shall be surrendered to
the Company in good form for transfer and shall be valued at their Fair Market
Value on the date of Option exercise. To the extent that a public market for the
Shares exists and to the extent permitted by applicable law, in each case as
determined by the Company, you also may exercise your Option by delivery (on a
form prescribed by the Company) of an irrevocable direction to a securities
broker to sell Shares and to deliver all or part of the sale proceeds to the
Company in payment of the aggregate Exercise Price and, if requested, applicable
withholding taxes. The Company will provide the forms necessary to make such a
cashless exercise. The Board may permit such other payment forms as it deems
appropriate, subject to applicable laws, regulations and rules.
TAX WITHHOLDING AND REPORTING.
(g)
You will not be allowed to exercise this Option unless you pay, or make
acceptable arrangements to pay, any taxes required to be withheld as a result of
the Option exercise or the sale of Shares acquired upon exercise of this Option.
You hereby authorize withholding from payroll or any other payment due you from
the Company or your employer to satisfy any such withholding tax obligation.

(h)
If you sell or otherwise dispose of any of the Shares acquired pursuant to an
ISO on or before the later of (i) two (2) years after the grant date, or (ii)
one year after the exercise date, you shall immediately notify the Company in
writing of such disposition.

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TRANSFER OF OPTION.
Prior to your death, only you may exercise this Option. This Option and the
rights and privileges conferred hereby cannot be sold, pledged or otherwise
transferred (whether by operation of law or otherwise) and shall not be subject
to sale under execution, attachment, levy or similar process. For instance, you
may not sell this Option or use it as security for a loan. If you attempt to do
any of these things, this Option will immediately become invalid. You may,
however, dispose of this Option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor an Exercise Notice
from your spouse or former spouse, nor is the Company obligated to recognize
such individual’s interest in your Option in any other way. Notwithstanding the
foregoing, however, to the extent permitted by the Board in its sole discretion,
an NSO may be transferred by you to a revocable trust or to one or more family
members or to a trust established for your benefit and/or one or more of your
family members to the extent permitted by the Plan.
RETENTION RIGHTS.
This Agreement does not give you the right to be retained by the Company in any
capacity. The Company reserves the right to terminate your Service at any time
and for any reason without thereby incurring any liability to you.
STOCKHOLDER RIGHTS.
Neither you nor your estate or heirs have any rights as a stockholder of the
Company until a certificate for the Shares acquired upon exercise of this Option
has been issued. No adjustments are made for dividends or other rights if the
applicable record date occurs before your stock certificate is issued, except as
described in the Plan.
ADJUSTMENTS.
In the event of a stock split, a stock dividend or a similar change in the
Company’s Stock, the number of Shares covered by this Option and the Exercise
Price per share may be adjusted pursuant to the Plan. Your Option shall be
subject to the terms of the agreement of merger, liquidation or reorganization
in the event the Company is subject to such corporate activity as set forth in
the Plan.
LEGENDS.
All certificates representing the Shares issued upon exercise of this Option
shall, where applicable, have endorsed thereon the following legend:

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If the Option is an ISO, then the following legend will be included:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED UPON EXERCISE OF AN
INCENTIVE STOCK OPTION, AND THE COMPANY MUST BE NOTIFIED IF THE SHARES SHALL BE
TRANSFERRED BEFORE THE LATER OF THE TWO (2) YEAR ANNIVERSARY OF THE DATE OF
GRANT OF THE OPTION OR THE ONE (1) YEAR ANNIVERSARY OF THE DATE ON WHICH THE
OPTION WAS EXERCISED. THE REGISTERED HOLDER MAY RECOGNIZE ORDINARY INCOME IF THE
SHARES ARE TRANSFERRED BEFORE SUCH DATE.
TAX DISCLAIMER.
You agree that you are responsible for consulting your own tax advisor as to the
tax consequences associated with your Option. The tax rules governing options
are complex, change frequently and depend on the individual taxpayer’s
situation. Although the Company will make available to you general tax
information about stock options, you agree that the Company shall not be held
liable or responsible for making such information available to you or for any
tax or financial consequences that you may incur in connection with your Option.
By accepting this Option, you acknowledge that any tax liability or other
adverse tax consequences to you resulting from the grant of the Option will be
the responsibility of, and will be borne entirely by, you.  YOU ARE THEREFORE
ENCOURAGED TO CONSULT YOUR OWN TAX ADVISOR BEFORE ACCEPTING THE GRANT OF THIS
OPTION.
THE PLAN AND OTHER AGREEMENTS.
The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan. The Notice of
Stock Option Grant, this Agreement, including its attachments, and the Plan
constitute the entire understanding between you and the Company regarding this
Option. Any prior agreements, commitments or negotiations concerning this Option
are superseded.
MISCELLANEOUS PROVISIONS.
(b)
You understand and acknowledge that: (i) the Plan is entirely discretionary;
(ii) the Company and your employer have reserved the right to amend, suspend or
terminate the Plan at any time; (iii) the grant of an option does not in any way
create any contractual or other right to receive additional grants of options
(or benefits in lieu of options) at any time or in any amount; and (iv) all
determinations with respect to any additional grants, including (without
limitation) the times when options will be granted, the number of Shares
offered,

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the Exercise Price and the vesting schedule, will be at the sole discretion of
the Company.
(c)
The value of this Option shall be an extraordinary item of compensation outside
the scope of your employment contract, if any, and shall not be considered a
part of your normal or expected compensation for purposes of calculating
severance, resignation, redundancy or end-of-service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments.

(d)
You understand and acknowledge that participation in the Plan ceases upon
termination of your Service for any reason, except as may explicitly be provided
otherwise in the Plan or this Agreement.

(e)
You hereby authorize and direct your employer to disclose to the Company or any
Subsidiary any information regarding your employment, the nature and amount of
your compensation and the fact and conditions of your participation in the Plan,
as your employer deems necessary or appropriate to facilitate the administration
of the Plan.

(f)
You consent to the collection, use and transfer of personal data as described in
this Subsection. You understand and acknowledge that the Company, your employer
and the Company’s other Subsidiaries hold certain personal information regarding
you for the purpose of managing and administering the Plan, including (without
limitation) your name, home address, telephone number, date of birth, social
insurance number, salary, nationality, job title, any Shares or directorships
held in the Company and details of all options or any other entitlements to
Shares awarded, canceled, exercised, vested, unvested or outstanding in the your
favor (the “Data”). You further understand and acknowledge that the Company
and/or its Subsidiaries will transfer Data among themselves as necessary for the
purpose of implementation, administration and management of your participation
in the Plan and that the Company and/or any Subsidiary may each further transfer
Data to any third party assisting the Company in the implementation,
administration and management of the Plan. You understand and acknowledge that
the recipients of Data may be located in the United States or elsewhere. You
authorize such recipients to receive, possess, use, retain and transfer Data, in
electronic or other form, for the purpose of administering your participation in
the Plan, including a transfer to any broker or other third party with whom you
elect to deposit Shares acquired under the Plan of such Data as may be required
for the administration of the Plan and/or the subsequent holding of Shares on
your behalf. You may, at any time, view the Data, require any necessary
modifications of Data or withdraw the consents set forth in this Subsection by
contacting the Human Resources Department of the Company in writing.

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APPLICABLE LAW.

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This Agreement will be interpreted and enforced under the laws of the State of
California (without regard to their choice of law provisions).

 

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EXHIBIT A

NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK

 
Name:                                                  
 
Address:

 
SSN:
 
Date:

Kindred Biosciences, Inc.
Attention: Corporate Secretary
1555 Bayshore Highway, Suite 200
Burlingame, California 94010

Re:    Exercise of Stock Option

Ladies and Gentlemen:

I elect to purchase ______________ shares of Common Stock of Kindred
Biosciences, Inc. (the “Company”) pursuant to the Stock Option Agreement, dated
___________, between the Company and me and the Kindred Biosciences, Inc. 2012
Equity Incentive Plan. The purchase will take place on the Exercise Date, which
will be (i) as soon as practicable following the date this notice and all other
necessary forms and payments are received by the Company, unless I specify a
later date (not to exceed 30 days following the date of this notice) or (ii) in
the case of a Broker-assisted cashless exercise (as indicated below), the date
of this notice.
On or before the Exercise Date, I will pay the full exercise price in the form
specified below (check one):
[ ]    Cash: by delivering cash to the Company for $___________.
[ ]    Check: by delivering a check made payable to the Company for
$___________.

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I will pay the full exercise price in the following form, as expressly
authorized in writing by the Company:
[ ]    Other Company Shares: by delivering for surrender other shares of the
Company’s Common Stock having a fair market value at the time of receipt by the
Company equal to not less than the Exercise Price.
[ ]    Deferred Payment Arrangement: on such terms as have been approved by the
Board.
[ ]    Net Exercise Arrangement: pursuant to the Plan and on such terms as have
been approved by the Board.
[ ]    Cash From Broker: by delivering the purchase price from ________________,
a broker, dealer or other “creditor” as defined by Regulation T issued by the
Board of Governors of the Federal Reserve System (the “Broker”). I authorize the
Company to issue a stock certificate in the number of shares indicated above in
the name of the Broker in accordance with instructions received by the Company
from the Broker and to deliver such stock certificate directly to the Broker (or
to any other party specified in the instructions from the Broker) upon receiving
the exercise price from the Broker.
On or before the Exercise Date, I will pay any applicable tax withholding
obligations, as provided in the Option Agreement and the Plan, for the full tax
withholding amount.
Please deliver the stock certificate to me (unless I have chosen to pay the
purchase price through a broker).
 
Very truly yours,
 
 
 
 
AGREED TO AND ACCEPTED:
 
 
 
KINDRED BIOSCIENCES, INC.
 
 
 
By:                                                
 
Title:                                               
 
 
 
Number of Option Shares
 
Exercised:                                      
 
 
 
Number of Option Shares
 
Remaining:                                    
 
 
 
Date:                                              
 

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