EXHIBIT 10.17
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is entered into as of December
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1, 1993 (the "Effective Date") between Centaur Pharmaceuticals, Inc., a Delaware
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corporation with its principal offices located at 000 Xxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and Xxxxx X. Xxxxxxx, an individual
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residing at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Employee").
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In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. POSITION. During the term of this Agreement, Company will employ
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Employee, and Employee will serve Company, as Company's President and Chief
Executive Officer, with such responsibilities and authority as may from time to
time be assigned to Employee by the Board of Directors of Company. Employee
will report directly to the Chairman of Company's Board of Directors.
2. DUTIES. Employee will serve Company in such capacities and with such
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duties and responsibilities as the Board of Directors of Company may from time
to time determine. Employee will comply with and be bound by Company's
operating policies, procedures and practices from time to time in effect during
Employee's employment. Employee will perform his duties under this Agreement at
the offices of Company, provided, that Employee may be required to do extensive
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traveling in connection with the performance of his duties hereunder. Employee
hereby represents and warrants that he is free to enter into and fully perform
this Agreement and the agreements referred to herein without breach of any
agreement or contract to which he is a party or by which he is bound.
3. EXCLUSIVE SERVICE.
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3.1 INTERIM PERIOD. The parties acknowledge that as of the Effective
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Date, because of certain other obligations, Employee is unable to devote his
full time and efforts exclusively to this employment. The parties agree that
Employee will use his best efforts to secure a release from such other
obligations, so that Employee may become a full-time employee of Company no
later than September 1, 1994. The period beginning on the Effective Date and
ending on the date Employee becomes a full-time employee of Company (the "Full-
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Time Employment Date") is hereinafter referred to as the "Interim Period."
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Employee will notify Company in writing as soon as he is able to become a full-
time employee of Company.
3.2 BALANCE OF TERM. After the Interim Period and for the balance of
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the term of this Agreement, Employee will devote his full time and efforts
exclusively to this employment and apply all his skill and experience to the
performance of his duties and advancing Company's interests in accordance with
Employee's experience and skills. Notwithstanding the foregoing, Company
acknowledges that Employee currently serves on the boards of directors of four
other companies (Vesta Medical Company, Immusol, Alamed and PCD Therapeutics)
that are not competitive with Company and that Employee may continue to serve on
those boards of
directors so long as Employee's duties to those companies do not conflict with
his obligations to Company or interfere with his ability to perform his duties
to Company during the normal work week. Employee may serve on other boards of
directors only with the prior written approval of Company, which will not be
unreasonably withheld. In addition, Company acknowledges that Employee is a
Venture Partner of Charter Ventures and that in his capacity as a Venture
Partner he may provide occasional consultation to Charter Ventures so long as
such consultation does not conflict with his obligations to Company or interfere
with his ability to perform his duties to the Company during the normal work
week. Employee will not engage in any other consulting activity except with the
prior written approval of Company, or at the direction of Company, and Employee
will otherwise do nothing inconsistent with the performance of his duties
hereunder.
4. TERM OF AGREEMENT.
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4.1 TERM. This Agreement will commence on the Effective Date, and
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will continue until the earlier of four (4) years after the Effective Date or
when terminated pursuant to Section 7 hereof, unless renewed pursuant to Section
4.2 hereof.
4.2 RENEWAL. After the initial four-year term, unless either party
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notifies the other of its intention to terminate this Agreement pursuant to
Section 7 hereof at least 90 days prior to the expiration of the term, this
Agreement shall automatically renew for successive one-year terms on the same
terms and conditions stated herein.
5. COMPENSATION AND BENEFITS.
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5.1 BASE SALARY. During the Interim Period, Company agrees to pay
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Employee a salary at the rate of one hundred thirty-two thousand five hundred
dollars ($132,500) per year. As of the Full-Time Employment Date, Company
agrees to pay Employee an initial minimum salary at the rate of one hundred
seventy-five thousand dollars ($175,000) per year. Employee's salary will be
payable as earned in accordance with Company's customary payroll practice.
Employees' salary will be reviewed periodically by the Company's Board of
Directors and may be adjusted from time to time by the Board of Directors in its
discretion.
5.2 ADDITIONAL BENEFITS. Employee will be eligible to participate in
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Company's employee benefit plans of general application, including without
limitation those plans covering pension and profit sharing, executive bonuses,
stock purchases, stock options, and those plans covering life, health, and
dental insurance in accordance with the rules established for individual
participation in any such plan and applicable law. Employee will receive such
other benefits, including vacation, holidays and sick leave, as Company
generally provides to its employees holding positions similar to that of
Employee.
5.3 STOCK OPTIONS. Upon amendment of the Company's 1993 Equity
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Incentive Plan to increase the number of shares issuable thereunder and the
granting of a permit therefor by the California Department of Corporations,
Employee shall be granted an incentive stock option, under Company's 1993 Equity
Incentive Plan, to purchase up to 300,000 shares of Company's Common Stock at a
price of $0.15 per share (the "Options"). One half of the Options (150,000
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shares) will vest monthly over four (4) years beginning on the Effective Date.
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The remaining half of the Options will vest monthly over four (4) years
beginning on the Full-Time Employment Date. The Options will have a ten (10)
year term and will be subject to the terms and conditions set forth on the form
of Option Grant attached hereto as Exhibit 1.
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5.4 EXPENSES. Company will reimburse Employee for all reasonable and
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necessary expenses incurred by Employee in connection with Company's business,
provided that such expenses (i) are deductible in whole or in substantial part
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by Company, (ii) are in accordance with the Company's applicable policy, and
(iii) are properly documented and accounted for in accordance with Company
Policy and with the requirements of the Internal Revenue Service.
6. PROPRIETARY RIGHTS. Employee hereby agrees to execute an Employee
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Invention Assignment and Confidentiality Agreement with Company in substantially
the form attached hereto as Exhibit 2.
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7. TERMINATION.
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7.1 EVENTS OF TERMINATION. Employee's employment with Company shall
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terminate upon any one of the following:
(a) Company's determination made in good faith that it is
terminating Employee for "cause" as defined under Section 7.2 below
("Termination for Cause");
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(b) the effective date of a written notice sent to Employee
stating that Company is terminating his employment without cause,
which notice can be given by Company at any time after the Effective
Date at Company's sole discretion, for any reason or for no reason
("Termination Without Cause"); or
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(c) the effective date of a written notice sent to Company from
Employee stating that Employee is electing to terminate his employment
with Company ("Voluntary Termination").
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7.2 "CAUSE" DEFINED. For purposes of this Agreement, "cause" for
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Employee's termination will exist at any time after the happening of one or more
of the following events:
(a) failure to carry out the reasonable duties assigned to
Employee by the Board of Directors consistent with his position as
President and Chief Executive Officer of Company, after written notice
thereof and a thirty (30) day opportunity to cure;
(b) any act of fraud, dishonesty or breach of fiduciary duty to
the Company;
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(c) any intentional act that is materially harmful to the
Company, undertaken without the approval of the Board of Directors and
inconsistent with Employee's role as President and Chief Executive
Officer;
(d) as a result of disability, Employee is unable to perform the
duties contemplated by this Agreement for more than an aggregate of
ninety (90) days out of any six-month period; or
(e) Employee's death.
8. EFFECT OF TERMINATION.
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8.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event of
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any termination of this Agreement pursuant to Sections 7.1(a) or 7.1(c), Company
shall pay Employee the compensation and benefits otherwise payable to Employee
under Section 5 through the date of termination. Employee's rights under
Company's benefit plans of general application shall be determined under the
provisions of those plans.
8.2 TERMINATION WITHOUT CAUSE. In the event of any termination of
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this Agreement pursuant to Section 7.1(b),
(a) Company will pay Employee the compensation and benefits
otherwise payable to Employee under Section 5 through the date of
termination;
(b) For six (6) months after the date of termination, Company
will continue to pay Employee his base salary under Section 5.1 above
at Employee's then-current salary rate, less applicable withholding
taxes, payable on Company's normal payroll dates during that period;
provided, however, that if Employee secures other full-time employment
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during such six-month period, Employee shall promptly notify Company
thereof and Company shall pay to Employee, by check or cancellation of
indebtedness of Employee to Company (if any), within ten (10) days of
such notice by Employee to Company, an amount equal to one half (1/2)
of any additional amount Company would otherwise be obligated to pay
to Employee pursuant to this Section 8.2(b) for the period beginning
on the date Employee secures such other employment through the end of
such six-month period, which amount shall constitute payment in full
by Company to Employee of any outstanding obligations pursuant to this
Section 8.2(b).
(c) Employee's rights under Company's benefit plans of general
application shall be determined under the provisions of those plans.
9. EMPLOYEE SOLICITATION. So long as Employee is an employee of Company
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and for one (1) year thereafter, Employee shall not, directly or indirectly,
either for himself or for any other person or entity, directly or indirectly,
solicit, induce or attempt to induce any employee of Company to terminate his or
her employment with Company.
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10. MISCELLANEOUS.
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10.1 ARBITRATION. Employee and Company shall submit to mandatory
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binding arbitration in any controversy or clam arising out of, or relating to,
this Agreement or any breach hereof, provided, however, that Company retains its
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right to, and shall not be prohibited, limited or in any other way restricted
from, seeking or obtaining equitable relief from a court having jurisdiction
over the parties. Such arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in effect
at that time, and judgment upon the determination or award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
10.2 SEVERABILITY. If any provision of this Agreement shall be found
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by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
10.3 REMEDIES. Company and Employee acknowledge that the service to
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be provided by Employee is of a special, unique, unusual, extraordinary and
intellectual character, which gives it peculiar value, the loss of which cannot
be reasonably or adequately compensated in damages in an action at law.
Accordingly, Employee hereby consents and agrees that for any breach or
violation by Employee of any of the provisions of this Agreement including,
without limitation, Section 3. a restraining order and/or injunction may be
issued against Employee, in addition to any other rights and remedies Company
may have, at law or equity, including without limitation the recovery of money
damages.
10.4 NO WAIVER. The failure by either party at any time to require
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performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter. The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
breach of such provision or as a waiver of the provision itself. No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.
10.5 ASSIGNMENT. This Agreement and all rights hereunder are
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personal to Employee and may not be transferred or assigned by Employee at any
time. Company may assign its rights, together with its obligations hereunder,
to any parent, subsidiary, affiliate or successor, or in connection with any
sale, transfer or other disposition of all or substantially all of its business
and assets, provided, however, that any such assignee assumes Company's
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obligations hereunder.
10.6 WITHHOLDING. All sums payable to Employee hereunder shall be
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reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.
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10.7 ENTIRE AGREEMENT. This Agreement constitutes the entire and
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only agreement between the parties relating to employment of Employee with
Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto including but not
limited to the Consulting Agreement between Employee and Company dated October
8, 1992, as amended May 1, 1993, but does not affect Employee's Restricted Stock
Purchase Agreement dated October 8, 1992.
10.8 AMENDMENT. This Agreement may be amended, modified, superseded,
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canceled, renewed or extended only by an agreement in writing executed by both
parties hereto.
10.9 NOTICES. All notices and other communications required or
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permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by certified first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
address as either party shall notify the other:
If to Company: Centaur Pharmaceuticals, Inc.
000 Xxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Chairman of the Board of Directors
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Fenwick & Xxxx
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
If to Employee: Xxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxx, Xxxx & Xxxxxxx
0000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
10.10 BINDING NATURE. This Agreement shall be binding upon, and inure
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to the benefit of, the successors and personal representatives of the respective
parties hereto.
10.11 HEADINGS. The headings contained in this Agreement are for
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reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this
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Agreement, the singular includes the plural, the plural included the singular,
the masculine gender includes both male and female referents, and the word "or"
is used in the inclusive sense.
10.12 COUNTERPARTS. This Agreement may be executed in multiple
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counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.
10.13 GOVERNING LAW. This Agreement and the rights and obligations
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of the parties hereto shall be construed in accordance with the laws of the
State of California, without giving effect to the principles of conflict of
laws.
10.14 ATTORNEYS' FEES. In the event that any litigation, arbitration
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or other legal proceeding is brought by either party to enforce the terms of
this Agreement, the prevailing party in such proceeding shall be entitled, in
addition to any other relief awarded, to recover its reasonable costs and
attorneys' fees incurred in such proceeding.
IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of
the date first above written.
COMPANY EMPLOYEE
Centaur Pharmaceuticals, Inc.
By: /s/ Xxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Print Name: Xxxx. X. Xxxxxxx
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Title: Chief Financial Officer
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List of Exhibits
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Exhibit 1: Stock Option Grant
Exhibit 2: Employee Invention Assignment and Confidentiality Agreement
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EXHIBIT 1 NO. ______
CENTAUR PHARMACEUTICALS, INC.
1993 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of
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the date of grant set forth below (the "Date of Grant") by and between Centaur
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Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and the
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participant named below ("Participant"). Capitalized terms not defined herein
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shall have the meaning ascribed to them in the Company's 1993 Equity Incentive
Plan (the "Plan").
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PARTICIPANT: Xxxxx X. Xxxxxxx
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SOCIAL SECURITY NUMBER: __________________________________
ADDRESS: 0000 Xxxxxxxxx Xxxxx
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Xxx Xxxxx, XX 00000
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TOTAL OPTION SHARES: 300,000
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EXERCISE PRICE PER SHARE: $0.15
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DATE OF GRANT: __________________________________
VESTING START DATE: See Section 2.1 below
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EXPIRATION DATE: 10 years after Date of Grant
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TYPE OF STOCK OPTION
(CHECK ONE): [X] INCENTIVE STOCK OPTION
[_] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an option
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(the "Option") to purchase the total number of shares of Common Stock, $0.001
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par value, of the Company set forth above (the "Shares") at the Exercise Price
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Per Share set forth above (the "Exercise Price"), subject to all of the terms
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and conditions of this Agreement and the Plan. If designated as an Incentive
Stock Option above, the Option is intended to qualify as an "incentive stock
option" ("ISO") within the meaning of Section 422 of the Internal Revenue Code
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of 1986, as amended (the "Code").
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2. EXERCISE PERIOD.
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2.1 EXERCISE PERIOD OF OPTION. For purposes of vesting hereunder,
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this Option shall be deemed granted in two (2) equal parts of One Hundred Fifty
Thousand (150,000)
Shares each (hereinafter referred to as the "Initial Option" and the "Full-Time
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Employment Option"). Provided Participant continues to provide services to the
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Company throughout the specified periods, each of the Initial Option and the
Full-Time Employment Option shall become exercisable with respect to One Forty-
Eighth (1/48) of the Shares thereof on its respective First Vesting Date ("First
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Vesting Date"); thereafter at the end of each full succeeding month, each of the
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Initial Option and the Full-Time Employment Option shall become exercisable as
to an additional One Forty-Eighth (1/48) of the Shares thereof.
(a) The First Vesting Date for the Initial Option shall be
January 1, 1994
(b) The First Vesting Date for the Full-Time Employment Option
shall be the first day of the second calendar month
following the "Full-Time Employment Date," as defined in
that certain Employment Agreement between Participant and
the Company and dated of even dated herewith.
2.2 EXPIRATION. The Option shall expire on the Expiration Date set
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forth above and must be exercised, if at all, on or before the Expiration Date;
provided, that the Option will become fully exercisable within 5 years from the
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Date of Grant with at least 20% of the total shares first becoming exercisable
at the end of each of the five years.
3. TERMINATION.
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3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
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Participant is Terminated for any reason, except death or Disability, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the date of Termination, may be exercised by
Participant no later than ninety (90) days after the date of Termination, but in
any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
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Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the date of Termination, may be
exercised by Participant (or Participant's legal representative) no later than
twelve (12) months after the date of Termination, but in any event no later than
the Expiration Date.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement
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shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent, Subsidiary or Affiliate of the
Company, or limit in any way the right of the Company or any Parent, Subsidiary
or Affiliate of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
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4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
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Participant (or in the case of exercise after Participant's death, Participant's
executor, administrator, heir or
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legatee, as the case may be) must deliver to the Company an executed stock
option exercise agreement in the form attached hereto as Exhibit A, or in such
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other form as may be approved by the Company) from time to time (the "Exercise
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Agreement"), which shall set forth, inter alia, Participant's election to
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exercise the Option, the number of Shares being purchased, any restrictions
imposed on the Shares and any representations, warranties and agreements
regarding Participant's investment intent and access to information as may be
required by the Company to comply with applicable securities laws. If someone
other than Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless
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such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than 100 Shares unless it is exercised as to all Shares as
to which the Option is then exercisable.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
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payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Participant for more than six
(6) months and have been paid for within the meaning of SEC
Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been
fully paid with respect to such shares); or (2) were
obtained by Participant in the open public market; and (3)
are clear of all liens, claims, encumbrances or security
interests;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD
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Dealer") whereby Participant irrevocably elects to exercise
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the Option and to sell a portion of the Shares so purchased
to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward
the exercise price directly to the Company, or (2) through a
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"margin" commitment from Participant and an NASD Dealer
whereby Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby
the NASD Dealer irrevocably
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commits upon receipt of such Shares to forward the exercise
price directly to the Company; or
(e) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
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exercise of the Option, Participant must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Participant may provide for payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to the Participant by
deducting the Shares retained from the Shares issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and
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payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is an
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ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (1) the date two years
after the Date of Grant, and (2) the date one year after transfer of such Shares
to Participant upon exercise of the Option, Participant shall immediately notify
the Company in writing of such disposition. Participant agrees that Participant
may be subject to income tax withholding by the Company on the compensation
income recognized by Participant from the early disposition by payment in cash
or out of the current wages or other compensation payable to Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
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the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
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manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the Date of
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Grant of some of the federal and California tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD
CONSULT
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A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
8.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will
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be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the fair market value of the Shares
on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal income tax purposes and may subject the Participant
to the alternative minimum tax in the year of exercise.
8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
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qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. The Company will be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
8.3 DISPOSITION OF SHARES. If the Shares are held for more than
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twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of the Option (and, in the case of an ISO, are disposed of more than
two years after the Date of Grant), any gain realized on disposition of the
Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
one year of exercise or within two years after the Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price. The
Company will be required to withhold from Participant's compensation or collect
from Participant and pay to the applicable taxing authorities an amount equal to
a percentage of this compensation income at the time of exercise.
9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
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rights of a shareholder with respect to any Shares until Participant exercises
the Option and pays the Exercise Price.
10. INTERPRETATION. Any dispute regarding the interpretation of this
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Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
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Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
12. NOTICES. Any notice required to be given or delivered to the Company
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under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
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notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
----------------------
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
14. 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
agreements between California residents entered into and to be performed
entirely within California.
15. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
----------
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Participant has executed
this Agreement in duplicate as of the Effective Date.
CENTAUR PHARMACEUTICALS, INC. PARTICIPANT
By:__________________________ ______________________________
Xxxxx X. Xxxxxxx
_____________________________
(Please print name)
_____________________________
(Please print title)
SIGNATURE PAGE TO XXXXX X. XXXXXXX STOCK OPTION AGREEMENT
6
EXHIBIT A
---------
STOCK OPTION EXERCISE AGREEMENT
EXHIBIT A NO. ______
CENTAUR PHARMACEUTICALS, INC.
1993 EQUITY INCENTIVE PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of ____________,
_________ (the "Effective Date") by and between Centaur Pharmaceuticals, Inc., a
--------------
Delaware corporation (the "Company"), and the purchaser named below (the
-------
"Purchaser"). Capitalized terms not defined herein shall have the meaning
---------
ascribed to them in the Company's 1993 Equity Incentive Plan (the "Plan").
----
PURCHASER:______________________________________________________________________
SOCIAL SECURITY NUMBER:_________________________________________________________
ADDRESS:________________________________________________________________________
________________________________________________________________________________
TOTAL NUMBER OF SHARES:_________________________________________________________
PURCHASE PRICE PER SHARE:_______________________________________________________
TOTAL PURCHASE PRICE:___________________________________________________________
OPTION NO.__________ DATE OF GRANT:_________________________________________
TYPE OF OPTION: [_] INCENTIVE STOCK OPTION
[_] NONQUALIFIED STOCK OPTION
1. EXERCISE OF OPTION.
1.1 EXERCISE. Pursuant to exercise of that certain option ("Option")
-------- ------
granted to Purchaser under the Plan and subject to the terms and conditions of
this Agreement, Purchaser hereby purchases from the Company, and the Company
hereby sells to Purchaser, the total number of shares set forth above ("Shares")
------
of the Company's Common Stock, $0.001 par value per share, at a purchase price
per share set forth above for a total purchase price set forth above (the
"Purchase Price"). As used in this Agreement, the term "Shares" refers to the
-------------- ------
Shares purchased under this Exercise Agreement and includes all securities
received (a) in replacement of the Shares, (b) as a result of stock dividends or
stock splits with respect to the Shares, and (c) all securities received in
replacement of the Shares in a merger, recapitalization, reorganization or
similar corporate transaction.
1.2 TITLE TO SHARES. The exact spelling of the name(s) under which
---------------
Purchaser will take title to the Shares is:
________________________________________________________________________
________________________________________________________________________
Purchaser desires to take title to the Shares as follows:
[_] Individual, as separate property
[_] Husband and wife, as community property
[_] Joint Tenants
[_] Alone or with spouse as trustee(s) of the following trust (including
date):
_______________________________________________________________________
_______________________________________________________________________
[_] Other: please specify:
_______________________________________________________________________
_______________________________________________________________________
1.3 PAYMENT. Purchaser hereby delivers pavement of the Purchase
-------
Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):
[_] in cash in the amount of $_____ , receipt of which is acknowledged by
the Company;
[_] by cancellation of indebtedness of the Company to Purchaser in the
amount of $_______; or
[_] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $_____________.
2. DELIVERY.
--------
2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
-----------------------
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of Exhibit I attached
---------
hereto (the "Stock Powers"), both executed by Purchaser (and Purchaser's spouse,
------------
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
Exhibit 2 attached hereto (the "Spouse Consent") executed by Purchaser's spouse.
--------- --------------
and (iv) the Purchase Price.
2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the Purchase
-------------------------
Price and all the documents to be executed and delivered by Purchaser to the
Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser, to be placed in
escrow as provided in Section 1 until expiration or termination of the Company's
Right of First Refusal described in Section 8.
2
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
-------------------------------------------
warrants to the Company that:
3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy of
---------------------------
the Plan and the Stock Option Agreement, has read and understands the terms of
the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to
be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.
3.2 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser is purchasing
---------------------------------------
the Shares for Purchaser's own account for investment purposes only and not with
a view to, or for sale in connection with, a distribution of the Shares within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
--------------
Purchaser has no present intention of selling or otherwise disposing of all or
any portion of the Shares and no one other than Purchaser has any beneficial
ownership of any of the Shares.
3.3 ACCESS TO INFORMATION. Purchaser has had access to all
---------------------
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 UNDERSTANDING OF RISKS. Purchaser is fully aware of: (i) the
----------------------
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Purchaser may not be able to sell
---
or dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.
3.5 NO GENERAL SOLICITATION. At no time was Purchaser presented with
-----------------------
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.
4. COMPLIANCE WITH SECURITIES LAWS.
-------------------------------
4.1 COMPLIANCE WITH FEDERAL SECURITIES LAWS. Purchaser understands
---------------------------------------
and acknowledges that the Shares have not been registered with the Securities
and Exchange Commission ("SEC") under the Securities Act and that,
---
notwithstanding any other provision of the Stock Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act and all applicable state
securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws. The Shares are being issued under the Securities Act
pursuant to (the Company will check the applicable box):
3
[_] the exemption provided by SEC Rule 701;
[_] the exemption provided by SEC Rule 504;
[_] Section 4(2) of the Securities Act;
[_] other: ______________________________________
4.2 COMPLIANCE WITH CALIFORNIA SECURITIES LAWS. THE SALE OF THE
------------------------------------------
SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED
WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
5. RESTRICTED SECURITIES.
---------------------
5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands
---------------------------------------
that Purchaser may not transfer any Shares unless such Shares are registered
under the Securities Act or qualified under applicable state securities laws or
unless, in the opinion of counsel to the Company, exemptions from such
registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC RULE 144. In addition, Purchaser has been advised that SEC
------------
Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of two
years, and in certain cases three years, after they have been purchased and paid
--------
for (within the meaning of Rule 144), before they may be resold under Rule 144.
---
Purchaser understands that Rule 144 may indefinitely restrict transfer of the
Shares so long as Purchaser remains an "affiliate" of the Company or if "current
public information" about the Company (as defined in Rule 144) is not publicly
available.
5.3 SEC RULE 701. The Shares may become freely tradeable by non-
------------
affiliates if issued pursuant to SEC Rule 701 promulgated under the Securities
Act (under limited conditions regarding the method of sale) 90 days after the
first sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the SEC, subject to
the lengthier market standoff agreement contained in Section 7 of this Exercise
Agreement or any other agreement entered into by Purchaser. Affiliates must
comply with the provisions (other than the holding period requirements) of Rule
144.
5.4 STATE LAW RESTRICTIONS ON TRANSFER. Purchaser understands that
----------------------------------
transfer of the Shares may be restricted by Section 260.141.11 of the Rules of
the California
4
Commissioner of Corporations, a copy of which is attached hereto as Exhibit 3,
and that the certificate(s) representing the Shares may bear a legend to that
effect.
6. RESTRICTIONS ON TRANSFERS.
-------------------------
6.1 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser
---------------------
shall make no disposition of the Shares (other than as permitted by this
Agreement) unless and until:
(a) Purchaser shall have notified the Company 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
Exercise Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Shares under
the Securities Act or (ii) all appropriate action necessary for compliance with
the registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act (including Rule 144) has been
taken: and
(d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares pursuant to the provisions of the Commissioner Rules
identified in Section 4.2.
6.2 RESTRICTION ON TRANSFER. Purchaser shall not transfer, assign,
-----------------------
xxxxx x xxxx or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Shares which are subject to the Company's Right of First
Refusal, except as permitted by this Agreement.
6.3 TRANSFEREE OBLIGATIONS. Each person (other than the Company) to
----------------------
whom the Shares are transferred by means of one of the permitted transfers
specified in this Agreement must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Company that such person is bound
by the provisions of this Exercise Agreement and that the transferred shares are
subject to (i) the Company's Right of First Refusal granted hereunder and (ii)
the market stand-off provisions of Section 7, to the same extent such shares
would be so subject if retained by the Purchaser.
7. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
-------------------------
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed the longer of 90 days or such longer period
as the California Department of Corporations may subsequently allow to be
5
provided for under equity incentive plans generally) after the effective date of
such registration requested by such managing underwriters.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Purchaser
--------------------------------
or any transferee of such Shares (either being sometimes referred to herein as
the "Holder") may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Shares to be
sold or transferred (the "Offered Shares") on the terms and conditions set forth
--------------
in this Section (the "Right of First Refusal").
----------------------
8.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
------
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the
name of each proposed bona fide purchaser or other transferee ("Proposed
--------
Transferee"); (iii) the number of Offered Shares to be transferred to each
----------
Proposed Transferee, (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
-------------
and (v) that the Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as 'provided in this Section.
8.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
----------------------------------
(30) days after the date of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all of the Offered
Shares proposed to be transferred to any one or more of the Proposed Transferees
named in the Notice, at the purchase price determined as specified below.
8.3 PURCHASE PRICE. The purchase price for the Offered Shares
--------------
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such non-
cash consideration as determined in good faith by the Company's Board of
Directors.
8.4 PAYMENT. Payment of the purchase price for Offered Shares will
-------
be payable, at the option of the Company and/or its assignee(s) (as applicable),
by check or by cancellation of all or a portion of any outstanding indebtedness
of the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
8.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
--------------------------
proposed in the Notice to transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
--------
such sale or other transfer is consummated within 120 days after the date of the
Notice, and provided further, that (i) any such sale or other transfer is
----------------
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of
6
this Section will continue to apply to the Offered Shares in the hands of such
Proposed Transferee. If the Offered Shares described in the Notice are not
transferred to the Proposed Transferee within such 120 day period, then a new
Notice must be given to the Company, and the Company will again be offered the
Right of First Refusal before any Shares held by the Holder may be sold or
otherwise transferred.
8.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary in
----------------
this Section, the following transfers of Shares will be exempt from the Right of
First Refusal: (i) the transfer of any or all of the Shares during Purchaser's
lifetime by gift or on Purchaser's death by will or intestacy to Purchaser's
"immediate family" (as defined below) or to a trust for the benefit of Purchaser
or Purchaser's immediate family, provided that each transferee or other
recipient agrees in a writing satisfactory to the Company that the provisions of
this Section will continue to apply to the transferred Shares in the hands of
such transferee or other recipient; (ii) any transfer of Shares made pursuant to
a statutory merger or statutory consolidation of the Company with or into
another corporation or corporations (except that the Right of First Refusal will
continue to apply thereafter to such Shares, in which case the surviving
corporation of such merger or consolidation shall succeed to the rights of the
Company under this Section unless the agreement of merger or consolidation
expressly otherwise provides); or (iii) any transfer of Shares pursuant to the
winding up and dissolution of the Company. As used herein, the term "immediate
---------
family" will mean Purchaser's spouse, the lineal descendant or antecedent,
------
father, mother, brother or sister, adopted child or grandchild of the Purchaser
or the Purchaser's spouse, or the spouse of any child, adopted child, grandchild
or adopted grandchild of Purchaser or the Purchaser's spouse.
8.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First
-------------------------------------
Refusal will terminate as to all Shares on the effective date of the first sale
of Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the SEC under the Securities Act
(other than a registration statement relating solely to the issuance of Common
Stock pursuant to a business combination or an employee incentive or benefit
plan).
9. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of this
---------------------
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Purchaser
delivers payment of the Purchase Price until such time as Purchaser disposes of
the Shares or the Company and/or its assignee(s) exercise(s) the Right of First
Refusal. Upon an exercise of the Right of First Refusal, Purchaser will have no
further rights as a holder of the Shares so purchased upon such exercise, except
the right to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Agreement, and Purchaser will promptly surrender the
stock certificate(s) evidencing the Shares so purchased to the Company for
transfer or cancellation.
10. ESCROW. As security for Purchaser's faithful performance of this
------
Agreement. Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company ("Escrow Holder"), who is hereby appointed to
-------------
hold
7
such certificate(s) and Stock Powers in escrow and to take all such actions and
to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Agreement. Purchaser and the Company agree
that Escrow Holder will not be liable to any party to this Exercise Agreement
(or to any other party) for any actions or omissions unless Escrow Holder is
grossly negligent or intentionally fraudulent in carrying out the duties of
Escrow Holder under this Exercise Agreement. Escrow Holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Agreement. The Shares will
be released from escrow upon termination of both the Repurchase Option and the
Right of First Refusal.
11. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
--------------------------------------------
11.1 LEGENDS. Purchaser understands and agrees that the Company will
-------
place the legends set forth below or similar legends on any stock certificate(s)
evidencing the Shares, together with any other legends that may be required by
state or federal securities laws, the Company's Certificate of Incorporation or
Bylaws, any other agreement between Purchaser and the Company or any agreement
between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
--------------
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON PUBLIC RESALE, TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A
STOCK OPTION EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES. A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS AND THE RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES
OF THESE SHARES.
8
The California Commissioner of Corporations may require that the
following legend also be placed upon the share certificate(s) evidencing
ownership of the Shares:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.
11.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to ensure
--------------------------
compliance with the restrictions imposed by this Agreement, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
11.3 REFUSAL TO TRANSFER. The Company will not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares, or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares have been so transferred.
12. TAX CONSEQUENCES. Purchaser Understands That Purchaser May Suffer
----------------
Adverse Tax Consequences As A Result Of Purchaser's Purchase Or Disposition Of
The Shares. Purchaser Represents That Purchaser Has Consulted With Any Tax
Adviser Purchaser Deems Advisable In Connection With The Purchase Or Disposition
Of The Shares And That Purchaser Is Not Relying On The Company For Any Tax
Advice. In Particular, If The Shares Are Subject To Repurchase By The Company
Or If Purchaser Is An Insider Subject To Section 16(B) Of The Exchange Act.
Purchaser Represents That Purchaser Has Consulted With Purchaser's Tax Adviser
Concerning The Advisability Of Filing An 83(B) Election With The Internal
Revenue Service. Set Forth Below Is A Brief Summary As Of The Date Of This
Exercise Agreement Of Some Of The Federal And California Tax Consequences Of
Exercise Of The Option And Disposition Of The Shares. This Summary Is
Necessarily Incomplete, And The Tax Laws And Regulations Are Subject To Change.
Participant Should Consult A Tax Adviser Before Executing This Option Or
Disposing Of The Shares.
12.1 EXERCISE OF INCENTIVE STOCK OPTION. If the Option qualifies as
----------------------------------
an incentive stock option, there will be no regular federal income tax liability
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Purchase Price Per Share will be treated as a tax preference item for
federal income tax purposes and may subject Purchaser to the alternative minimum
tax in the year of exercise.
12.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
-------------------------------------
qualify as an incentive stock option, there may be a regular federal income tax
liability and a California income tax liability upon the exercise of the Option.
Purchaser will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair
9
market value of the Shares on the date of exercise over the Purchase Price Per
Share. The Company will be required to withhold from Purchaser's compensation or
collect from Purchaser and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
12.3 DISPOSITION OF SHARES. If the Shares are held for more than
---------------------
twelve months after the date of the transfer of the Shares pursuant to the
exercise of the Option (and, in the case of an ISO, are disposed of more than
two years after the Option Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
one year of exercise or within two years after the Option Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
fair market value of the Shares on the date of exercise over the Purchase Price
Per Share. The Company will be required to withhold from Purchaser's
compensation or collect from Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
13. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
------------------------------------
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.
14. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
----------------------
under this Agreement, including its rights to repurchase Shares under the Right
of First Refusal. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement will be binding upon
Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
15. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
---------------------------
construed in accordance with the internal laws of the State of California as
such laws are applied to agreements between California residents entered into
and to be performed entirely within California, excluding that body of laws
pertaining to conflict of laws. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
16. NOTICES. Any notice required to be given or delivered to the Company
-------
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered
to Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, three (3) days after deposit in the United States mail
by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return
10
receipt express courier (prepaid), or one (1) business day after transmission by
rapifax or telecopier.
17. FURTHER INSTRUMENTS. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
18. HEADINGS. The captions and headings of this Agreement are included
--------
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. All references herein to Sections will refer to Sections of
this Agreement.
19. ENTIRE AGREEMENT. The Plan and this Agreement, together with all its
----------------
Exhibits, constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement, and supersede all prior
understandings and agreements, whether oral or written, between the parties
hereto with respect to the specific subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Purchaser has executed this
Agreement in duplicate as of the Effective Date.
CENTAUR PHARMACEUTICALS, INC. PURCHASER
By:______________________ _______________________________
(Signature)
_________________________ _______________________________
(Please print name) (Please print name)
_________________________
(Please print title)
[SIGNATURE PAGE TO CENTAUR PHARMACEUTICALS, INC.
STOCK OPTION EXERCISE AGREEMENT]
11
LIST OF EXHIBITS
----------------
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: California Commissioner Rule 260.141.11
Exhibit 4: Copy of Purchaser's Check or other Evidence of Payment
EXHIBIT 1
---------
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
-------------------------------
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No.______ dated as of _______________, (the "Agreement"), the
---------
undersigned hereby sells, assigns and transfers unto _______________,
______________ shares of the Common Stock, $0.001 par value per share, of
Centaur Pharmaceuticals, Inc., a Delaware corporation (the "Company"), standing
-------
in the undersigned's name on the books of the Company represented by Certificate
No(s). _____ delivered herewith, and does hereby irrevocably constitute and
appoint the Secretary of the Company as the undersigned's attorney-in-fact, with
full power of substitution, to transfer said stock on the books of the Company.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS
THERETO.
Dated:______________________
PURCHASER
________________________________________
(Signature)
________________________________________
(Please Print Name)
________________________________________
(Spouse's Signature, if any)
________________________________________
(Please Print Spouse's Name)
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
------------
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon exercise of its "Repurchase Option" set forth in the
Agreement without requiring additional signatures on the part of the Purchaser
or Purchaser's Spouse.
EXHIBIT 2
---------
SPOUSE CONSENT
--------------
I, the undersigned, am the spouse of __________________ ("Purchaser"). I
---------
have read, understand, and hereby approve the Stock Option Exercise Agreement
between Purchaser and the Company (the "Agreement"). In consideration of the
---------
Company's granting my spouse the right to purchase the Shares as set forth in
the Agreement, I hereby agree to be irrevocably bound by the Agreement and
further agree that any community property interest shall similarly be bound by
the Agreement. I hereby appoint Purchaser as my attorney-in-fact with respect
to any amendment or exercise of any rights under the Agreement.
Date:_____________________
_________________________________
Purchaser's Spouse
Address: ________________________
________________________
________________________
EXHIBIT 3
---------
CALIFORNIA COMMISSIONER RULE 260.141.11
---------------------------------------
(a) The issuer of any security upon which a restriction on transfer has been
imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a copy
of this section to be delivered to each issuee or transferee of such security at
the time the certificate evidencing the security is delivered to the issuee or
transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of these rules:
(4) to the transferor's ancestors, descendants or spouse, or any custodian
or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or
custodian for the account of the transferee or the transferee's
ancestors, descendants or spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation intervivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting
as such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the
broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign
state, territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal transaction,
or as an underwriter or member of an underwriting syndicate or selling
group;
(9) if the interest sold or transferred is a pledge or other lien given by
the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not
required;
(10) by way of a sale qualified under Section 25111, 25112, 25113, or 25121
of the Code, of the securities to be transferred, provided that no
order under Section 25140 or subdivision (a) of Section 25143 is in
effect with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113 of
the Code, provided that no order under Section 25140 or subdivision
(a) of Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or the
administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or by
the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers
at the sale that transfer of the securities is restricted under this
rule, and (ii) delivers to each purchaser a copy of this rule, and
(iii) advises the Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirements of
Section 25110 of the Code but exempt from that qualification
requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as
follows:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
EXHIBIT 2
---------
EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT
-----------------------------------------------------------
In consideration of my employment with Centaur Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), I hereby represent to, and agree with the
-------
Company as follows:
1. COMPANY BUSINESS. I understand that the Company is engaged in a
----------------
continuous program of research, development, production and marketing in
connection with its business and that, as an essential part of my employment
with the Company, I may be expected to make new contributions to and create
inventions of value for the Company.
2. DISCLOSURE OF INVENTIONS. From and after the date I first became
------------------------
employed with the Company, I will promptly disclose in confidence to the Company
all inventions, improvements, designs, original works of authorship, formulas,
processes, compositions of matter, computer software programs, databases, and
trade secrets ("Inventions"), whether or not patentable, copyrightable or
----------
protectible as trade secrets, that are made or conceived or first reduced to
practice or created by me, either alone or jointly with others, during the
period of my employment, whether or not in the course of my employment.
3. WORK FOR HIRE; ASSIGNMENT OF INVENTIONS. I acknowledge that
---------------------------------------
copyrightable works prepared by me within the scope of my employment are "works
for hire" under the Copyright Act and that the Company will be considered the
author thereof. I agree that all Inventions that (a) are developed using
equipment, supplies, facilities or trade secrets of the Company, (b) result from
work performed by me for the Company or (c) relate to the Company's business or
current or anticipated research and development, will be the sole and exclusive
property of the Company and are hereby assigned by me to the Company.
4. LABOR CODE 2870 NOTICE. I have been notified and understand that the
----------------------
provisions of this paragraph do not apply to any Invention that qualifies fully
under the provisions of Section 2870 of the California Labor Code, which states
as follows:
ANY PROVISION IN AN EMPLOYMENT AGREEMENT WHICH PROVIDES THAT AN EMPLOYEE SHALL
ASSIGN, OR OFFER TO ASSIGN, ANY OF HIS OR HER RIGHTS IN AN INVENTION TO HIS OR
HER EMPLOYER SHALL NOT APPLY TO AN INVENTION THAT THE EMPLOYEE DEVELOPED
ENTIRELY ON HIS OR HER OWN TIME WITHOUT USING THE EMPLOYER'S EQUIPMENT,
SUPPLIES, FACILITIES, OR TRADE SECRET INFORMATION EXCEPT FOR THOSE INVENTIONS
THAT EITHER: (1) RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO PRACTICE OF
THE INVENTION TO THE EMPLOYER'S BUSINESS, OR ACTUALLY OR DEMONSTRABLY
ANTICIPATED RESEARCH OR DEVELOPMENT OF THE EMPLOYER, OR (2) RESULT FROM ANY WORK
PERFORMED BY THE EMPLOYEE FOR THE EMPLOYER. TO THE EXTENT A PROVISION IN AN
EMPLOYMENT AGREEMENT PURPORTS TO REQUIRE AN EMPLOYEE TO ASSIGN AN INVENTION
OTHERWISE EXCLUDED FROM BEING
1
REQUIRED TO BE ASSIGNED UNDER CALIFORNIA LABOR CODE SECTION 2870(a), THE
PROVISION IS AGAINST THE PUBLIC POLICY OF THIS STATE AND IS UNENFORCEABLE.
5. ASSIGNMENT OF OTHER RIGHTS. I hereby irrevocably transfer and assign
--------------------------
to the Company: (a) all worldwide patents, patent applications, copyrights,
trade secrets and other intellectual property rights in Invention; and (b) any
and all "Moral Rights" (as defined below) that I may have in or with respect to
any Invention. I also hereby forever waive and agree never to assert any and
all Moral Rights I may have in or with respect to any Invention, even after
termination of my work on behalf of the Company. "Moral Rights" mean any rights
------------
of paternity or integrity, any right to claim authorship of an Invention, to
object to any distortion, mutilation or other modification of, or other
derogatory action in relation to, any Invention, whether or not such would be
prejudicial to my honor or reputation, and any similar right, existing under
judicial or statutory law of any country in the world, or under any treaty,
regardless of whether or not such right is denominated or Generally referred to
as a "moral right".
6. ASSISTANCE. I agree to assist the Company in every proper way to
----------
obtain for the Company and enforce patents, copyrights and other legal
protections for the Company's Inventions in any and all countries. I will
execute any documents that the Company may reasonably request for use in
obtaining or enforcing such patents, copyrights, trade secrets and other legal
protections. My obligations under this paragraph will continue beyond the
termination of my employment with the Company, provided that the Company will
compensate me at a reasonable rate after such termination for time or expenses
actually spent by me at the Company's request on such assistance. I appoint the
Secretary of the Company as my attorney-in-fact to execute documents on my
behalf for this purpose.
7. PROPRIETARY INFORMATION. I understand that my employment by the
-----------------------
Company creates a relationship of confidence and trust with respect to any
information of a confidential or secret nature that may be disclosed to me by
the Company that relates to the business of the Company or to the business of
any parent, subsidiary, affiliate, customer or supplier of the Company or any
other party with whom the Company agrees to hold information of such party in
confidence ("Proprietary Information"). Such Proprietary Information includes
-----------------------
but is not limited to Inventions, marketing plans, product plans, business
strategies, financial information, forecasts, personnel information and customer
lists.
8. CONFIDENTIALITY. At all times, both during my employment and after its
---------------
termination, I will keep and hold all such Proprietary Information in strict
confidence and trust, and I will not use or disclose any of such Proprietary
Information without the prior written consent of the Company, except as may be
necessary to perform my duties as an employee of the Company. Upon termination
of my employment with the Company, I will promptly deliver to the Company all
documents and materials of any nature pertaining to my work with the Company and
I will not take with me any documents or materials or copies thereof containing
any Proprietary Information.
2
9. NO BREACH OF PRIOR AGREEMENT. I represent that my performance of all
----------------------------
the terms of this Agreement and my duties as an employee of the Company will not
breach any invention assignment, proprietary information or similar agreement
with any former employer or other party. I represent that I will not bring with
me to the Company or use in the performance of my duties for the Company any
documents or materials of a former employer that are not generally available to
the public or have not been legally transferred to the Company.
10. NOTIFICATION. I hereby authorize the Company to notify my actual or
------------
future employers of the terms of this Agreement and my responsibilities
hereunder.
11. NON-SOLICITATION. During, and for a period of one (1) year after
----------------
termination of, my employment with the Company, I will not solicit or take away
suppliers, customers, employees or consultants of the Company for my own benefit
or for the benefit of any other party.
12. INJUNCTIVE RELIEF. I understand that in the event of a breach or
-----------------
threatened breach of this Agreement by me the Company may suffer irreparable
harm and will therefore be entitled to injunctive relief to enforce this
Agreement.
13. GOVERNING LAW. This Agreement will be governed and interpreted in
-------------
accordance with the internal laws of the State of California, excluding that
body of law governing conflicts of law.
14. NO DUTY TO EMPLOY. I understand that this Agreement does not
-----------------
constitute a contract of employment or obligate the Company to employ me for any
stated period of time. This Agreement shall be effective as of the first day of
my employment by the Company, namely: _______________, 199__.
CENTAUR PHARMACEUTICALS, INC. EMPLOYEE
----------------------------- --------
By:__________________________ _____________________________
Signature
Its:_________________________ _____________________________
Name (Please print)
3
EXHIBIT 4
---------
COPY OF PURCHASER'S CHECK
OR OTHER EVIDENCE OF PAYMENT
----------------------------
