EXHIBIT 10.1
COLLATERAL THERAPEUTICS, INC.
FORM OF RESTRICTED STOCK ISSUANCE AGREEMENT
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AGREEMENT made as of this ___ day of __________, 19__, by and between
COLLATERAL THERAPEUTICS, INC., a California corporation (the "Corporation"), and
_______________, an individual resident in the State of __________________
("Purchaser") and ________________, the Purchaser's spouse.
I. PURCHASE OF SHARES
1.1 PURCHASE. The Purchaser hereby purchases, and the Corporation
hereby sells to Purchaser, __________ shares (the "Shares") of the Corporation's
common stock ("Common Stock") at a purchase price of $_______ per share (the
"Purchase Price") __________________ of which shall have a vesting start date of
_________________(the "Vesting Start Date").
1.2 PAYMENT. Concurrently with the execution of this Agreement, the
Purchaser shall deliver to the Corporate Secretary of the Corporation (i) the
aggregate Purchase Price payable for the _____________ Shares in cash or cash
equivalents and (ii) a duly-executed blank Assignment Separate from Certificate
(in the form attached hereto as EXHIBIT A).
1.3 DELIVERY OF CERTIFICATES. The certificates representing Unvested
Shares hereunder shall be held in escrow by the Secretary of the Corporation as
provided in Article VII hereof.
1.4 SHAREHOLDER RIGHTS. Until such time as the Corporation actually
exercises its repurchase right or rights of first refusal under this Agreement,
Purchaser (or any successor in interest) shall have all the rights of a
shareholder (including voting and dividend rights) with respect to the Shares,
including the Shares held in escrow under Article VII, subject, however, to the
transfer restrictions of Article IV.
II. SECURITIES LAW COMPLIANCE
2.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Purchaser in reliance upon Purchaser's representation to the Company, which by
Purchaser's execution of this Agreement Purchaser hereby confirms, that the
Shares are being acquired for investment for Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Purchaser further represents that Purchaser does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares. Purchaser represents that he has full power and
authority to enter into this Agreement.
2.2 DISCLOSURE OF INFORMATION. Purchaser believes he/she has
received all the information he/she considers necessary or appropriate for
deciding whether to purchase the Shares. Purchaser acknowledges that the
Company has not prepared any financial statements. Purchaser further represents
that he/she has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Shares.
2.3 INVESTMENT EXPERIENCE. Purchaser is an investor in securities of
companies in the early development stage and acknowledges that he is able to
fend for himself/herself, can bear the economic risk of his/her investment and
has such knowledge and experience in financial or business matters that he/she
is capable of evaluating the merits and risks of the investment in the Shares.
2.4 PERSONAL KNOWLEDGE. As of Purchaser's execution of this
Agreement, Purchaser (i) has a preexisting personal and business relationship
with the Company (ii) is thoroughly familiar with the Company's operations and
its financial condition and (iii) has such knowledge and experience in financial
and business matters (including experience with investments of a similar
nature), that Purchaser is capable of evaluating the merits and risks of an
investment in the Shares. PURCHASER RECOGNIZES THAT THE PURCHASE OF THE SHARES
IS A SPECULATIVE INVESTMENT THAT INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE
ONLY FOR PERSONS WITH THE FINANCIAL CAPABILITY OF MAKING AND HOLDING LONG-TERM
INVESTMENTS NOT READILY REDUCIBLE TO CASH.
2.5 EXEMPTION FROM REGISTRATION. The Shares have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are
accordingly being issued to Purchaser in reliance upon the exemption from such
registration provided by Rule 701 of the Securities and Exchange Commission for
stock issuances under compensatory agreements.
2.6 RESTRICTED SECURITIES.
(a) Purchaser hereby confirms that Purchaser has been informed
that the Shares are restricted securities under the 1933 Act and may not be
resold or transferred unless the Shares are first registered under the Federal
securities laws or unless an exemption from such registration is available.
Accordingly, Purchaser hereby acknowledges that Purchaser is prepared to hold
the Shares for an indefinite period and that Purchaser is aware that Rule 144 of
the Securities and Exchange Commission issued under the 1933 Act is not
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presently available to exempt the sale of the Shares from the registration
requirements of the 1933 Act.
(b) Upon the expiration of the ninety (90)-day period
immediately following the date on which the Corporation first becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Shares, to the extent vested under Article V, may be
sold (without registration) pursuant to the applicable requirements of Rule 144.
If Purchaser is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the two-year holding period requirement of
the Rule will not be applicable. If Purchaser is not at the time of the sale an
affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Shares held for less than three (3)
years following payment in cash of the Purchase Price therefor) will be
applicable to the sale.
(c) Should the Corporation not become subject to the reporting
requirements of the Exchange Act, then Purchaser may, provided he/she is not at
the time an affiliate of the Corporation (nor was such an affiliate during the
preceding three (3) months), sell the Shares (without registration) pursuant to
paragraph (k) of Rule 144 after the Shares have been held for a period of three
(3) years following the payment in cash of the Purchase Price for such shares.
2.7 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser
shall make no disposition of the Shares (other than a permitted transfer under
paragraph 4.1) unless and until there is compliance with all of the following
requirements:
(a) Purchaser shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and
conditions of the proposed disposition.
(b) Purchaser shall have complied with all requirements of
this Agreement applicable to the disposition of the Shares.
(c) Purchaser shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Shares under the 1933 Act or (ii) all appropriate
action necessary for compliance with the registration requirements of
the 1933 Act or of any exemption from registration available under the
1933 Act (including Rule 144) has been taken.
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The Corporation shall NOT be required (i) to transfer on its books any
Shares which have been sold or transferred in violation of the provisions of
this Article II NOR (ii) to treat as the owner of the Shares, or otherwise to
accord voting or dividend rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.
2.8 RESTRICTIVE LEGENDS. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares will be
endorsed with restrictive legends, including one or more of the following
legends:
(i) "The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares may not
be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a 'no
action' letter of the Securities and Exchange Commission with respect
to such sale or offer, or (c) satisfactory assurances to the
Corporation that registration under such Act is not required with
respect to such sale or offer."
(ii) "The shares represented by this certificate may be
unvested and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the
terms of a written agreement dated _______________________, between
the Corporation and the registered holder of the shares (or the
predecessor in interest to the shares). Such agreement grants certain
repurchase rights and rights of first refusal to the Corporation (or
its assignees) upon the sale, assignment, transfer, encumbrance or
other disposition of the Corporation's shares or upon termination of
service with the Corporation. The Corporation will upon written
request furnish a copy of such agreement to the holder hereof without
charge."
III. SPECIAL TAX PROVISIONS
3.1 SECTION 83(B) ELECTION. The Purchaser understands that under
Section 83 of the Code, the excess of the fair market value of the Shares on the
date any forfeiture restrictions applicable to such shares lapse over the
Purchase Price for such Shares will be reportable as ordinary income on such
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Shares pursuant to the Repurchase
Right provided under Article V of this Agreement. Purchaser understands that
he/she may elect under Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code") to be taxed at the time the Shares are acquired hereunder,
rather than when and as such Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Shares on the date of this Agreement equals the Purchase
Price paid (and thus no tax is payable), the election must be made to avoid
adverse tax consequences in the future. The form for making this election is
attached as EXHIBIT B hereto.
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Purchaser understands that failure to make this filing within the thirty
(30)-day period will result in the recognition of ordinary income by the
Purchaser as the forfeiture restrictions lapse.
3.2 PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF PURCHASER REQUESTS THE CORPORATION OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be made by registered
or certified mail, return receipt requested, and Purchaser must retain two (2)
copies of the completed form for filing with his/her State and Federal tax
returns for the current tax year and an additional copy for his/her personal
records.
IV. TRANSFER RESTRICTIONS
4.1 RESTRICTION ON TRANSFER. Purchaser shall not transfer, assign,
encumber or otherwise dispose of any of the Shares which are subject to the
Corporation's Repurchase Right under Article V. In addition, Shares which are
released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise made the subject of disposition in contravention of the
Corporation's First Refusal Right under Article VI. Such restrictions on
transfer, however, shall NOT be applicable to (i) a gratuitous transfer of the
Shares made to the Purchaser's spouse or issue, including adopted children, or
to a trust for the exclusive benefit of the Purchaser or the Purchaser's spouse
or issue, PROVIDED AND ONLY IF the Purchaser obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Shares
effected pursuant to the Purchaser's will or the laws of intestate succession,
or (iii) a transfer by a Purchaser who is a partner in a partnership to such
partnership or a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his spouse or to the siblings, lineal descendants or ancestors
of such partner or his spouse.
4.2 TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
to whom the Shares are transferred by means of one of the permitted transfers
specified in paragraph 4.1 must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Corporation that such person is
bound by the provisions of this Agreement and that the transferred shares are
subject to (i) both the Corporation's Repurchase Right and the Corporation's
First Refusal Right granted hereunder and (ii) the market stand-off provisions
of paragraph 4.4, to the same extent such Shares would be so subject if retained
by the Purchaser.
4.3 DEFINITION OF OWNER. For purposes of Articles IV, V, VI and VII
of this Agreement, the term "Owner" shall include the Purchaser and all
subsequent holders of
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the Shares who derive their chain of ownership through a permitted transfer from
the Purchaser in accordance with paragraph 4.1.
4.4 MARKET STAND-OFF PROVISIONS.
(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Shares without the prior written consent of the Corporation or
its underwriters. Such limitations shall be in effect for such period of time
from and after the effective date of such registration statement as may be
requested by the Corporation or such underwriters; PROVIDED, however, that in no
event shall such period exceed one hundred-eighty (180) days in connection with
Corporation's initial public offering or ninety (90) days in connection with any
subsequent public offering.
(b) Owner shall be subject to the market stand-off provisions of
this paragraph 4.4 PROVIDED AND ONLY IF the then-current officers and directors
of the Corporation are also subject to similar arrangements.
(c) In the event of any stock dividend, stock split,
recapitalization or other change affecting the Corporation's outstanding Common
Stock effected without receipt of consideration, then any new, substituted or
additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this paragraph 4.4, to the same extent
the Shares are at such time covered by such provisions.
(d) In order to enforce the limitations of this paragraph 4.4,
the Corporation may impose stop-transfer instructions with respect to the Shares
until the end of the applicable stand-off period.
(e) This market stand-off terminates three (3) years after the
effective date of the Corporation's initial public offering.
V. REPURCHASE RIGHT
5.1 GRANT.
(a) 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 remain in Service or (if later)
during the sixty (60)-day period following the execution date of this Agreement,
to repurchase at the Purchase Price all or (at the discretion of the Corporation
and with the consent of the Purchaser) any portion of
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the Shares in which the Purchaser has not acquired a vested interest in
accordance with the vesting provisions of paragraph 5.3 below (such shares to be
called the "Unvested Shares"). For purposes of this Agreement, the Purchaser
shall be deemed to remain in Service for so long as the Purchaser continues to
be employed by, or acts as an advisor or consultant to, the Corporation or any
parent or subsidiary corporation.
5.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 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 Unvested Shares may have been previously
delivered out of escrow to the Owner, then 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 Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents an amount equal to the
original Purchase Price paid by Owner hereunder for the Unvested Shares which
are to be repurchased.
5.3 TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Shares in
which the Purchaser vests in accordance with the schedule below. Accordingly,
as the Purchaser continues to provide services to the Corporation, the Owner
shall acquire a vested interest in, and the Repurchase Right shall lapse with
respect to, the Shares in installments in accordance with the following
provisions:
(i) The Purchaser shall acquire a vested interest in, and no
Repurchase Right shall apply to, Shares upon the effective date
of this Agreement.
(ii) The Purchaser shall acquire a vested interest in, and
the Repurchase Right shall lapse with respect to, the
Shares in a series of successive equal monthly installments over each
of the next thirty-six (36) months of Service completed by the
Purchaser after the Vesting Start Date;
(iii) If the Purchaser ceases to provide services to the
Corporation as a result of a voluntary resignation or a termination for
"Cause," vesting ceases and the Purchaser may not acquire any further
vested interests in the Unvested Shares. For the purposes of this
Agreement, the Corporation shall have "Cause" to terminate Purchaser's
providing services to the Corporation if Purchaser has committed any act
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which directly and adversely affects the Corporation and, which in the
reasonable judgment of the Board of Directors, constitutes dishonesty,
larceny, fraud, deceit, gross negligence, the conviction of a crime
involving moral turpitude, or willful misrepresentation to shareholders,
directors or officers.
(iv) If Purchaser ceases to provide services to the
Corporation as a result of his death, disability or for any reason other
than for "Cause" (as defined above), vesting fully accelerates, and all
Unvested Shares shall immediately become fully-vested and the Repurchase
Right shall lapse in its entirety.
All Shares as to which the Repurchase Right lapses shall, however, continue
to be subject to (i) the First Refusal Right under Article VI and (ii) the
market stand-off and other transfer restrictions of Article IV.
5.4 FRACTIONAL SHARES. No fractional shares shall be repurchased by
the Corporation. Accordingly should the Repurchase Right extend to a fractional
share (in accordance with the vesting computation provisions of paragraph 5.3)
at the time the Purchaser ceases Service, then such fractional share shall be
added to any fractional share in which the Purchaser is at such time vested in
order to make one whole vested share no longer subject to the Repurchase Right.
5.5 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, then 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 Shares shall
be immediately subject to the Repurchase Right, but only to the extent the
Shares are at the time covered by such right. Appropriate adjustments to
reflect the distribution of such securities or property shall be made to the
number of Shares at the time subject to the Repurchase Right 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.
5.6 CORPORATE TRANSACTION. The Repurchase Right granted under this
Article V shall automatically lapse in its entirety immediately prior to the
consummation of any of the following shareholder-approved transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which more than fifty
percent (50%) of the Corporation's outstanding voting stock is
transferred to a person or persons different from those who held the
stock immediately prior to such transaction,
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(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) a merger or consolidation in which the Corporation
is not the surviving entity (other than a transaction effected
primarily to change the state in which the Corporation is
incorporated, or to create a holding company structure).
VI. RIGHT OF FIRST REFUSAL
6.1 GRANT. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Shares in which the Purchaser has vested. For purposes of this
Article VI, the term "transfer" shall include any sale, assignment, pledge,
encumbrance or other disposition for value of the Shares intended to be made by
the Owner, but shall not include any of the permitted transfers under paragraph
4.1.
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 Shares (the shares
subject to such offer to be hereinafter called the "Target Shares"), Owner shall
promptly (i) deliver to the Corporate Secretary of the Corporation written
notice (the "Disposition Notice") of the terms and conditions of the offer,
including the purchase price and the identity of the third-party offeror and
(ii) provide satisfactory proof that the disposition of the Target Shares to
such third-party offeror would not be in contravention of the provisions set
forth in Articles II and IV of this Agreement.
6.3 EXERCISE OF RIGHT. The Corporation (or its assignees) shall, for
a period of twenty-five (25) 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 or upon terms and conditions which do not materially vary from those
specified therein. Such right shall be exercisable by delivery of written
notice (the "Exercise Notice") to Owner prior to the expiration of the
twenty-five (25)-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 five (5) 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, the certificates for such shares shall automatically be released from
escrow and delivered to the Corporation for purchase.
6.4 NON-EXERCISE OF RIGHT. In the event the Exercise Notice is not
given to Owner within twenty-five (25) days following the date of the
Corporation's receipt of the
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Disposition Notice, Owner shall have a period of thirty (30) days thereafter in
which to sell or otherwise dispose of the Target Shares to the third-party
offeror identified in the Disposition Notice upon terms and conditions
(including the purchase price) no more favorable to such third-party offeror
than those specified in the Disposition Notice; PROVIDED, however, that any such
sale or disposition must not be effected in contravention of the provisions of
Article II of this Agreement. To the extent any of the Target Shares are at the
time held in escrow under Article VII, the certificates for such shares shall
automatically be released from escrow and surrendered to the Owner. The
third-party offeror shall acquire the Target Shares free and clear of the
Corporation's Repurchase Right and First Refusal Right hereunder, but the
acquired shares shall remain subject to (i) the securities law restrictions of
paragraph 2.6 and (ii) the market stand-off provisions of paragraph 4.4. In the
event Owner does not effect such sale or disposition of the Target Shares within
the specified thirty (30) day period, the Corporation's First Refusal Right
shall continue to be applicable to any subsequent disposition of the Target
Shares by Owner until such right lapses in accordance with paragraph 6.7.
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,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) sale or other disposition of all the Target Shares
to the third-party offeror identified in the Disposition Notice, but
in full compliance with the requirements of paragraph 6.4, as if the
Corporation did not exercise the First Refusal Right hereunder; or
(ii) sale to the Corporation (or its assignees) of the
portion of the Target Shares which the Corporation (or its assignees)
has elected to purchase, such sale to be effected in substantial
conformity with the provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the Corporation
under this paragraph 6.5 shall be deemed to be an election by Owner to sell the
Target Shares pursuant to alternative (i) above.
6.6 RECAPITALIZATION/MERGER.
(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 the time covered by such right.
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(b) The Corporation's First Refusal Right shall terminate in
the event of any of the following transactions:
(i) a merger or consolidation in which more than
fifty percent (50%) of the Corporation's outstanding voting stock is
transferred to a person or persons different from those who held the
stock immediately prior to such transaction,
(ii) the sale, transfer or other disposition of
all or substantially all of the Corporation's assets, or
(iii) a merger or consolidation in which the
Corporation is not the surviving entity (other than a transaction
effected primarily to change the state in which the Corporation is
incorporated, or to create a holding company structure).
6.7 LAPSE. The First Refusal Right under this Article VI shall lapse
and cease to have effect upon the EARLIEST to occur of (i) the first date on
which shares of the Corporation's Common Stock are held of record by more than
five hundred (500) persons, (ii) a determination is made by the Corporation's
Board of Directors that a public market exists for the outstanding shares of the
Corporation's Common Stock, or (iii) a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Corporation's Common Stock in the aggregate
amount of at least $10,000,000. However, the market stand-off provisions of
paragraph 4.4 shall continue to remain in full force and effect following the
lapse of the First Refusal Right hereunder.
VII. ESCROW
7.1 DEPOSIT. Upon issuance, the certificates for any Unvested Shares
purchased hereunder shall be deposited in escrow with the Corporation to be held
in accordance with the provisions of this Article VII. Each deposited
certificate shall be accompanied by a duly executed Assignment Separate from
Certificate in the form of EXHIBIT A. The deposited certificates, together with
any other assets or securities from time to time deposited with the Corporation
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and securities) are to
be released or otherwise surrendered for cancellation in accordance with
paragraph 7.3. Upon delivery of the certificates (or other assets and
securities) to the Corporation, the Owner shall be issued an instrument of
deposit acknowledging the number of Unvested Shares (or other assets and
securities) delivered in escrow to the Corporation.
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7.2 RECAPITALIZATION. All regular cash dividends on the Unvested
Shares (or other securities at the time held in escrow) shall be paid directly
to the Owner and shall not be held in escrow. However, 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 or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporation to be held in escrow under this Article VII, but
only to the extent the Unvested Shares are at the time subject to the escrow
requirements of paragraph 7.1.
7.3 RELEASE/SURRENDER. The Unvested Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Corporation for repurchase and cancellation:
(i) Should the Corporation (or its assignees) elect to
exercise the Repurchase Right under Article V with respect to any
Unvested Shares, then the escrowed certificates for such Unvested
Shares (together with any other assets or securities issued with
respect thereto) shall be delivered to the Corporation, concurrently
with the payment to the Owner, in cash or cash equivalent (including
the cancellation of any purchase-money indebtedness), of an amount
equal to the aggregate Purchase Price for such Unvested Shares, and
the Owner shall cease to have any further rights or claims with
respect to such Unvested Shares (or other assets or securities
attributable to such Unvested Shares).
(ii) Should the Corporation (or its assignees) elect to
exercise its First Refusal Right under Article VI with respect to any
vested Target Shares held at the time in escrow hereunder, then the
escrowed certificates for such Target Shares (together with any other
assets or securities attributable thereto) shall, concurrently with
the payment of the paragraph 6.3 purchase price for such Target Shares
to the Owner, be surrendered to the Corporation, and the Owner shall
cease to have any further rights or claims with respect to such Target
Shares (or other assets or securities).
(iii) Should the Corporation (or its assignees) elect NOT
to exercise its First Refusal Right under Article VI with respect to
any Target Shares held at the time in escrow hereunder, then the
escrowed certificates for such Target Shares (together with any other
assets or securities attributable thereto) shall be surrendered to the
Owner for disposition in accordance with the provisions of paragraph
6.4.
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(iv) As the interest of the Purchaser in the Unvested
Shares (or any other assets or securities attributable thereto) vests
in accordance with the provisions of Article V, the certificates for
such vested shares (as well as all other vested assets and securities)
shall be released from escrow and delivered to the Owner in accordance
with the following schedule:
A. The initial release of vested shares (or other
vested assets and securities) from escrow shall be effected at
semi-annual intervals, with the first such semi-annual release to
occur six (6) months after the initial paragraph 5.3 vesting date.
B. Upon the Purchaser's cessation of Service, any
escrowed Shares (or other assets or securities) in which the Purchaser
is at the time vested shall be promptly released from escrow.
C. Upon any earlier termination of the Corporation's
Repurchase Right in accordance with the applicable provisions of
Article V, the Shares (or other assets or securities) at the time held
in escrow hereunder shall promptly be released to the Owner as
fully-vested shares or other property.
(v) All Shares (or other assets or securities) released
from escrow in accordance with the provisions of subparagraph (iv)
shall nevertheless remain subject to (I) the Corporation's First
Refusal Right under Article VI until such right lapses pursuant to
paragraph 6.7, and (II) the restrictions on transfer, including the
market stand-off provision, of Article IV, until such provisions
terminate in accordance with their terms.
VIII. GENERAL PROVISIONS
8.1 ASSIGNMENT. The Corporation may assign its Repurchase Right
under Article V and its First Refusal Right under Article VI to any person or
entity selected by the Corporation's Board of Directors, including (without
limitation) one or more shareholders of the Corporation.
8.2 DEFINITIONS. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a PARENT corporation of the Corporation, provided
each such corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total
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combined voting power of all classes of stock in one of the other
corporations in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
8.3 NOTICES. Any notice required in connection with the Repurchase
Right, the First Refusal Right or the disposition of any Shares covered thereby
shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified, postage
prepaid and addressed to the party entitled to such notice at the address
indicated below such party's signature line on this Agreement or at such other
address as such party may designate by ten (10) days advance written notice
under this paragraph 8.3 to all other parties to this Agreement.
8.4 NO WAIVER. The failure of the Corporation (or its assignees) in
any instance to exercise the Repurchase Right granted under Article V, or the
failure of the Corporation (or its assignees) in any instance to exercise the
First Refusal Right granted under Article VI, shall not constitute a waiver of
any other repurchase rights and/or rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and the Purchaser or the Purchaser's spouse. 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 like or different nature.
8.5 CANCELLATION OF SHARES. If the Corporation (or its assignees)
shall make available, at the time and place and in the amount and form provided
in this Agreement, the consideration for the Shares to be repurchased in
accordance with the provisions 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), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
IX. MISCELLANEOUS PROVISIONS
9.1 PURCHASER UNDERTAKING. Purchaser hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the
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obligations or restrictions imposed on either the Purchaser or the Shares
pursuant to the express provisions of this Agreement.
9.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof.
9.3 GOVERNING 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 without resort
to that State's conflict-of-laws rules.
9.4 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
9.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Purchaser and the Purchaser's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
9.6 COMPANY COUNSEL. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT HAS BEEN PREPARED BY THE CORPORATION'S COUNSEL, WHICH
COUNSEL HAS REPRESENTED THE INTERESTS OF THE CORPORATION AND NOT THOSE OF
PURCHASER WITH RESPECT TO THIS AGREEMENT, THAT PURCHASER IS NOT RELYING ON ANY
REPRESENTATION OR ADVICE FROM THE CORPORATION OR ITS COUNSEL OR FROM ANY OTHER
INVESTOR IN THE CORPORATION ABOUT THIS AGREEMENT, ITS CONTENT OR EFFECT AND THAT
PURCHASER HAS BEEN ENCOURAGED TO SEEK INDEPENDENT COUNSEL TO REVIEW THIS
AGREEMENT ON BEHALF OF PURCHASER. PURCHASER REPRESENTS THAT HE HAS REVIEWED
THIS AGREEMENT, AND SPECIFICALLY ACKNOWLEDGES THAT THE VESTING OF THE SHARES
UNDER THIS AGREEMENT IS EARNED ONLY BY CONTINUING EMPLOYMENT OR SERVICE TO THE
CORPORATION AT THE WILL OF THE CORPORATION.
9.7 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
shall confer upon the Purchaser any right to continue in the Service of the
Corporation (or any parent or subsidiary corporation employing or retaining
Purchaser) for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any parent or subsidiary
corporation employing or retaining Purchaser) or the Purchaser, which rights are
hereby expressly reserved by each, to terminate the Purchaser's Service at any
time for any reason whatsoever, with or without cause.
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9.8 POWER OF ATTORNEY. Purchaser's spouse hereby appoints Purchaser
his or her true and lawful attorney in fact, for him or her and in his or her
name, place and stead, and for his or her use and benefit, to agree to any
amendment or modification of this Agreement and to execute such further
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Purchaser's spouse further gives and
grants unto Purchaser as his or her attorney in fact full power and authority to
do and perform every act necessary and proper to be done in the exercise of any
of the foregoing powers as fully as he or she might or could do if personally
present, with full power of substitution and revocation, hereby ratifying and
confirming all that Purchaser shall lawfully do and cause to be done by virtue
of this power of attorney.
9.9 ADDITIONAL RIGHTS OF FIRST PARTICIPATION. The Corporation hereby
agrees that it will take all necessary action to allow Purchaser the right to
maintain his or her pro rata percentage interest of the Corporation. The
percentage ownership applicable to Purchaser shall be the number of shares
divided by the sum of (i) 3,000,000 outstanding or reserved shares plus (ii) any
shares issued to any institutional investor after the date of this Agreement
having similar rights of maintaining its percentage ownership in the
Corporation. Purchaser's right shall terminate on the earlier of (A) the date
on which Purchaser ceases vesting under the terms of this Agreement or (B) the
date on which the similar rights of all institutional investors having such
rights terminate or lapse by their terms.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
COLLATERAL THERAPEUTICS, INC.,
a California corporation
By:
---------------------------------------
Xxxx Xxxxx, President
Address:
---------------------------------------
---------------------------------------
PURCHASER
---------------------------------------
[Purchaser]
Address:
---------------------------------------
---------------------------------------
The undersigned spouse of Purchaser has read and hereby approves the
foregoing Agreement. In consideration of the Corporation's entering into this
Agreement with Purchaser, the undersigned hereby agrees to be irrevocably bound
by all the terms and provisions of such Agreement, including (specifically) the
right of the Corporation (or its assignees) to purchase any and all interest or
right the undersigned may otherwise have in such shares pursuant to community
property laws or other marital property rights.
---------------------------------------
[Purchaser's Spouse]
Address:
---------------------------------------
---------------------------------------
[SIGNATURE PAGE TO RESTRICTED STOCK ISSUANCE AGREEMENT]
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EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto COLLATERAL THERAPEUTICS, INC. (the "Corporation")
( ) shares of the Common Stock of the
Corporation standing in his name on the books of the Corporation represented by
Certificate No. and does hereby irrevocably constitute and appoint
as Attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated:
--------------------
Signature
----------------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Corporation to exercise the
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Purchaser.
A-1
SECTION 83(B) TAX ELECTION
--------------------------
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
-------------------------------
Address:
----------------------------
Taxpayer Ident. No.:
----------------
(2) The property with respect to which the election is being made is _______
shares of the common stock of COLLATERAL THERAPEUTICS, INC.
(3) The property was issued on __________________.
(4) The taxable year in which the election is being made is the calendar year
_____.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's employment with the issuer is terminated. The
issuer's repurchase right lapses in a series of monthly installments over a
three (3) year period ending on ____________________.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $__________ per share.
(7) The amount paid for such property is $_________ per share.
(8) A copy of this statement was furnished to COLLATERAL THERAPEUTICS, INC. for
whom taxpayer rendered the service underlying the transfer of property.
(9) This statement is executed as of: ______________.
-------------------------------- ------------------------------
[Spouse] Taxpayer
SCHEDULE OF RESTRICTED STOCK ISSUANCE AGREEMENTS
Xx. Xxxx Xxxxx, dated April 5, 1995
Xx. Xxxxxx Xxxxxx, dated April 5, 1995
Xx. Xxxx Xxxxxxx, dated April 5, 1995
Xxxxxxxxxxx Xxxxxxxx, dated April 5, 1995
Xxxxx Xxxxxxx, dated April 5, 1995
Xx. Xxxx Xxxxx, dated August 9, 1995
Xx. Xxxxxx Xxxxxx, dated August 9, 1995
Xx. Xxxx Xxxxxxx, dated August 9, 1995
Xxxxxxxxxxx Xxxxxxxx, dated August 9, 1995
Xxxxx Xxxxxxx, dated August 9, 1995
Xxxxx Xxxx, dated August 9, 1995
Xxxx Xxxx, dated August 9, 1995
Xxxx Xxxx, dated August 9, 1995
Xxxxx Xxxxxxxx, dated November 20, 1995
