Document:

Document

Exhibit 10.13

Global Stock Option Agreement
VITAL THERAPIES, INC.
2014 EQUITY INCENTIVE PLAN
GLOBAL STOCK OPTION AGREEMENT – UNITED KINGDOM CONSULTANTS
Unless otherwise defined herein, the terms defined in the Vital Therapies, Inc. 2014 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Global Stock Option Agreement which includes the Notice of Stock Option Grant (the “Notice of Grant”), Terms and Conditions of Stock Option Grant (attached hereto as Exhibit A) and the Appendices (attached hereto as Appendix A and Appendix B) containing country specific terms and conditions (collectively, the “Agreement”)
NOTICE OF STOCK OPTION GRANT
Participant:                        
Participant has been granted an Option to purchase Common Stock of Vital Therapies, Inc. (the “Company”), subject to the terms and conditions of the Plan and this Agreement, as follows:
Grant Number                        
Date of Grant                        
Vesting Commencement Date                    
Number of Shares Granted                        
Exercise Price per Share    $                    
Total Exercise Price    $                    
Type of Option    Non-Statutory Stock Option
Term/Expiration Date    _______________________________
Vesting Schedule:
Subject to accelerated vesting as set forth below or in the Plan, this Option will be exercisable, in whole or in part, in accordance with the following schedule:
One forty-eighth (1/48th) of the Shares subject to the Option shall vest each month following the Vesting Commencement Date on the same day of the month as the Vesting Commencement Date 

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(and if there is no corresponding day, on the last day of the month), subject to Participant continuing to be a Service Provider through each such date. For purposes of this Agreement, Participant shall be deemed a Service Provider so long as he/she is providing services to the Company either directly or through his/her employment with Medical Research Network Limited (“MRN”) or any successor contract organization (also referred to as, “Participant’s Employer” or “Employer”). For purposes of this Agreement references to MRN shall include any successor contract organization through which Participant is providing services to the Company.
Termination Period:
           Unless otherwise provided, this Option will be exercisable for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death or Disability, in which case this Option will be exercisable for twelve (12) months after Participant ceases to be a Service Provider.  Notwithstanding the foregoing sentence, in no event may this Option be exercised after the Term/Expiration Date as provided above and may be subject to earlier termination as provided in Section 14(c) of the Plan.
By Participant’s signature and the signature of the Company’s representative below, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, this Agreement or any agreement between Participant and MRN (the “MRN Agreement”), including exhibits hereto, all of which are made a part of this document.  Participant has reviewed the Plan, this Agreement and the MRN Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan, the Agreement and the MRN Agreement.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Agreement.  Participant further agrees to notify the Company upon any change in the residence address indicated below.
PARTICIPANT    VITAL THERAPIES, INC.

            
Signature    By

            
Print Name    Title
Address:

            
            

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EXHIBIT A
TERMS AND CONDITIONS OF STOCK OPTION GRANT
1.Grant of Option.  The Company hereby grants to the Participant named in the Notice of Grant (the “Participant”) an option (the “Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), subject to all of the terms and conditions in this Agreement and the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of this Agreement will prevail. Capitalized terms used and not defined in this Agreement will have the meaning set forth in the Plan.
2.    Vesting Schedule.  Except as provided in Section 3, the Option awarded by this Agreement will vest in accordance with the vesting provisions set forth in the Notice of Grant.  Shares scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in Participant in accordance with any of the provisions of this Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs.
3.    Administrator Discretion.  The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the unvested Option at any time, subject to the terms of the Plan.  If so accelerated, such Option will be considered as having vested as of the date specified by the Administrator.
4.    Exercise of Option.  
(a)    Right to Exercise.  This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Agreement.
(b)    Method of Exercise.  This Option is exercisable by delivery of an exercise notice, in the form attached as Exhibit B (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice will be completed by Participant and delivered to the Company.  This Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.  Participant may only exercise this Option concurrent with a sale of underlying shares and only through Participant’s account with E-Trade or another broker designated by the Company (a “Designated Broker”). 
5.    Method of Payment.  E-Trade or the Designated Broker will remit all proceeds from the exercise and sale of the underlying shares to the Company. The Company will apply an amount of the proceeds to the payment of the exercise price and will transfer the balance of the proceeds to Participant’s Employer for payment of employee’s and employer’s tax obligations on account of the exercise of the 

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Options, including all employee and employer National Insurance Contributions, with the balance remaining after payment of such tax obligations to be transferred to Participant by Participant’s Employer.
6.    Tax Obligations.  Participant agrees that he/she is responsible for all income, employment, National Insurance Contributions or other tax‐related items and other taxes which Participant’s Employer determines must be withheld on account of the exercise of the Options or related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”) which is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or Participant’s Employer.  Participant further acknowledges that the Company and Participant’s Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including, but not limited to, the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Option to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result.  Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the Company and/or the Participant’s Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
                 Participant further agrees that Participant’s Employer may deduct the amounts required to satisfy all obligations in respect of income tax, employee’s National Insurance Contributions and employer’s National Insurance Contributions from the proceeds transferred from the Company prior to payment of the remaining balance of the proceeds to Participant. Prior to the relevant taxable or tax withholding event, as applicable, Participant agrees to cooperate with the Company and Participant’s Employer if other arrangements are necessary to satisfy all Tax-Related Items.
                Participant authorizes the Company Participant’s Employer to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the amount of such Tax-Related Items, (iii) request Participant’s Employer to withhold the amount of such Tax-Related Items from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Participant’s Employer, (iv) if Participant is a U.S. taxpayer, delivering to the Company already owned Shares having a Fair Market Value equal to such Tax-Related Items, or (v) if the Shares are then registered under the Securities Act and listed or quoted on a recognized national securities exchange, by selling a sufficient number of such Shares either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization without further consent) as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the amount of the Tax-Related Items.  For the avoidance of doubt, if Participant is a Service Provider outside the U.S., payment of Tax-Related Items may not be effectuated by surrender of other Shares with a Fair Market Value equal to the amount of any Tax-Related Items.
Depending on the withholding method, the Company or the Participant’s Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case 

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Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Shares equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Exercised Shares, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items.
Finally, Participant agrees to pay to the Company or the Participant’s Employer any amount of Tax-Related Items that the Company or the Participant’s Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with his or her obligations in connection with the Tax-Related Items.
7.    Rights as Stockholder.  Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company. Participant acknowledges and understands that the sale of the underlying Shares will be concurrent with the exercise of the Options.
8.    Nature of Grant.  In accepting this Option, Participant acknowledges, understands and agrees that:
(a)the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted in the past; 
(b)all decisions with respect to future stock options or other grants, if any, will be at the sole discretion of the Company; 
(c)Participant is voluntarily participating in the Plan; 
(d)the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty; 
(e)if the underlying Shares do not increase in value, this Option will have no value; and
(f)if Participant is providing services outside the U.S., neither the Company nor any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of this Option or of any amounts due to Participant pursuant to the exercise of this Option or the subsequent sale of the Exercised Shares.
9.    No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the Exercised Shares.  Participant is hereby advised to consult 

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with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
10.    Data Privacy.  Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other grant materials by and among, as applicable, the Company and Participant’s Employer for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
Participant understands that the Company and Participant’s Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. 
Participant understands that Data may be transferred to a third party stock plan service provider, which may assist the Company (presently or in the future) with the implementation, administration and management of the Plan.  Participant understands that the recipients of Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the U.S.) may have different data privacy laws and protections than Participant’s country.  Participant understands that if Participant resides outside the U.S., he or she may request a list with the names and addresses of any potential recipients of Data by contacting the Company’s human resources representative.  Participant authorizes the Company, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purposes of implementing, administering and managing Participant’s participation in the Plan.  Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan.  Participant understands that if Participant resides outside the U.S., he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s human resources representative.  Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis.  If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her relationship as a Service Provider and status with the Company or subsidiary or the Participant’s Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant this Option or other equity awards or administer or maintain such awards.  Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan.  For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact the Company’s human resources representative.

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11.    No Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE PARTICIPANT’S EMPLOYER OR THE COMPANY AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER.  PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE PARTICIPANT’S EMPLOYER OR THE COMPANY TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
12.    Address for Notices.  Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at Vital Therapies, Inc., 15010 Avenue of Science, Suite 200, San Diego, CA 92128, or at such other address as the Company may hereafter designate in writing. Any notice to be given to MRN under the terms of this Agreement will be addressed to MRN at Talon House, Presley Way, Crownhill, Milton Keynes, Buckinghamshire MK8 0ES, or at such other address as MRN may hereafter designate in writing.
13.    Non-Transferability of Option.  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Participant only by Participant.
14.    Binding Agreement.  Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
15.    Additional Conditions to Issuance of Stock.  If at any time the Company will determine, in its discretion, that the listing, registration, qualification or rule compliance of the Shares upon any securities exchange or under any state, federal or foreign law, the tax code and related regulations or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the purchase by, or issuance of Shares to, Participant (or his or her estate) hereunder, such purchase or issuance will not occur unless and until such listing, registration, qualification, rule compliance, consent or approval will have been completed, effected or obtained free of any conditions not acceptable to the Company.  Assuming such compliance, for income tax purposes the Exercised Shares will be considered transferred to Participant on the date the Option is exercised with respect to such Exercised Shares.
16.    Agreement Governs.  This Agreement is subject to all terms and provisions of the Plan; however, in the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of this Agreement will govern.  Capitalized terms used and not defined in this Agreement will have the meaning set forth in the Plan.

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17.    Administrator Authority.  The Administrator will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares subject to the Option have vested).  All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons.  No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.
18.    Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to Options awarded under the Plan or future options that may be awarded under the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means.  Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.
19.    Captions.  Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
20.    Agreement Severable.  In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.
21.    Modifications to the Agreement.  This Agreement constitutes the entire understanding of the parties on the subjects covered.  Participant expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein.  Modifications to this Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company.  Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Participant, to comply with any applicable tax or other regulatory law or regulation.
22.    Amendment, Suspension or Termination of the Plan.  By accepting this Award, Participant expressly warrants that he or she has received an Option under the Plan, and has received, read and understood a description of the Plan.  Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.
23.    Governing Law and Venue.  This Agreement will be governed by the laws of Delaware, without giving effect to the conflict of law principles thereof.  For purposes of litigating any dispute that arises under this Option or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of San Diego County, California, or the federal courts for the United States for the Southern District of California, and no other courts, where this Option is made and/or to be performed. 

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24.    Insider Trading Restrictions/Market Abuse Laws.  Participant acknowledges that, depending on his or her country, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by Applicable Laws).  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy.  Participant acknowledges that it is his or her responsibility to comply with any applicable restrictions, and Participant is advised to speak to his or her personal advisor on this matter.
25.    Language.  If Participant has received this Agreement, or any other document related to this Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
26.    Appendix.  Notwithstanding any provisions in this Agreement, this Option shall be subject to any special terms and conditions for Participant’s country set forth in the Appendices attached to this Agreement.  Moreover, if Participant relocates to one of the countries included in the Appendices, the special terms and conditions for such country will apply to Participant to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.  The Appendices constitute part of this Agreement.
27.    Waiver.  Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other participant.

EXHIBIT B
VITAL THERAPIES, INC.
2014 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Vital Therapies, Inc.
15010 Avenue of Science, Suite 200
San Diego, CA 92128

Attention:  Stock Administration
1.Exercise of Option.  Effective as of today, ________________, _____, the undersigned (“Purchaser”) hereby elects to purchase ______________ shares (the “Shares”) of the Common Stock of Vital Therapies, Inc. (the “Company”) under and pursuant to the 2014 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated ________ (the “Agreement”).  The purchase price for the Shares will be $_____________, as required by the Agreement.
2.    Delivery of Payment.  Purchaser hereby herewith orders the sale of all the Shares.  E-Trade (or other Designated Broker) is instructed to deliver to the Company all of the proceeds of the sale of the Shares and that the Company apply the proceeds to the full purchase price of the Shares and to remit the balance of the proceeds to the Participant’s Employer for payment of any required tax withholding to be paid by Participant and/or Participant’s Employer in connection with the exercise of the Option. 
3.    Representations of Purchaser.  Purchaser acknowledges that Purchaser has received, read and understood the Plan and the Agreement and agrees to abide by and be bound by their terms and conditions.
4.    Rights as Stockholder.  Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company. 
5.    Tax Consultation.  Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase and sale of the Shares.  Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or sale of the Shares and that Purchaser is not relying on the Company for any tax advice.
6.    Entire Agreement; Governing Law.  The Plan and Agreement are incorporated herein by reference.  This Exercise Notice, the Plan and the Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and Purchaser; provided, however, Purchaser and agrees that he/she is bound by the terms of that certain VTL Equity Award Agreement entered into between Purchaser and Medical Research Network Limited (or successor employer). This Exercise Notice is governed by the internal substantive laws, but not the choice of law rules, of the State of Delaware, United States of America.
Submitted by:            Accepted by:
PURCHASER            VITAL THERAPIES, INC.

                    
Signature        By
                    
Print Name        Its
Address:    

        
        
        
        

        
Date Received
Appendix A
COUNTRY-SPECIFIC TERMS AND CONDITIONS
FOR EMPLOYEES IN THE UNITED KINGDOM.
This Appendix includes additional terms and conditions that govern the Option granted to Participant under the Plan if Participant is an Employee and resides and/or works in one of the countries listed below.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan and/or this Agreement to which this Appendix is attached.
If Participant is a citizen or resident of a country other than the one in which he or she is currently working and/or residing, transfers to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the Company shall, in its discretion, determine the extent to which the special terms and conditions contained herein shall be applicable to Participant.
In accepting this Option, Participant acknowledges, understands and agrees that:
1.    this Option and any Shares acquired under the Plan, and the income and value of same, are not intended to replace any pension rights or compensation;
2.    this Option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments; 
3.    no claim or entitlement to compensation or damages shall arise from forfeiture of this Option resulting from the termination of Participant’s employment (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), and in consideration of the grant of this Option to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary, waives his or her ability, if any, to bring any such claim, and releases the Company and any Parent or Subsidiary from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim; and
4.    for purposes of this Option, Participant’s employment relationship will be considered terminated as of the date Participant is no longer actively providing services to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where Participant is providing services or the terms of Participant’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, (i) Participant’s right to vest in this Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., if Participant is an Employee, Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is an Employee or Participant’s employment agreement, if any, unless Participant is providing bona fide services during such time);  and (ii) the Termination Period (if any) during which Participant may exercise this Option after such termination of Participant’s employment relationship will commence on the date Participant ceases to actively provide service and will not be extended by any notice period mandated under employment laws in the jurisdiction where Participant is employed or Participant’s employment agreement, if any; the Administrator shall have the exclusive discretion to determine when Participant is no longer actively providing service for purposes of this Option (including whether Participant may still be considered to be providing service while on a leave of absence).
Notifications
This Appendix also includes information regarding exchange controls and certain other issues of which Participant should be aware with respect to Participant’s participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of July 2014.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that Participant not rely on the information noted herein as the only source of information relating to the consequences of Participant’s participation in the Plan because the information may be out of date by the time Participant vests in or exercises this Option or sells any Exercised Shares.
In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result.  Accordingly, Participant is advised to seek appropriate professional advice as to how the Applicable Laws in his or her country may apply to his or her situation.
Finally, Participant understands that if he or she is a citizen or resident of a country other than the one in which he or she is currently residing and/or working, transfers to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the notifications contained herein may not be applicable to Participant in the same manner. 
Terms and Conditions
Responsibility for Taxes.  The following provisions supplement Section 6 of the Terms and Conditions of Stock Option Grant:
Participant must pay to the Company or Subsidiary or contracting agency employing Participant (“Employer”) any amount of income tax due that the Company or the Employer may be required to account to Her Majesty’s Revenue and Customs (“HMRC”) with respect to the event giving rise to the Tax-Related Items (the “Taxable Event”) that cannot be satisfied by the means described in this Section 6(a).  If payment or withholding of the income tax is not made within ninety (90) days of the end of the U.K. tax year in which the Taxable Event occurs or such other period as required under U.K. law (the “Due Date”), Participant agrees that the amount of any uncollected income tax will (assuming Participant is not a director or executive officer of the Company, within the meaning of Section 13(k) of the Exchange Act) constitute a loan owed by Participant to the Company or the Employer (as applicable), effective on the Due Date.  Participant agrees that the loan will bear interest at the then-current HMRC official rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to in Section 6 of the Terms and Conditions.  If Participant fails to comply with his or her obligations in connection with the income tax due as described in this section, the Company may refuse to deliver the Shares acquired under the Plan.  
Notwithstanding the foregoing, if Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), Participant will not be eligible for such a loan to cover the income tax due.  In the event that Participant is a director or executive officer and the income tax due is not collected from or paid by Participant by the Due Date, the amount of any uncollected tax will constitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) will be payable.  Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit.  Participant acknowledges that the Company or the Employer may recover any such NICs at any time thereafter by any of the means referred to in Section 6 of the Terms and Conditions.

 
Appendix B
COUNTRY-SPECIFIC TERMS AND CONDITIONS
FOR CONSULTANTS IN THE UNITED KINGDOM
This Appendix includes additional terms and conditions that govern this Option granted to Participant under the Plan if Participant is a consultant and resides and/or works in one of the countries listed below.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan and/or this Agreement to which this Appendix is attached.
If Participant is a citizen or resident of a country other than the one in which he or she is currently working and/or residing, transfers to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the Company shall, in its discretion, determine the extent to which the special terms and conditions contained herein shall be applicable to Participant.
In accepting this Option, Participant acknowledges, understands and agrees that:
1.    this Option and any Shares acquired under the Plan, and the income and value of same, are not intended to replace any compensation owed to Participant as a contractor;
2.    this Option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation for any purpose and shall not be treated as employment-related income; 
3.    no claim or entitlement to compensation or damages shall arise from forfeiture of this Option resulting from the termination of Participant’s relationship as a Service Provider (for any reason whatsoever, whether or not later found to be invalid or to be subject to employment laws in the jurisdiction where Participant is providing service or the terms of Participant’s service agreement, if any), and in consideration of the grant of this Option to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary, waives his or her ability, if any, to bring any such claim, and releases the Company, any Parent or Subsidiary from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim; and
4.    for purposes of this Option, Participant’s relationship as a Service Provider will be considered terminated as of the date Participant is no longer providing service to the Company, any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or to be subject to the employment or other laws in the jurisdiction where Participant is providing service or the terms of Participant’s service agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, (i) Participant’s right to vest in this Option under the Plan, if any, will terminate as of such date and will not be extended by any notice period; and (ii) the Termination Period (if any) during which Participant may exercise this Option after such termination of Participant’s relationship as a Service Provider will commence on the date Participant ceases to provide service; the Administrator shall have the exclusive discretion to determine when Participant is no longer actively providing service for purposes of this Option.
Notifications
This Appendix also includes information regarding exchange controls and certain other issues of which Participant should be aware with respect to Participant’s participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of July 2014.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that Participant not rely on the information noted herein as the only source of information relating to the consequences of Participant’s participation in the Plan because the information may be out of date by the time Participant vests in or exercises this Option or sells any Exercised Shares.
In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result.  Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to his or her situation.
Finally, Participant understands that if he or she is a citizen or resident of a country other than the one in which he or she is currently residing and/or working, transfers to another country after the Date of Grant, or is considered a resident of another country, the notifications contained herein may not be applicable to Participant in the same manner. 
Terms and Conditions
Responsibility for Taxes.  The following provisions supplement Section 6 of the Terms and Conditions of Stock Option Grant:
Participant must pay to the Company or Subsidiary or contracting agency employing Participant (“Employer”) any amount of income tax due that the Company or the Employer may be required to account to Her Majesty’s Revenue and Customs (“HMRC”) with respect to the event giving rise to the Tax-Related Items (the “Taxable Event”) that cannot be satisfied by the means described in Section 6.  If payment or withholding of the income tax is not made within ninety (90) days of the end of the U.K. tax year in which the Taxable Event occurs or such other period as required under U.K. law (the “Due Date”), Participant agrees that the amount of any uncollected income tax will (assuming Participant is not a director or executive officer of the Company, within the meaning of Section 13(k) of the Exchange Act) constitute a loan owed by Participant to the Company or the Employer (as applicable), effective on the Due Date.  Participant agrees that the loan will bear interest at the then-current HMRC official rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to in Section 6 of the Terms and Conditions.  If Participant fails to comply with his or her obligations in connection with the income tax due as described in this section, the Company may refuse to deliver the Shares acquired under the Plan.  
Notwithstanding the foregoing, if Participant becomes a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), Participant will not be eligible for such a loan to cover the income tax due.  In the event that Participant is a director or executive officer and the income tax due is not collected from or paid by Participant by the Due Date, the amount of any uncollected tax will constitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) will be payable.  Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit.  Participant acknowledges that the Company or the Employer may recover any such NICs at any time thereafter by any of the means referred to in Section 6 of the Terms and Conditions.

- 9 -Exhibit 10.1

AGREEMENT

This Agreement is made this 12th day of March 2018 between Good Times Restaurants Inc. (“Good Times”) and Robert J. Stetson and where applicable his controlled affiliates, and Charles Jobson and where applicable his controlled affiliates (“Stetson and Jobson”).

 

	1.	
Amendments.  The Board of Directors of Good Times shall amend the ByLaws of Good Times to reduce the number of Directors to five to be effective upon the completion of the fiscal 2017 annual shareholders meeting of Good Times.  No other change shall be made to the ByLaws prior to such shareholders meeting nor shall any change to the Articles of Incorporation be recommended for approval at such shareholders meeting without the consent of Stetson and Jobson. From the date of execution of this Agreement through May 24, 2018, Good Times agrees that no individuals (including any individual listed in the second sentence) shall be added to the Board of Directors to fill any vacancy currently existing on the Board of Directors.

 

	2.	
Shareholders Meeting.  The fiscal 2017 annual shareholders meeting of Good Times shall be held May 24, 2018.  The proxy statement of Good Times for the annual shareholders meeting shall propose the following persons to be elected as Directors: Geoffrey Bailey, Boyd Hoback, Robert Stetson, Charles Jobson and Jason Maceda.  By their execution of this Agreement Stetson and Jobson agree to vote at the annual shareholders meeting in favor of (i) the foregoing persons as Directors and the proxy statement of Good Times for the annual shareholders meeting shall state such agreement, and (ii) and the Company’s Value-for-Value Option Exchange program unanimously approved by the Board of Directors on December 8, 2017, and the expansion of the Company’s Omnibus Plan unanimously approved by the Board of Directors of the Company on January 3, 2018.

 

	3.	
Committees.  The committees of Good Times Board of Directors and the members thereof following the 2017 annual shareholders meeting shall consist of the following:

 

Audit Committee: Jason Maceda, Chairman, and Stetson and Jobson

 

Compensation Committee: Geoffrey Bailey, Chairman, and Stetson and Jobson

 

Geoffrey Bailey shall continue to act as the Chairman of the Board of Directors until the earlier of (i) the annual shareholders meeting for the 2019 fiscal year, or (ii) his resignation as such or his removal by a vote of not less than two-thirds of the members of the Board of Directors.

 

	4.	
Amendment of Schedule 13D/A and Issuance of Press Release.  Promptly after the execution of this Agreement:

 

		(i)	
Stetson and Jobson shall amend their Schedule 13D/A filing to provide that they are no longer intending to vote for and to solicit proxies to vote for a change in the composition of the Board of Directors of Good Times from that described in section 2 above, and in other respects Item 4 of the amendment shall substantially be in the form attached hereto as Exhibit A; and

 

 

		(ii)	
Good Times shall issue a press release describing the agreement for the restructured Board of Directors described in section 2 above and its belief that the restructured Board of Directors is in the best interests of the shareholders of Good Times, and in other respects such press release shall substantially be in the form attached hereto as Exhibit B.

 

		(iii)	
Good Times shall timely file a form 8-K, reporting on the terms of this Agreement and on the actions described in subsections (i) and (ii) above.

 

	5.	
Mutual Release.  Good Times and the present members of the Board of Directors, on the one hand, and Stetson and Jobson, on the other hand, by their execution of this Agreement shall release and discharge the other of all claims and liabilities arising from actions occurring between October 2017 and the date of this Agreement.

 

	6.	
Departing Directors.  The departing Directors of the Board of Directors shall receive the following benefits in recognition of their long services for Good Times:

 

		(i)	
Prorated compensation based upon their annual rate of compensation for the fiscal 2018 year to the date of annual shareholders meeting;

 

		(ii)	
Restricted stock grants with a trading market value of $20,000, based on the average closing price of Good Times over the thirty trading days prior to the date of this Agreement per person assuming that Good Times has achieved its full bonus target for the 2017 fiscal year; and

 

		(iii)	
Extension of the period to exercise their non-qualified stock options extending three years following the fiscal 2017 shareholders meeting.

 

	7.	
Counterparts.  This Agreement may be executed in counterparts electronically or by facsimile.

  

[Signatures on following page.]

 

- 2 -

 

	 	 	
GOOD TIMES RESTAURANTS INC.

	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Geoffrey Bailey

	 	By: 	
/s/ Boyd E. Hoback

	
Geoffrey Bailey

	 	Name: 	
Boyd E. Hoback

	 	 	Title: 	
President and CEO

	 	 	 	 
	 	 	 	 
	
/s/ Boyd Hoback

	 	 	 
	
Boyd Hoback

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Alan Teran

	 	 	 
	
Alan Teran

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Eric Reinhard

	 	 	 
	
Eric Reinhard

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Gary Heller

	 	 	 
	
Gary Heller

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Robert J. Stetson

	 	 	 
	
Robert J. Stetson

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
/s/ Charles Jobson

	 	 	 
	
Charles Jobson

	 	 	 

 

- 3 -

 

EXHIBIT A

Item 4 of the Schedule 13D is hereby amended by adding the following paragraphs to the end of such Item:

On [_], Jobson, Stetson, and the Issuer amicably entered into the Settlement Agreement attached hereto as Exhibit [_] (the “Settlement Agreement”).  Pursuant to the terms of the Settlement Agreement, Jobson and Stetson have agreed to cause Delta and REIT to withdraw the Nomination Letter.  In exchange, the Issuer has agreed to nominate Geoffrey Bailey, Boyd Hobak, Jason Maceda, Stetson and Jobson for election to the Issuer’s board of directors at the Issuers annual meeting of stockholders to be held on May 24, 2018.  Jobson and Stetson have agreed to vote for such persons at such meeting, and intend to cause the Reporting Persons to do the same. The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the Settlement Agreement, as copy of which is attached as Exhibit [_] hereto, which exhibit is incorporated by reference in its entirety in this Item 4.

Accordingly, Delta and REIT have withdrawn the Nomination Letter and no longer intend to solicit proxies for the election of the Nominees. In light of the execution of the Settlement Agreement, the Reporting Persons look forward to working constructively with the Issuer and, the case of Jobson and Stetson in their roles as directors, working together with the other directors to enhance shareholder value.

A-1

 

EXHIBIT B

 

	
NEWS RELEASE

For Immediate Release

March 12, 2018

	
 

 

Nasdaq Capital Markets - GTIM

 

 

Good Times Restaurants, Inc. Announces Agreement with Principal Shareholders and Former Directors

 

(DENVER, CO) Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Good Times Burgers & Frozen Custard, a regional quick service restaurant chain focused on fresh, high quality, all natural products and Bad Daddy’s Burger Bar, a full service, upscale concept today announced that it has entered into an agreement with Delta Partners, LP (“Delta Partners”) and REIT Redux LP (“REIT Redux”), principal shareholders of the Company, and Robert Stetson and Charles Jobson, former members of the Company’s Board of Directors, whereby the Company will prior to its 2018 Annual Meeting of Shareholders reduce the number of its Directors from seven to five and, with the support of Delta Partners and REIT Redux, nominate for election at the meeting as members of its Board of Directors Messrs. Stetson and Jobson, the Company’s President and Chief Executive Officer Boyd Hoback, its Chairman Geoffrey Bailey and Jason Maceda, Senior Vice President, Baskin-Robbins U.S. and Canada.  Mr. Hoback stated that, “We are confident that the members of the restructured Board will work together for the continued long-term enhancement of shareholder value.”

 

About Good Times Restaurants Inc.: Good Times Restaurants Inc. (GTIM) operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants located primarily in Colorado, in its wholly owned subsidiary, Good Times Drive Thru Inc.  Good Times provides a menu of high quality all-natural hamburgers, 100% all-natural chicken tenderloins, fresh frozen custard, natural cut fries, fresh lemonades and other unique offerings.  Good Times currently operates and franchises a total of 36 restaurants.

 

GTIM owns, operates, franchises and licenses 27 Bad Daddy’s Burger Bar restaurants through its wholly-owned subsidiaries.  Bad Daddy’s Burger Bar is a full service, upscale, “small box” restaurant concept featuring a chef driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft microbrew beers in a high energy atmosphere that appeals to a broad consumer base.

 

Good Times Forward Looking Statements: This press release contains forward looking statements within the meaning of federal securities laws.  The words “intend,” “may,” “believe,” “will,” “should,” “anticipate,” “expect,” “seek” and similar expressions are intended to identify forward looking statements.  These statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from results expressed or implied by the forward-looking statements.  These risks include such factors as the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, and other matters discussed under the “Risk Factors” section of Good Times’ Annual Report on Form 10-K for the fiscal year ended September 26, 2017 filed with the SEC.

 

B-1

 

Although Good Times may from time to time voluntarily update its forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

 

GOOD TIMES RESTAURANTS INC INVESTOR RELATIONS CONTACTS:

Boyd E. Hoback, President and CEO, (303) 384-1411

Ryan Zink, Chief Financial Officer (303) 384-1432

Christi Pennington (303) 384-1440

 

B-2

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