AMENDMENT TO EMPLOYEE STOCK PURCHASE AGREEMENT
Amendment to Employee Stock Purchase Agreement dated as of December 29,
1994, among VIROPHARMA, INC., a Delaware corporation (the "Corporation"), and
Xx. Xxxxxx Xxxx (the "Purchaser"), dated as of June 15, 1995 (this "Amendment").
WITNESSETH:
-----------
WHEREAS, on December 29, 1994, the Corporation and the Purchaser entered
into an Employee Stock Purchase Agreement (the "Purchase Agreement"), whereby,
among other things, the Corporation issued and sold to the Purchaser, and the
Purchaser purchased from the Corporation, 650,000 shares of the Common Stock,
par value $0.001 per share, of the Corporation (the "Shares"), subject to the
terms and conditions thereof, including vesting in accordance therewith, rights
of repurchase in the event of the termination of Purchaser, and a right of first
refusal of the Corporation, in the event of a "transfer" (as defined in the
Purchase Agreement") by the Purchaser; and
WHEREAS, the Corporation currently intends to issue and sell to certain
institutional investors shares of Series B Convertible Preferred Stock, par
value $0.001 per share, of the Corporation (the "Series B Shares"), pursuant to
the terms and subject to the conditions of that certain Series B Convertible
Preferred Stock Purchase Agreement (the "Series B Agreement"), dated as of even
date herewith, among the Corporation and each of the "Purchasers" whose names
are set forth on Schedule A thereto; and
WHEREAS, it is a condition precedent to the Purchasers obligations to
acquire the Series B Shares at the "First Closing" (as defined in the Series B
Agreement) that, among other things, the Purchaser and the Corporation enter
into this Amendment for purposes of, among other things, terminating the
Corporation's right to repurchase a Purchaser's shares after such shares shall
vest in accordance with the terms of the Purchase Agreement, and providing for
the automatic vesting of such Shares upon the occurrence of certain events;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Amendment of Repurchase Right. Section V of the Purchase Agreement is
-----------------------------
hereby deleted in its entirety, and substituted therefor shall be the following
Section V:
5.1 Grant. The Corporation is hereby granted the right (the
-----
"Repurchase Right"), exercisable at any time during the sixty (60) day
period following the date the Purchaser ceases for any reason to be a
Service Provider (as defined below) to the Corporation (or its assignees)
to repurchase at the Purchase Price all or (at the discretion of the
Corporation and with the consent of the Purchaser) any portion of the
Purchased Shares in which the Purchaser has not acquired a vested interest
in accordance with the vesting provisions of Section 5.3 (such shares to be
hereinafter called the "Unvested Shares"). The Corporation
shall not have any Repurchase Right with respect to any portion of the Purchased
Shares in which the Purchaser has acquired a vested interest in accordance with
the vesting provisions of Section 5.3 (the "Vested Shares"). For purposes of
this Agreement, the Purchaser shall be deemed to be a "Service Provider" to the
Corporation for so long as the Purchaser renders periodic services to the
Corporation or one or more of its parent or subsidiary corporations, whether as
an employee, non-employee member of the board of directors, or an independent,
non-employee consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall be
---------------------------------
exercisable by written notice delivered to the Owner of the Purchased Shares at
any time during the sixty (60) day period specified in Section 5.1. The notice
shall indicate the number of Unvested Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty
(30) days after the date of notice. To the extent one or more certificates
representing Purchased Shares may have been previously delivered out of escrow
to the Owner, then the Owner shall, prior to the close of business on the date
specified for the repurchase, deliver to the Secretary of the Corporation the
certificates representing the Purchased Shares to be repurchased, each
certificate to be properly endorsed for transfer. The Corporation (or its
assignees) shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with Section 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Purchase Price
previously paid for the Unvested Shares which are to be purchased.
5.3 Termination of the Repurchase Right.
-----------------------------------
(a) The Repurchase Right shall terminate with respect to any Purchased
Shares for which it is not timely exercised under Section 5.2. In addition, the
Repurchase Right provided in Section 5.1 shall terminate, and cease to be
exercisable, with respect to any and all Purchased Shares in which the Purchaser
vests in accordance with the schedule below. Accordingly, provided the Purchaser
continues to be a Service Provider to the Corporation, the Purchaser shall
acquire a vested interest in, and the Repurchase Right provided in Section 5.1
shall lapse with respect to, the Purchased Shares in accordance with the
following provisions:
(i) The Purchaser shall not acquire any vested interest in, nor
shall the Repurchase Right provided in Section 5.1 lapse with respect to, any
Purchased Shares during the initial twelve (12) month period measured from and
after the date hereof (the "Vesting Measurement Date").
(ii) Upon the expiration of the initial twelve (12) month period
measured from the Vesting Measurement Date, the Purchaser shall acquire a vested
interest in, and the Repurchase Right provided in Section 5.1 shall lapse with
respect to, that number of Purchased Shares equal to twenty-five percent (25%)
of the Purchased Shares.
-2-
(iii) From and after twelve (12) months following the expiration
of the initial twelve (12) month period measured from the Vesting Measurement
Date, the Purchaser shall acquire a vested interest in, and the Repurchase Right
provided in Section 5.1 shall lapse with respect to, the remaining Purchased
Shares in a series of successive annual installments each equal to twenty-five
percent (25%) of the number of Purchased Shares issued by the Corporation to the
Purchaser as of the date hereof.
(b) All Purchased Shares as to which the Repurchase Right provided in
Section 5.1 lapses shall, however, continue to be subject to (i) the First
Refusal Right of the Corporation and its assignees under Article VI hereof and
(ii) the market stand-off provisions of Section 3.3 above.
5.4 Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which is by reason
of any such transaction distributed with respect to the Purchased Shares shall
be immediately subject to the Repurchase Right, but only to the extent the
Purchased Shares are at the time Unvested Shares. Appropriate adjustments to
reflect the distribution of such securities or property shall be made to the
number of Purchased Shares hereunder and to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of any such
transaction upon the Corporation's capital structure; provided, however, that
-------- -------
the aggregate Purchase Price shall remain the same.
5.5 Corporate Transaction.
---------------------
(a) In the event of any of the following transactions:
(i) a merger or acquisition in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which at least fifty percent (50%) or more of the
Corporation's outstanding voting stock is transferred to holders different from
those who held the stock immediately prior to such merger, and in each case, the
valuation of the Company exceeds $50,000,000 (in each case, provided such
valuation is exceeded, a "Corporate Transaction") then the Repurchase Right
shall lapse in its entirety and the Purchaser shall acquire a vested interest in
all such Purchased Shares upon the consummation of such Corporate Transaction.
Otherwise, the Purchased Shares shall remain subject to the Repurchase Right
pursuant to an
-3-
assignment by the Corporation to the successor corporation (or its parent
company) in connection with such Corporate Transaction, in which case the
Purchased Shares shall vest in accordance with Section 5.3 hereof.
(b) To the extent the Repurchase Right remains in effect
following a corporate transaction which is not deemed a "Corporate
Transaction" as defined in Section 5.5(a) hereof, the Repurchase Right
shall apply to the new capital stock or other property received in exchange
for the Purchased Shares in consummation of the Corporate Transaction, but
only to the extent the Purchased Shares are at the time covered by such
right. Appropriate adjustments shall be made to the price per share payable
upon exercise of the Repurchase Right to reflect the effect of the
Corporate Transaction upon the Corporation's capital structure; provided,
--------
however, that the aggregate Purchase Price shall remain the same.
-------
5.6 Legend. In addition to the legends required by Section 2.4
------
above, all certificates representing Purchased Shares subject to the
Corporation's Repurchase Right shall be endorsed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
CORPORATION AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS CERTAIN
REPURCHASE RIGHTS TO THE COMPANY UPON TERMINATION OF THE REGISTERED
HOLDER'S SERVICES WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER
HEREOF WITHOUT CHARGE."
2. Amendment of Right of First Refusal. Section VI of the Purchase
-----------------------------------
Agreement is hereby deleted in its entirety and substituted therefor shall be
the following:
6.1 Grant. The Corporation is hereby granted the right of first
-----
refusal (the "First Refusal Right"), exercisable in connection with any
proposed sale or other transfer of all or any part of the Purchased Shares
which have become Vested Shares in accordance with Section 5.3 hereof. For
purposes of this Article VI, the term "transfer" shall include any
assignment, pledge, encumbrance or other disposition for value of the
Purchased Shares intended to be made by the Owner, but shall not include
any of the permitted transfers under Section 4.1 above.
-4-
6.2 Notice of Intended Disposition. In the event the Owner desires to
------------------------------
accept a bona fide third-party offer for any or all of the Purchased Shares (the
shares subject to such offer to be hereinafter called, solely for the purposes
of this Article VI, the "Target Shares"), Owner shall promptly (i) deliver to
the Secretary of the Corporation written notice (the "Disposition Notice") of
the offer and the basic terms and conditions thereof, including the proposed
purchase price thereof, and (ii) provide satisfactory proof that the disposition
of the Target Shares to the third party offeror would not be in contravention of
the provision set forth in Articles II and III of this Agreement.
6.3 Exercise Right. The Corporation (or its assignees) shall, for a
--------------
period of thirty (30) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares specified in the Disposition
Notice upon substantially the same terms and conditions specified therein. Such
right shall be exercisable by written notice (the "Exercise Notice") delivered
to Owner prior to the expiration of the thirty (30) day exercise period. If
such right is exercised with respect to all the Target Shares specified in the
Disposition Notice, then the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than ten (10) business days after delivery of the Exercise Notice; and at
such time Owner shall deliver to the Corporation the certificates representing
the Target Shares to be repurchased, each certificate to be properly endorsed
for transfer. To the extent any of the Target Shares are at the time held in
escrow under Article VII hereof, the certificates for such shares shall
automatically be released from escrow and surrendered to the Corporation for
cancellation. The Target Shares so purchased shall thereupon be cancelled and
cease to be issued and outstanding shares of the Corporation's Common Stock.
Should the purchase price specified in the Disposition Notice be payable in
property other than cash or evidences of indebtedness, the Corporation (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Owner and the Corporation
(or its assignees) cannot agree on such cash value within ten (10) days after
the Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by the Owner and the Corporation
(or its assignees), or, if they cannot agree on an appraiser within twenty (20)
days after the Corporation's receipt of the Disposition Notice, each shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value. The cost of such appraisal shall be shared equally
by the Owner and the Corporation. The Closing shall then be held on the latter
of (i) the fifth (5th) business day following delivery of the Exercise Notice or
(ii) the fifteenth (15th) day after such cash valuation shall have been made.
6.4 Non-Exercise of Right. In the event the Exercise Notice is not given
---------------------
to the Owner within thirty (30) days following the date of the Corporation's
receipt of the Disposition Notice, the Owner shall have a period of thirty (30)
days thereafter, in which to sell or otherwise dispose of the Target Shares upon
terms and conditions (including the
-5-
purchase price) no more favorable to third-party purchaser than those specified
in the Disposition Notice; provided, however, that any such sale or disposition
--------- -------
shall not be effected in contravention of the provisions of Article 11 of this
Agreement. To the extent any of the Target Shares are at the time held in
escrow pursuant to Article VII below, the certificates for such shares shall
automatically be released from escrow and surrendered to the Owner. The third
party purchaser shall acquire the Target Shares free and clear of all the terms
and provisions of this Agreement (including the Corporation's Repurchase Right
under Article V and the Corporation's (or its assignees') First Refusal Right
hereunder). In the event the Owner does not sell or otherwise dispose of all or
any portion of the Target Shares within the specified thirty (30) day period,
the Corporation's (or its assignees') First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by the Owner until
such right lapses in accordance with Section 6.7 below.
6.5 Partial Exercise of Right. In the event the Corporation (or its
-------------------------
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
the Owner shall have the option, exercisable by written notice to the
Corporation delivered within twenty (20) days after the date of the Disposition
Notice, to effect the sale of the Target Shares pursuant to one of the following
alternatives:
(a) Sale or other disposition of all the Target Shares to a third-
party purchaser in compliance with the requirements of Section 6.4, as if the
Corporation did not exercise the First Refusal Right hereunder; or
(b) sale to the Corporation (or its assignees) of the portion of the
Target Shares which the Corporation (or its assignees) has or have elected to
purchase, such sale to be effected in substantial conformity with the provisions
of Section 6.3.
Failure of Owner to deliver timely notification to the Corporation under
this Section 6.5 shall be deemed to be an election by Owner to sell the Target
Shares pursuant to alternative (b) above.
6.6 Recapitalization.
----------------
(a) In the event of any stock dividend, stock split, recapitalization
or other transaction affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration, then any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Purchased Shares shall be immediately subject to
the Corporation's First Refusal Right hereunder, but only to the extent the
Purchased Shares are at a time covered by such right.
(b) In the event of a Corporate Transaction (as defined in Section 5.6
above), the Corporation's First Refusal Right shall remain in full force and
effect and shall
-6-
apply to the new capital stock or other property received in exchange for
the Purchased Shares in consummation of the Corporate Transaction, but only
to the extent the Purchased Shares are at the time covered by such right.
6.7 Termination. The First Refusal Right under this Article VI shall
-----------
terminate and cease to have effect upon the earlier to occur of (i) the
first date on which the shares of the Corporation's Common Stock are held
of record by more than five hundred (500) persons, or (ii) the closing of a
firm commitment underwritten public offering pursuant to an effective
registration under the 1933 Act covering the offer and sale of Common Stock
in the aggregate amount of at least $10,000,000 (or such lesser amount as
may be approved by the Corporation's Board of Directors, which shall
include a majority of the directors designated by holders of the Series B
Shares, pursuant to Section C.3(b) of Article FOURTH of the Company's
Certificate of Incorporation). However, the market stand-off provisions of
Section 3.3 above shall continue to remain in full force and effect
following the termination of the First Refusal Right hereunder.
6.8 Legend. All certificates representing Purchased Shares subject
------
to the Right of First Refusal shall be endorsed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
CORPORATION AND THE REGISTERED HOLDERS OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE
CORPORATION CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER
OF THE SHARES. THE SECRETARY OF THE CORPORATION WILL UPON WRITTEN
REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT
CHARGE."
3. Amendment to Section 8.1. Section 8.1 of the Purchase Agreement is
------------------------
hereby deleted in its entirety and substituted therefor shall be the following:
8.1 Assignment. The Corporation may assign its Repurchase Rights under
Article V and/or its First Refusal Right under Article VI to one or more
persons or entities selected by the Corporation's Board of Directors,
including (without
-7-
limitation) one or more stockholders of the Corporation; provided,
--------
however, that any assignment of such Repurchase Rights and/or Rights
-------
of First Refusal shall not apply to any subsequent Repurchase Right or
Right of First Refusal in favor of the Corporation.
4. Effectiveness. This Amendment shall become as of the date first
-------------
written above, upon the later to occur of the following: (i) such time as the
Company shall have received from the Purchaser at least three (3) duly executed
and delivered copies of this Amendment, and (ii) such time as the Corporation
shall have consummated the "First Closing" (as that term is defined in the
Series B Agreement) of the purchase and sale of the Series B Shares.
5. Limited Amendment. Except as modified hereby, the Purchase Agreement
-----------------
shall remain unmodified and shall continue to be in full force and effect in
accordance with its terms.
6. Governing Law. This Amendment shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such state.
7. Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but both of which, when
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
VIROPHARMA, INC.
By: Xxxxxx Xxxx
----------------
/s/ Xxxxxx Xxxx
---------------------
Xxxxxx Xxxx
-8-
