EXHIBIT A AURIGA LABORATORIES, INC. Notice of Exercise and Common Stock Purchase Agreement
EXHIBIT
A
Notice
of Exercise and Common Stock Purchase Agreement
THIS
AGREEMENT is dated as of ___________, ____, between Auriga Laboratories, Inc.,
a
Delaware corporation (the “Company”), and _________________
(“Purchaser”).
W
I T N E
S S E T H:
WHEREAS,
the Company and Purchaser are parties to that certain ___ Incentive ___
Nonstatutory Stock Option Agreement dated as of ___________, ____ (the “Option
Agreement”) pursuant to which the Purchaser has the right to purchase up to
___________________ shares of the Company’s common stock (the “Option Shares”);
and
WHEREAS,
the Option is exercisable with respect to certain of the Option Shares as of
the
date hereof; and
WHEREAS,
pursuant to the Option Agreement, Purchaser desires to purchase shares of the
Company as herein described, on the terms and conditions set forth in this
Agreement, the Option Agreement and the Auriga Laboratories, Inc. 2008 Omnibus
Stock Grant and Option Plan (the “Plan”). Certain capitalized terms used in this
Agreement are defined in the Plan.
NOW,
THEREFORE, it is agreed between the parties as follows:
SECTION
1: PURCHASE
OF SHARES.
(a) Pursuant
to the terms of the Option Agreement, Purchaser hereby agrees to purchase from
the Company and the Company agrees to sell and issue to Purchaser
________________ shares of the Company’s common stock (the “Stock”) for the
Exercise Price per share specified in the Option Agreement payable by personal
check, cashier’s check or money order, if permitted by the Option Agreement, as
follows:
_______________________________. Payment shall be delivered at the Closing,
as
such term is hereinafter defined.
(b) The
closing hereunder (the “Closing”) shall occur at the offices of the Company on
__________, ____, or such other time and place as may be designated by the
Company (the “Closing Date”).
SECTION
2: REPURCHASE
OPTION
All
unvested shares of the Stock purchased by the Purchaser pursuant to this
Agreement (sometimes referred to as the “Repurchase Option Stock”) shall be
subject to the following option (the “Repurchase Option”):
(a) In
the
event the Purchaser terminates service with the Company (“Service”) for any
reason, with or without cause, the Company may exercise the Repurchase
Option.
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(b) Purchaser
understands that the Stock is being sold in order to induce Purchaser to become
and/or remain associated with the Company and to work diligently for the success
of the Company and that the Repurchase Option Stock will continue to vest in
accordance with the schedule set forth in the Option Agreement. Accordingly,
the
Company shall have the right at any time within ninety (90) days after the
termination of Service to purchase from the Purchaser all shares of Stock
purchased hereunder which have not vested in accordance with the terms of such
vesting schedule in the Option Agreement. The purchase price for such unvested
shares of Repurchase Option Stock shall be the Exercise Price per share paid
by
Purchaser for such shares pursuant to the Option (the “Option Price”). The
purchase price shall be paid by certified or cashier’s check or by cancellation
of any indebtedness of Purchaser to the Company.
(c) Nothing
in this Agreement shall be construed as a right by purchaser to be employed
by
Company, or a parent or subsidiary of Company.
SECTION
3: EXERCISE
OF REPURCHASE OPTION
The
Repurchase Option shall be exercised by written notice signed by an officer
of
the Company and delivered or mailed as provided in Section 16 of this
Agreement and to the Escrow Agent as provided in Section 16 of the Joint
Escrow Instructions attached as Exhibit B
to the
Option Agreement.
SECTION
4: WAIVER,
ASSIGNMENT, EXPIRATION OF REPURCHASE OPTION
If
the
Company waives or fails to exercise the Repurchase Option as to all of the
shares subject thereto, the Company may, in the discretion of its Board of
Directors, assign the Repurchase Option to any other holder or holders of
preferred or common stock of the Company in such proportions as such Board
of
Directors may determine. In the event of such an assignment, the assignee shall
pay to the Company in cash an amount equal to the fair market value of the
Repurchase Option. The Company shall promptly, upon expiration of the 90-day
period referred to in Section 2 above, notify Purchaser of the number of
shares subject to the Repurchase Option assigned to such stockholders and shall
notify both the Purchaser and the assignees of the time, place and date for
settlement of such purchase, which must be made within ninety (90) days from
the
date of cessation of continuous employment. In the event that the Company and/or
such assignees do not elect to exercise the Repurchase Option as to all or
part
of the shares subject to it, the Repurchase Option shall expire as to all shares
which the Company and/or such assignees have not elected to
purchase.
SECTION
5: ESCROW
OF SHARES
(a) As
security for Purchaser’s faithful performance of the terms of this Agreement and
to ensure the availability for delivery of Purchaser’s shares upon exercise of
the Repurchase Option herein provided for, Purchaser agrees at the Closing
hereunder, to deliver to and deposit with the Escrow Agent named in the Joint
Escrow Instructions attached to the Option Agreement as Exhibit B,
the
certificate or certificates evidencing the Option Stock subject to the
Repurchase Option and two Assignments Separate from Certificate duly executed
(with date and number of shares in blank) in the form attached to the Option
Agreement as Exhibit D.
Such
documents are to be held by the Escrow Agent and delivered by the Escrow Agent
pursuant to the Joint Escrow Instructions, which instructions shall also be
delivered to the Escrow Agent at the Closing hereunder.
(b) Within
thirty (30) days after the last day of each successive completed calendar
quarter after the Closing Date, if Purchaser so requests, the Escrow Agent
will
deliver to Purchaser certificates representing so many shares of Stock as are
no
longer subject to the Repurchase Option (less such shares as have been
previously delivered). Ninety (90) days after cessation of Purchaser’s
employment with the Company the Company will direct the Escrow Agent to deliver
to Purchaser a certificate or certificates representing the number of shares
not
repurchased by the Company or its assignees pursuant to exercise of the
Repurchase Option (less such shares as have been previously
delivered).
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SECTION
6: ADJUSTMENT
OF SHARES
Subject
to the provisions of the Articles of Incorporation of the Company, if, from
time
to time during the term of the Repurchase Option:
(a) there
is
any stock dividend or liquidating dividend of cash and/or property, stock split
or other change in the character or amount of any of the outstanding securities
of the Company, or
(b) there
is
any consolidation, merger or sale of all or substantially all, of the assets
of
the Company,
then,
in
such event, any and all new, substituted or additional securities or other
property to which Purchaser is entitled by reason of Purchaser’s ownership of
the shares shall be immediately subject to such Repurchase Option with the
same
force and effect as the shares of Option Stock from time to time subject to
the
Repurchase Option. While the total Option Price shall remain the same after
each
such event, the Option Price per share of Option Stock upon exercise of the
Repurchase Option shall be appropriately and equitably adjusted as determined
by
the Board of Directors of the Company.
SECTION
7: THE
COMPANY’S RIGHT OF FIRST REFUSAL.
Before
any shares of Stock registered in the name of Purchaser and not subject to
the
Repurchase Option may be sold or transferred, such shares shall first be offered
to the Company as set forth in the Option Agreement.
SECTION
8: PURCHASER’S
RIGHTS AFTER EXERCISE OF REPURCHASE
OPTION OR RIGHT OF FIRST REFUSAL.
If
the
Company makes available, at the time and place and in the amount and form
provided in this Agreement, the consideration for the Stock to be repurchased
in
accordance with the provisions of Sections 2 and 7 of this Agreement, then
from
and after such time the person from whom such shares are to be repurchased
shall
no longer have any rights as a holder of such shares (other than the right
to
receive payment of such consideration in accordance with this Agreement). Such
shares shall be deemed to have been repurchased in accordance with the
applicable provisions hereof, whether or not the certificate(s) therefor have
been delivered as required by this Agreement.
SECTION
9: TRANSFER
BY PURCHASER TO CERTAIN TRUSTS.
Purchaser
shall have the right to transfer all or any portion of Purchaser’s interest in
the shares issued under this Agreement which have been delivered to Purchaser
under the provisions of Section 5 of this Agreement, to a trust established
by Purchaser for the benefit of Purchaser, Purchaser’s spouse or Purchaser’s
children, without being subject to the provisions of Section 7 hereof,
provided that the trustee on behalf of the trust shall agree in writing to
be
bound by the terms and conditions of this Agreement. The transferee shall
execute a copy of Exhibit C attached to the Option Agreement and file the
same with the Secretary of the Company.
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SECTION
10: LEGEND
OF SHARES.
All
certificates representing the Stock purchased under this Agreement shall, where
applicable, have endorsed thereon the legends set forth in the Option Agreement
and any other legends required by applicable securities laws.
SECTION
11: PURCHASER’S
INVESTMENT REPRESENTATIONS.
(a) This
Agreement is made with Purchaser in reliance upon Purchaser’s representation to
the Company, which by Purchaser’s acceptance hereof Purchaser confirms, that the
Stock which Purchaser will receive will be acquired with Purchaser’s own funds
for investment for an indefinite
period for Purchaser’s own account, not as a nominee or agent, and not with a
view to the sale or distribution of any part thereof, and that Purchaser has
no
present intention of selling, granting participation in, or otherwise
distributing the same, but subject, nevertheless, to any requirement of law
that
the disposition of Purchaser’s property shall at all times
be
within Purchaser’s
control. By executing this Agreement, Purchaser further represents that
Purchaser does not have any contract, understanding or agreement with any person
to sell, transfer, or grant participation, to such person or to any third
person, with respect to any of the Stock.
(b) Purchaser
understands that the Stock will not be registered or qualified under federal
or
state securities laws on the ground that the sale provided for in this Agreement
is exempt from registration or qualification under federal or state securities
laws and that the Company’s
reliance on such exemption is predicated on Purchaser’s representations set
forth herein.
(c) Purchaser
agrees that in no event will Purchaser make a disposition of any of the Stock
(including a disposition under Section 9 of this Agreement), unless and
until
(i) Purchaser
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition and
(ii) Purchaser
shall have furnished the Company with an opinion of counsel satisfactory to
the
Company to the effect that
(A) such
disposition will not require registration or qualification of such Stock under
federal or state securities laws or
(B) appropriate
action necessary for compliance with the federal or state securities laws has
been taken or
(iii) the
Company shall have waived, expressly and in writing, its rights under clauses
(i) and (ii) of this section.
(d) With
respect to a transaction occurring prior to such date as the Plan and Stock
thereunder are covered by a valid Form S-8 or similar federal registration
statement, this subsection shall apply unless the transaction is covered by
the
exemption in California Corporation Law or a similar broad based exemption.
In
connection with the investment representations made herein, Purchaser represents
that Purchaser is able to fend for himself or herself in the transactions
contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
Purchaser’s investment, has the ability to bear the economic risks of
Purchaser’s investment and has been furnished with and has had access to such
information as would be made available in the form of a registration statement
together with such additional information as is necessary to verify the accuracy
of the information supplied and to have all questions answered by the
Company.
(e) Purchaser
understands that if the Company does not register with the Securities and
Exchange Commission pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) or if a registration statement covering
the Stock (or a filing pursuant to the exemption from registration under
Regulation A of the Securities Act of 1933) under the Securities Act of 1933
is
not in effect when Purchaser desires to sell the Stock, Purchaser may be
required to hold the Stock for an indeterminate period. Purchaser also
acknowledges that Purchaser understands that any sale of the Stock which might
be made by Purchaser in reliance upon Rule 144 under the Securities Act of
1933
may be made only in limited amounts in accordance with the terms and conditions
of that Rule.
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SECTION
12: ASSISTANCE
TO PURCHASER UNDER RULE 144.
The
Company covenants and agrees that
(a) at
all times after it first becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, it will use its best efforts to
comply with the current public information requirements of Rule 144(c)(1) under
the Securities Act of 1933, and that if prior to becoming subject to such
reporting requirements an over-the-counter market develops for the Stock, it
will make publicly available the information required by
Rule 144(c)(2);
(b) it
will furnish Purchaser, upon request, with all information required for the
preparation and filing of Form 144; and
(c) it
will on a timely basis use its best efforts to file all reports required to
be
filed and make all disclosures, including disclosures of materially adverse
information, required to permit Purchaser to make the required representations
in Form 144.
SECTION
13: NO
DUTY TO TRANSFER IN VIOLATION HEREUNDER.
The
Company shall not be required (a) to transfer on its books any shares of
Stock of the Company which shall have been sold or transferred in violation
of
any of the provisions set forth in this Agreement or (b) to treat as owner
of such shares or to accord the right to vote as such owner or to pay dividends
to any transferee to whom such shares shall have been so
transferred.
SECTION
14: RIGHTS
OF PURCHASER.
Except
as
otherwise provided herein, Purchaser shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Company with respect
to the Stock.
SECTION
15: OTHER
NECESSARY ACTIONS.
The
parties agree to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this
Agreement.
SECTION
16: NOTICE.
Any
notice required or permitted hereunder shall be given in writing and shall
be
deemed effectively given upon the earliest of personal delivery, receipt or
the
third full day following deposit in the United States Post Office with postage
and fees prepaid, addressed to the other party hereto at the address last known
or at such other address as such party may designate by ten (10) days’ advance
written notice to the other party hereto.
SECTION
17: SUCCESSORS
AND ASSIGNS.
This
Agreement shall inure to the benefit of the successors and assigns of the
Company and, subject to the restrictions on transfer herein set forth, be
binding upon Purchaser and Purchaser’s heirs, executors, administrators,
successors and assigns. The failure of the Company in any instance to exercise
the Repurchase Option or rights of first offer described herein shall not
constitute a waiver of any other Repurchase Option or right of first offer
that
may subsequently arise under the provisions of this Agreement. No waiver of
any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of a like or different
nature.
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SECTION
18: APPLICABLE
LAW.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California, as such laws are applied to contracts entered into
and
performed in such state.
SECTION
19: NO
STATE QUALIFICATION.
THE
SALE
OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
SECTION
20: NO
ORAL MODIFICATION.
No
modification of this Agreement shall be valid unless made in writing and signed
by the parties hereto.
SECTION
21: ENTIRE
AGREEMENT.
This
Agreement and the Option Agreement constitute the entire complete and final
agreement between the parties hereto with regard to the subject matter
hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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Purchaser
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By:
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Its:
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EXHIBIT B
Joint
Escrow Instructions
_________,
_____
Secretary
_____________________
Dear
Sir
or Madam:
As
Escrow
Agent for both Auriga Laboratories, Inc., a Delaware corporation (the
“Company”), and ___________________ (“Purchaser”), you are hereby authorized and
directed to hold the documents delivered to you pursuant to the terms of that
certain Common Stock Purchase Agreement (the “Agreement”) of even date herewith,
to which a copy of these Joint Escrow Instructions is attached as Exhibit
B
to a
certain Stock Option dated _________________ (“Option Agreement”), in accordance
with the following instructions:
1. In
the
event the Company shall elect to exercise the Repurchase Option set forth in
the
Agreement, the Company shall give to Purchaser and you a written notice as
provided in the Agreement. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice,
including prompt delivery of stock certificates.
2. At
the
closing, you are directed (a) to date the stock assignment form or forms
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate or
certificates evidencing the shares to be transferred, to the Company against
the
simultaneous delivery to you of the purchase price (by certified or bank
cashier’s check) for the number of shares being purchased pursuant to the
exercise of the Repurchase Option.
3. Purchaser
irrevocably authorizes the Company to deposit with you any certificates
evidencing shares to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement. Purchaser does hereby
irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent
for the term of this escrow to execute with respect to such securities all
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated. Subject to the provisions of
this
Section 3, Purchaser shall exercise all rights and privileges, including
but not limited to, the right to vote and to receive dividends (if any), of
a
stockholder of the Company while the shares are held by you.
4. In
accordance with the terms of Section 5 of the Agreement, you may from time
to time deliver to Purchaser a certificate or certificates representing so
many
shares as are no longer subject to the Repurchase Option.
5. This
escrow shall terminate upon the release of all shares held under the terms
and
provisions hereof.
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6. If
at the
time of termination of this escrow you should have in your possession any
documents, securities or other property belonging to Purchaser, you shall
deliver all of same to Purchaser and shall be discharged from all further
obligations hereunder.
7. Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
8. You
shall
be obligated only for the performance of such duties as are specifically set
forth herein and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed by you to be genuine and to have
been signed or presented by the proper party or parties. You shall not be
personally liable for any act you may do or omit to do hereunder as Escrow
Agent
or as attorney-in-fact of Purchaser while acting in good faith and in the
exercise of your own good judgment, and any act done or omitted by you pursuant
to the advice of your own attorneys shall be conclusive evidence of such good
faith.
9. You
are
hereby expressly authorized to disregard any and all warnings given by any
of
the parties hereto or by any other person or corporation, excepting only orders
or process of courts of law, and are hereby expressly authorized to comply
with
and obey orders, judgments or decrees of any court. In case you obey or comply
with any such order, judgment or decree of any court, you shall not be liable
to
any of the parties hereto or to any other person, firm or corporation by reason
of such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
10. You
shall
not be liable in any respect on account of the identity, authority or rights
of
the parties executing or delivering or purporting to execute or deliver the
Agreement or any documents or papers deposited or called for
hereunder.
11. You
shall
not be liable for the outlawing of any rights under any statute of limitations
with respect to these Joint Escrow Instructions or any documents deposited
with
you.
12. You
shall
be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder
and may rely upon the advice of such counsel.
13. Your
responsibilities as Escrow Agent hereunder shall terminate if you shall cease
to
be Secretary of the Company or if you shall resign by written notice of each
party. In the event of any such termination, the Company shall appoint any
officer of the Company as successor Escrow Agent.
14. If
you
reasonably require other or further instruments in connection with these Joint
Escrow Instructions or obligations in respect hereto, the necessary parties
hereto shall join in furnishing such instruments.
15. It
is
understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the securities held by you hereunder,
you are authorized and directed to retain in your possession without liability
to anyone all or any part of said securities until such dispute shall have
been
settled either by mutual written agreement of the parties concerned or by a
final order, decree or judgment of a court of competent jurisdiction after
the
time for appeal has expired and no appeal has been perfected, but you shall
be
under no duty whatsoever to institute or defend any such
proceedings.
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16. Any
notice required or permitted hereunder shall be given in writing and shall
be
deemed effectively given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled.
17. By
signing these Joint Escrow Instructions, you become a party hereto only for
the
purpose of said Joint Escrow Instructions; you do not become a party to the
Agreement.
18. This
instrument shall be governed by and construed in accordance with the laws of
the
State of California.
19. This
instrument shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
| Very truly yours, | ||
| Auriga Laboratories, Inc. | ||
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| ESCROW AGENT: | PURCHASER: | |
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EXHIBIT C
Acknowledgment
of and Agreement to be Bound
By
the Notice of Exercise and Common Stock Purchase Agreement
of
The
undersigned, as transferee of shares of Auriga Laboratories, Inc., a Delaware
corporation, hereby acknowledges that he or she has read and reviewed the terms
of the Notice of Exercise and Common Stock Purchase Agreement of Auriga
Laboratories, Inc. and hereby agrees to be bound by the terms and conditions
thereof, as if the undersigned had executed said Agreement as an original party
thereto.
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Dated:
____________________, ______.
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EXHIBIT D
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE
RECEIVED _________________________________ hereby sells, assigns and transfers
unto _________________________ ________________________ (________) shares of
the
Common Stock of Auriga Laboratories, Inc. (the “Company”), standing in
__________ name on the books of the Company represented by Certificate No.
___________ herewith and hereby irrevocably constitutes and appoints
________________ Attorney to transfer said stock on the books of the Company
with full power of substitution in the premises.
Dated:
____________________, ______.
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