Exhibit 10.36

 

 

Sucampo Pharmaceuticals, Inc. Duration-Based Stock Option Incentive Award

 

Stock Option Agreement Terms and Conditions

 

This Incentive Stock Option Agreement, along with the Sucampo Pharmaceuticals,
Inc. Duration -Based Stock Option Incentive Award Summary delivered herewith
(the "Award Summary"), once signed by the individual named on the Award Summary
(the "Participant"), shall constitute an Agreement made as of the Grant Date (as
indicated on the Award Summary), by and between Sucampo Pharmaceuticals, Inc., a
Delaware corporation having its principal office at 805 King Farm Boulevard,
Suite 550, Rockville, MD 20850 (“Sucampo” and with its direct and indirect
subsidiaries, the "Company"), and the Participant.

 

WITNESSETH:

 

     WHEREAS, the Board of Directors and shareholders of Sucampo have approved
the Sucampo Pharmaceuticals, Inc. 2006 Stock Incentive Plan, as amended and
restated (the “Plan”); and

 

     WHEREAS, pursuant to the authority granted to it in the Plan, the
Compensation Committee of the Board of Directors of Sucampo (the "Committee"),
either directly authorized the award evidenced by this Agreement or delegated
such authority to the Company’s Chief Executive Officer who in turn authorized
this award pursuant to such authority; and

 

     WHEREAS, awards granted under the Plan are subject to the terms and
conditions in the Plan;

 

     NOW, THEREFORE, it is mutually agreed as follows:

 

     A. Terms and Conditions Applicable to Stock Options. All the terms and
conditions set forth in this Agreement, in the Plan that apply to stock option
awards and in the Award Summary shall govern the stock options granted to the
Participant under this Agreement.

 

1.             Grant of Options.

 

In consideration of the Participant remaining in the continuous service of the
Company and agreeing to be bound by the covenants of Section B, Sucampo hereby
grants to Participant, on the terms and conditions set forth herein, the right
and option to purchase, in whole or in part, the number of shares (the “Shares”)
of Class A common stock, $0.01 par value per share, of the Company (“Common
Stock”) indicated on the Award Summary under the heading “Total Award” at the
Grant/Exercise Price per share indicated on the Award Summary (the “Option
Exercise Price”), which was the Fair Market Value (as defined below) of the
Common Stock on the Grant Date, rounded up to the nearest one-fourth. The right
to purchase each such share is referred to herein as an “Option.” If designated
in the Award Summary as an Incentive Stock Option, those Options are intended to
qualify as Incentive Stock Options under Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”); however, if any Options that are intended
to be Incentive Stock Options fail to qualify as Incentive Stock Options, such
Options shall be treated as Nonstatutory Stock Options.

 

 
 

2.             Vesting Schedule.

 

Those Options that vest based on duration as set forth in the Award Summary
shall vest on the applicable vesting dates and will become exercisable from the
applicable Vesting Date through the expiration date set forth in the Award
Summary (the "Expiration Date"). Options may vest only while the Participant is
in continuous service with the Company. Once vested and exercisable, and until
terminated, all or any portion of the Options may be exercised from time to time
and at any time under procedures that the Committee or its delegate shall
establish from time to time, including, without limitation, procedures regarding
the frequency of exercise and the minimum number of Options which may be
exercised at any time.

 

The right of exercise shall be cumulative so that to the extent any Options are
not exercised in any period to the maximum extent permissible such Options shall
continue to be exercisable, in whole or in part, with respect to all Shares for
which such Options are vested until the earlier of the Expiration Date or the
termination of such Options under Paragraph 4 hereof or the Plan.

 

3.             Exercise of Options.

 

(a)        Form of Exercise. Subject to terms and conditions set forth herein,
each election to exercise Options shall be in writing, signed by the
Participant, and received by the Company at its principal office, accompanied by
this Agreement, and payment in full in the manner provided in the Plan. The
Participant may purchase less than the number of Shares covered by vested
Options that have not previously been exercised, provided that no partial
exercise of Options may be for any fractional Share. The aggregate Option
Exercise Price for the Shares being purchased, together with any amount which
the Company may be required to withhold upon such exercise in respect of
applicable foreign, federal (including FICA), state and local taxes, must be
paid in full at the time of issuance of the Shares being purchased as a result
of the exercise of any Options.

 

(b)        Continuous Relationship with the Company Required. Except as
otherwise provided in Paragraph 4, Options may not be exercised unless the
Participant, at the time he or she exercises Options, is, and has been at all
times since the Grant Date, an employee, officer or director of, or consultant
or advisor to, the Company as defined in Section 424(e) or (f) of the Code.

 

4.             Effect of Termination of Employment, Death, Retirement and Total
Disability.

 

(a)         Termination of Relationship with the Company. If the Participant
ceases to have a continuous relationship with the Company for any reason, then,
except as provided in paragraphs (b) and (c) below, the right to exercise
Options shall terminate three months after such cessation (but in no event after
the Expiration Date); provided, that Options shall be exercisable only to the
extent that the Participant was entitled to exercise Options on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the
Expiration Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise Options
shall terminate immediately upon written notice to the Participant from the
Company describing such violation.

 

 - 2 - 

 

(b)         Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Expiration Date while he or she is in a continuous relationship with the
Company and the Participant had not been terminated from such relationship for
“Cause” as defined below, Options shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant (or in the case of death by an authorized transferee), provided,
that Options shall be exercisable only to the extent that Options were
exercisable by the Participant on the date of his or her death or disability,
and further provided that Options shall not be exercisable after the Expiration
Date.

 

(c)         Termination for Cause. If, prior to the Expiration Date, the
Participant’s employment is terminated by the Company for Cause, the right to
exercise Options shall terminate immediately upon the effective date of such
termination of employment. If, prior to the Expiration Date, the Participant is
given notice by the Company of the termination of his or her employment by the
Company for Cause, and the effective date of such employment termination is
subsequent to the date of delivery of such notice, the right to exercise Options
shall be suspended from the time of the delivery of such notice until the
earlier of (i) such time as it is determined or otherwise agreed that the
Participant’s employment shall not be terminated for Cause as provided in such
notice or (ii) the effective date of such termination of employment (in which
case the right to exercise Options shall, pursuant to the preceding sentence,
terminate upon the effective date of such termination of employment). If the
Participant is a party to an employment or severance agreement with the Company
that contains a definition of “Cause” for termination of employment, “Cause”
shall have the meaning ascribed to such term in such agreement. Otherwise,
“Cause” shall mean willful misconduct by the Participant or willful failure by
the Participant to perform his or her responsibilities to the Company
(including, without limitation, breach by the Participant of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company or breach of such
Participant’s duty of loyalty to the Company under applicable law), as
determined by the Company, which determination shall be conclusive. The
Participant shall be considered to have been discharged for Cause if the Company
determines, within 30 days after the Participant’s resignation, that discharge
for cause was warranted.

 

(d)        Transfers to a Related Entity. In the event the Participant transfers
to a Related Entity (as defined below) as a result of actions by Sucampo, any
reference to "Company" in this Agreement shall be deemed to refer to such
Related Entity in addition to the Company.

 

5.             Buy-Out of Option Gains. Except as provided hereinafter, at any
time after any Option becomes exercisable, the Committee shall have the right,
in its sole discretion and without the consent of the Participant, to cancel
such Option and to cause Sucampo to pay to the Participant the excess of the
Fair Market Value of the shares of Common Stock covered by such Option over the
Option Exercise Price of such Option as of the date the Committee provides
written notice (the "Buy Out Notice") of its intention to exercise such right.
Payments of such buy out amounts pursuant to this provision shall be effected by
Sucampo as promptly as possible after the date of the Buy Out Notice and shall
be made in shares of Common Stock. The number of shares shall be the greatest
number of whole shares determined by dividing the amount of the payment to be
made by the Fair Market Value of a share of Common Stock at the date of the Buy
Out Notice. Payments of any such buy out amounts shall be made net of all
applicable foreign, federal (including FICA), state and local withholding taxes,
if any, calculated at the assumed maximum tax withholding rate.

 

 - 3 - 

 

6.             No Rights as Stockholder. The Participant shall have no rights as
a holder of the Common Stock with respect to the Options granted hereunder
unless and until such Options are exercised and the Shares have been registered
in the Participant's name as owner.

 

7.             Nontransferability of Options. Options may not be sold, assigned,
transferred, pledged or otherwise encumbered by the Participant, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, Options shall be
exercisable only by the Participant.

 

B.  Prohibited Conduct.

 

In consideration of the grant by the Company of the Options, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Participant and the Company, intending to be legally bound,
and recognizing that the Company has made and will continue to make available to
Participant Confidential Information, as more fully described in Section B.2.
below, that Participant acknowledges constitutes proprietary information of the
Company, hereby agree as follows.

 

1. Non-Competition and Non-Solicitation. At all times during his or her
continuous relationship with the Company and for a period of twelve months after
the termination of the Participant's continuous relationship with the Company
for any reason whatsoever (including a termination due to the Participant's
Retirement or Total Disability), Participant shall and will not, without the
prior written consent of Sucampo's chief human resources officer or chief legal
officer, either directly or indirectly, for himself/herself or on behalf of or
in conjunction with any other person, partnership, corporation or other entity,
engage in any activities prohibited in the following Section B.1 (a) and (b):

 

(a) The Participant shall not, in any country in which the Company operates,
accept any employment, assignment, position or responsibility, or provide
services in any capacity or acquire any ownership interest which involves the
Participant's Participation in a Conflicting Organization that engages in
research on, or development, production, marketing, licensing, selling or
servicing of, a Conflicting Product; or

 

(b) The Participant shall not in any way, directly or indirectly (including
through someone else acting on the Participant's recommendation, suggestion,
identification or advice), solicit or hire, or assist any other person in
soliciting or hiring, any Company employee to leave the Company's employment or
to accept any position with any other entity or any person who had been an
employee of the Company at any time in the past twelve (12) months from the date
of determination.

 

 - 4 - 

 

2. Non-Disclosure. In order to assist the Participant with his or her duties,
during the time Participant is an employee of the Company, the Company shall
continue to provide the Participant with access to confidential and proprietary
and operational information and other confidential information which is either
information not known by actual or potential competitors, customers and third
parties of the Company or is proprietary information of the Company
("Confidential Information"). Such Confidential Information shall mean all
confidential and proprietary information of the Company, its predecessors and
Affiliates, whether in written, oral, electronic or other form, including but
not limited to trade secrets; technical, applications filed with any
governmental agency such as NDAs and ANDAs filed with the Food and Drug
Administration, scientific or business information; processes; works of
authorship; Inventions; discoveries; developments; systems; chemical compounds;
computer programs; code; algorithms; formulae; methods; ideas; test data; know
how; functional and technical specifications; designs; drawings; passwords;
analyses; business plans; information regarding actual or demonstrably
anticipated business, research or development; marketing, sales and pricing
strategies; and information regarding the Company's current and prospective
consultants, customers, licensors, licensees, investors and personnel, including
their names, addresses, duties and other personal characteristics. Confidential
Information does not include information that (i) is in the public domain, other
than as a result of an act of misappropriation or breach of an obligation of
confidentiality by any person; (ii) Participant can verify by written records
kept in the ordinary course of business was in Participant 's lawful possession
prior to its disclosure to Participant; (iii) is received by Participant from a
third party without a breach of an obligation of confidentiality owed by the
third party to the Company and without the requirement that Participant keep
such information confidential; or (iv) Participant is required to disclose by
applicable law, regulation or order of a governmental agency or a court of
competent jurisdiction. If Participant is required to make disclosure pursuant
to clause (iv) of the preceding sentence as a result of the issuance of a court
order or other government process, Participant shall (a) promptly, but in no
event more than 72 hours after learning of such court order or other government
process, notify the Company; (b) at the Company's expense, take all reasonable
necessary steps requested by the Company to defend against the enforcement of
such court order or other government process, and permit the Company to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof; and (c) if such compelled disclosure is required,
Participant shall disclose only that portion of the Confidential Information
that is necessary to meet the minimum legal requirement imposed on Participant.
The Participant agrees that such Confidential Information remains confidential
even if committed to the Participant's memory. The Participant agrees, during
the term of his or her employment and at all times thereafter, not to use,
divulge, or furnish or make accessible to any third party, company, corporation
or other organization (including but not limited to, customers, competitors, or
governmental agencies), without the Company's prior written consent, any
Confidential Information of the Company, except as necessary in his or her
position with the Company.

 

3. Return of Confidential Information and Company Property. The Participant
agrees that whenever the Participant's employment with the Company ends for any
reason, (a) all records, materials, notes, equipment, drawings, documents and
data of any nature or medium, and all copies thereof, relating to any
Confidential Information (collectively the "the Company Materials") which is in
Participant 's possession or under Participant 's control, and (b) all Company
computer and computer-related equipment and software, and all Company property,
files, records, documents, drawings, specifications, lists, equipment, keys,
passes, and similar items relating to the business of the Company, whether
prepared by or provided to the Participant or otherwise, coming into the
Participant's possession or control during the course of his employment shall
remain the exclusive property of the Company, shall in each case under clauses
(a) and (b) be delivered by the Participant to the Company immediately, with no
request being required. Participant shall not remove any of the Company
Materials from the Company's business premises or deliver any of the Company
Materials to any person or entity outside of the Company, except as required in
connection with Participant’s duties of employment.

 - 5 - 

 

 

4. Misconduct. The Participant shall not engage in any of the following acts
that are considered to be contrary to the Company's best interests during the
term of his or her employment with the Company: (a) violating the Company's Code
of Conduct, Insider Trading Policy or any other written policies of the Company,
(b) unlawfully trading in the securities of Sucampo or of any other company
based on information gained as a result of his or her employment with the
Company, or (c) engaging in any activity which constitutes gross misconduct.

 

5. Reasonableness of Provisions. The Participant agrees that: (a) the terms and
provisions of this Agreement are reasonable and constitute an otherwise
enforceable agreement to which the terms and provisions of this Paragraph B are
ancillary or a part of; (b) the consideration provided by the Company under this
Agreement is not illusory but are in fact material and considerable; (c) the
restrictions contained in this Section B are necessary and reasonable for the
protection of the legitimate business interests and goodwill of the Company; and
(d) the consideration given by the Company under this Agreement, including,
without limitation, the provision by the Company of Confidential Information to
the Participant, all give rise to the Company's reasonable interest in requiring
the Participant to comply with the covenants set forth in this Section B.

 

6. Repayment and Forfeiture. The Participant specifically recognizes and affirms
that each of the covenants contained in Sections B.1 through B.4 of this
Agreement is a material and important term of this Agreement which has induced
the Company to provide for the award of the Options granted hereunder, the
disclosure of Confidential Information referenced herein, and the other promises
made by the Company herein. The Participant further agrees that in the event
that (i) the Company determines that the Participant has breached any term of
Sections B.1 through B.4 or (ii) all or any part of Section B is held or found
invalid or unenforceable for any reason whatsoever by a court of competent
jurisdiction in an action between the Participant and the Company, in addition
to any other remedies at law or in equity the Company may have available to it,
the Company may in its sole discretion:

 

               (a) Cancel any unexercised Options granted hereunder; and/or

 

               (b) Require the Participant to pay to the Company all gains
realized from the exercise of any Options granted hereunder.

 

7. Equitable Relief. In the event the Company determines that the Participant
has breached or attempted or threatened to breach any term of Section  B, in
addition to any other remedies at law or in equity the Company may have
available to it, it is agreed that the Company shall be entitled, upon
application to any court of proper jurisdiction, to a temporary restraining
order or preliminary injunction (without the necessity of (a) proving
irreparable harm, (b) establishing that monetary damages are inadequate or
(c) posting any bond with respect thereto) against the Participant prohibiting
such breach or attempted or threatened breach by proving only the existence of
such breach or attempted or threatened breach.

 

 - 6 - 

 

8. Extension of Restrictive Period. The Participant agrees that the period
during which the covenants contained in this Section B shall be effective shall
be computed by excluding from such computation any time during which the
Participant is in violation of any provision of Section B.

 

9. Acknowledgments. The Company and the Participant agree that it was their
intent to enter into a valid and enforceable agreement. The Participant and the
Company thereby acknowledge the reasonableness of the restrictions set forth in
Section B, including the reasonableness of the geographic area, duration as to
time and scope of activity restrained. The Participant further acknowledges that
his or her skills are such that he or she can be gainfully employed in
noncompetitive employment and that the agreement not to compete will not prevent
him or her from earning a living. The Participant agrees that if any covenant
contained in Section B is found by a court of competent jurisdiction to contain
limitations as to time, geographical area, or scope of activity that are not
reasonable and impose a greater restraint than is necessary to protect the
goodwill or other business interest of the Company, then the court shall reform
the covenant to the extent necessary to cause the limitations contained in the
covenant as to time, geographical area, and scope of activity to be restrained
to be reasonable and to impose a restraint that is not greater than necessary to
protect the goodwill and other business interests of the Company and to enforce
the covenants as reformed.

 

10. Provisions Independent. The covenants on the part of the Participant in this
Section B shall be construed as an agreement independent of any other agreement,
including any employee benefit agreement, and independent of any other provision
of this Agreement, and the existence of any claim or cause of action of the
Participant against the Company, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
such covenants.

 

11. Notification of Subsequent Employer. The Participant agrees that the Company
may notify any person or entity employing the Participant or evidencing an
intention of employing the Participant of the existence and provisions of this
Agreement.

 

 C. Additional Terms and Conditions.

 

1. Adjustment for Change in Common Stock. In the event of any change in the
outstanding shares of Sucampo Common Stock by reason of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination
or exchange of shares, spin-off or other similar corporate change, the number
and type of shares which the Participant may purchase pursuant to the Options
and the Option Exercise Price at which the Participant may purchase such shares
shall be adjusted, to such extent (if any), determined to be appropriate and
equitable by the Committee.

 

2. Effect of Reorganization Event. In the event of a Reorganization Event (as
defined in the Plan), the following provisions shall apply:

 

               (a) If the successor corporation (or affiliate thereto)
(1) assumes the outstanding Options granted hereunder or (2) replaces the
outstanding Options with equity awards that preserve the existing value of such
Options at the time of the Reorganization Event and provide for subsequent
payout in accordance with a vesting schedule, as applicable, that are the same
or more favorable to the Participant than the vesting schedule applicable to
such Options, then the outstanding Options or such substitute thereof shall
remain outstanding and be governed by their respective terms and the provisions
of the Plan, subject to Section C.2 (c) below.

 

 - 7 - 

 

               (b) If the outstanding Options granted hereunder are not assumed
or replaced in accordance with Section C.2 (a) above, then upon the
Reorganization Event, (1) the outstanding Options granted hereunder shall
immediately vest and become exercisable and shall remain outstanding in
accordance with their terms, and shall be paid immediately in accordance with
their terms or, if later, as of the earliest permissible date under Code
Section 409A and (2), notwithstanding Section C.2 (b)(1) but after taking into
account the accelerated vesting set forth therein, the Board or Committee may,
in its sole discretion, provide for cancellation of the outstanding Options at
the time of the Reorganization Event in which case a payment of cash, property
or a combination thereof shall be made to the Participant that is determined by
the Board in its sole discretion, but is at least equal to the excess, if any,
of the value of such consideration over the Option Exercise Price for such
Options less applicable taxes.

 

               (c) If the outstanding Options granted hereunder are assumed or
replaced in accordance with Section C.2 (a) and the Participant's employment
with the Company (or if applicable, a successor corporation) is terminated by
the Company or such successor for any reasons other than Cause or by the
Participant for Good Reason, if applicable, in each case, within the two-year
period commencing on the Reorganization Event, then, as of the date of the
Participant's termination, (1) the outstanding Options granted hereunder shall
immediately vest and become exercisable and shall remain outstanding until the
Expiration Date and shall be paid immediately in accordance with their terms or,
if later, as of the earliest permissible date under Code Section 409A. For
purposes of this Section C.2, "Cause" and "Good Reason" are defined in the
Participant’s employment agreement, if applicable, or Cause is defined
hereinafter, and a termination for Cause or Good Reason is subject to the terms
and conditions set forth in the Plan.

 

3. Nontransferability. Unless the Committee specifically determines otherwise:
(a) the Options are personal to the Participant and, with respect to Options,
during the Participant's lifetime, such Options may be exercised only by the
Participant, and (b) the Options shall not be transferable or assignable, other
than in the case of the Participant's death by will, the laws of descent and
distribution.

 

4. Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:

 

(a) “Affiliate” shall mean a person or entity that directly or indirectly
through one or more intermediaries, controls or is controlled by, or under
common control with another person or entity, including current and former
directors and officers of such an entity.

 

(b) “Conflicting Product” means any product, method or process, system or
service of any person or organization other than the Company that is the same
as, similar to or interchangeable with any product, method or process, system or
service that was provided or under development by the Company or any of its
Affiliates at the time Participant’s employment with the Company terminates, or
about which Participant acquired any Confidential Information or developed any
Participant Work Product.

 

(c) “Conflicting Organization” means any person or organization which is engaged
in research on or development, production, marketing, licensing, selling or
servicing of any Conflicting Product.

 

 - 8 - 

 

 (d) “Fair Market Value” of a share of Common Stock on any date shall mean the
Closing Price of a share of Common Stock. For purposes of this definition,
Closing Price shall mean for any particular date the closing price of a share of
Common Stock as reported for the last trade on the Nasdaq Global Market or if
the stock is not then traded on the Nasdaq Global Market then as reported on
such national securities exchange on which the stock is then listed and if not
then listed on a national securities exchange as reported in the OTC Bulletin
Board provided that for a day to be considered a trading day at least 50,000
shares of Common Stock must trade on such day or if there is no listing on OTC
Bulletin Board then no such determination can be made until the Common Stock is
so listed and traded. If the particular date falls on a date in which the Common
Stock is not traded, the Closing Price shall be determined on the prior date in
which the Common Stock was traded.

 

(e) “Participant Work Product” shall mean all Confidential Information and
inventions conceived of, created, developed or prepared by Participant (whether
individually or jointly with others) before or during Participant 's employment
with the Company, during or outside of working hours, which relate in any manner
to the actual or demonstrably anticipated business, research or development of
the Company or its products, methods, processes, systems or services, or result
from or are suggested by any task assigned to Participant or any work performed
by Participant for or on behalf of the Company or any of its Affiliates.

 

(f) “Participation” shall be construed broadly to include, without limitation:
(i) serving as a director, officer, employee, consultant or advisor with respect
to such a business entity; (ii) providing input, advice, guidance or suggestions
to such a business entity; or (iii) providing a recommendation or testimonial on
behalf of such a business entity or one or more products it produces.

 

(g) “Related Entity” shall mean any entity as to which the Company directly or
indirectly owns 20% or more of the entity's voting securities, general
partnership interests, or other voting or management rights at the relevant
time.

 

(h) “Retirement” shall mean (i) early, normal or late retirement under the U.S.
pension plan of the Company in which the Participant participates (if any),
(ii) retirement as explicitly set out in an individual agreement between the
Company and the Participant for this purpose in effect on the Grant Date,
(iii) termination of employment after attaining at least age 55 with at least 10
years of service with the Company (or, if earlier, after attaining at least age
65 and completing at least five years of service with the Company), or
(iv) retirement as otherwise determined by the Committee.

 

(i) “Total Disability” shall mean being considered disabled under the Company's
Long Term Disability Plan (as amended and restated from time to time), with such
status having resulted in benefit payments from such plan or another Sucampo
disability plan and 12 months having elapsed since the Participant was so
considered to be disabled from the cause of the current disability. The
effective date of a Participant's Total Disability shall be the first day that
all of the foregoing requirements are met.

 

5. Notices. Any notice to be given to Sucampo in connection with the terms of
this Agreement shall be addressed to Sucampo at 805 King Farm Boulevard, Suite
550, Rockville, MD 20850, Attention: Chief Legal Officer or such other address
as Sucampo may hereafter designate to the Participant. Any notice to be given to
Participant in connection with the terms of this Agreement shall be addressed to
the Participant at the address set forth below the Participant’s signature, or
such other address as the Participant may hereafter designate to Sucampo. Any
such notice shall be deemed to have been duly given when personally delivered,
addressed as aforesaid, or when enclosed in a properly sealed envelope or
wrapper, addressed as aforesaid, and deposited, certified mail postage prepaid,
with the United States postal service.

 

 - 9 - 

 

6. Binding Effect.

 

               (a) This Agreement shall be binding upon and inure to the benefit
of any assignee or successor in interest to Sucampo, whether by merger,
consolidation or the sale of all or substantially all of Sucampo's assets.
Unless the Options are cancelled, terminated or paid out as provided under
Section B.2., Sucampo will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Sucampo expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Sucampo would be
required to perform it if no such succession had taken place.

 

               (b) This Agreement shall be binding upon and inure to the benefit
of the Participant or his or her legal representative and any person to whom the
Options may be transferred by will or the applicable laws of descent and
distribution as permitted under the terms of this Agreement.

 

7. No Contract of Employment; Agreement's Survival. This Agreement is not a
contract of employment. This Agreement does not impose on the Company any
obligation to retain the Participant in its employ and shall not interfere with
the ability of the Company to terminate the Participant's employment
relationship at any time and for any reason. This Agreement shall survive the
termination of the Participant's employment for any reason.

 

8. Registration, Listing and Qualification of Shares. The Committee may require
that the Participant make such representations and agreements and furnish such
information as the Committee deems appropriate to assure compliance with or
exemption from the requirements of any securities exchange, any foreign,
federal, state or local law, any governmental regulatory body, or any other
applicable legal requirement, and shares of Common Stock shall not be issued
unless and until the Participant makes such representations and agreements and
furnished such information as the Committee deems appropriate and the Committee
otherwise believes Sucampo has complied with all legal requirements applicable
to such issuance.

 

9. Amendment; Waiver. As directed by the Board or the Committee, the terms and
conditions of this Agreement may be amended in writing by the chief human
resources officer or chief legal officer of Sucampo (or either of their
delegates), provided, however, that (i) no such amendment shall be adverse to
the Participant without the Participant's written consent (except to the extent
the Committee reasonably determines that such amendment is necessary or
appropriate to comply with applicable law, including the provisions of Code
Section 409A and the regulations thereunder pertaining to the deferral of
compensation, or the rules and regulations of any stock exchange on which
Sucampo Common Stock is listed or quoted); and (ii) the amendment must be
permitted under the Plan. The Company's failure to insist upon strict compliance
with any provision of this Agreement or failure to exercise, or any delay in
exercising, any right, power or remedy under this Agreement shall not be deemed
to be a waiver of such provision or any such right, power or remedy which the
Board, the Committee or the Company has under this Agreement.

 

 - 10 - 

 

10. Severability or Reform by Court. In the event that any provision of this
Agreement is deemed by a court to be broader than permitted by applicable law,
then such provision shall be reformed (or otherwise revised or narrowed) so that
it is enforceable to the fullest extent permitted by applicable law. If any
provision of this Agreement shall be declared by a court to be invalid or
unenforceable to any extent, the validity or enforceability of the remaining
provisions of this Agreement shall not be affected.

 

11. Plan Controls. The Options and the terms and conditions set forth herein are
subject in all respects to the terms and conditions of the Plan and any
guidelines, policies or regulations which govern administration of the Plan,
which shall be controlling. The Committee reserves its rights to amend or
terminate the Plan at any time without the consent of the Participant; provided,
however, that Options outstanding under the Plan at the time of such action
shall not, without the Participant's written consent, be adversely affected
thereby (except to the extent the Committee reasonably determines that such
amendment is necessary or appropriate to comply with applicable law, including
the provisions of Code Section 409A and the regulations thereunder pertaining to
the deferral of compensation, or the rules and regulations of any stock exchange
on which the Common Stock is listed or quoted). All interpretations or
determinations of the Board or the Committee or its delegate shall be final,
binding and conclusive upon the Participant (and his or her legal
representatives and any recipient of a transfer of the Options permitted by this
Agreement) on any question arising hereunder or under the Plan or other
guidelines, policies or regulations which govern administration of the Plan.

 

12. Participant Acknowledgements. By entering into this Agreement, the
Participant acknowledges and agrees that:

 

(a) the Option grant will be exclusively governed by the terms of the Plan,
including the right reserved by the Company to amend or cancel the Plan at any
time without the Company incurring liability to the Participant (except in
circumstances set forth above for Options already granted under the Plan);

 

 (b) stock options and restricted stock units are not a constituent part of the
Participant's salary and that the Participant is not entitled, under the terms
and conditions of his/her employment, or by accepting or being awarded the
Options pursuant to this Agreement, to require options, restricted stock units
or other awards to be granted to him/her in the future under the Plan or any
other plan;

 

(c) upon exercise of the Options the Participant will arrange for payment to the
Company an estimated amount to cover employee payroll taxes resulting from the
exercise and/or, to the extent necessary, any balance may be withheld from the
Participant's wages;

 

(d) benefits received under the Plan will be excluded from the calculation of
termination indemnities or other severance payments;

 

(e) in the event of termination of the Participant's employment, a severance or
notice period to which the Participant may be entitled under local law and which
follows the date of termination specified in a notice of termination or other
document evidencing the termination of the Participant's employment will not be
treated as active employment for purposes of this Agreement and, as a result,
vesting of unvested Options will not be extended by any such period;

 

(f) the Participant will seek all necessary approval under, make all required
notifications under and comply with all laws, rules and regulations applicable
to the ownership of stock options and stock and the exercise of stock options,
including, without limitation, currency and exchange laws, rules and
regulations; and

 

 - 11 - 

 

(g) this Agreement will be interpreted and applied so that the Options, in all
cases, to the extent possible, will not be subject to Code Section 409A.
Notwithstanding any other provisions of this Agreement, this Agreement will be
modified to the extent the Committee reasonably determines that is necessary or
appropriate for such Options to comply with Code Section 409A.

 

13. Right of Set-Off. The Participant agrees, in the event that the Company in
its reasonable judgment determines that the Participant owes the Company or any
Related Entity any amount due to any loan, note, obligation or indebtedness,
including but not limited to amounts owed to the Company pursuant to the
Company's tax equalization program or the Company's policies with respect to
travel and business expenses, and if the Participant has not satisfied such
obligation(s), then the Company may instruct the plan administrator to withhold
and/or sell shares of the Common Stock acquired by the Participant upon exercise
of his or her Options (to the extent such Options are not subject to Code
Section 409A), or the Company may deduct funds equal to the amount of such
obligation from other funds due to the Participant from the Company to the
maximum extent permitted by Code Section 409A.

 

14. Electronic Delivery and Acceptance. The Participant hereby consents and
agrees to electronic delivery of any Plan documents, proxy materials, annual
reports and other related documents. The Participant hereby consents to any and
all procedures that the Company has established or may establish for an
electronic signature system for delivery and acceptance of Plan documents
(including documents relating to any programs adopted under the Plan), and
agrees that his or her electronic signature is the same as, and shall have the
same force and effect as, his or her manual signature. Participant consents and
agrees that any such procedures and delivery may be effected by a third party
engaged by the Company to provide administrative services related to the Plan,
including any program adopted under the Plan.

 

15. Data Privacy. Participant hereby acknowledges and consents to the
collection, use, processing and transfer of personal data as described in this
paragraph. Participant is not obliged to consent to such collection, use,
processing and transfer of personal data. However, failure to provide the
consent may affect Participant's ability to participate in the Plan. The Company
and Participant’s employer hold certain personal information about Participant,
that may include his/her name, home address and telephone number, date of birth,
social security number or other employee identification number, salary grade,
hire data, salary, nationality, job title, any shares of stock held in Sucampo,
or details of all options, restricted stock units or any other entitlement to
shares of stock awarded, canceled, purchased, vested, or unvested, for the
purpose of managing and administering the Plan (“Data”). The Company and/or its
subsidiaries will transfer Data amongst themselves as necessary for the purpose
of implementation, administration and management of Participant’s participation
in the Plan, and the Company and/or any of its subsidiaries may each further
transfer Data to any third parties assisting the Company in the implementation,
administration and management of the Plan. These recipients may be located
throughout the world, including the United States. Participant’s authorizes them
to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing Participant’s
participation in the Plan, including any requisite transfer of such Data as may
be required for the administration of the Plan and/or the subsequent holding of
shares of stock on Participant’s behalf to a broker or other third party with
whom Participant may elect to deposit any shares of stock acquired pursuant to
the Plan. Participant may, at any time, review Data, require any necessary
amendments to it or withdraw the consents herein in writing by contacting the
Company; however, withdrawing consent may affect Participant’s ability to
participate in the Plan.

 

 - 12 - 

 

16. Stock Ownership Guidelines. The Participant agrees as a condition of this
grant that, in the event that the Participant is subject to the Company's Stock
Ownership Guidelines, the Participant shall not sell any shares obtained upon
exercise of the Options unless such sale complies with the Stock Ownership
Guidelines as in effect from time to time.

 

17. Governing Law. This Agreement and the relationship of the parties hereto
shall be governed, construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to conflict of law rules or principles.

 

18. Choice of Venue. Any action or proceeding seeking to enforce any provision
of or based on any right arising out of this Agreement may be brought against
the Participant or the Company only in the courts of the State of Delaware or,
if it has or can acquire jurisdiction, in the United States District Court for
the District of Delaware, and the Participant and the Company consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.

 

19. Entire Agreement. This Agreement contains all the understanding and
agreements between the Participant and the Company regarding the subject matter
hereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

 - 13 - 

 

 

 

Sucampo Duration-Based Stock Option Incentive Award Summary

 

Participant Name: [_____________]

 

Grant Date: [_____________]

 

Exercise Price: $[_____________]

 

TOTAL AWARD:

 

Stock Options: [_____________]

 

DURATION-BASED STOCK OPTIONS GRANT

 

Number of Stock Options Granted: [_____________]

Option Exercise (Grant) Price: $[_____________]

Expiration Date: [_____________]

Vesting Schedule:

 

[_____________]

 

*   Vesting and exercisability are subject to the terms and conditions set forth
above.

 

 

 

 

 

 

 

 - 14 - 

 

 

AWARD ACCEPTANCE

 

This Sucampo Duration-Based Stock Option Incentive Award (“Award”) is not
considered valid unless you accept it on or before [_____________]. At the
bottom of this Award Summary, you can indicate that you either “Accept” or
“Reject” the Award by marking an “x” in the box next to “Accept” below and
accepting your Award or by marking an “x” in the box next to “Reject” below or
by failing to make any such indication by the indicated date, in either of such
cases you will be deemed to have rejected this award. By marking this award with
an “x” you acknowledge having received and read this Award Summary, the Terms
and Conditions document and the Plan under which this Award was granted and you
agree to comply with, and be bound by, the terms and conditions of the Plan,
this Award Summary and the Terms and Conditions document. If you “Reject” this
Award, the Award will be null and void and will NOT become yours. Likewise, if
you do not either “Accept” or “Reject” this Award on or before [_____________],
the Award will be null and void and will NOT become yours.

 

 

     ☐      ☐     ACCEPT   REJECT  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 - 15 - 

 

 

IN WITNESS WHEREOF, the Company has caused Options to be executed by its duly
authorized officer.

 

  Sucampo Pharmaceuticals, Inc.         Dated:  [_____________] By:
[greenleaf_sig.jpg]                           Name:  Peter S. Greenleaf  
Title:  Chief Executive Officer

 

 

 

 

 

 

 

PARTICIPANT’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing Options and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company’s 2006 Stock Incentive Plan, as amended and restated.

 

  PARTICIPANT SIGNATURE:   ____________________________   Address:
___________________     ___________________

 

 

 

 

 

 

 

 

 

 

- 16 -