Document:

Exhibit 10.15

 

VERONA PHARMA PLC
 2017 INCENTIVE AWARD PLAN

 

ARTICLE I.
 PURPOSE

 

The Plan’s purpose is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities.  Capitalized terms used in the Plan are defined in Article XI.

 

ARTICLE II.
 ELIGIBILITY

 

Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.

 

ARTICLE III.
 ADMINISTRATION AND DELEGATION

 

3.1                               Administration.  The Plan is administered by the Administrator.  The Administrator has authority to determine which Service Providers receive Awards, grant Awards, set Award terms and conditions, and designate whether such Awards will cover Ordinary Shares or ADSs, subject to the conditions and limitations in the Plan.  The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable.  The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award as it deems necessary or appropriate to administer the Plan and any Awards.  The Administrator’s determinations under the Plan are in its sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award.

 

3.2                               Appointment of Committees.  To the extent Applicable Laws permit, the Board may delegate any or all of its powers under the Plan to one or more Committees or officers of the Company or any of its Subsidiaries.  The Board may abolish any Committee or re-vest in itself any previously delegated authority at any time.

 

ARTICLE IV.
  SHARES AVAILABLE FOR AWARDS

 

4.1                               Number of Shares.  Subject to adjustment under Article VIII and the terms of this Article IV, Awards may be made under the Plan covering up to the Overall Share Limit.  As of the Plan’s effective date under Section 10.3, the Company will cease granting awards under the Prior Plans; however, Prior Plan Awards will remain subject to the terms of the applicable Prior Plan.  Shares issued under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market, treasury Shares or ADSs.

 

4.2                               Share Recycling.  If all or any part of an Award or Prior Plan Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award or Prior Plan Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award or Prior Plan Award, the

 

 

unused Shares covered by the Award or Prior Plan Award will, as applicable, become or again be available for Award grants under the Plan.  Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award or Prior Plan Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award or Prior Plan Award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for Award grants under the Plan.  The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards or Prior Plan Awards shall not count against the Overall Share Limit.

 

4.3                               Incentive Option Limitations.  Notwithstanding anything to the contrary herein, no more than 5,000,000 Shares may be issued pursuant to the exercise of Incentive Options.

 

4.4                               Substitute Awards.  In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Administrator may grant Awards in substitution for any options or other equity or equity-based awards granted before such merger or consolidation by such entity or its affiliate.  Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan.  Substitute Awards will not count against the Overall Share Limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of substitute Incentive Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Options under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

 

ARTICLE V.
 OPTIONS AND SHARE APPRECIATION RIGHTS

 

5.1                               General.  The Administrator may grant Options or Share Appreciation Rights to Service Providers subject to the limitations in the Plan, including any limitations in the Plan that apply to Incentive Options.  The Administrator will determine the number of Shares covered by each Option and Share Appreciation Right, the exercise price of each Option and Share Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Share Appreciation Right.  A Share Appreciation Right will entitle the Participant (or other person entitled to exercise the Share Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Share Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Share Appreciation Right by the number of Shares with respect to which the Share Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose and payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the Award Agreement.

 

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5.2                               Exercise Price.  The Administrator will establish each Option’s and Share Appreciation Right’s exercise price and specify the exercise price in the Award Agreement.  The exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option or Share Appreciation Right.

 

5.3                               Duration.  Each Option or Share Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that the term of an Option or Share Appreciation Right will not exceed ten years.  Notwithstanding the foregoing and unless determined otherwise by the Company, in the event that on the last business day of the term of an Option or Share Appreciation Right (other than an Incentive Option) (i) the exercise of the Option or Share Appreciation Right is prohibited by Applicable Law, as determined by the Company, or (ii) Shares may not be purchased or sold by the applicable Participant due to any Company insider trading policy (including blackout periods) or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option or Share Appreciation Right shall be extended until the date that is thirty (30) days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the Company; provided, however, in no event shall the extension last beyond the ten year term of the applicable Option or Share Appreciation Right.  Notwithstanding the foregoing, if the Participant, prior to the end of the term of an Option or Share Appreciation Right, violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company or any of its Subsidiaries, the right of the Participant and the Participant’s transferees to exercise any Option or Share Appreciation Right issued to the Participant shall terminate immediately upon such violation, unless the Company otherwise determines.  In addition, if, prior to the end of the term of an Option or Share Appreciation Right, the Participant is given notice by the Company or any of its Subsidiaries of the Participant’s Termination of Service by the Company or any of its Subsidiaries for Cause, and the effective date of such Termination of Service is subsequent to the date of the delivery of such notice, the right of the Participant and the Participant’s transferees to exercise any Option or Share Appreciation Right issued to the Participant 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 service as a Service Provider will not be terminated for Cause as provided in such notice or (ii) the effective date of the Participant’s Termination of Service by the Company or any of its Subsidiaries for Cause (in which case the right of the Participant and the Participant’s transferees to exercise any Option or Share Appreciation Right issued to the Participant will terminate immediately upon the effective date of such Termination of Service).

 

5.4                               Exercise.  Options and Share Appreciation Rights may be exercised by delivering to the Company a written notice of exercise, in a form the Administrator approves (which may be electronic), signed by the person authorized to exercise the Option or Share Appreciation Right, together with, as applicable, payment in full (i) as specified in Section 5.5 for the number of Shares for which the Award is exercised and (ii) as specified in Section 9.5 for any applicable taxes.  Unless the Administrator otherwise determines, an Option or Share Appreciation Right may not be exercised for a fraction of a Share.

 

5.5                               Payment Upon Exercise.  Subject to Section 10.8, any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by:

 

(a)                                 cash, wire transfer of immediately available funds or by check payable to the order of the Company, provided that the Company may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;

 

(b)                                 if there is a public market for Shares at the time of exercise, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to pay the exercise price, or (B) the Participant’s delivery to the Company of

 

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a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;

 

(c)                                  to the extent permitted by the Administrator, delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their Fair Market Value;

 

(d)                                 to the extent permitted by the Administrator, surrendering Shares then issuable upon the Option’s exercise valued at their Fair Market Value on the exercise date;

 

(e)                                  to the extent permitted by the Administrator, delivery of a promissory note or any other property that the Administrator determines is good and valuable consideration; or

 

(f)                                   to the extent permitted by the Company, any combination of the above payment forms approved by the Administrator.

 

ARTICLE VI.
 RESTRICTED SHARES; RESTRICTED SHARE UNITS

 

6.1                               General.  The Administrator may grant Restricted Shares, or the right to purchase Restricted Shares, to any Service Provider, subject to the Company’s right to repurchase all or part of such shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award.  In addition, the Administrator may grant to Service Providers Restricted Share Units, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement.  The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Share and Restricted Share Unit Award, subject to the conditions and limitations contained in the Plan.

 

6.2                               Restricted Shares.

 

(a)                                 Dividends.  Participants holding Restricted Shares will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement.  In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Restricted Shares of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid.

 

(b)                                 Certificates.  The Company may require that the Participant deposit in escrow with the Company (or its designee) any certificates issued in respect of Restricted Shares, together with a stock transfer form endorsed in blank.

 

6.3                               Restricted Share Units.

 

(a)                                 Settlement.  The Administrator may provide that settlement of Restricted Share Units will occur upon or as soon as reasonably practicable after the Restricted Share Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election.

 

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(b)                                 Shareholder Rights. A Participant will have no rights of a shareholder with respect to Shares subject to any Restricted Share Unit unless and until the Shares are delivered in settlement of the Restricted Share Unit.

 

(c)                                  Dividend Equivalents.  If the Administrator provides, a grant of Restricted Share Units may provide a Participant with the right to receive Dividend Equivalents.  Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Restricted Share Units with respect to which the Dividend Equivalents are granted and subject to other terms and conditions as set forth in the Award Agreement.

 

ARTICLE VII.
 OTHER SHARE OR CASH BASED AWARDS

 

Other Share or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards (whether based on specified Performance Criteria or otherwise), in each case subject to any conditions and limitations in the Plan. Such Other Share or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled.  Other Share or Cash Based Awards may be paid in Shares, cash or other property, as the Administrator determines.  Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Share or Cash Based Award, including any purchase price, performance goal (which may be based on the Performance Criteria), transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement.

 

ARTICLE VIII.
 ADJUSTMENTS FOR CHANGES IN SHARES
  AND CERTAIN OTHER EVENTS

 

8.1                               Equity Restructuring.  In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Award’s exercise price or grant price (if applicable), granting new Awards to Participants, and making a cash payment to Participants.  The adjustments provided under this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.

 

8.2                               Corporate Transactions.  In the event of any Equity Restructuring, dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), capitalization, share issue, offer, subdivision, reorganization, merger, consolidation, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Shares or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Shares or other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting principles (any “Corporate Event”), the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time after such change) and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the

 

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Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:

 

(a)                                 To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;

 

(b)                                 To provide that such Award shall vest and, to the extent applicable, be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;

 

(c)                                  To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the equity securities of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;

 

(d)                                 To make adjustments in the number and type of shares (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article IV hereof on the maximum number and kind of shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards;

 

(e)                                  To replace such Award with other rights or property selected by the Administrator; and/or

 

(f)                                   To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable transaction or event.

 

8.3                               Administrative Stand Still.  In the event of any pending Corporate Event or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to sixty days before or after such transaction.

 

8.4                               General.  Except as expressly provided in the Plan or the Administrator’s action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class, issue, rights issue, offer or dissolution, liquidation, merger, or consolidation of the Company or other corporation.  Except as expressly provided with respect to an Equity Restructuring under Section 8.1 above or the Administrator’s action under the Plan, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Award’s grant or exercise price.  The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Company’s right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any Corporate Event or (iii) sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares.  The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.

 

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ARTICLE IX.
 GENERAL PROVISIONS APPLICABLE TO AWARDS

 

9.1                               Transferability.  Except as the Administrator may determine or provide in an Award Agreement or otherwise for Awards other than Incentive Options, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except by will or the laws of descent and distribution, or, subject to the Administrator’s consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant.  References to a Participant, to the extent relevant in the context, will include references to a Participant’s authorized transferee that the Administrator specifically approves.

 

9.2                               Documentation.  Each Award will be evidenced in an Award Agreement, which may be written or electronic, as the Administrator determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.

 

9.3                               Discretion.  Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award.  The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.

 

9.4                               Termination of Status.  The Administrator will determine how the disability, death, retirement, authorized leave of absence or any other change or purported change in a Participant’s Service Provider status affects an Award and the extent to which, and the period during which, the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.

 

9.5                               Withholding.  Each Participant must pay the Company, or make provision satisfactory to the Administrator for payment of, any taxes (which includes any social security contributions or the like) required by law to be withheld or paid by the Company or by an Subsidiary that is the employing entity of the Participant in connection with such Participant’s Awards by the date of the event creating the tax liability.  The Company may deduct an amount sufficient to satisfy such tax obligations based on the minimum statutory withholding rates (or such other rate as may be determined by the Company after considering any accounting consequences or costs) from any payment of any kind otherwise due to a Participant.  Subject to Section 10.8 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations (i) in cash, by wire transfer of immediately available funds, by check made payable to the order of the Company, provided that the Company may limit the use of the foregoing payment forms if one or more of the payment forms below is permitted, (ii) to the extent permitted by the Administrator, in whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding, provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Company, any combination of the foregoing payment forms approved by the Administrator.  If any tax withholding obligation will be satisfied under clause (ii) of the immediately preceding sentence by the Company’s retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participant’s behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participant’s acceptance of

 

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an Award under the Plan will constitute the Participant’s authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence.

 

9.6                               Amendment of Award; Repricing.  The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, changing the exercise or settlement date, and converting an Incentive Option to a Non-Qualified Option.  The Participant’s consent to such action will be required unless (i) the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Award, or (ii) the change is permitted under Article VIII or pursuant to Section 10.6.  Notwithstanding the foregoing or anything in the Plan to the contrary, the Administrator may not, except pursuant to Article VIII, without the approval of the shareholders of the Company, reduce the exercise price per share of outstanding Options or Share Appreciation Rights or cancel outstanding Options or Share Appreciation Rights in exchange for cash, other Awards or Options or Share Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Share Appreciation Rights.

 

9.7                               Conditions on Delivery of Shares.  The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Company’s satisfaction, (ii) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws.  The Company’s inability to obtain authority from any regulatory body having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.

 

9.8                               Acceleration.  The Administrator may at any time provide that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.

 

9.9                               Additional Terms of Incentive Options.  The Administrator may grant Incentive Options only to employees of the Company, any of its present or future parent or subsidiary corporations, as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Options under the Code.  If an Incentive Option is granted to a Greater Than 10% Shareholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s grant date, and the term of the Option will not exceed five years.  All Incentive Options will be subject to and construed consistently with Section 422 of the Code.  By accepting an Incentive Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (i) two years from the grant date of the Option or (ii) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer.  Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code.  Any Incentive Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a fair market value exceeding the $100,000 limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Option.

 

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ARTICLE X.
 MISCELLANEOUS

 

10.1                        No Right to Employment or Other Status.  No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement.

 

10.2                        No Rights as Shareholder; Certificates.  Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a shareholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares.  Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).  The Company may place legends on certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.

 

10.3                        Effective Date and Term of Plan.  Unless earlier terminated by the Board, the Plan will become effective on the day prior to the NASDAQ Listing Date and will remain in effect until the tenth anniversary of the effective date, but Awards previously granted may extend beyond that date in accordance with the Plan.  If the Plan is not approved by the Company’s shareholders, the Plan will not become effective, no Awards will be granted under the Plan and the Prior Plans will continue in full force and effect in accordance with their terms.

 

10.4                        Amendment of Plan.  The Administrator may amend, suspend or terminate the Plan at any time; provided that no amendment, other than an increase to the Overall Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent.  No Awards may be granted under the Plan during any suspension period or after Plan termination.  Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination.  The Board will obtain shareholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.

 

10.5                        Provisions for Foreign Participants.  The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

 

10.6                        Section 409A.  The following provisions only apply to Participants subject to tax in the United States.

 

(a)                                 General.  The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply.  Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participant’s consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date.  The Company makes no representations or warranties as to an Award’s tax treatment under Section 409A or otherwise.  The Company will have no obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under

 

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the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or interest under Section 409A.

 

(b)                                 Separation from Service.  If an Award constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a termination of a Participant’s Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the termination of the Participant’s Service Provider relationship.  For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms means a “separation from service.”

 

(c)                                  Payments to Specified Employees.  Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” required to be made under an Award to a “specified employee” (as defined under Section 409A and as the Administrator determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such “separation from service” (or, if earlier, until the specified employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest).  Any payments of “nonqualified deferred compensation” under such Award payable more than six months following the Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be made.

 

10.7                        Limitations on Liability.  Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary.  The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

 

10.8                        Lock-Up Period.  The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.

 

10.9                        Data Privacy.  As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan.  The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”).  The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to

 

10

 

implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management.  These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country.  By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares.  The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan.  A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10.9 in writing, without cost, by contacting the local human resources representative.  The Company may cancel Participant’s ability to participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 10.9.  For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.

 

10.10                 Severability.  If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.

 

10.11                 Governing Documents.  If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan will not apply.

 

10.12                 Governing Law.  The Plan and all Awards will be governed by and interpreted in accordance with the laws of the United Kingdom, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the United Kingdom.

 

10.13                 Claw-back Provisions.  All Awards (including any proceeds, gains or other economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to any Company claw-back policy, including any claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder) as set forth in such claw-back policy or the Award Agreement.

 

10.14                 Titles and Headings.  The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.

 

10.15                 Conformity to Securities Laws.  Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws.  Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws.  To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.

 

10.16                 Relationship to Other Benefits.  No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare

 

11

 

or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.

 

10.17                 Broker-Assisted Sales. In the event of a broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be paid under the final sentence of Section 9.5: (a) any Shares to be sold through the broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant 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 Company or its designee receives proceeds of such sale that exceed the amount owed, the Company will pay such excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company and its designees are under no obligation to arrange for such sale at any particular price; and (f) in the event the proceeds of such sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company or its designee an amount in cash sufficient to satisfy any remaining portion of the Participant’s obligation.

 

ARTICLE XI.
 DEFINITIONS

 

As used in the Plan, the following words and phrases will have the following meanings:

 

11.1                        “ADSs” means American Depositary Shares, representing Ordinary Shares on deposit with a U.S. banking institution selected by the Company and which are registered pursuant to a Form F-6.

 

11.2                        “Administrator” means the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

 

11.3                        “Applicable Laws” shall mean any applicable law, including without limitation: (a) the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Shares are listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted; and (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether U.S. federal, state, local or foreign, applicable in the United Kingdom, United States or any other relevant jurisdiction.

 

11.4                        “Award” means, individually or collectively, a grant under the Plan of Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units or Other Share or Cash Based Awards.

 

11.5                        “Award Agreement” means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.

 

11.6                        “Board” means the Board of Directors of the Company.

 

11.7                        “Cause” means (i) if a Participant is a party to a written employment or consulting agreement with the Company or any of its Subsidiaries or an Award Agreement in which the term “cause” is defined (a “Relevant Agreement”), “Cause” as defined in the Relevant Agreement, and (ii) if no Relevant Agreement exists, (A) the Administrator’s determination that the Participant failed to substantially perform the Participant’s duties (other than a failure resulting from the Participant’s Disability); (B) the

 

12

 

Administrator’s determination that the Participant failed to carry out, or comply with any lawful and reasonable directive of the Board or the Participant’s immediate supervisor; (C) the occurrence of any act or omission by the Participant that could reasonably be expected to result in (or has resulted in) the Participant’s conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or indictable offense or crime involving moral turpitude; (D) the Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its Subsidiaries or while performing the Participant’s duties and responsibilities for the Company or any of its Subsidiaries; or (E) the Participant’s commission of an act of fraud, embezzlement, misappropriation, misconduct, or breach of fiduciary duty against the Company or any of its Subsidiaries.

 

11.8                        “Change in Control” means and includes each of the following:

 

(i)                                     a Sale; or

 

(ii)                                  a Takeover.

 

The Administrator shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

11.9                        “Code” means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

 

11.10                 “Committee” means one or more committees or subcommittees of the Board, which may include one or more Company directors or executive officers, to the extent Applicable Laws permit.  To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however, a Committee member’s failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.

 

11.11                 “Company” means Verona Pharma plc, registered in England and Wales with company number 05375156, or any successor.

 

11.12                 “Consultant” means any person, including any adviser, engaged by the Company or its parent or Subsidiary to render services to such entity if the consultant or adviser: (i) renders bona fide services to the Company; (ii) renders services not in connection with the offer or sale of securities in a capital-raising transaction and does not directly or indirectly promote or maintain a market for the Company’s securities; and (iii) is a natural person.

 

11.13                 “Control” shall have the meaning given in section 995 (2) of the UK Income Tax Act 2007, unless otherwise specified.

 

11.14                 “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated.  Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.

 

13

 

11.15                 “Director” means a Board member.

 

11.16                 “Disability” means a permanent and total disability under Section 22(e)(3) of the Code, as amended.

 

11.17                 “Dividend Equivalents” means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.

 

11.18                 “Employee” means any employee of the Company or its Subsidiaries.

 

11.19                 “Equity Restructuring” means a nonreciprocal transaction between the Company and its shareholders, such as a share dividend, share split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other Company securities) or the price of Shares (or other Company securities) and causes a change in the per share value of the Shares underlying outstanding Awards.

 

11.20                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

11.21                 “Fair Market Value” means, as of any date, the value of Shares determined as follows: (i) if the Shares are listed on any established stock exchange, its Fair Market Value will be the closing sales price for Shares as quoted on such exchange for the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Shares are not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) without an established market for the Shares, the Administrator will determine the Fair Market Value in its discretion.  Notwithstanding the foregoing, with respect to any Award granted on the pricing date of the Company’s initial public offering, the Fair Market Value shall mean the initial public offering price of a Share as set forth in the Company’s final prospectus relating to its initial public offering filed with the Securities and Exchange Commission.

 

11.22                 “Greater Than 10% Shareholder” means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of equity securities of the Company or its parent or subsidiary corporation, as defined in Section 424(e) and (f) of the Code, respectively.

 

11.23                 “Incentive Option” means an Option intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.

 

11.24                 “NASDAQ Listing Date” means the first date upon which the Shares are listed (or approved for listing) upon notice of issuance on the NASDAQ Global Market.

 

11.25                 “Non-Qualified Option” means an Option not intended or not qualifying as an Incentive Option.

 

11.26                 “Option” means an option to purchase Shares.

 

11.27                 “Ordinary Share” means an ordinary share of £0.05 each in the capital of the Company.

 

11.28                 “Other Share or Cash Based Awards” means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property.

 

14

 

11.29                 “Overall Share Limit” means the sum of (i) 6,333,000 Shares; (ii) any Shares which are subject to Prior Plan Awards which become available for issuance under the Plan pursuant to Article IV and (iii) an annual increase on the first day of each calendar year beginning January 1, 2018 and ending on and including January 1, 2027, equal to the least of (A) 4% of the aggregate number of Shares outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of Shares as is determined by the Board.

 

11.30                 “Participant” means a Service Provider who has been granted an Award.

 

11.31                 “Performance Criteria” mean the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on shareholders’ equity; total shareholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies.  The Committee may provide for exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j) unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of convertible securities to Shares, (m) any business interruption event (n) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results.

 

11.32                 “Plan” means this 2017 Incentive Award Plan.

 

15

 

11.33                 “Prior Plans” means, collectively, the Verona Pharma plc EMI Option Scheme, the Verona Pharma plc Unapproved Share Option Scheme and any prior equity incentive plans of the Company or its predecessor.

 

11.34                 “Prior Plan Award” means an award outstanding under the Prior Plans as of the Plan’s effective date in Section 10.3.

 

11.35                 “Restricted Shares” means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.

 

11.36                 “Restricted Share Unit” means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.

 

11.37                 “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.

 

11.38                 “Sale” shall mean the sale of all or substantially all of the assets of the Company.

 

11.39                 “Section 409A” means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.

 

11.40                 “Securities Act” means the Securities Act of 1933, as amended.

 

11.41                 “Service Provider” means an Employee, Consultant or Director.

 

11.42                 “Share” means an Ordinary Share or the number of ADSs equal to an Ordinary Share.

 

11.43                 “Share Appreciation Right” means a Share Appreciation right granted under Article V.

 

11.44                 “Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

 

11.45                 “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

 

(a)                                 “Takeover” shall mean if any person (or a group of persons acting in concert) (the “Acquiring Person”):

 

(i)                                     obtains Control of the Company as the result of making a general offer to:-

 

(A)                               acquire all of the issued ordinary share capital of the Company, which is made on a condition that, if it is satisfied, the Acquiring Person will have Control of the Company;  or

 

(B)                               acquire all of the shares in the Company which are of the same class as the Shares; or

 

16

 

(ii)                                  obtains Control of the Company  as a result of a compromise or arrangement sanctioned by a court under Section 899 of the UK Companies Act 2006, or sanctioned under any other similar law of another jurisdiction; or

 

(iii)                               becomes bound or entitled under Sections 979 to 985 of the UK Companies Act 2006 (or similar law of another jurisdiction) to acquire shares of the same class as the Shares; or

 

(iv)                              obtains Control of the Company in any other way.

 

11.46                 “Termination of Service” means the date the Participant ceases to be a Service Provider.

 

* * * * *

 

17

 

VERONA PHARMA PLC
 2017 INCENTIVE AWARD PLAN

 

OPTION GRANT NOTICE

 

Capitalized terms not specifically defined in this Option Grant Notice (the “Grant Notice”) have the meanings given to them in the 2017 Incentive Award Plan (as amended from time to time, the “Plan”) of Verona Pharma plc (the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the option described in this Grant Notice (the “Option”), subject to the terms and conditions of the Plan and the Option Agreement attached as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant   Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise   Price per Share:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Shares   Subject to the Option:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Final   Expiration Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting   Commencement Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
[To be specified in individual award agreements]
    
	
 
    	
 
    	
 
    
	
Type of   Option
    	
 
    	
[Incentive Option/Non-Qualified Option]
    

 

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

 

 

	
VERONA PHARMA PLC
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
[Participant Name]
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

Exhibit A

 

OPTION AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I.
 GENERAL

 

1.1                               Grant of Option.  The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the “Grant Date”).

 

1.2                               Incorporation of Terms of Plan.  The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

ARTICLE II.
 PERIOD OF EXERCISABILITY

 

2.1                               Commencement of Exercisability.  The Option will vest and become exercisable according to the vesting schedule in the Grant Notice (the “Vesting Schedule”) except that any fraction of a Share as to which the Option would be vested or exercisable will be accumulated and will vest and become exercisable only when a whole Share has accumulated.  Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, (i) unless the Administrator otherwise determines, the Option will immediately expire and be forfeited as to any portion that is not vested and exercisable as of Participant’s Termination of Service for any reason and (ii) upon a Change in Control, the Option will vest and become exercisable in full immediately prior to such Change in Control, so long as Participant remains continuously a Service Provider from the date hereof through the date of the Change in Control.

 

2.2                               Duration of Exercisability.  The Vesting Schedule is cumulative.  Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires.  The Option will be forfeited immediately upon its expiration.

 

2.3                               Expiration of Option.  The Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:

 

(a)                                 The final expiration date in the Grant Notice;

 

(b)                                 Except as the Administrator may otherwise approve, the expiration of three (3) months from the date of Participant’s Termination of Service, unless Participant’s Termination of Service is for Cause or by reason of Participant’s death or Disability;

 

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

 

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

 

 

ARTICLE III.

EXERCISE OF OPTION

 

3.1                               Person Eligible to Exercise.  During Participant’s lifetime, only Participant may exercise the Option.  After Participant’s death, any exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant’s Designated Beneficiary as provided in the Plan.

 

3.2                               Partial Exercise.  Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.

 

3.3                               Tax Withholding.

 

(a)                                 The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Option as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Option.

 

(b)                                 Participant acknowledges that Participant 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 Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.

 

ARTICLE IV.
 OTHER PROVISIONS

 

4.1                               Adjustments.  Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.2                               Notices.  Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number.  Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the person entitled to exercise the Option) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files.  By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party.  Any notice will be deemed duly given when actually received, when sent by email, 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, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

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

 

4.4                               Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

 

A-2

 

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

 

4.6                               Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will 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) that are requirements for the application of such exemptive rule.  To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.7                               Entire Agreement.  The Plan, 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 Participant with respect to the subject matter hereof.

 

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

 

4.9                               Limitation on Participant’s Rights.  Participation in the Plan 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 may not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant will 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 Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.

 

4.10                        Not a Contract of Employment.  Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant 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 Participant.

 

4.11                        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 will be deemed an original and all of which together will constitute one instrument.

 

4.12                        Incentive Options.  If the Option is designated as an Incentive Option:

 

(a)                                 Participant acknowledges that to the extent the aggregate fair market value of shares (determined as of the time the option with respect to the shares is granted) with respect to which options intended to qualify as “incentive stock options” under Section 422 of the Code, including the Option, are exercisable for the first time by Participant during any calendar year exceeds $100,000 or if for any other reason such options do not qualify or cease to qualify for treatment as “incentive stock options” under Section 422 of the Code, such options (including the Option) will be treated as non-qualified options.  Participant further acknowledges that the rule set forth in the preceding sentence will be applied by taking the Option and other options into account in the order in which they were granted, as determined under

 

A-3

 

Section 422(d) of the Code.  Participant also acknowledges that if the Option is exercised more than three (3) months after Participant’s Termination of Service, other than by reason of death or disability, the Option will be taxed as a Non-Qualified Option.

 

(b)                                 Participant will give prompt written notice to the Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or other transfer is made (a) within two (2) years from the Grant Date or (b) within one (1) year after the transfer of such Shares to Participant.  Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

 

* * * * *

 

A-4

 

VERONA PHARMA PLC
 2017 INCENTIVE AWARD PLAN

 

RESTRICTED SHARE GRANT NOTICE

 

Capitalized terms not specifically defined in this Restricted Share Grant Notice (the “Grant Notice”) have the meanings given to them in the 2017 Incentive Award Plan (as amended from time to time, the “Plan”) of Verona Pharma plc (the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the Restricted Shares described in this Grant Notice (the “Restricted Shares”), subject to the terms and conditions of the Plan and the Restricted Share Agreement attached as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Restricted Shares:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Commencement Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Schedule:
    	
 
    	
[To be specified in individual award agreements]
    

 

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

 

 

	
VERONA PHARMA PLC
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
[Participant Name]
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

Exhibit A

 

RESTRICTED SHARE AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I.
 GENERAL

 

1.1                               Issuance of Restricted Shares.  The Company will issue the Restricted Shares to the Participant effective as of the grant date set forth in the Grant Notice and will cause (a) a certificate or certificates representing the Restricted Shares to be registered in Participant’s name or (b) the Restricted Shares to be held in book-entry form.  If a certificate representing the Restricted Shares is issued, the certificate will be delivered to, and held in accordance with this Agreement by, the Company or its authorized representatives and will bear the restrictive legends required by this Agreement.  If the Restricted Shares are held in book-entry form, then the book-entry will indicate that the Restricted Shares are subject to the restrictions of this Agreement.

 

1.2                               Incorporation of Terms of Plan.  The Restricted Shares are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

ARTICLE II.
 VESTING, FORFEITURE AND ESCROW

 

2.1                               Vesting.  The Restricted Shares will become vested Shares (the “Vested Shares”) according to the vesting schedule in the Grant Notice except that any fraction of a Share that would otherwise become a Vested Share will be accumulated and will become a Vested Share only when a whole Vested Share has accumulated.

 

2.2                               Forfeiture.  In the event of Participant’s Termination of Service for any reason, Participant will immediately and automatically forfeit to the Company any Shares that are not Vested Shares (the “Unvested Shares”) at the time of Participant’s Termination of Service, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company.  Upon forfeiture of Unvested Shares, the Company will become the legal and beneficial owner of the Unvested Shares and all related interests and Participant will have no further rights with respect to the Unvested Shares.

 

2.3                               Escrow.

 

(a)                                 Unvested Shares will be held by the Company or its authorized representatives until (i) they are forfeited, (ii) they become Vested Shares or (iii) this Agreement is no longer in effect.  By accepting this Award, Participant appoints the Company and its authorized representatives as Participant’s attorney(s)-in-fact to take all actions necessary to effect any transfer of forfeited Unvested Shares (and Retained Distributions (as defined below), if any, paid on such forfeited Unvested Shares) to the Company as may be required pursuant to the Plan or this Agreement and to execute such representations or other documents or assurances as the Company or such representatives deem necessary or advisable in connection with any such transfer.  The Company, or its authorized representative, will not be liable for any good faith act or omission with respect to the holding in escrow or transfer of the Restricted Shares.

 

(b)                                 All cash dividends and other distributions made or declared with respect to Unvested Shares (“Retained Distributions”) will be held by the Company until the time (if ever) when the

 

 

Unvested Shares to which such Retained Distributions relate become Vested Shares.  The Company will establish a separate Retained Distribution bookkeeping account (“Retained Distribution Account”) for each Unvested Share with respect to which Retained Distributions have been made or declared in cash and credit the Retained Distribution Account (without interest) on the date of payment with the amount of such cash made or declared with respect to the Unvested Share.  Retained Distributions (including any Retained Distribution Account balance) will immediately and automatically be forfeited upon forfeiture of the Unvested Share with respect to which the Retained Distributions were paid or declared.

 

(c)                                  As soon as reasonably practicable following the date on which an Unvested Share becomes a Vested Share, the Company will (i) cause the certificate (or a new certificate without the legend required by this Agreement, if Participant so requests) representing the Share to be delivered to Participant or, if the Share is held in book-entry form, cause the notations indicating the Share is subject to the restrictions of this Agreement to be removed and (ii) pay to Participant the Retained Distributions relating to the Share.

 

2.4                               Rights as Shareholder.  Except as otherwise provided in this Agreement or the Plan, upon issuance of the Restricted Shares by the Company, Participant will have all the rights of a shareholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and to receive dividends or other distributions paid or made with respect to the Restricted Shares.

 

ARTICLE III.
 TAXATION AND TAX WITHHOLDING

 

3.1                               Representation.  Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of the Restricted Shares and the transactions contemplated by the Grant Notice and this Agreement.  Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

 

3.2                               Section 83(b) Election.  If Participant makes an election under Section 83(b) of the Code with respect to the Restricted Shares, Participant will deliver a copy of the election to the Company promptly after filing the election with the Internal Revenue Service.

 

3.3                               Tax Withholding.

 

(a)                                 The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Restricted Shares as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise deliverable under the Award.

 

(b)                                 Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Restricted Shares, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Restricted Shares.  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 payment of the Restricted Shares or the subsequent sale of the Restricted Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure this Award to reduce or eliminate Participant’s tax liability.

 

A-2

 

ARTICLE IV.
 RESTRICTIVE LEGENDS AND TRANSFERABILITY

 

4.1                               Legends.  Any certificate representing a Restricted Share will bear the following legend until the Restricted Share becomes a Vested Share:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED SHARE AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

4.2                               Transferability.  The Restricted Shares and any Retained Distributions are subject to the restrictions on transfer in the Plan and may not be sold, assigned or transferred in any manner unless and until they become Vested Shares.  Any attempted transfer or disposition of Unvested Shares or related Retained Distributions prior to the time the Unvested Shares become Vested Shares will be null and void.  The Company will not be required to (a) transfer on its books any Restricted Share that has been sold or otherwise transferred in violation of this Agreement or (b)  treat as owner of such Restricted Share or accord the right to vote or pay dividends to any purchaser or other transferee to whom such Restricted Share has been so transferred.  The Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, or make appropriate notations to the same effect in its records.

 

ARTICLE V.
 OTHER PROVISIONS

 

5.1                               Adjustments.  Participant acknowledges that the Restricted Shares are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

5.2                               Notices.  Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number.  Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files.  By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party.  Any notice will be deemed duly given when actually received, when sent by email, 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, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

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

 

5.4                               Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

 

5.5                               Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth in this Agreement or the Plan, this

 

A-3

 

Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

5.6                               Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Restricted Shares will 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) that are requirements for the application of such exemptive rule.  To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

5.7                               Entire Agreement.  The Plan, 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 Participant with respect to the subject matter hereof.

 

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

 

5.9                               Limitation on Participant’s Rights.  Participation in the Plan 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 may not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant will 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 Award.

 

5.10                        Not a Contract of Employment.  Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant 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 Participant.

 

5.11                        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 will be deemed an original and all of which together will constitute one instrument.

 

* * * * *

 

A-4

 

VERONA PHARMA PLC
 2017 INCENTIVE AWARD PLAN

 

PERFORMANCE RESTRICTED SHARE UNIT GRANT NOTICE

 

Capitalized terms not specifically defined in this Performance Restricted Share Unit Grant Notice (the “Grant Notice”) have the meanings given to them in the 2017 Incentive Award Plan (as amended from time to time, the “Plan”) of Verona Pharma plc (the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the Performance Restricted Share Units described in this Grant Notice (the “PRSUs”), subject to the terms and conditions of the Plan and the Performance Restricted Share Unit Agreement attached as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of PRSUs:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Commencement Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Schedule:
    	
 
    	
[To be specified in individual award agreements]
    

 

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

 

 

	
VERONA   PHARMA PLC
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
[Participant Name]
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

Exhibit A

 

PERFORMANCE RESTRICTED SHARE UNIT AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I.
 GENERAL

 

1.1                               Award of PRSUs and Dividend Equivalents.

 

(a)                                 The Company has granted the PRSUs to Participant effective as of the grant date set forth in the Grant Notice (the “Grant Date”).  Each PRSU represents the right to receive one Share or, at the option of the Company, an amount of cash, in either case, as set forth in this Agreement.  Participant will have no right to the distribution of any Shares or payment of any cash until the time (if ever) the PRSUs have vested.

 

(b)                                 The Company hereby grants to Participant, with respect to each PRSU, a Dividend Equivalent for ordinary cash dividends paid to substantially all holders of outstanding Shares with a record date after the Grant Date and prior to the date the applicable PRSU is settled, forfeited or otherwise expires.  Each Dividend Equivalent entitles Participant to receive the equivalent value of any such ordinary cash dividends paid on a single Share.  The Company will establish a separate Dividend Equivalent bookkeeping account (a “Dividend Equivalent Account”) for each Dividend Equivalent and credit the Dividend Equivalent Account (without interest) on the applicable dividend payment date with the amount of any such cash paid.

 

1.2                               Incorporation of Terms of Plan.  The PRSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

1.3                               Unsecured Promise.  The PRSUs and Dividend Equivalents will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

 

ARTICLE II.
 VESTING; FORFEITURE AND SETTLEMENT

 

2.1                               Vesting; Forfeiture.  The PRSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an PRSU that would otherwise be vested will be accumulated and will vest only when a whole PRSU has accumulated.  In the event of Participant’s Termination of Service for any reason, all unvested PRSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company.  Dividend Equivalents (including any Dividend Equivalent Account balance) will vest or be forfeited, as applicable, upon the vesting or forfeiture of the PRSU with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates.

 

2.2                               Settlement.

 

(a)                                 PRSUs and Dividend Equivalents (including any Dividend Equivalent Account balance) will be paid in Shares or cash at the Company’s option as soon as administratively practicable after the vesting of the applicable PRSU, but in no event more than sixty (60) days after the PRSU’s vesting date.  Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the

 

 

Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation.

 

(b)                                 If an PRSU is paid in cash, the amount of cash paid with respect to the PRSU will equal the Fair Market Value of a Share on the day immediately preceding the payment date.  If a Dividend Equivalent is paid in Shares, the number of Shares paid with respect to the Dividend Equivalent will equal the quotient, rounded down to the nearest whole Share, of the Dividend Equivalent Account balance divided by the Fair Market Value of a Share on the day immediately preceding the payment date.

 

ARTICLE III.
 TAXATION AND TAX WITHHOLDING

 

3.1                               Representation.  Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this Award and the transactions contemplated by the Grant Notice and this Agreement.  Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

 

3.2                               Tax Withholding.

 

(a)                                 The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the PRSUs or Dividend Equivalents as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Award.

 

(b)                                 Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the PRSUs and the Dividend Equivalents, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the PRSUs or Dividend Equivalents.  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 payment of the PRSUs or the Dividend Equivalents or the subsequent sale of Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure the PRSUs or Dividend Equivalents to reduce or eliminate Participant’s tax liability.

 

ARTICLE IV.
 OTHER PROVISIONS

 

4.1                               Adjustments.  Participant acknowledges that the PRSUs, the Shares subject to the PRSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.2                               Notices.  Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number.  Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files.  By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party.  Any notice will be deemed duly given when actually received, when sent by email, 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, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

A-2

 

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

 

4.4                               Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

 

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

 

4.6                               Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement, the PRSUs and the Dividend Equivalents will 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) that are requirements for the application of such exemptive rule.  To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.7                               Entire Agreement.  The Plan, 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 Participant with respect to the subject matter hereof.

 

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

 

4.9                               Limitation on Participant’s Rights.  Participation in the Plan 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 may not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant will 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 PRSUs and Dividend Equivalents, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the PRSUs and Dividend Equivalents, as and when settled pursuant to the terms of this Agreement.

 

4.10                        Not a Contract of Employment.  Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant 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 Participant.

 

4.11                        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 will be deemed an original and all of which together will constitute one instrument.

 

* * * * *

 

A-3

 

VERONA PHARMA PLC
 2017 INCENTIVE AWARD PLAN

 

RESTRICTED SHARE UNIT GRANT NOTICE

 

Capitalized terms not specifically defined in this Restricted Share Unit Grant Notice (the “Grant Notice”) have the meanings given to them in the 2017 Incentive Award Plan (as amended from time to time, the “Plan”) of Verona Pharma plc (the “Company”).

 

The Company has granted to the participant listed below (“Participant”) the Restricted Share Units described in this Grant Notice (the “RSUs”), subject to the terms and conditions of the Plan and the Restricted Share Unit Agreement attached as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of RSUs:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Commencement Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Schedule:
    	
 
    	
[To be specified in individual award agreements]
    

 

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

 

 

	
VERONA   PHARMA PLC
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
[Participant Name]
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

Exhibit A

 

RESTRICTED SHARE UNIT AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I.
 GENERAL

 

1.1                               Award of RSUs and Dividend Equivalents.

 

(a)                                 The Company has granted the RSUs to Participant effective as of the grant date set forth in the Grant Notice (the “Grant Date”).  Each RSU represents the right to receive one Share or, at the option of the Company, an amount of cash, in either case, as set forth in this Agreement.  Participant will have no right to the distribution of any Shares or payment of any cash until the time (if ever) the RSUs have vested.

 

(b)                                 The Company hereby grants to Participant, with respect to each RSU, a Dividend Equivalent for ordinary cash dividends paid to substantially all holders of outstanding Shares with a record date after the Grant Date and prior to the date the applicable RSU is settled, forfeited or otherwise expires.  Each Dividend Equivalent entitles Participant to receive the equivalent value of any such ordinary cash dividends paid on a single Share.  The Company will establish a separate Dividend Equivalent bookkeeping account (a “Dividend Equivalent Account”) for each Dividend Equivalent and credit the Dividend Equivalent Account (without interest) on the applicable dividend payment date with the amount of any such cash paid.

 

1.2                               Incorporation of Terms of Plan.  The RSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

1.3                               Unsecured Promise.  The RSUs and Dividend Equivalents will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

 

ARTICLE II.
 VESTING; FORFEITURE AND SETTLEMENT

 

2.1                               Vesting; Forfeiture.  The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated.  In the event of Participant’s Termination of Service for any reason, all unvested RSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company.  Dividend Equivalents (including any Dividend Equivalent Account balance) will vest or be forfeited, as applicable, upon the vesting or forfeiture of the RSU with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates.

 

2.2                               Settlement.

 

(a)                                 RSUs and Dividend Equivalents (including any Dividend Equivalent Account balance) will be paid in Shares or cash at the Company’s option as soon as administratively practicable after the vesting of the applicable RSU, but in no event more than sixty (60) days after the RSU’s vesting date.  Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the

 

 

Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation.

 

(b)                                 If an RSU is paid in cash, the amount of cash paid with respect to the RSU will equal the Fair Market Value of a Share on the day immediately preceding the payment date.  If a Dividend Equivalent is paid in Shares, the number of Shares paid with respect to the Dividend Equivalent will equal the quotient, rounded down to the nearest whole Share, of the Dividend Equivalent Account balance divided by the Fair Market Value of a Share on the day immediately preceding the payment date.

 

ARTICLE III.
 TAXATION AND TAX WITHHOLDING

 

3.1                               Representation.  Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this Award and the transactions contemplated by the Grant Notice and this Agreement.  Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

 

3.2                               Tax Withholding.

 

(a)                                 The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the RSUs or Dividend Equivalents as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Award.

 

(b)                                 Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs and the Dividend Equivalents, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the RSUs or Dividend Equivalents.  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 payment of the RSUs or the Dividend Equivalents or the subsequent sale of Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure the RSUs or Dividend Equivalents to reduce or eliminate Participant’s tax liability.

 

ARTICLE IV.
 OTHER PROVISIONS

 

4.1                               Adjustments.  Participant acknowledges that the RSUs, the Shares subject to the RSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.2                               Notices.  Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number.  Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files.  By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party.  Any notice will be deemed duly given when actually received, when sent by email, 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, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

A-2

 

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

 

4.4                               Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

 

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

 

4.6                               Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement, the RSUs and the Dividend Equivalents will 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) that are requirements for the application of such exemptive rule.  To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.7                               Entire Agreement.  The Plan, 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 Participant with respect to the subject matter hereof.

 

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

 

4.9                               Limitation on Participant’s Rights.  Participation in the Plan 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 may not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant will 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 RSUs and Dividend Equivalents, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs and Dividend Equivalents, as and when settled pursuant to the terms of this Agreement.

 

4.10                        Not a Contract of Employment.  Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant 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 Participant.

 

4.11                        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 will be deemed an original and all of which together will constitute one instrument.

 

* * * * *

 

A-3Exhibit 10.16

 

Dated 27th March 2017

 

VERONA PHARMA PLC

 

- and -

 

RICHARD HENNINGS

 

 

EMPLOYMENT AGREEMENT

 

 

 

INDEX

 

	
1
    	
DEFINITIONS
    	
3
    
	
2
    	
APPOINTMENT
    	
4
    
	
3
    	
PERIOD OF APPOINTMENT
    	
4
    
	
4
    	
DUTIES OF EXECUTIVE
    	
4
    
	
5
    	
COMPANY POLICIES
    	
5
    
	
6
    	
INTELLECTUAL PROPERTY
    	
5
    
	
7
    	
CONFIDENTIALITY
    	
6
    
	
8
    	
DELIVERY UP OF THE   COMPANY’S PROPERTY
    	
7
    
	
9
    	
REMUNERATION AND   DEDUCTIONS
    	
7
    
	
10
    	
EXPENSES
    	
7
    
	
11
    	
BENEFITS
    	
8
    
	
12
    	
BONUS
    	
8
    
	
13
    	
SHARE SCHEMES
    	
8
    
	
14
    	
CHANGE OF CONTROL
    	
9
    
	
15
    	
WORKING HOURS AND   HOLIDAYS
    	
9
    
	
16
    	
ILL-HEALTH OR INJURY
    	
9
    
	
17
    	
TERMINATION OF   EMPLOYMENT
    	
10
    
	
18
    	
PAYMENT IN LIEU AND   GARDEN LEAVE
    	
11
    
	
19
    	
POST-TERMINATION   RESTRICTIONS
    	
12
    
	
20
    	
EXCISE TAX
    	
13
    
	
21
    	
TAX EQUALISATION
    	
14
    
	
22
    	
DATA PROTECTION
    	
14
    
	
23
    	
STATEMENT OF TERMS OF   EMPLOYMENT
    	
14
    
	
24
    	
THIRD PARTIES
    	
15
    
	
25
    	
NOTICES
    	
15
    
	
26
    	
INTERPRETATION
    	
15
    
	
27
    	
GOVERNING LAW AND   JURISDICTION
    	
15
    

 

2

 

Employment Agreement

 

THIS AGREEMENT is made on 27th March 2017

 

BETWEEN:

 

(1)                                 VERONA PHARMA PLC, with its principal office at 3 More London Riverside, London SE1 2RE (the “Company”); and

 

(2)                                 RICHARD HENNINGS of 2 Albury Heights, 8 Albury Road, Guildford, Surrey, GU1 2BT, UK (the “Executive”).

 

IT IS AGREED as follows:

 

1                                         DEFINITIONS

 

1.1                               In this Agreement, unless the context otherwise expressly requires, the following expressions shall have the following meanings:

 

“Agreement” means this Agreement;

 

“Board” means the board of directors of the Company or any duly authorised committee of the Board;

 

“CEO” means the Chief Executive Officer of the Company;

 

“Change of Control Event” means:

 

(a)                                 a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in the Company to give it or them the ability and that ability is successfully exercised, in a general meeting, to replace all or a majority of the Board;

 

(b)                                 in relation to a takeover bid in respect of shares in the Company, during the “Bid Period” as defined the Companies Act provided that where a takeover bid is publicly announced prior to the service of a bidder’s statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement; and

 

(c)                                  on an application under the Companies Act if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.

 

“Commencement Date” means 27 March 2017;

 

“Companies Act” means the Companies Act 1985;

 

“Company” means Verona Pharma plc, a company incorporated under the laws of England and Wales with registered number 05375156;

 

“Employment” means the employment established by this Agreement;

 

“Group” means the Group Companies collectively;

 

“Group Company” means the Company, and any company which is from time to time a subsidiary of the Company, the holding company of the Company or a subsidiary of such holding company;

 

“holding company” and “subsidiary” shall have the respective meanings ascribed to such expressions by section 736 of the Companies Act 1985;

 

“Holiday Year” means the period of twelve consecutive calendar months commencing on 1 January in each year; and

 

3

 

“Intellectual Property Rights” means rights in ideas, know how, confidential information, inventions, discoveries, biological and chemical formulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data, products, patents, designs, trademarks, database right or copyright work or any right to prevent reproduction whether or not any of these is registered and including applications for any such right, matter or thing or registration thereof and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world.

 

2                                         APPOINTMENT

 

2.1                               The Company appoints the Executive and the Executive agrees to serve the Company as Commercial Director, or in such other capacity as the Company may reasonably require (such other appointment not to be of a lower status than the Executive’s appointment under this Agreement).

 

2.2                               The Executive hereby warrants to the Company that he will not be in breach of any former terms of employment, whether express or implied, or of any other obligation, arrangement, order or contract binding on the Executive, by reason of his entering into this Agreement.

 

2.3                               The Executive hereby warrants that he knows of no circumstances which may result in proceedings being brought against him by the Financial Services Authority, under the provisions of the Financial Services and Markets Act 2000 (“FSMA”) or any similar regulatory authority, whether in the UK or otherwise and that no such proceedings have been threatened or commenced against him.

 

3                                         PERIOD OF APPOINTMENT

 

3.1                               The Employment shall begin on the Commencement Date and, subject to Clause 17, shall continue until it is terminated by either party giving to the other not less than six months’ written notice.

 

4                                         DUTIES OF EXECUTIVE

 

4.1                               The Executive shall be Commercial Director of the Company and, subject to the directions of the CEO, or such other person nominated by the CEO as the Executive’s manager, shall carry out such duties in relation to the Company as are consistent with the Executive’s position and as may from time to time be assigned to the Executive by the CEO or anyone else authorised by the CEO.  The Executive shall, at the request of the CEO or his nominee, and without additional remuneration, act as an officer or employee of any Group Company.

 

4.2                               The Executive shall faithfully and diligently serve the Company as Commercial Director and shall act at all times in the best interests of the Company.  The Executive shall perform diligently such duties and exercise such powers consistent with his employment under this Agreement as may from time to time be assigned to or vested in him and, in his capacity as Commercial Director, shall obey the reasonable and lawful directions of the CEO or his nominee.

 

4.3                               The Executive shall not, during the course of the Employment, whether alone or jointly with another and whether directly or indirectly, carry on, or be engaged or concerned in, or (except as the owner for investment of securities dealt in on a recognised stock exchange and not exceeding 3% in nominal value of the issued securities of any class or otherwise as approved in writing by the Company from time to time) be interested in, any other business which competes with the business of the Company or the Group.

 

4.4                               The Executive shall at all times keep the CEO or his nominee, promptly and fully informed (in writing if so requested) of his conduct of the business or affairs of the Company or the Group and provide such explanations as the CEO may require in connection therewith.

 

4.5                               The Executive shall comply with (a) every rule of law; (b) every regulation of the London Stock Exchange or of the Alternative Investment Market or any other Recognised Investment Exchange as defined in the FSMA and including the NASDAQ Stock Market; (c) every rule or regulation of any competent regulatory authority; and (d) every regulation of the Company for the time 

 

4

 

being in force in relation to dealings in shares or other securities of the Company or any other member of the Group.

 

4.6                               The Executive’s initial place of employment shall be the principal office of the Company stated in this Agreement. The Executive agrees that the Company may change the Executive’s place of work to anywhere in the United Kingdom, provided that, if this requires the Executive to relocate, reasonable relocation expenses are paid by the Company.  In addition, the Executive will be required to travel and work on the business of the Company both inside and outside the United Kingdom.

 

5                             COMPANY POLICIES

 

5.1                               The Executive shall comply with all Company policies, rules, systems and procedures as shall be in force from time to time.

 

6                                         INTELLECTUAL PROPERTY

 

6.1                               All Intellectual Property Rights devised, developed or created by the Executive during the period of his employment with the Company or any Group Company and relating to the business of the Company shall belong to, and be the absolute property of the Company or such Group Company as the Company may nominate. To the extent that such Intellectual Property Rights are not otherwise vested in the Company, the Executive hereby assigns the same to the Company, together with all related past and future rights to action.

 

6.2                               It shall be part of the normal duties of the Executive to consider in what manner and by what new methods or devices, products, services, processes, equipment or systems of the Company and each Group Company might be improved, and promptly to give to the CEO, or such person nominated by the CEO, full details of any invention, discovery, formula, technique, design, improvement or other matter or work whatsoever in relation thereto which the Executive may from time to time make or discover during the course of the Employment, and to further the interests of the Company in relation to the same.

 

6.3                               The Executive shall at the request and cost of the Company do all things necessary or desirable and execute all and any documents required to give the Company, or such other member of the Group as the Company may nominate, title to the Intellectual Property Rights vested or assigned under Clause 6.1.  The obligation contained in this Clause 6.3 shall continue to apply after the termination of the Executive’s employment with the Company without limit in point of time.

 

6.4                               The Company may edit, copy, add to, take from, adapt, alter and translate the product of the Executive’s services in exercising the rights vested or assigned under Clause 6.1.

 

6.5                               To the full extent permitted by law, the Executive irrevocably and unconditionally waives any moral rights the Executive may otherwise have under sections 77 to 85 inclusive of the Copyright Designs and Patents Act 1988 and any equivalent provisions of law anywhere in the world, in relation to the rights referred to in Clause 6.1.

 

6.6                               The Executive must not knowingly do or omit to do anything which will or may have the result of preventing the Company from enjoying the full benefits of ownership of the Intellectual Property Rights vested or assigned under Clause 6.1.

 

6.7                               The Executive must not at any time make use of the Company’s property or documents or materials in which the Company owns the Intellectual Property Rights for any purpose which has not been authorised by the Company.

 

6.8                               Each of the provisions of this Clause 6 is distinct and severable from the others and if at any time one or more of such provisions is or becomes invalid, unlawful or unenforceable (whether wholly or to any extent), the validity, lawfulness and enforceability of the remaining provisions (or the same provision to any other extent) of this Clause 6 shall not in any way be affected or impaired.

 

5

 

7                                         CONFIDENTIALITY

 

7.1                               During the course of the Employment, the Executive will have access to and become aware of information which is confidential to the Company.  Without prejudice to his common law duties, the Executive undertakes that he will not, save in the proper performance of his duties, make use of, or  disclose to any person, (including for the avoidance of doubt any competitors of the Company), any of the trade secrets or other confidential information of or relating to the Company, or any user of the Company’s services or any company, organisation or business with which the Company is involved in any kind of business venture or partnership, or any other information concerning the business of the Company which he may have received or obtained in confidence while in the service of the Company. The Executive will use his best endeavours to prevent the unauthorised publication or disclosure of any such trade secrets or confidential information.

 

7.2                               This restriction shall continue to apply after the termination of the Executive’s employment without limit in point of time but, both during the Executive’s employment and after its termination, shall cease to apply to information ordered to be disclosed by a Court or Tribunal of competent jurisdiction or otherwise required to be disclosed by law or to information which becomes available to the public generally (other than by reason of the Executive breaching this Clause 7). Nothing in this Clause 7 will prevent the Executive making a “protected disclosure” within the meaning of the Public Interest Disclosure Act 1998.

 

7.3                               For the purposes of this Agreement confidential information shall include, but shall not be limited to:

 

(a)                                 the Company’s corporate, business development and marketing strategy and plans;

 

(b)                                 budgets, management accounts, bank account details and other confidential financial data of the Company;

 

(c)                                  know-how and products being developed by the Company, including inventions and discoveries, biological and chemical formulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data;

 

(d)                                 reports, confidential aspects of the Company’s computer technology and systems, confidential algorithms developed or used by the Company, confidential information relating to proprietary computer hardware or software (including updates) not generally known to the public;

 

(e)                                  confidential methods and processes, information relating to the running of the Company’s business which is not in the public domain, including details of salaries, bonuses, commissions and other employment terms applicable within the Company;

 

(f)                                   the names, addresses and contact details of any existing or prospective customers, suppliers or business partners of the Company and their requirements for any of the Company’s products or services.  Without prejudice to the foregoing, this includes personal information provided to the Company by visitors to and users of any of its websites;

 

(g)                                  the terms on which the Company does business with any existing or prospective customers, suppliers or business partners of the Company and the terms of any partnership, joint venture or other form of commercial co-operation or agreement the Company enters into with any third party;

 

(h)                                 software and technical information necessary for the development, maintenance or operation of any of the Company’s websites and the source code of each website; and

 

(i)                                     any other information which the Company is bound by an obligation of confidence owed to a third party, in particular the content of discussions or communications with any prospective customers, suppliers or business partners.

 

7.4                               In this Clause 7, any reference to “Company” includes any “Group Company” as defined in Clause 1.1 and the Executive’s undertaking to the Company in Clause 7.1 is given to the Company for itself and as trustee for each Group Company.

 

6

 

7.5                               The provisions of this Clause 7 shall be without prejudice to the Executive’s duties at common law.

 

8                                         DELIVERY UP OF THE COMPANY’S PROPERTY

 

8.1                               The Executive shall not, except in the proper performance of his duties, or with the Company’s permission, remove any property belonging or relating to the Company or any Group Company from the Company’s or Group Company’s premises, or make any copies of documents or records relating to the Company’s or any Group Company’s affairs.

 

8.2                               Upon the Company’s request at any time, and in any event on the termination of the Employment, the Executive shall immediately deliver up to the Company or its authorised representative, any plans, keys, mobile telephone, security passes, credit cards, equipment, documents, records, papers, computer disks, tapes or other computer hardware or software (together with all copies of the same), and all property of whatever nature in the Executive’s possession or control which belongs to the Company or any other Group Company or relates to its or their business affairs.  The Executive shall, at the Company’s request, provide the Company with a written statement that he has complied with this obligation.

 

8.3                               If the Executive has any information relating to the Company or the Group or work he has carried out for the Company or any Group Company which is stored on a computer or laptop computer, whether or not the computer or laptop computer is owned by the Company or a Group Company, the Company shall be entitled to download the information and/or supervise its deletion from the computer or laptop concerned.

 

9                                         REMUNERATION AND DEDUCTIONS

 

9.1                               The Executive shall receive during the Employment a salary at the rate of £155,000 per annum (or such higher rate as may be agreed in writing). The Company shall review the Executive’s salary within a reasonable time after, and with effect from, 1 January 2018 and thereafter annually with a change in any year effective from 1 January of that year. Such undertaking of a salary review does not confer a contractual right (whether express or implied) to any increase in salary, and an increase in salary one year will not guarantee an increase in salary in any subsequent year or years.

 

9.2                               The Executive’s salary will accrue on a day-to-day basis payable by equal monthly payments in arrears no later than the last day of each month. Such salary shall include any sums receivable as director’s fees or other remunerations from any Group Company.

 

9.3                               Payment of salary to the Executive may be made either by the Company or by another Group Company and, if by more than one company, in such proportion as the Board may from time to time decide.

 

9.4                               At any time during the Employment, or, in any event, on the termination thereof howsoever arising, the Company shall be entitled to deduct from the Executive’s remuneration any monies due to the Company from the Executive, including, but not limited to, any outstanding loans, advances, the cost of repairing any damage or loss to the Company’s property caused by the negligence of the Executive (and of recovering the same), excess holiday pay and any other monies owed by the Executive to the Company.

 

10                                  EXPENSES

 

The Company shall refund the Executive all reasonable expenses wholly and exclusively incurred by him in the proper performance of the Company or the Group’s business provided that the Executive produces to the Company such evidence of actual payment as the Company reasonably requires.  Any credit card or similar facility supplied to the Executive by the Company shall be used solely for expenses incurred by him in the course of the Employment.

 

7

 

11                                  BENEFITS

 

11.1                        The Company shall, if so requested by the Executive during the Employment, provide membership of a private medical insurance scheme for the Executive and his spouse. If the Executive is not accepted at standard rates of premium, the Executive shall be responsible for any excess premium.

 

11.2                        The Company shall provide the Executive access to a workplace pension scheme and make contributions in accordance with the Company’s policy from time to time, which at the date of this agreement includes an undertaking by the Company to match the Executive’s pension contributions to such pension scheme during the Employment up to a maximum Company contribution rate of 6% of the Executive’s salary.

 

11.3                        The Company shall maintain for the Executive Directors’ and Officers’ insurance in respect of those liabilities which he may incur as a director or officer of the Company or any other Group Company for which such insurance is normally available to the Company in respect of its directors and officers.

 

12                                  BONUS

 

12.1                        The Executive shall be entitled to receive a discretionary bonus of up to 35% of the Executive’s salary under Clause 9.1, dependent on performance objectives to be agreed by the Company and the Executive.

 

12.2                        Any bonus scheme operated by the Company will not constitute a contractual term and bonus payments (if any) will be paid at the absolute discretion of the Company. The Executive shall not be eligible to be considered for a bonus if the Employment of the Executive is terminated under Clause 17.2(b). In addition, as the bonus is paid as an incentive to employees to remain in the employment of the Company, payment of any bonus is conditional on the Executive remaining in the employment of the Company and not having given notice to the Company to terminate his employment at the date that any bonus is payable.

 

13                                  SHARE SCHEMES

 

13.1                        The Executive shall be entitled to participate in the Company’s share and share option schemes in place from time to time (the “Share Schemes”). With respect to any award made to the Executive under a Share Scheme:

 

(a)                                 the number and value, vesting schedule, circumstances of exercise and all other terms and conditions of any award will be as determined in the Company’s sole discretion and set out in a separate letter from the Company to the Executive;

 

(b)                                 the award may be subject to the Executive entering into a joint election approved by HM Revenue & Customs with respect to secondary national insurance liability;

 

(c)                                  the making of any award under a Share Scheme shall not entitle the Executive to any further award or right to participate in any other Share Scheme;

 

(d)                                 subject to Clause 13.1(e), the Executive’s rights under or in relation to this Agreement are separate from and shall not be affected by any participation in the Share Schemes, and his participation shall be subject to the Share Schemes’ rules from time to time;

 

(e)                                  subject to Clause 14, if the Employment is terminated for whatever reason and whether lawfully or unlawfully, the Executive agrees that he shall not be entitled by way of damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, shares or other benefits to compensate him for the loss or diminution in value of any actual or prospective rights, benefits or expectations under or in relation to the Share Schemes.

 

8

 

13.2                        As soon as reasonably practicable after the Commencement Date having regard to the Company’s Share Dealing Policy and any relevant approvals by the Company’s shareholders, the Company shall grant to the Executive, under the Company’s Incentive Award Plan, equity-based incentives in the Company comprising, in the discretion of the Remuneration Committee of the Board, 160,000 share options with an exercise price equal to the Company’s NASDAQ listing price and restricted stock units equivalent to an approximate value of £40,000.

 

14                                  CHANGE OF CONTROL

 

Notwithstanding any other terms and conditions of this Agreement, if a Change of Control Event occurs:

 

(a)                                 any award made to the Executive under a Share Scheme referred to in Clause 13 will automatically vest and may be exercised prior to the award’s expiry date; and

 

(b)                                 the Executive will be entitled to receive his full bonus under Clause 12 without any obligation to purchase shares in the Company referred to in Clause 12.2.

 

15                                  WORKING HOURS AND HOLIDAYS

 

15.1                        The Executive shall devote the whole of his time, attention and abilities to his duties hereunder during the Company’s usual business hours and such additional hours as may from time to time be reasonably necessary for the proper performance of his duties.  This may include working in the evenings outside normal office hours, at weekends or on public holidays.  The Executive shall not be entitled to receive any additional remuneration for work outside the Company’s usual business hours.

 

15.2                        The Executive hereby agrees to disapply Regulation 4 of the Working Time Regulations 1998 to the effect that the 48 hour limit on average working time will not apply in respect of his employment by the Company, subject to his right to revoke this election by 13 weeks’ notice by the Executive to the Company.

 

15.3                        The Executive shall (in addition to normal UK public holidays) be entitled to 25 working days’ holiday at full salary in each Holiday Year during the Employment to be taken at such reasonable time or times as the CEO may approve.  Holiday may only be taken during the notice period if either the Company so requires or the CEO has approved the holiday after notice has been served.

 

15.4                        Holiday entitlement shall accrue pro rata during each Holiday Year.  Any entitlement to holiday remaining at the end of any Holiday Year may not be carried forward to the next succeeding Holiday Year, except that with the prior written approval of the CEO up to 5 days holiday entitlement may be carried forward to the first quarter of the following year, and any such holiday entitlement not used by 31 March of that following year will be forfeited.  The notice requirements in relation to statutory annual leave, as provided by Regulation 15 of the Working Time Regulations 1998 shall not apply to this Agreement.

 

15.5                        If the Executive has holiday entitlement accrued but not taken, the Company may, in its sole discretion, require him to take some or all of his holiday entitlement during his notice period or pay him a sum in lieu of accrued holiday on termination.  If, on the termination of the Employment, the Executive has exceeded his accrued holiday entitlement, this excess will be deducted from any sums due to the Executive from the Company.  A day’s holiday pay for these purposes shall be 1/260 of the Executive’s annual basic salary in accordance with Clause 9.1.

 

16                                  ILL-HEALTH OR INJURY

 

16.1                        During any period of absence on medical grounds, the Executive shall be paid such contractual and statutory sick pay as the Executive may be entitled to receive under the Company’s sick leave policy from time to time.

 

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16.2                        If the Executive is absent from work on medical grounds, he is required to notify the Company by telephone on the first morning of his absence or as soon as reasonably practicable thereafter.    If the Executive is absent from work for more than seven consecutive days, he must submit to the Company a medical certificate signed by a practising medical practitioner.  Thereafter, the Executive shall submit further medical certificates to cover the whole of his period of absence.

 

16.3                        In the event that the Executive is incapacitated by reason of ill health or accident from performing his duties hereunder for a period or periods exceeding 130 working days in any 12 month period then:

 

(a)                                 the Company shall automatically become entitled to appoint a temporary successor to the Executive to perform all or any of the duties required to be performed by the Executive under the terms of this Agreement and the Executive’s duties shall be amended temporarily accordingly;

 

(b)                                 subject to (c) below, the Employment of the Executive may be subject to termination by the Company giving to the Executive not less than thirteen weeks’ notice in writing; and

 

(c)                                  nothing in this Clause 16.3 shall prejudice any rights that the Executive may have under the provisions of the Disability Discrimination Act 1995.

 

16.4                        It is a condition of the Employment that the Executive consents to an examination by an independent doctor nominated by the Company should the Company so require.  The Executive hereby authorises the Company to have unconditional access to any report or reports (including copies of and documents referred to in such reports) prepared as a result of any such examination and authorises the doctor(s) to discuss the same with the Chairman of the Company.

 

16.5                        The Company reserves the right to suspend the Executive on medical grounds, if, at any time, in the Company’s reasonable opinion, the Executive is incapable on grounds of ill-health of performing some or all of his duties under this Agreement.  During any period of suspension on medical grounds, the Executive will be subject to the same rights and duties as apply to employees on garden leave, as set out in Clause 18.2 of this Agreement.

 

17                                  TERMINATION OF EMPLOYMENT

 

17.1                        The Employment may be terminated by either party by notice given in accordance with Clause 3.1.

 

17.2                        The Employment of the Executive shall be subject to termination by the Company (but without prejudice to any of the Executive’s continuing obligations hereunder):

 

(a)                                 pursuant to the provisions of Clause 16.3 above;

 

(b)                                 immediately by notice in writing if the Executive shall:

 

(i)                                     have committed and repeated or continued (after warning) any material breach of his obligations hereunder; or

 

(ii)                                  have been guilty of conduct calculated or likely or tending to bring himself or any Group Company into disrepute or otherwise prejudicially to affect the interests of any Group Company; or

 

(iii)                               have a bankruptcy order made against him or enter into a voluntary arrangement within the meaning of the Insolvency Act 1986 or enter into a Deed of Arrangement under the Deeds of Arrangement Act 1914 or make any composition with some or all of his creditors; or

 

(iv)                              be convicted of any arrestable criminal offence, other than an offence under the Road Traffic legislation in respect of which a non-custodial sentence or penalty is imposed.

 

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17.3                        The Company may terminate the Employment if, in the opinion of the CEO, the Executive’s performance of his duties is below the standard required of him.  Such termination will not usually occur without at least one prior written warning to the Executive of the possibility of such termination.

 

17.4                        If the Company becomes entitled to terminate the Employment pursuant to Clause 17.2 above, it shall be entitled (but without prejudice to its rights subsequently to terminate the Employment on the same or any other ground) to suspend the Executive on full payment of salary for so long as it may think fit.

 

17.5                        The Executive shall have no claim against the Company if this Agreement is terminated by reason of the liquidation of the Company for the purpose of reconstruction or amalgamation and the Executive is offered employment with any concern or undertaking resulting from such reconstruction or amalgamation in a similar position and on terms which are substantially the same as the terms of this Agreement.

 

17.6                        On the termination of the Employment, howsoever arising, the Executive shall forthwith or at any time thereafter at the request of the Company, resign from any offices held by him in any Group Company together with any other offices or memberships held by him by virtue of the Employment.  Should the Executive fail to resign within seven days of being so requested, the Company is irrevocably authorised to appoint some person as his attorney to sign upon his behalf any document or do anything necessary or requisite to give effect thereto.

 

17.7                        The Executive shall not at any time during or after the termination of the Employment make any untrue or misleading statement in relation to the Company or the Group nor, in particular, after the termination of the Employment represent himself as being employed by or connected with the Group.

 

17.8                        Termination of the Employment within this Clause 17 shall be without prejudice to any rights which have accrued at the time of termination and to the provisions of Clauses 6, 7, 8 and 19 which shall remain in full force and effect.

 

18                                  PAYMENT IN LIEU AND GARDEN LEAVE

 

18.1                        The Company reserves the right in its absolute discretion to terminate the Employment at any time with immediate effect by giving written notice to the Executive that the Company shall pay in lieu of notice. The payment shall be calculated at the rate of the Executive’s basic annual salary, pro-rated full bonus and contractual benefits prevailing at the time when such notice is given.  The Company shall not, under any circumstances, be obliged to make a payment in lieu of notice.

 

18.2                        If either party serves notice on the other to terminate the Employment, the Company may require the Executive to take “garden leave” for all or part of the remaining period of his employment.  If the Executive is asked to take garden leave he:

 

(a)                                 may not attend at his place of work or any other premises of the Company and/or any Group Company unless at the Company’s written request;

 

(b)                                 may not contact any customers, suppliers, partners or contacts of the Company without the Company’s prior written permission;

 

(c)                                  may be required not to carry out all or any of his normal day to day duties for the remaining period of the Employment or any part thereof;

 

(d)                                 may be assigned other duties or have powers vested in him withdrawn;

 

(e)                                  must return to the Company all equipment, including, but not limited to, laptop computers and fax machines, all documents, discs and other materials (including copies) belonging to the Company and/or any Group Company containing confidential information; and

 

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(f)                                   must remain contactable by telephone on a daily basis during any period of absence from work under this Clause 18, and may not take holiday, save with the Company’s prior written consent, such consent not to be unreasonably withheld.

 

18.3                        It is expressly agreed between the parties that, during any period of garden leave, the mutual duties of good faith and trust and confidence, and the Executive’s duty of fidelity to the Company, shall continue during any period that the Executive is not required to attend work, pursuant to this Clause 18.

 

19                                  POST-TERMINATION RESTRICTIONS

 

19.1                        Within this Clause 19 the following words shall have the following meanings:

 

“Competitive Business” shall mean any business or activity in competition with that carried on by the Company or any Group Company at the Termination Date in which the Executive shall have been directly concerned at any time in the Contact Period;

 

“Contact Period” shall mean the 12 month period ending with the Termination Date;

 

“Customer Connection” shall mean any person, company or other organisation who:

 

(a)                                 was at any time in the Contact Period a customer (including as licensee) or supplier (including as licensor) of the Company; or

 

(b)                                 was at the Termination Date negotiating with the Company with a view to dealing with the Company as customer (including as licensee) or supplier (including as licensor);

 

provided that this will only include suppliers where alternative sources of supply on equivalent terms would not be generally available to the Company or where the interference with any such supplier may be anticipated to cause damage to the Company;

 

“Skilled Employee” shall mean any person who was:

 

(a)                                 employed by the Company; or

 

(b)                                 contracted to render services to the Company;

 

in technical or managerial work during the Contact Period and who was so engaged or contracted on the Termination Date;

 

“Supplier” shall mean any person, company or other organisation supplying (including under licence) goods or services to the Company or negotiating with the Company at the Termination Date with a view to supplying (including under licence) goods or services to the Company, where alternative sources of supply on equivalent terms would not be generally available to the Company or where the interference with any such supplier may be anticipated to cause damage to the Company;

 

“Termination Date” shall mean the date of termination of the Executive’s Employment under this Agreement; and

 

“Territory” shall mean any member country of the European Union.

 

19.2                        The Executive shall not during the period of 6 months after the Termination Date, directly or indirectly, either on his own account or otherwise, canvass or solicit business in competition with the Company from any Customer Connection with whom the Executive shall have had material dealings in the Contact Period in the course of his Employment.

 

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19.3                        The Executive shall not during the period of 6 months after the Termination Date, either on his own account or otherwise, do business in competition with the Company with any Customer Connection  with whom the Executive shall have had material dealings in the Contact Period in the course of his Employment.

 

19.4                        The Executive will not during the period of 6 months after the Termination Date, in competition with the Company, either on his/her own account or otherwise, accept the supply of goods or directly or indirectly interfere with or seek to interfere with the continuance of the supply of goods to the Company from any Supplier with whom the Executive shall have had material dealings in the Contact Period in the course of his employment.

 

19.5                        The Executive shall not, during the period of 6 months after the Termination Date, directly or indirectly, induce or seek to induce any Skilled Employee, with whom the Executive shall have had material dealings in the course of his duties hereunder in the Contact Period, to leave the Company’s employment, whether or not this would be a breach of contract on the part of such Skilled Employee or offer employment or an engagement to any such Skilled Employee.

 

19.6                        The Executive shall not, during the period of 6 months after the Termination Date, carry on or be interested in Competitive Business in competition with the Company in the Territory whether as principal, agent, director, partner, proprietor, employee or otherwise.

 

19.7                        The period of time of the restrictions under this Clause 19 shall be reduced by the length of any period of garden leave the Executive may be required to take pursuant to Clause 18.2 above.  In the event that the period of the restrictions is so reduced, the Contact Period shall mean the 12 month period ending with the date on which the Executive’s garden leave commences.

 

19.8                        The Executive agrees that he will, at the request of the Company, enter into a direct agreement or undertaking with any Group Company whereby he will accept restrictions corresponding to the restrictions contained in this Clause 19 (or such of them as may be appropriate in the circumstances) in relation to such products and services and such areas and for such period as such Group Company may reasonably require for the protection of its legitimate interests.

 

19.9                        Each of the restrictions contained in this Clause 19 are considered reasonable by the Company and the Executive as being no greater than is required for the protection of the goodwill of the business of the Company and the Group and are intended to be separate and severable.  In the event that any of the said restrictions shall be held void, but would be valid if part of the wording thereof were deleted, such restriction shall apply with such deletion as may be necessary to make it valid and effective.

 

20                                  EXCISE TAX

 

20.1                        If any payment or benefit that Executive would receive following a Change of Control Event or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the United States Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (B) the largest portion, up to and including the total amount, of the Payment, whichever of the amounts determined under (A) and (B), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of outstanding awards under a Share Scheme; and reduction of employee benefits.  In the event that acceleration of vesting of outstanding awards under a Share Scheme is to be reduced, such acceleration of vesting shall be undertaken in the reverse order of the date of grant of the Executive’s outstanding equity awards.

 

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20.2                        All calculations required to be performed under this Clause 20 shall be made by a public accounting or employee benefits consulting firm with a national practice selected by the Company (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations on the  applicable matter to both to the Company and the Executive.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

 

21                                  TAX EQUALISATION

 

21.1                        During the course of the Employment, the Executive will be liable for UK income tax and employee’s National Health Insurance contributions (“UK Tax”).  In addition, the Executive may be liable to pay US federal and state income taxes in respect of earnings from work carried out in the US. The Company intends to minimize the effect of the different rate of US and UK tax rates and leave the Executive in a net after-tax position substantially equivalent to what the Executive would experience if Executive were subject only to UK Tax during this period.  The Company shall tax equalise the Executive so that the income and employment tax burden to the Executive on his remuneration and other amounts payable pursuant to this Agreement (including any remuneration with respect to the Share Schemes and including the tax equalisation payments made pursuant to this Clause 21.1), exclusive of any taxes under Section 409A, Section 457A or Section 4999 of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any other provisions of the Code relating to excise taxes, penalties or interest, is neither substantially greater nor less than the UK Tax that the Executive would have paid had Executive performed all of Executive’s duties to the Company in the UK, subject to the terms of any tax equalisation policy adopted by the Company, as it may be amended by the Company from time to time in the Company’s sole discretion (“Tax Equalisation”).  Such payments, if any are payable pursuant to this Clause 21.1, shall be made within 60 days after the actual US tax amounts due are paid by the Executive for any applicable tax periods.  To the extent that payments pursuant to this Clause 21.1 exceed the amount that was required to achieve Tax Equalisation, the Executive will repay to the Company an amount equal to the overpayment on demand by the Company and agrees that the Company may deduct amounts equal to any overpayment from the Executive’s salary or other payments due from the Company to the Executive.  The Executive shall cooperate with the Company in determining any Tax Equalisation and in seeking any tax refunds owed on taxes paid by the Company pursuant to this Clause 21.1 in accordance with applicable tax rules and regulations.  This Clause 21.1 shall continue to apply after the termination of the Executive’s employment with the Company without limit in point of time.

 

22                                  DATA PROTECTION

 

22.1                        In order to keep and maintain records relating to the Employment it shall be necessary for the Company to record, keep and process personal data (including sensitive personal data) relating to the Executive.  This data may be recorded, kept and processed on computer and in hard copy form.  To the extent that it is reasonably necessary in connection with the Employment and the performance of the Company’s responsibilities as an employer, the Company may be required to disclose this data to others, including other employees of the Company, Group Companies, the Company’s professional advisers, the Her Majesty’s Revenue and Customs and other authorities. The Executive consents to the recording, processing, use and disclosure by the Company of personal data relating to the Executive as set out above. This does not affect the Executive’s rights as a data subject or the Company’s obligations and responsibilities under the Data Protection Act 1984 and/or the Data Protection Act 1998.  For the purposes of these Acts, the Company has nominated the Chairman as its representative.

 

23                                  STATEMENT OF TERMS OF EMPLOYMENT

 

23.1                        The information in this Agreement constitutes a written statement of the terms of employment of the Executive in compliance with the provisions of the Employment Rights Act 1996.

 

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24                                  THIRD PARTIES

 

24.1                        This Agreement may be enforced by any Group Company subject to and in accordance with the terms of this Agreement.  Nothing in this Agreement confers on any other third party any benefits under the provision of the Contract (Rights of Third Parties) Act 1999.

 

25                                  NOTICES

 

25.1                        Notices by either party must be in writing addressed:

 

(a)                                 to the Company at its principal office for the time being; and

 

(b)                                 to the Executive at his place of work or at the address set out in this Agreement or such other address as the Executive may from time to time have notified in writing to the Company for the purpose of this Clause.

 

25.2                        Notices will be effectively served:

 

(a)                                 if delivered by hand-delivered letter, on the day of receipt where such letter is received on a business day before or during normal working hours, or on the following business day where such letter is received either on a business day after normal working hours or on any other day;

 

(b)                                 if delivered by email, upon the recipient, by an email sent to the email address of the sender or by a notice delivered by another method in accordance with this clause, acknowledging having received that email;

 

(c)                                  if posted from within the United Kingdom by first class prepaid mail, on the second business day following the day of posting; or

 

(d)                                 if posted from outside the United Kingdom by prepaid airmail letter, on the fifth business day following the day of posting.

 

26                                  INTERPRETATION

 

26.1                        The headings in this Agreement are for convenience only and are not to be used as an aid to construction of this Agreement.

 

26.2                        Reference to provisions of statutes, rules or regulations shall be deemed to include references to such provisions as amended, modified or re-enacted from time to time.

 

27                                  GOVERNING LAW AND JURISDICTION

 

27.1                        This Agreement shall be governed by, and interpreted in accordance with, English law and the parties hereby submit to the exclusive jurisdiction of the courts and tribunals of England and Wales.

 

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IN WITNESS WHEREOF this Deed has been executed by the duly authorised representatives of the Company and by the Executive the day and year first above written.

 

	
EXECUTED AND
    	
)
    	
 
    
	
DELIVERED AS A DEED
    	
)
    	
 
    
	
on the date hereof
    	
)
    	
 
    
	
by the Company
    	
)
    	
 
    
	
acting by:
    	
)
    	
/s/ JA Karlsson
    
	
 
    	
 
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In the presence of:
    	
)
    	
/s/ PJ Morgan
    
	
 
    	
 
    	
PJ Morgan
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
EXECUTED AND
    	
)
    	
 
    
	
DELIVERED AS A DEED
    	
)
    	
 
    
	
on the date hereof
    	
)
    	
/s/ Richard Hennings
    
	
by the Executive
    	
)
    	
R. Hennings 28/3/17
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In the presence of:
    	
)
    	
/s/ S. George
    
	
 
    	
 
    	
S. George, PA to CEO Verona Pharma plc
    

 

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