Document:

fprx-ex1025_1545.htm

 

Exhibit 10.25

Executive Severance Benefits Agreement

This Executive Severance Benefits Agreement (this “Agreement”), effective as of February 1, 2016 (the “Effective Date”), between Kevin Paul Baker, Ph.D. (“Executive”) and Five Prime Therapeutics, Inc. (“FivePrime”).  This Agreement is intended to provide Executive with certain compensation and benefits in the event that Executive is subject to certain qualifying terminations of employment.  Certain capitalized terms used in this Agreement are defined in Article 6.

FivePrime and Executive hereby agree as follows:

article 1

Scope of and Consideration for this Agreement

1.1FivePrime desires to employ Executive in the position of Senior Vice President, Developmental Sciences, and Executive wishes to be employed by FivePrime in such position.

1.2FivePrime and Executive wish to set forth the compensation and benefits that Executive shall be entitled to receive upon a Change in Control Termination or a Covered Termination.

1.3The duties and obligations of FivePrime to Executive under this Agreement shall be in consideration for Executive’s employment with FivePrime (and if Executive is a continuing employee, his or her past services to FivePrime), and, with respect to the benefits described in Article 2 and Article 3, Executive’s compliance with the limitations and conditions on benefits as described in Article 4, including the execution of an effective Release, return of Company property and continued compliance with the Restrictive Covenants.

1.4This Agreement shall supersede any other policy, plan, program or arrangement, including any contract between Executive and any entity, relating to severance benefits payable by FivePrime to Executive in connection with a Change in Control Termination or Covered Termination.

article 2

Change in Control Severance Benefits

2.1Severance Benefits.  Upon a Change in Control Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 2.

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2.2Salary Continuance.  Executive shall receive, as severance, an amount equal to Executive’s Base Salary and Pro-Rata Bonus for that number of months in the Change in Control Severance Period, payable over such number of months immediately following the Termination Date in accordance with FivePrime’s payroll schedule then in effect.  Except as set forth in Article 4, the payments provided for in this Section 2.2 shall commence with the first regularly scheduled payroll pay date following the Termination Date.

2.3Health Continuation Coverage.

(a)Provided that Executive is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental, or vision plan sponsored by FivePrime, FivePrime shall pay the applicable premiums (inclusive of premiums for Executive’s dependents for such health, dental, or vision plan coverage as in effect immediately prior to the date of the Change in Control Termination) for such continued health, dental, or vision plan coverage following the date of the Change in Control Termination for up to the number of months equal to the Change in Control Severance Period (but in no event after such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer or as Executive and Executive’s dependents are no longer eligible for COBRA coverage).  Such coverage shall be counted as coverage pursuant to COBRA.  FivePrime shall have no obligation in respect of any premium payments (or any other payments in respect of health, dental, or vision coverage from FivePrime) following the effective date of the Executive’s coverage by a health, dental, or vision insurance plan of a subsequent employer.  Executive shall be required to notify FivePrime immediately if Executive becomes covered by a health, dental, or vision insurance plan of a subsequent employer.  If Executive and Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the Change in Control Severance Period, Executive will be responsible for the entire payment of such premiums required under COBRA for the duration of the COBRA period.

(b)For purposes of this Section 2.3, (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and (ii) any applicable insurance premiums that are paid by FivePrime shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of Executive.

2.4Stock Awards.  Upon a Change in Control Termination, (i) the vesting and exercisability of all outstanding options to purchase common stock of FivePrime (or stock appreciation rights or other rights with respect to stock of FivePrime issued pursuant to any equity incentive plan of FivePrime) that are held by Executive on the Termination Date shall be accelerated in full, and (ii) any reacquisition or repurchase rights held by FivePrime with respect to common stock issued or issuable (or with respect to other rights with respect to common stock of FivePrime issued or issuable) pursuant to any other stock award granted to Executive pursuant to any equity incentive plan of FivePrime (other than the Restricted Stock Award for 75,000 shares of common stock granted to Executive in connection with the start of his employment as Senior Vice President) shall lapse.

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article 3

Covered Termination Severance Benefits

3.1Severance Benefits.  Upon a Covered Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 3.

3.2Salary Continuance.  Executive shall receive, as severance, an amount equal to Executive’s Base Salary and Pro-Rata Bonus for that number of months in the Covered Termination Severance Period, payable over such number of months immediately following the Termination Date in accordance with FivePrime’s payroll schedule then in effect.  Except as set forth in Article 4, the payments provided for in this Section 3.2 shall commence with the first regularly scheduled payroll pay date following the Termination Date.

3.3Health Continuation Coverage.

(a)Provided that Executive is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental, or vision plan sponsored by FivePrime, FivePrime shall pay for the applicable premiums (inclusive of premiums for Executive’s dependents for such health, dental, or vision plan coverage as in effect immediately prior to the date of the Covered Termination) for such continued health, dental, or vision plan coverage following the date of the Covered Termination for up to the number of months equal to the Covered Termination Severance Period (but in no event after such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer or as Executive and Executive’s dependents are no longer eligible for COBRA coverage).  Such coverage shall be counted as coverage pursuant to COBRA.  FivePrime shall have no obligation in respect of any premium payments (or any other payments in respect of health, dental, or vision coverage from FivePrime) following the effective date of the Executive’s coverage by a health, dental, or vision insurance plan of a subsequent employer.  Executive shall be required to notify FivePrime immediately if Executive becomes covered by a health, dental, or vision insurance plan of a subsequent employer. If Executive and Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the Covered Termination Severance Period, Executive will be responsible for the entire payment of such premiums required under COBRA for the duration of the COBRA period.

(b)For purposes of this Section 3.3, (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and (ii) any applicable insurance premiums that are paid by FivePrime shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of Executive.

3.4Stock Awards.  Upon a Covered Termination, (i) the vesting and exercisability of all unvested shares subject to outstanding options to purchase common stock of FivePrime (or 

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stock appreciation rights or other rights with respect to stock of FivePrime issued pursuant to any equity incentive plan of FivePrime) that are held by Executive on the Termination Date shall be accelerated by fifty percent (50%), and (ii) any reacquisition or repurchase rights held by FivePrime with respect to common stock of FivePrime issued or issuable (or with respect to other rights with respect to stock of FivePrime issued or issuable) pursuant to any other stock award granted to Executive pursuant to any equity incentive plan of FivePrime (other than the Restricted Stock Award for 75,000 shares of common stock granted to Executive in connection with the start of his employment as Senior Vice President) shall lapse with respect to fifty percent (50%) of those shares then unvested as of the Termination Date.

article 4

Limitations and Conditions on Benefits

4.1Rights Conditioned on Compliance.  Executive’s rights to receive all severance benefits described in Article 2 and Article 3 shall be conditioned upon and subject to Executive’s compliance with the limitations and conditions on benefits as described in this Article 4.

4.2Continuation of Service Until Date of Termination.  Executive shall continue to provide service to FivePrime in good faith until the Termination Date, unless such performance is otherwise excused in writing by FivePrime.

4.3Release Prior to Payment of Benefits.  Upon the occurrence of a Change in Control Termination or a Covered Termination, as applicable, and prior to the provision or payment of any benefits under this Agreement on account of such Change in Control Termination or Covered Termination, as applicable, Executive must execute a general waiver and release in substantially the form attached hereto and incorporated herein as Exhibit A, or Exhibit B, as appropriate (each a “Release”), and such release must become effective in accordance with its terms, but in no event later than 60 days following the Termination Date.  No amount shall be paid prior to such date.  Instead, on the 60th day following the Termination Date, FivePrime will pay Executive the severance amount that Executive would otherwise have received on or prior to such date but for the delay in payment related to the effectiveness of the Release, with the balance of the severance amount being paid as originally scheduled.  FivePrime may modify the Release in its discretion to comply with changes in applicable law at any time prior to Executive’s execution of such Release.  Such Release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under Executive’s Proprietary Information and Inventions Agreement (or any successor agreement thereto) and any similar obligations under applicable law.  It is understood that, as specified in the applicable Release, Executive has a certain number of calendar days to consider whether to execute such Release.  If Executive does not execute such Release within the applicable period, no benefits shall be provided or payable under, and Executive shall have no further rights, title or interests in or to any severance benefits or payments pursuant to, this Agreement.  It is further understood that in connection with a Change in Control Termination or a Covered Termination, as applicable, Executive may revoke the 

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applicable Release within seven calendar days after its execution by Executive.  If Executive revokes such Release within such subsequent seven-day period, no benefits shall be provided or payable under this Agreement pursuant to such Change in Control Termination or Covered Termination, as applicable.

4.4Return of Company Property.  Not later than the Termination Date, Executive shall return to FivePrime all documents (and all copies thereof) and other property belonging to FivePrime that Executive has in his or her possession or control.  The documents and property to be returned include, but are not limited to, all files, correspondence, email, memoranda, notes, notebooks, records, plans, forecasts, reports, studies, analyses, compilations of data, proposals, agreements, financial information, research and development information, marketing information, operational and personnel information, databases, computer-recorded information, tangible property and equipment (including computers, facsimile machines, mobile telephones, and servers), credit cards, entry cards, identification badges and keys; and any materials of any kind that contain or embody any proprietary or confidential information of FivePrime (and all reproductions thereof in whole or in part).  Executive agrees to make a diligent search to locate any such documents, property and information.  If Executive has used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, then within 10 business days after the Termination Date, Executive shall provide FivePrime with a computer-useable copy of all such information and then permanently delete and expunge such confidential or proprietary information from those systems.  Executive agrees to provide FivePrime access to Executive’s system as requested to verify that the necessary copying or deletion is done.

4.5Cooperation and Continued Compliance with Restrictive Covenants.

(a)From and after the Termination Date, Executive shall cooperate fully with FivePrime in connection with its actual or contemplated defense, prosecution, or investigation of any existing or future litigation, arbitrations, mediations, claims, demands, audits, government or regulatory inquiries, or other matters arising from events, acts, or failures to act that occurred during the time period in which Executive was employed by FivePrime (including any period of employment with an entity acquired by FivePrime).  Such cooperation includes being available upon reasonable notice, without subpoena, to provide accurate and complete advice, assistance and information to FivePrime, including offering and explaining evidence, providing truthful and accurate sworn statements, and participating in discovery and trial preparation and testimony.  Executive also agrees to promptly send FivePrime copies of all correspondence (for example subpoenas) received by Executive in connection with any such legal proceedings, unless Executive is expressly prohibited by law from so doing.  FivePrime will reimburse Executive for reasonable out-of-pocket expenses incurred in connection with any such cooperation (excluding foregone wages, salary, or other compensation) within 30 days of Executive’s timely presentation of appropriate documentation thereof, in accordance with FivePrime’s standard reimbursement policies and procedures, and will make reasonable efforts to accommodate Executive’s scheduling needs.  To the extent that any taxable reimbursements of expenses are provided hereunder, they shall be made or provided in accordance with Section 409A of the 

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Code, including the following provisions: (i) the amount of any such expense reimbursement provided during Executive’s taxable year shall not affect any expenses eligible for reimbursement in any other taxable year; (ii) the reimbursement of the eligible expense shall be made no later than the last day of Executive’s taxable year that immediately follows the taxable year in which the expense was incurred; and (iii) the right to any reimbursement shall not be subject to liquidation or exchange for another benefit or payment.

(b)From and after the Termination Date, Executive shall continue to abide by all of the terms and provisions of the Confidential Information and Innovation Assignment Agreement between FivePrime and Executive (and any other comparable agreement signed by Executive), in accordance with its terms.

(c)Executive acknowledges and agrees that Executive’s obligations under this Section 4.5 are an essential part of the consideration Executive is providing hereunder in exchange for which and in reliance upon which FivePrime has agreed to provide the payments and benefits under this Agreement.  Executive further acknowledges and agrees that Executive’s violation of Section 4.5 inevitably would involve use or disclosure of FivePrime’s proprietary and confidential information. Accordingly, Executive agrees that Executive will forfeit, effective as of the date of any breach, any right, entitlement, claim or interest in or to any unpaid portion of the severance payments or benefits provided in Article 2 or Article 3.

4.6Parachute Payments.

(a)Parachute Payment Limitation.  If any payment or benefit (including payments and benefits pursuant to this Agreement) Executive would receive in connection with a Change in Control from FivePrime or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of 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 FivePrime shall cause to be determined, before any amounts of the Payment are paid to Executive, which of the following two alternative forms of payment shall be paid to Executive: (i) payment in full of the entire amount of the Payment (a “Full Payment”), or (ii) payment of only a part of the Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  A Full Payment shall be made in the event that the quotient obtained by dividing (i) the excess of (a) the Full Payment, over (b) the Reduced Payment, by (ii) the Reduced Payment, is greater than ten percent (10%).  A Reduced Payment shall be made in the event that the quotient obtained by dividing (i) the excess of (a) the Full Payment, over (b) the Reduced Payment, by (ii) the Reduced Payment, is less than or equal to ten percent (10%).  If a Reduced Payment is made, (i) the Payment shall be paid only to the extent permitted under the Reduced Payment alternative, and Executive shall have no rights to any additional payments or benefits constituting the Payment, and (ii) reduction in payments or benefits shall occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive.  In the event that 

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acceleration of compensation from Executive’s equity awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant.

(b)The independent registered public accounting firm engaged by FivePrime for general audit purposes as of the day prior to the effective date of the Change in Control shall make all determinations required to be made under this Section 4.6. If the independent registered public accounting firm so engaged by FivePrime is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, FivePrime shall appoint a nationally recognized independent registered public accounting firm to make the determinations required hereunder.  FivePrime shall bear all expenses with respect to the determinations by such independent registered public accounting firm required to be made hereunder.

(c)The independent registered public accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to FivePrime and Executive within 15 calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by FivePrime or Executive) or such other time as requested by FivePrime or Executive.  If the independent registered public accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish FivePrime and Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon FivePrime and Executive.

4.7Certain Reductions and Offsets.  To the extent that any federal, state or local laws, including the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any other so-called “plant closing” laws, require FivePrime to give advance notice or make a payment of any kind to Executive because of Executive’s involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, change in control, or any other similar event or reason, the benefits payable under this Agreement shall be correspondingly reduced.  The benefits provided under this Agreement are intended to satisfy any and all statutory obligations that may arise out of Executive’s involuntary termination of employment for the foregoing reasons, and the parties shall construe and enforce the terms of this Agreement accordingly.

4.8Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by any retirement benefits received by Executive after the date of a Change in Control Termination or Covered Termination (except as expressly provided in Sections 2.3 and 3.3 above).

4.9Indebtedness of Executive. If Executive is indebted to FivePrime on the effective date of a Change in Control Termination or Covered Termination, FivePrime reserves 

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the right to offset any severance payments and benefits under this Agreement by the amount of such indebtedness.

4.10Application of Section 409A.  It is intended that each installment of the payments provided for in this Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that the payments under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if FivePrime (or, if applicable, the successor entity thereto) determines that the severance payments provided under this agreement (the “Agreement Payments”) constitute “deferred compensation” under Section 409A and Executive is, on the termination of service, a “specified employee” of FivePrime or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Code Section 409A, the timing of the Agreement Payments shall be delayed as follows:  on the earlier to occur of (i) the date that is six months and one day after Executive’s separation from service or (ii) the date of Executive’s death (such earlier date, the “Delayed Initial Payment Date”), FivePrime (or the successor entity thereto, as applicable) shall (A) pay Executive a lump sum amount equal to the sum of the Agreement Payments that she would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the Agreement Payments had not been so delayed pursuant to this paragraph and (B) commence paying the balance of the Agreement Payments in accordance with the applicable payment schedules set forth in this agreement.

4.11Tax Withholding.  All payments under this Agreement shall be subject to applicable withholding for federal, state and local income and employment taxes.

article 5

Other Rights and Benefits

Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by FivePrime and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under other agreements with FivePrime except as provided in Section 1.4 above. Except as otherwise expressly provided herein, amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan, policy, practice or program of FivePrime at or subsequent to the date of a Change in Control shall be payable in accordance with such plan, policy, practice or program.

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article 6

Definitions

Unless otherwise provided, for purposes of this Agreement, the following definitions shall apply:

6.1“Base Salary” means 1/12th of the greater of (i) Executive’s annual base salary (excluding incentive pay, premium pay, commissions, overtime, bonuses, and other forms of variable compensation) as in effect immediately prior to a Change in Control Termination or a Covered Termination, as applicable, or (ii) in the case of a Change in Control Termination, Executive’s annual base salary (excluding incentive pay, premium pay, commissions, overtime, bonuses, and other forms of variable compensation) as in effect immediately prior to a Change in Control.

6.2“Board” means the Board of Directors of FivePrime.

6.3“Cause” means Executive’s: (i) dishonest statements or acts with respect to FivePrime, any subsidiary or any affiliate of FivePrime or any subsidiary; (ii) commission by or indictment for (A) a felony or (B) any misdemeanor (excluding minor traffic violations) involving moral turpitude, deceit, dishonesty or fraud (“indictment,” for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made); (iii) gross negligence, willful misconduct or insubordination with respect to FivePrime, any subsidiary or any affiliate of FivePrime or any subsidiary; (iv) material breach of any of Executive’s obligations under any agreement to which Executive and FivePrime or any subsidiary are a party; or (v) death or disability.  With respect to item (iv), Executive will be given notice and a 30-day period in which to cure such breach, only to the extent such breach can be reasonably expected to be able to be cured within such period.  Executive agrees that the breach of any non-solicitation or confidentiality obligation to FivePrime or any subsidiary shall not be curable to any extent.

6.4“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(a)Any natural person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (“Exchange Act Person”) becomes the owner, directly or indirectly, of securities of FivePrime representing more than fifty percent (50%) of the combined voting power of FivePrime’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (i) on account of the acquisition of securities of FivePrime by any institutional investor, any affiliate thereof or any other Exchange Act Person that acquires FivePrime’s securities in a transaction or series of related transactions that are primarily a private financing transaction for FivePrime or (ii) solely because the level of ownership held by any 

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Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by FivePrime reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by FivePrime, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

(b)There is consummated a merger, consolidation or similar transaction involving (directly or indirectly) FivePrime if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of FivePrime immediately prior thereto do not own, directly or indirectly, either (i) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (ii) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction;

(c)The stockholders of FivePrime approve or the Board approves a plan of complete dissolution or liquidation of FivePrime, or a complete dissolution or liquidation of FivePrime shall otherwise occur; or

(d)There is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of FivePrime and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of FivePrime and its subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of FivePrime in substantially the same proportion as their ownership of FivePrime immediately prior to such sale, lease, license or other disposition.

The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of FivePrime. Notwithstanding the foregoing or any other provision of this Agreement, the definition of Change in Control (or any analogous term) in an individual written agreement between FivePrime or any affiliate and the participant shall supersede the foregoing definition with respect to stock awards subject to such agreement (it being understood, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply).

6.5“Change in Control Severance Period” means the period of 18 months commencing on the Termination Date.

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6.6“Change in Control Termination” means an “Involuntary Termination Without Cause” or “Resignation for Good Reason,” either of which occurs on, or within three months prior to, or within 12 months following, the effective date of a Change in Control, provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). Death and disability shall not be deemed Change in Control Terminations.

6.7“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

6.8“Code” means the Internal Revenue Code of 1986, as amended.

6.9“Company” means Five Prime Therapeutics, Inc. or, following a Change in Control, the surviving entity resulting from such transaction, or any subsequent surviving entity resulting from any subsequent Change in Control.

6.10“Covered Termination” means an “Involuntary Termination Without Cause”,  provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).  Death, disability, and termination of employment by Executive, shall not be deemed Covered Terminations.

6.11“Covered Termination Severance Period” means the period of nine months commencing on the Termination Date.

6.12“Involuntary Termination Without Cause” means Executive’s dismissal or discharge by FivePrime for reasons other than Cause and other than as a result of death or disability.

6.13“Pro-Rata Bonus” means 1/12th of the greater of (i) the average annual bonus paid to Executive for the three years preceding the date of a Change in Control Termination or Covered Termination, as applicable, (or such lesser number of years during which Executive has been employed by FivePrime), or (ii) annual target cash bonus, as in effect immediately prior to a Change in Control Termination or Covered Termination, as applicable.

6.14“Resignation for Good Reason” means Executive’s resignation from all employee positions Executive then-holds with FivePrime within 60 days following any of the following events taken without Executive’s consent, provided Executive has given FivePrime written notice of such event within 30 days after the first occurrence of such event and FivePrime has not cured such event within 30 days thereafter:

(a)A decrease in Executive’s total target cash compensation (base and bonus) of more than 10% (i.e., a material reduction in Executive’s base compensation and a material breach by FivePrime of Executive’s employment terms with FivePrime), other than in connection with a comparable decrease in compensation for all comparable executives of FivePrime;

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(b)Executive’s duties or responsibilities are materially diminished (not simply a change in title or reporting relationships); Executive shall not be deemed to have a “Resignation for Good Reason” if FivePrime survives as a separate legal entity or business unit following the Change in Control and Executive holds materially the same position in such legal entity or business unit as Executive held before the Change in Control;

(c)An increase in Executive’s round-trip driving distance of more than 50 miles from Executive’s principal personal residence to the principal office or business location at which Executive is required to perform services (except for required business travel to the extent consistent with Executive’s prior business travel obligations); or

(d)The failure of FivePrime to obtain a satisfactory agreement from any successor to materially assume and materially agree to perform under the terms of this Agreement.

6.15“Termination Date” means the effective date of the Change in Control Termination or Covered Termination, as applicable.

article 7

General Provisions

7.1Employment Status.  This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on FivePrime any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee or (iii) to change FivePrime’s policies regarding termination of employment.

7.2Notices.  Any notices provided hereunder must be in writing, and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail, to FivePrime at its primary office location and to Executive at Executive’s address as listed in FivePrime’s payroll records.  Any payments made by FivePrime to Executive under the terms of this Agreement shall be delivered to Executive either in person or at the address as listed in FivePrime’s payroll records.

7.3Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

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7.4Waiver.  If either party should waive any breach of any provisions of this Agreement, he, she or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

7.5Arbitration.  Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be resolved solely and exclusively by final and binding arbitration held in the San Francisco Bay Area through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) under the then existing JAMS employment law arbitration rules.  However, nothing in this Section 7.5 is intended to prevent either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Each party in any such arbitration shall be responsible for its own attorneys’ fees, costs and necessary disbursement; provided, however, that in the event one party refuses to arbitrate and the other party seeks to compel arbitration by court order, if such other party prevails, it shall be entitled to recover reasonable attorneys’ fees, costs and necessary disbursements.  Pursuant to California Civil Code Section 1717, each party warrants that it was represented by counsel in the negotiation and execution of this Agreement, including the attorneys’ fees provision herein.

7.6Complete Agreement.  This Agreement, including Exhibit A and Exhibit B, constitutes the entire agreement between Executive and FivePrime and is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter, wholly superseding all written and oral agreements with respect to payments and benefits to Executive in the event of employment termination.  It is entered into without reliance on any promise or representation other than those expressly contained herein.

7.7Amendment or Termination of Agreement; Continuation of Agreement.  This Agreement may be changed or terminated only upon the mutual written consent of FivePrime and Executive.  The written consent of FivePrime to a change or termination of this Agreement must be signed by an executive officer of FivePrime (other than Executive) after such change or termination has been approved by the Board. Unless so terminated, this Agreement shall continue in effect for as long as Executive continues to be employed by FivePrime or by any surviving entity following any Change in Control.  In other words, if, following a Change in Control, Executive continues to be employed by the surviving entity without a Change in Control Termination and the surviving entity then undergoes a Change in Control, following which Executive is terminated by the subsequent surviving entity in a Change in Control Termination, then Executive shall receive the benefits described in Article 2 hereof.

7.8Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

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7.9Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

7.10Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, and FivePrime, and any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by FivePrime, and their respective successors, assigns, heirs, executors and administrators, without regard to whether or not such person actively assumes any rights or duties hereunder; provided, however, that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of FivePrime, which consent shall not be withheld unreasonably.

7.11ERISA.  This Agreement is intended to constitute a severance agreement subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

7.12Choice of Law.  To the extent not preempted by ERISA, all questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state’s conflict of laws rules.

7.13Construction of Agreement.  In the event of a conflict between the text of this Agreement and any summary, description or other information regarding this Agreement, the text of this Agreement shall control.

7.14Circular 230 Disclaimer.  The following disclaimer is provided in accordance with the Internal Revenue Service’s Circular 230 (21 C.F.R. Part 10).  Any tax advice contained in this Agreement is intended to be preliminary, for discussion purposes only, and not final.   Any such advice is not intended to be used for marketing, promoting or recommending any transaction or for the use of any person in connection with the preparation of any tax return.  Accordingly, this advice is not intended or written to be used, and it cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed on such person.

14

 

In Witness Whereof, the parties have executed this Agreement on the Effective Date.

	
Five Prime Therapeutics, Inc.

 

 

By: /s/ Lewis T. Williams

Lewis T. Williams

President and Chief Executive Officer

 
	
 

 

 

/s/ Kevin Paul Baker

Kevin Paul Baker, Ph.D.

 

 

		
	
Exhibit A:
	
Release (Individual Termination – Age 40 or Older)

	
Exhibit B:
	
Release (Group Termination – Age 40 or Older)

 

 

15

 

Exhibit A

RELEASE
(Individual Termination – Age 40 or Older)

Certain capitalized terms used in this Release are defined in the Executive Change in Control Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under FivePrime’s Employee Confidentiality and Inventions Assignment Agreement (or other comparable agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge FivePrime, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with FivePrime), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including all such claims and demands directly or indirectly arising out of or in any way connected with my employment with FivePrime or the termination of that employment, including claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in FivePrime, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release FivePrime from its obligation to indemnify me pursuant to FivePrime’s indemnification obligation pursuant to written agreement or applicable law.

A-1

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given under this Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have 21 days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven days following my execution of this Release to revoke the Release by providing a written notice of revocation to FivePrime’s Chief Executive Officer; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after I execute this Release (provided that I do not revoke it).

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

			
	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
Kevin Paul Baker, Ph.D.

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
Date:
	
 

 

 

A-2

 

Exhibit B

RELEASE

(Group Termination – Age 40 or Older)

Certain capitalized terms used in this Release are defined in the Executive Change in Control Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under FivePrime’s Employee Confidentiality and Inventions Assignment Agreement (or other comparable agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge FivePrime, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with FivePrime), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including all such claims and demands directly or indirectly arising out of or in any way connected with my employment with FivePrime or the termination of that employment, including claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in FivePrime, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release FivePrime from its obligation to indemnify me pursuant to FivePrime’s indemnification obligation pursuant to written agreement or applicable law.

B-1

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA.  I also acknowledge that the consideration given under this Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have 45 days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven days following my execution of this Release to revoke the Release by providing a written notice of revocation to FivePrime’s Chief Executive Officer; (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after I execute this Release; and (F) I have  received with this Release the required written disclosure for a “group termination” under the ADEA, including a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of FivePrime in the same job classification or organizational unit who were not terminated.

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

 

			
	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
Kevin Paul Baker, Ph.D.

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
Date:
	
 

 

B-2fprx-ex1027_1544.htm

Exhibit 10.27

Five Prime Therapeutics, Inc.
2013 Omnibus Incentive Plan 

Restricted Stock Agreement

This Restricted Stock Agreement (this “Agreement”) governs the grant of a Restricted Stock award (the “RSA”) by Five Prime Therapeutics, Inc., a Delaware corporation (“FivePrime”), to the award recipient identified below.  The RSA is subject to the terms and conditions set forth in this Agreement, which includes this cover sheet and the attached additional terms and conditions, and in FivePrime’s 2013 Omnibus Incentive Plan (as amended from time to time, the “Plan”).

 

	
Name of Award Recipient:
	
 

	
Grant Date:
	
 

	
Number of Shares of Common Stock Subject to the RSA:

 

				
	
 
	
Shares
	
Vest Date

	
Vesting Schedule:
	
25% of shares

50% of shares

25% of shares
	
February 5, 2019

February 5, 2020

The earlier to occur of (A) the date of administration of the first dose (whether of cabiralizumab, a combination with cabiralizumab or a comparator) to the first human subject in (x) the first Phase 3 clinical trial of cabiralizumab or (y) the first human clinical trial that would, based on interactions with a regulatory authority, (1) satisfy the requirements of 21 CFR 312.21(c) or applicable corresponding foreign regulations or (2) is designed in a manner to allow for the addition of patients such that it could satisfy the requirements of 21 CFR 312.21(c) or applicable corresponding foreign regulations or is otherwise intended to support (either alone or together with data from one or more additional clinical trials) an application for marketing approval of cabiralizumab (or a new indication or expanded use) (either (x) or (y), a “Registration-Enabling Trial”) and (B) the date of administration of the first dose (whether of FPA144, a combination with FPA144 or a comparator) to the first (1st) human subject in the first Registration-Enabling Trial of FPA144;

 

	
 
	
 
	
 
	
 

 

 

 

By your signature below, you agree to all of the terms and conditions described herein, in the attached Agreement and in the Plan, a copy of which is also attached.  You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this Agreement should appear to be inconsistent.

 

		
	
Recipient:
	
 

	
 
	
(Signature)

	
 
	
 

	
Five Prime Therapeutics, Inc. 

	
 
	
 

	
By:  
	
 

	
 
	
Lewis T. Williams, 

President and Chief Executive Officer

 

This is not a share certificate or a negotiable instrument.

2

Restricted Stock Agreement

(Additional Terms and Conditions)

	
Restricted Stock/ Nontransferability
	
The RSA is for the number of shares of Common Stock set forth on the cover sheet (the “Restricted Shares”) and is subject to the Vesting Schedule described on the cover sheet and below.  The purchase price for the Restricted Shares is deemed paid by your services to FivePrime.  To the extent not yet vested, your Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered, whether voluntarily or by operation of law, except by will or the laws of descent and distribution. 

	
Vesting
	
FivePrime will issue the Restricted Shares in your name as of the Grant Date.

Your right to the Restricted Shares will vest as set forth in the Vesting Schedule shown on the cover sheet, provided you then continue in Service as of the Vest Date set forth therein.

	
Leaves of Absence
	
For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  Your Service terminates in any event when the approved leave ends unless you immediately return to active Service.

The Company may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan.

3

	
Change in Control
	
Notwithstanding the Vesting Schedule set forth above, all unvested Restricted Shares will become 100% vested (i) immediately prior to the consummation of a Change in Control, if the RSA is not assumed, or an equivalent award is not substituted for the unvested Restricted Shares, by FivePrime or its successor, or (ii) if the RSA is assumed or substituted for in connection with a Change in Control, upon your Involuntary Termination within the 12-month period following the consummation of the Change in Control.

 

“Involuntary Termination” means termination of your Service by reason of (i) your involuntary dismissal by FivePrime or its successor for reasons other than Cause; or (ii) your voluntary resignation for Good Reason as defined in any applicable employment or severance agreement, plan, or arrangement between you and FivePrime, or if none, then following (x) a substantial adverse alteration in your title or responsibilities from those in effect immediately prior to the Change in Control; (y) a reduction in your annual base salary as of 

immediately prior to the Change in Control (or as the same may be increased from time to time) or a material reduction in your annual target bonus opportunity as of immediately prior to the Change in Control; or (z) the relocation of your principal place of employment to a location more than 35 miles from your principal place of employment as of the Change in Control or FivePrime’s requiring you to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on FivePrime’s business to an extent substantially consistent with your business travel obligations as of immediately prior to the Change in Control.  To qualify as an “Involuntary Termination” you must provide notice to FivePrime of any of the foregoing occurrences within 90 days of the initial occurrence and FivePrime shall have 30 days to remedy such occurrence. To the extent not remedied, you must terminate employment within 60 days following the expiration of the 30 day cure period for such occurrence to constitute an Involuntary Termination.

 

	
Forfeiture of Unvested Common Stock
	
In the event that your Service terminates for any reason, you will forfeit to FivePrime all of the unvested Restricted Shares or with respect to which all applicable restrictions and conditions have not lapsed. 

	
Issuance
	
The issuance of shares of Common Stock under this Agreement shall be evidenced in such a manner as FivePrime, in its discretion, deems appropriate, including book-entry, registration, or issuance of one or more stock certificates, with any unvested Restricted Shares bearing a legend with the appropriate restrictions imposed by this Agreement.  As your interest in the Restricted Shares vests as described above, the recordation of the number of unvested Restricted Shares attributable to you will be appropriately modified.  To the extent certificates are issued with regard to unvested Restricted Shares, such certificates will be held in escrow with the Secretary of FivePrime while such Restricted Shares remain unvested.

 

4

	
Withholding Taxes
	
You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the payment of dividends or the vesting of Restricted Shares.  In the event that FivePrime or any Affiliate determines that any federal, state, local, or foreign tax or withholding payment is required relating to the payment of dividends or the vesting of Restricted Shares under applicable laws, FivePrime or any Affiliate shall have the right to require such payments from you, or withhold such amounts from other payments due to you from FivePrime or any Affiliate (including by repurchasing or cancelling vested shares of Common Stock under this Agreement).  Subject to the prior approval of FivePrime, which approval may be withheld by FivePrime, in its 

sole discretion, you may elect to satisfy this withholding obligation, in whole or in part, by causing FivePrime to withhold shares of Common Stock otherwise issuable to you or by delivering to FivePrime shares of Common Stock.  The shares of Common Stock so delivered or withheld may not be subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.  

 

	
Code Section 83(b) Election
	
Under Code Section 83, the Fair Market Value of shares of Common Stock on the date any forfeiture restrictions applicable to such shares lapse will be reportable as ordinary income at the time such forfeiture restrictions lapse.  For this purpose, “forfeiture restrictions” include the forfeiture as to unvested Restricted Shares described above.  You may elect to be taxed at the time the Restricted Shares are acquired, rather than when such Restricted Shares cease to be subject to such forfeiture restrictions, by filing an election under Code Section 83(b) with the Internal Revenue Service within 30 days after the Grant Date.  If you timely make an election under Code Section 83(b) with the Internal Revenue Service, you will have to make a tax payment based on the Fair Market Value of the Restricted Shares on the Grant Date.  If you wish to make such an election, please contact the Finance group at FivePrime to obtain the form of election.  Your failure to file this election with the Internal Revenue Service within the 30-day period will result in the recognition of ordinary income by you as the forfeiture restrictions lapse.

 

YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT FIVEPRIME’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST FIVEPRIME OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF.  YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY CODE SECTION 83(b) ELECTION.

 

	
Retention Rights
	
This Agreement does not give you the right to be retained or employed by FivePrime or any Affiliate in any capacity.  Unless otherwise specified in an employment or other written agreement between FivePrime or any Affiliate and you, FivePrime or any Affiliate reserve the right to terminate your Service at any time and for any reason.

5

	
Stockholder Rights
	
You have the right to vote Restricted Shares and to receive any dividends declared or paid on such stock.  You have the right to a cash payment of any dividends within 45 days of the Vest Date of the Restricted Shares on which dividends are declared or paid if such dividends are not reinvested in shares of Common Stock.  Any distributions you receive as a result of any stock split, stock dividend, 

combination of shares or other similar transaction shall be deemed to be a part of the Restricted Shares and subject to the same conditions and restrictions applicable thereto. FivePrime may in its sole discretion require any dividends paid on the Restricted Shares to be reinvested in shares of Common Stock, which FivePrime may in its sole discretion deem to be a part of the Restricted Shares and subject to the same conditions and restrictions applicable thereto.  No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued. 

	
Forfeiture of Rights
	
If you should take actions in violation or breach of or in conflict with any agreement prohibiting solicitation of employees or clients of FivePrime or any Affiliate or any confidentiality obligation with respect to FivePrime or any Affiliate, FivePrime has the right to cause an immediate forfeiture of your rights to any unvested Restricted Shares and such Restricted Shares shall immediately expire. 

	
Adjustments
	
In the event of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification of shares, spin-off, or other similar change in capitalization or event, the number of Restricted Shares shall be adjusted pursuant to the Plan.  Your Restricted Shares shall be subject to the terms of the agreement of merger, liquidation, or reorganization in the event FivePrime is subject to such corporate activity in accordance with the terms of the Plan.  

	
Legends
	
All certificates representing unvested Restricted Shares issued in connection with this Agreement shall, where applicable, have endorsed thereon the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”

	
Applicable Law
	
This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

6

	
The Plan
	
The text of the Plan is incorporated in this Agreement by reference.  

Certain capitalized terms used in this Agreement are defined in the Plan and have the meaning set forth in the Plan.

This Agreement and the Plan constitute the entire understanding between you and FivePrime regarding the RSA.  Any prior agreements, commitments, or negotiations concerning this grant are superseded; except that any written employment, consulting, confidentiality, non-solicitation, and/or severance agreement between you and FivePrime or any Affiliate shall supersede this Agreement with respect to its subject matter.  Notwithstanding the foregoing, the vesting of this RSA shall not accelerate in the event of a “Covered Termination,” as that term is defined in any Executive Severance Benefits Agreements FivePrime has entered or may enter into with the Recipient.

	
Data Privacy
	
In order to administer the Plan, FivePrime may process personal data about you.  Such data may include the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information, and any other information that might be deemed appropriate by FivePrime to facilitate the administration of the Plan.

By accepting this grant, you give explicit consent to FivePrime to process any such personal data.

	
Consent to Electronic Delivery
	
FivePrime may choose to deliver certain statutory materials relating to the Plan in electronic form.  By accepting this grant you agree that FivePrime may deliver the Plan prospectus and FivePrime’s annual report to you in an electronic format.  If at any time you would prefer to receive paper copies of these documents, as you are entitled to, FivePrime would be pleased to provide copies.  Please contact FivePrime’s Secretary to request paper copies of these documents.

	
Other Agreements
	
You agree, as a condition of this grant, that you will execute such document(s) as necessary to become a party to any shareholder agreement or voting trust as FivePrime may require.

7

	
Code Section 409A
	
It is intended that the RSA comply with Code Section 409A or an exemption to Code Section 409A.  To the extent that FivePrime determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Code Section 409A as a result of any provision of any this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax.  The nature of any such amendment shall be determined by FivePrime.  For purposes of this Agreement, a termination of Service only occurs 

upon an event that would be a Separation from Service within the meaning of Code Section 409A.

 

This is not a stock certificate or a negotiable instrument.

By clicking the “Accept” button, you agree to all of the terms and conditions of this Agreement and in the Plan.

8

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