Exhibit 10.29
COMBINATORX, INCORPORATED
FOUNDER'S AGREEMENT
This Founder's Agreement (this "Agreement") is made and entered into as of
this 26th day January, 2001, by and between CombinatoRx, Incorporated, a
Delaware corporation (the "Company") and Xxxxxx Xxxxx (the "Founder").
RECITALS
WHEREAS, the Founder is now the owner of 1,500 shares of Common Stock of
the Company of which 375 shares have vested and are not subject to the
Repurchase Option (as defined below) and of which 1,125 shares (the "Shares")
are subject to the Repurchase Option pursuant to the terms of this Agreement.
WHEREAS, the parties desire to entire into this Agreement in connection
with, and as a condition precedent to, the issuance and sale of shares of the
Company's Series B Preferred Stock to certain investors.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. REPURCHASE OPTION.
(a) In the event that the Founder's employment with or services to
the Company are terminated other than as a result of a Termination Event before
all of the Shares are released from the Repurchase Option of the Company (as
provided in Section 2), the Company shall have, upon the date of such
termination (as reasonably fixed and determined by the Company), an irrevocable,
exclusive option (the "Repurchase Option") for a period of ninety (90) days from
such date to repurchase all or any portion of the Unreleased Shares (as defined
in Section 2) at such time, at the original purchase price per share (the
"Repurchase Price"). The Repurchase Option shall be exercised by the Company by
written notice to the Founder or the Founder's executor (with a copy to the
Escrow Holder) and, at the Company's option, (i) by delivery to the Founder or
the Founder's executor with such notice of a check in the amount of the
Repurchase Price for the Shares being repurchased, (ii) by cancellation by the
Company of an amount of the Founder's indebtedness to the Company equal to the
Repurchase Price for the Shares being repurchased or (iii) by a combination of
(i) and (ii) so that the combined payment and cancellation of indebtedness
equals such Repurchase Price. Upon delivery of such notice and the payment of
the Repurchase Price as described above, the Company shall become the legal and
beneficial owner of the Shares being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of Shares being repurchased by the Company.
A "Termination Event" shall mean any of the following events: (x) the death of
the Founder, (y) the Founder's election to terminate his employment with the
Company as a direct result of the Company's material reduction in the
nature of the Founder's responsibilities regarding his employment position with
the Company or (z) the Company's election to terminate the Founder's employment
with the Company other than in connection with any of the following relating to
the Founder: (1) conviction of, the indictment for, or the entering of a guilty
plea or plea of no contest with respect to, a felony, any act involving moral
turpitude, or a misdemeanor where imprisonment is a possible punishment, (2)
commission of any act of theft, fraud or dishonesty, (3) improper disclosure of
the Company's confidential or proprietary information, (4) any action involving
moral turpitude which has a detrimental effect on the Company's reputation or
business, (5) failure or inability to perform any reasonably assigned duties
after written notice from the Company of, and a reasonable opportunity to cure,
such failure or inability, (6) any breach of this Agreement or any employment,
consulting, advisory or other agreement with the Company, (7) a course of
conduct amounting to gross incompetence, (8) chronic and unexcused absenteeism,
(9) unlawful appropriation of a business opportunity, or (10) misconduct in
connection with the performance of any duties or responsibilities, including,
without limitation, misappropriation of funds or property of the Company,
securing or attempting to secure personally any profit in connection with any
transaction entered into on behalf of the Company, misrepresentation to the
Company, or any violation of law or regulations on Company premises or to which
the Company is subject.
2. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) One thirty-sixth (1/36) of the Shares shall be released from
the Repurchase Option on the last day of each full calendar month following
January 25, 2001 until all the Shares have been released from the Repurchase
Option provided that, except as set forth in the immediately following sentence,
in each case that the Founder's services as an employee of or consultant to the
Company have not been terminated prior to the date of any such release. In the
event that a Termination Event has occurred, all of the Unreleased Shares shall
be immediately released from the Company's Repurchase Option.
(b) Any of the Shares which have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares." The Shares
which have been released from the Repurchase Option shall be delivered to the
Founder at the Founder's request.
(c) This Agreement shall not confer upon the Founder any right with
respect to continuation of employment by the Company, nor shall it interfere
with or affect in any manner the right or power of the Company, or a parent or
subsidiary of the Company, to terminate the Founder's employment at any time or
for any reason, with or without cause, which right hereby reserved.
3. RESTRICTION ON TRANSFER. Except for the escrow described in Section 4
or the transfer of the Shares to the Company or its assignees as contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until the release of
such Shares from the Repurchase Option in accordance with the provisions of this
Agreement.
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4. ESCROW OF SHARES.
(a) The Shares shall be held by Xxxxx and Xxxxxx LLP (the "Escrow
Holder"), along with a stock assignment executed by the Founder in blank, until
the expiration of the Repurchase Option as set forth above.
(b) The Escrow Holder is hereby directed to permit transfer of the
Shares only in accordance with this Agreement or instructions signed by both
parties. In the event further instructions are desired by the Escrow Holder, the
Escrow Holder shall be entitled to rely upon directions executed by a majority
of the authorized number of the Company's Board of Directors. The Escrow Holder
shall have no liability for any act or omission hereunder while acting in good
faith in the exercise of the Escrow Holder's own judgment.
(c) If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such option
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from such Repurchase
Option, upon Founder's request the Escrow Holder shall promptly cause a new
certificate to be issued for such released Shares and shall deliver such
certificate to the Founder.
(e) Subject to the terms hereof, the Founder shall have all the
rights of a stockholder with respect to the Shares while they are held in
escrow, including, without limitation, the right to vote the Shares and receive
any dividends declared thereon. If, from time to time during the term of the
Repurchase Option, there is any stock dividend, stock split or other change in
the Shares, any and all new, substituted or additional securities to which the
Founder is entitled by reason of the Founder's ownership of the Shares subject
to the Repurchase Option shall be immediately subject to this escrow, deposited
with the Escrow Holder and included thereafter as "Shares" for purposes of this
Agreement and the Repurchase Option.
5. MARKET STAND-OFF AGREEMENT. The Founder hereby agrees that, during the
period of duration specified by the Company and an underwriter of Common Stock
or other securities of the Company, following the effective date of a
registration statement of the Company field under the Securities Act of 1933, as
amended, he shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell, grant
any option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of the Company held by him at
any time during such period except Common Stock included in such registration
6. LEGENDS. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legends:
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(a) "These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
(b) "The shares represented by this certificate may be transferred
only in accordance with the terms of an agreement between the Company and the
stockholder, a copy of which is on file with the Secretary of the Company."
(c) Any legend required by applicable securities laws including,
without limitation, any legend required by the General Corporation Law of the
State of Delaware.
7. ADJUSTMENT FOR STOCK. All references to the number of Shares and the
purchase price of the Shares in this Agreement shall be appropriately adjusted
to reflect any stock split, stock dividend or other change in the Shares which
may be made by the Company after the date of this agreement.
8. GENERAL PROVISIONS.
(a) This Agreement shall be governed by and construed under the
laws of the Commonwealth of Massachusetts without regard to the principles of
conflicts of law.
(b) This Agreement and the documents referred to herein constitute
the entire agreement among the parties regarding the subject matters hereof and
thereof.
(c) Any provision of this Agreement may be amended or the
observance thereof may be waived (either generally or specifically and either
retroactively or prospectively), only by an instrument in writing executed by
the Company and the Founder. Any amendment or waiver so effected shall be
binding upon the Founder, the Company and any assignee or successor of any such
party.
(d) Any notices required in connection with this Agreement shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(iii) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written notification of receipt. All notices
shall be addressed to the applicable party to such party's address appearing on
the signature page to this Agreement or at such address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
(e) All covenants and agreements hereunder shall inure to the
benefit of, and be enforceable by, the Company's successors and assigns. The
rights and obligations of the Founder under this Agreement may only be assigned
with the prior written consent of the Company.
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(f) This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument.
(g) The Founder agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(h) The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting in
this Agreement.
(i) In the event that one or more of the provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(j) No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
(k) THE FOUNDER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 2 HEREOF IS EARNED ONLY BY CONTINUING SERVICE TO THE
COMPANY. THE FOUNDER 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 AN
EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH THE FOUNDER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE THE
FOUNDER'S EMPLOYMENT RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
(l) The Founder has reviewed this Agreement in its entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understands all provisions of the Agreement. The Founder
agrees to notify the Company upon any change in the residence address indicated
below.
[Remainder of the page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
COMBINATORX, INCORPORATED
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name:
Title:
Address: 000 Xxxxxx Xxxxxx
Xxxxx X00
Xxxxxx, XX 00000
FOUNDER:
/s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx, Ph.D.
Address:
ESCROW HOLDER:
XXXXX AND XXXXXX LLP
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name:
Title:
Address: 00 Xxxxx Xxxxx
Xxxxxx, XX 00000-0000
[SIGNATURE PAGE TO FOUNDER'S AGREEMENT]
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers
unto ______________ (________) shares of the Common Stock of CombinatoRx,
Incorporated, a Delaware corporation (the "Company") standing in the name of
_______________ on the books of said corporation represented by Certificate No.
____ herewith and do hereby irrevocably constitute and appoint Xxxxx and Xxxxxx
LLP, attorney, to transfer the said stock on the books of the within named
corporation with full power of substitution in the premises.
This Assignment Separate from Certificate may be used only in accordance
with the Founder's Agreement by and between the Company and the undersigned
dated January 26, 2001.
Dated: January 26, 2001
Signature: /s/ Xxxxxx Xxxxx
-----------------------------
Name: Xxxxxx Xxxxx, Ph.D.
INSTRUCTION: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE
PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO EXERCISE ITS "REPURCHASE
OPTION" SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON
THE PART OF THE FOUNDER.
