TRANSITION AND AMENDMENT AGREEMENT
This Transition and Amendment Agreement (this Agreement) is made and entered into as of December 13, 2019 (the Transition Date) by and between Dr. Bhaskar Chaudhuri (the Dr. Chaudhuri) and Arcutis Biotherapeutics, Inc., a Delaware limited liability company (the Company and together with the Dr. Chaudhuri, the Parties and each, a Party).
WHEREAS, the Parties previously entered into that certain Consulting Agreement dated August 16, 2016 (together, the Consulting Agreement), pursuant to which Dr. Chaudhuri agreed to serve as Chair of the Companys board of directors (the Board).
WHEREAS, the Parties have agreed to end Dr. Chaudhuris service as Chair of the Board, effective as of the Transition Date.
WHEREAS, in connection with such transition, the Parties also mutually desire, in order to clarify, confirm and harmonize the equity vesting arrangements that will apply to Company equity held by Dr. Chaudhuri in connection with his continued service as a member of the Board, to amend certain terms of (1) that certain Stock Purchase Agreement dated as of August 16, 2016 (the Stock Purchase Agreement) and (2) that certain Notice of Stock Option Grant and Stock Option Agreement, each dated as of March 13, 2019 (the March 2019 Stock Option Agreement).
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises herein contained, and for other valid consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Termination of Consulting Agreement. The Parties hereby agree to terminate the Consulting Agreement, effective as of the Transition Date. The Parties each hereby waive any notice requirements with respect to such termination under the Consulting Agreement.
2. Amendment to Section 5(a) of the Stock Purchase Agreement. In connection with Dr. Chaudhuris continued service as a member of the Board and in order to confirm that the stock purchased pursuant to the Stock Purchase Agreement will continue to vest in connection with such Board service, the Parties agree that Section 5(a) of the Stock Purchase Agreement is hereby amended to provide that employed by the Company, as such term is used in the Stock Purchase Agreement, shall mean that Dr. Chaudhuri is rendering substantial services as an officer, employee, consultant, independent contractor or director to the Company or to any affiliate of the Company, as determined by the Board.
3. Amendment to Notice of Stock Option Grant Vesting Schedule. In addition, the Parties agree that the Notice of Stock Option Grant associated with the March 2019 Stock Option Agreement is hereby amended, such that the second paragraph of the section entitled Vesting Schedule as set forth on the Notice of Stock Option Grant is replaced in its entirety with the following:
In addition to the vesting arrangements outlined above and notwithstanding anything to the contrary in the Stock Option Agreement, the following vesting acceleration terms (the Vesting Acceleration Terms) shall apply:
If a Change of Control occurs prior to the termination of Optionees arrangement to provide services to the Corporation, then the vesting of all shares subject to the Option shall accelerate in full, effective as of the closing of the Change of Control.