VELCERA PHARMACEUTICAL, INC. RESTRICTED STOCK AGREEMENT
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EXHIBIT
10.5
VELCERA
PHARMACEUTICAL, INC.
This
Restricted Stock Agreement (this
“Agreement”)
made
effective as of June 1, 2006, is by and between Velcera Pharmaceuticals, Inc.,
a
Delaware corporation having a place of business at 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxx 00000-0000 (the “Company”),
and
Xxxxx X. Xxxxxxx, (“Employee”).
INTRODUCTION
A. In
July
2004, the Company issued Employee options to purchase an aggregate of 80,000
shares of the Company’s common stock at an exercise price of $0.70 per share
(the “Options”)
pursuant to the Company’s 2003 Stock Option Plan (the “Stock
Option Plan”).
B. Due
to
the tax implications of Section 409A of the Internal Revenue Code, the Company
and Employee have agreed (i) to reprice the Options at $3.50 per share, which
is
the fair market value of the common stock per share as determined by the
Company’s Board of Directors on the date of the repricing, pursuant to an
Amendment to Stock Option Agreements dated of even date herewith by and between
the Company and Employee, and (ii) that the Company will issue Employee 60,000
shares of restricted common stock, subject to the terms and conditions set
forth
herein, under the Stock Option Plan.
AGREEMENT
Now,
Therefore,
it is
agreed as follows:
1. Grant
of Stock.
Subject
to the terms and provisions of this Agreement and the Stock Option Plan, the
Company hereby grants to Employee 60,000 shares of Company common stock (such
shares are referred to hereinafter as the “Shares”).
Upon
the execution of this Agreement, the Shares shall be registered on the books
of
the Company, and the Company shall issue a stock certificate evidencing such
Shares (the “Stock
Certificate”)
in the
name of Employee. Employee shall immediately thereafter deposit with the
Company, together with a stock power endorsed in blank by Employee, the Stock
Certificate to be held by the Company until such time as the restrictions set
forth herein and under the Stock Option Plan have lapsed pursuant to paragraph
4
of this Agreement. The Stock Certificate shall bear a legend in substantially
the following form:
The
transferability of this certificate and the shares of Common Stock represented
by it are subject to the terms and conditions (including conditions of
forfeiture) contained in the 2003 Stock Incentive Plan of Velcera
Pharmaceuticals, Inc. (the “Company”), and an agreement entered into between the
registered owner and the Company. A copy of the Plan and the agreement is on
file in the office of the secretary of the Company.
2. Rights
of Employee.
Upon
the execution of this Agreement and issuance of the Shares, Employee shall
become a stockholder with respect to the Shares and shall have all of the rights
of a stockholder with respect to all such Shares, including the right to vote
such shares and to receive all dividends and other distributions paid with
respect to such Shares; provided,
however,
that
such Shares shall be subject to the restrictions set forth in paragraph
3
of this
Agreement.
3. Restrictions.
Employee agrees that, in addition to the restrictions set forth in Section
8.3
of the Stock Option Plan, at all times prior to the vesting of the Shares as
contemplated by paragraph 4
hereof:
(a) Employee
shall not sell, transfer, pledge, hypothecate or otherwise encumber the Shares;
and
(b) If
Employee’s employment with the Company is terminated for any reason whatsoever,
or Employee violates the terms of any confidentiality agreement,
non-solicitation covenant or covenant not to compete, however delineated, then,
subject to paragraph 4
hereof,
Employee shall, for no consideration, forfeit and transfer to the Company all
Shares that remain subject to the restrictions set forth in this paragraph
3.
4. Lapse
of Restrictions.
The
restrictions set forth in paragraph 3
of this
Agreement shall lapse upon the occurrence of any of the following: (i) the
acquisition by any person, entity or group, within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, of beneficial ownership of
more
than fifty percent (50%) of the outstanding shares of the Company’s common
stock; (ii) a merger, reorganization or consolidation whereby the stockholders
of the Company immediately prior to such merger, reorganization or consolidation
do not, immediately after such merger, reorganization or consolidation,
collectively own more than fifty percent (50%) of the voting stock of the
surviving entity; (iii) the liquidation or dissolution of the Company or the
sale of all or substantially all of the assets of the Company, or (iv) one
hundred eighty (180) days following the date upon which the Company’s common
stock is tradable on a national securities exchange, the National Association
of
Securities Dealers, Inc. Automated Quotation System or the Over The Counter
Bulletin Board.
Upon
request of Employee at any time after the date that the restrictions set forth
in paragraph 3
of this
Agreement have lapsed with respect to any Shares and such Shares have become
vested, free and clear of all restrictions, except
as
provided in Section 10 of the Stock Option Plan, the Company shall remove any
restrictive notations placed on the books of the Company and the Stock
Certificate in connection with such restrictions.
5. Copy
of Stock Option Plan.
By the
execution of this Agreement, Employee acknowledges receipt of a copy of the
Stock Option Plan, the terms and conditions of which are hereby incorporated
herein by reference and made a part hereof by reference as if set forth in
full.
6. Administration.
This
Agreement shall at all times be subject to the terms and conditions of the
Stock
Option Plan. The Committee shall have the sole and complete discretion with
respect to all matters reserved to it by the Stock Option Plan and decisions
of
the Committee with respect thereto and to this Agreement shall be final and
binding upon Employee. In the event of any conflict between the terms and
conditions of this Agreement and the Stock Option Plan, the provisions of the
Stock Option Plan shall govern and control.
7. Continuation
of Employment.
This
Agreement shall not confer upon Employee, and shall not be construed to confer
upon Employee, any right to continue in the employ of the Company for any period
of time, and shall not limit the rights of the Company in its sole discretion
(absent any other agreements to the contrary), to terminate the employment
of
Employee at any time, with or without cause, for any reason or no reason, or
to
change Employee’s assignment or rate of compensation.
8. Withholding
of Tax.
To the
extent that the receipt of the Stock or the lapse of any restrictions thereon
results in income to Employee for federal or state income-tax purposes, Employee
shall deliver to the Company at the time of such receipt or lapse, as the case
may be, such amount of money or shares of unrestricted Stock as the Company
may
require to meet its withholding obligation under applicable tax laws or
regulations, and, if Employee fails to do so, the Company is authorized to
withhold from any cash or Stock remuneration then or thereafter payable to
Employee any tax required to be withheld by reason of such resulting
compensation income. The Employee may have shares of Stock withheld to satisfy
the withholding tax obligation pursuant to an Election under Section 10.8(a)
of
the Stock Option Plan.
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9. Section
83(b) Election.
Employee understands that he (and not the Company) shall be responsible for
his
own federal, state, local or foreign tax liability and any of his other tax
consequences that may arise as a result of the transactions contemplated by
this
Agreement. Employee shall rely solely on the determinations of his tax advisors
or his own determinations, and not on any statements or representations by
the
Company or any of its agents, with regard to all such tax matters. Employee
understands that Section 83 of the Internal Revenue Code of 1986, as amended
(the “Code”),
taxes
as ordinary income the difference between the amount paid for the Stock and
the
fair market value of the Stock as of the date any restrictions on the Stock
lapse. In this context, “restriction” includes without limitation the vesting
restrictions set forth in paragraph 3
hereof.
In the event the Company has registered any of its shares under the Securities
Exchange Act of 1934, “restriction” with respect to officers, directors and 10%
stockholders also means the period during which such officer, director and
10%
stockholders could be subject to suit under Section 16(b) of the Securities
Exchange Act of 1934 in connection with a sale. Employee understands that
Employee may elect to be taxed at the time the shares of Stock are received
rather than when and as the restrictions on the Stock lapse or expire by filing
an election under Section 83(b) of the Code with the Internal Revenue Service
within 30 days from the date of the acquisition. In the event Employee files
an
election under Section 83(b) of the Code, such election shall contain all
information required under the applicable treasury regulation(s) and Employee
shall deliver a copy of such election to the Company contemporaneously with
filing such election with the Internal Revenue Service. Employee
acknowledges that it is Employee’s sole responsibility and not the Company’s to
file timely the election under Section 83(b) of the Code, even if Employee
requests that the Company or its representatives make this filing on Employee’s
behalf.
10. Governing
Law.
This
Agreement, in its interpretation and effect, shall be governed by the laws
of
the State of Delaware applicable to contracts executed and to be performed
therein.
11. Amendments.
This
Agreement may be amended only by a written agreement executed by the Company
and
Employee.
12. Entire
Agreement.
This
Agreement embodies the entire agreement made between the parties hereto with
respect to matters covered herein and shall not be modified except in accordance
with paragraph 11
of this
Agreement.
13. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which shall constitute but one and the same
agreement. Signatures hereto may be delivered by facsimile or other means of
electronic transmission, and signatures so delivered shall be valid and binding
to the same extent as original signatures.
In
Witness Whereof,
the
parties have executed this Agreement to be effective as of the date first set
forth above.
| VELCERA PHARMACEUTICALS, INC.: | EMPLOYEE: | ||
| /S/ XXXXXX XXXXXXXX | /S/ XXXXX X. XXXXXXX | ||
|
XXXXXX
XXXXXXXX,
CHIEF
EXECUTIVE
OFFICER
|
XXXXX
X.
XXXXXXX
|
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