EXHIBIT 10.23
AGREEMENT, dated as of December 18, 2003 (this "Agreement"),
among MEMORY PHARMACEUTICALS CORP., a Delaware corporation
(the "Company"), DR. XXXX XXXXXX (the "Consultant") and the
other signatories hereto (the "Stockholders")
A. The Consultant and the Company entered into a
Consulting Agreement dated as of April 1, 1998 (the "Original Consulting
Agreement"), which granted the Consultant certain rights to maintain a specified
percentage interest in the Company through the grant of options to purchase
shares of common stock, par value $.001, of the Company ("Common Stock").
B. The Consultant and the Company entered into an
Amendment to Consulting Agreement dated as of June 20, 2000, amending the
Original Consulting Agreement (as amended, the "Consulting Agreement") to
include an adjustment to the anti-dilution rights in the event of certain
dilutive issuances.
C. The Stockholders, the Consultant and the Company have
entered into a Fourth Amended and Restated Investor Rights Agreement dated as of
September 11, 2003, which included certain anti-dilution rights granted to the
Consultant (the "Investor Rights Agreement").
D. The Consultant and the Company entered into a Letter
Agreement dated as of April 23, 2002 (the "Letter Agreement"), in which the
Consultant waived certain of his anti-dilution rights with respect to the sale
by the Company of its Series D Convertible Preferred Stock in an amount in
excess of $40 million.
E. In consideration for the Consultant's entering into
the Letter Agreement, the application of the Adjustment Factor (as defined in
the Consulting Agreement and the Investor Rights Agreement) in respect of the
Company's issuance of Series D Convertible Preferred Stock, $.001 par value per
share (the "Series D Issuance") was waived.
F. Pursuant to the Consulting Agreement and the Investor
Rights Agreement, the Consultant has been granted options to purchase Common
Stock in the amounts, on the dates and at the exercise prices set forth below
("Existing Option Grants"), pursuant to the form of option agreement attached as
Exhibit A:
Number of Shares Exercise Price
Date of Grant of Common Stock per Share
----------------- ----------------- --------------
April 24, 1998 52,631 $0.10
July 22, 1998 5,263 $0.10
December 22, 1998 315,790 $0.18
February 24, 1999 7,525 $0.18
June 21, 2000 427,791 $0.25
August 1, 2000 99,000 $0.25
April 1, 2002 926,585 $0.25
---------
Total 1,834,585
=========
G. Certain terms of the Consulting Agreement, the Letter
Agreement and the Investor Rights Agreement are inconsistent with each other or
require clarification.
H. The Consultant and the Stockholders desire to correct
certain calculation errors and acknowledge and agree that the Consultant is
entitled to be granted an additional 275,180 options to purchase Common Stock at
an exercise price of $0.90 per share.
I. The Company, the Consultant and the Stockholders
desire to amend the Consulting Agreement and the Investor Rights Agreement to
clarify the understanding among such parties regarding Existing Option Grants
and any additional options to purchase Common Stock required to be granted to
the Consultant pursuant to the Consulting Agreement, as amended hereby.
In consideration of the premises and the mutual covenants and
agreements hereinafter contained the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1. Conflicts.
a. Except as specifically amended by this
Agreement, the Consulting Agreement remains in full force and effect. Wherever
the terms of this Agreement and the Consulting Agreement conflict, this
Agreement controls. All references in the Consulting Agreement to "this
Agreement" shall mean the Consulting Agreement, as amended hereby.
b. Except as specifically amended by this
Agreement, the Investor Rights Agreement remains in full force and effect.
Wherever the terms of this Agreement and the Investor Rights Agreement conflict,
this Agreement controls. All references in the Investor Rights Agreement to
"this Agreement" shall mean the Investor Rights Agreement, as amended hereby.
c. The Letter Agreement shall remain in full
force and effect.
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2. Amendments to the Consulting Agreement. The
Consulting Agreement is hereby amended as follows:
a. The number "thirty (30)" in Section 1.5 is
hereby deleted, and in lieu thereof, there is substituted the number "twenty
(20)".
b. Section 3(b) is hereby deleted in its
entirety and, in lieu thereof, there is substituted the following:
"(b)(i) As potential additional compensation for Consultant's
services pursuant to this Agreement, in the event that, at any
time during the term of this Agreement and until immediately
prior to the closing of a Qualified Initial Public Offering
(as defined in the Second Amended and Restated Certificate of
Incorporation of the Company, as amended from time to time,
the "Certificate of Incorporation"), the Company issues
additional shares of Common Stock or Common Stock Equivalents
(as defined below) in connection with a material equity
financing (excluding shares issued in a Qualified Initial
Public Offering) or a material strategic collaboration (each,
a "Dilutive Issuance"), the Company shall grant to Consultant
options to purchase a number of shares of Common Stock equal
to:
(Consultant's
(Pre-Dilutive Effective Percent
Issuance Shares + x Ownership x - Consultant's
Dilutive Issuance Adjustment Effective Share
Shares) Factor) Ownership
---------------------------------------------------------------
100% - (Consultant's Effective Percent Ownership x
Adjustment Factor)
where:
"Pre-Dilutive Issuance Shares" is the total number of
issued and outstanding shares of Common Stock and Common Stock
Equivalents of the Company immediately prior to the Dilutive
Issuance, calculated as if all such Common Stock Equivalents
had been fully converted into shares of Common Stock.
"Dilutive Issuance Shares" is the number of shares of
Common Stock and Common Stock Equivalents issued in the
Dilutive Issuance, calculated as if all such Common Stock
Equivalents had been fully converted into shares of Common
Stock.
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"Consultant's Effective Percent Ownership" is (x) for
the period beginning on the Effective Date of this Agreement
and ending immediately following the granting of options to
the Consultant on April 1, 2002, 5% and (y) from the period
beginning immediately following the granting of options to the
Consultant on April 1, 2002, (1) the Consultant's Effective
Share Ownership (as defined below) divided by (2) the total
number of issued and outstanding shares of Common Stock and
Common Stock Equivalents of the Company, calculated as if all
such Common Stock Equivalents had been fully converted into
shares of Common Stock.
"Adjustment Factor" is (x) if the consideration
(calculated in accordance with the Certificate of
Incorporation) paid per share for shares of Common Stock and
Common Stock Equivalents (on an as-converted basis) issued in
the Dilutive Issuance is greater than or equal to $2.50, as
adjusted for any stock split, stock dividend, combination,
reorganization, recapitalization or similar event involving a
change in the Common Stock (the "Effective Price"), 1 and (y)
if such consideration per share is less than the Effective
Price, (1)(a) Pre-Dilutive Issuance Shares plus (b) the total
consideration for the shares issued in the Dilutive Issuance
divided by the Effective Price divided by (2) Pre-Dilutive
Issuance Shares plus Dilutive Issuance Shares.
"Consultant's Effective Share Ownership" is the
number of shares of Common Stock, Common Stock Equivalents and
options held, directly or indirectly, by the Consultant and
the Consultant's spouse, siblings, children, children-in-law
and grandchildren, calculated as if all such Common Stock
Equivalents had been fully converted into shares of Common
Stock and all such options had been fully exercised
immediately prior to the Dilutive Issuance.
"Common Stock Equivalents" shall mean any shares of
capital stock of the Company (other than Common Stock) which,
at the option of the holder thereof, are immediately
convertible into or exchangeable for shares of Common Stock.
All options to purchase Common Stock granted to the
Consultant under this Section 3(b)(i) shall be referred to as
the "Consultant's Options."
(ii) Upon and subject to the closing of a Qualified Initial
Public Offering, the Company shall grant to Consultant an
option (the "IPO Option") to purchase the number of shares of
Common Stock equal to (x) (1) the Consultant's Effective
Percent Ownership immediately prior to the closing of such
Qualified Initial Public
4
Offering multiplied by the total number of shares of Common
Stock, Common Stock Equivalents and options, warrants or
rights to purchase Common Stock of the Company issued and
outstanding immediately prior to the closing of such Qualified
Initial Public Offering, calculated as if all outstanding
Common Stock Equivalents had been fully converted into shares
of Common Stock and all such outstanding options, warrants and
rights had been fully exercised less (2) the Consultant's
Effective Share Ownership immediately prior to such Qualified
Initial Public Offering divided by (y) 100% less the
Consultant's Effective Percent Ownership immediately prior to
such Qualified Initial Public Offering.
(iii) The exercise price per share of any option granted to
the Consultant pursuant to this Section 3(b) shall be the Fair
Market Value of a Share of Common Stock as defined in the
Company's 1998 Employee, Director and Consultant Stock Option
Plan, as amended from time to time (the "Plan") and shall be
approved in accordance with Section 7.12 of the Fourth Amended
and Restated Investor Rights Agreement dated as of September
11, 2003, as amended from time to time, between the Company
and the other parties thereto; provided, that the IPO Option
shall be granted to the Consultant at the price per share of
the Common Stock issued and sold in the Qualified Initial
Public Offering.
(iv) Any grant of an option to the Consultant shall be made
under the Plan and pursuant to a stock option agreement
substantially in the form attached hereto as Exhibit A with
such changes as the Company and Consultant may agree (a "Stock
Option Agreement"), a copy of which shall also be furnished by
the Company to the Institute.
(v) Notwithstanding anything in this Agreement to the
contrary, the Consultant and the Company agree that the
Company shall in no event grant the Consultant options under
Section 3(b)(i) to purchase additional shares of Common Stock
if, after giving effect to such grant, the Consultant's
ownership of capital stock would be equal to or greater than
5% of the capital stock of the Company, calculated solely for
the purpose of this subsection (v) as follows:
(A) The numerator shall be the Consultant's
Effective Share Ownership on the date of such calculation: and
(B) The denominator shall include all of the
outstanding shares of Common Stock and Common Stock
Equivalents of the Company plus all outstanding Consultant's
Options on the date of such calculation (but not including any
other options and warrants
5
outstanding), calculated as if all outstanding Common Stock
Equivalents had been fully converted into Common Stock and the
Consultant's Options had been fully exercised for shares of
Common Stock.
Notwithstanding anything in this Agreement to the contrary,
the Consultant hereby agrees that he will not exercise any
Consultant's Option or the IPO Option if and to the extent
that, as a result of such exercise, he and his family members
listed above would in fact hold in the aggregate shares
representing 5% or more shares of the Company calculated in
accordance with this subsection (v)."
c. Section 3(e) is hereby deleted in its
entirety.
d. Section 3(g) is hereby deleted in its
entirety.
e. Section 3(f), which reads: "The Company
shall also pay the Consultant $50,000 per annum during the term of this
Agreement for the Consultant's service as Chairman of the Scientific Advisory
Board of the Company." is hereby renumbered to be Section 3(e).
3. Amendment to the Investor Rights Agreement. The
Investor Rights Agreement shall be amended as follows:
a. Section 3 is hereby deleted in its entirety.
4. Ratification of Adjustment Factor Waiver. The parties
acknowledge and agree that the Adjustment Factor did not apply to the Series D
Issuance.
5. Acknowledgment of and Agreement to Consultant Option
Grants. The parties acknowledge and agree that the Consultant is entitled to be
granted options to purchase an additional 275,180 shares of Common Stock at an
exercise price of $0.90 per share, of which 100,501 result from calculation
errors as set forth on Exhibit B and 174,679 result from the issuance to
Xxxxxxxx-XxXxxxx on September 11, 2003 of 2,777,778 shares of Series Roche
Convertible Preferred Stock, $.001 par value per share. Except for the foregoing
275,180 shares and except for any options to purchase Common Stock to which the
Consultant becomes entitled either (i) upon a Dilutive Issuance (as defined in
Section 2(a) above) after the date hereof or (ii) upon the closing of a
Qualified Initial Public Offering (as defined in Section 2(a) above), the
Consultant acknowledges that the Company's obligations to grant him options to
purchase Common Stock under the Consulting Agreement have been satisfied in
full.
6. Company Representations and Warranties. The Company
hereby represents and warrants to the Consultant that, after giving effect to
the option grants for 275,180 shares contemplated by Section 5 above,
"Consultant's Effective Share Ownership" (as defined in the Consulting
Agreement, as amended hereby) is 2,184,765 shares and "Consultant's Effective
Percent Ownership" (as defined in the Consulting Agreement, as amended hereby),
immediately following the last Dilutive Issuance prior to the date hereof, is
4.9126%.
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7. Reimbursement of Consultant Expenses. The Company
agrees to reimburse Consultant for the reasonable out-of-pocket costs and
expenses of legal counsel for the Consultant in connection with this Agreement,
not to exceed $10,000. Such reimbursement shall be made by the Company promptly
upon receipt of written evidence of such costs and expenses in reasonable form
and detail.
8. Miscellaneous. This Agreement, together with the
Consulting Agreement, the Investor Rights Agreement and the Letter Agreement,
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior understandings and agreements,
whether written or oral, with respect to such subject matter. This Agreement may
be executed in counterparts, which together shall constitute one and the same
instrument. Any amendment or modification of this Agreement or waiver of any
right, in whole or in part, will be effective only if it is in writing and
signed by the parties hereto. This Agreement shall be governed by and construed
in accordance with the laws (other than the conflict of laws rules) of the State
of New Jersey.
9. Effectiveness of Agreement. This Agreement will
become effective when executed by the Company, the Consultant and stockholders
holding at least two-thirds of the outstanding shares of Preferred Stock (as
defined in the Investor Rights Agreement).
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed and delivered as of the date first above written.
COMPANY: MEMORY PHARMACEUTICALS CORP.
By: _________________________________________________
Name:
Title:
CONSULTANT:
_____________________________________________________
Xxxx X. Xxxxxx, M.D.
STOCKHOLDERS: OXFORD BIOSCIENCE PARTNERS II L.P.
By: OBP MANAGEMENT II L.P.
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Managing General Partner
OXFORD BIOSCIENCE PARTNERS (BERMUDA) II LIMITED
PARTNERSHIP
By: OBP MANAGEMENT II (BERMUDA) LIMITED PARTNERSHIP
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Managing General Partner
OXFORD BIOSCIENCE PARTNERS (ADJUNCT) II, L.P.
By: OBP MANAGEMENT II L.P.
By: _________________________________________________
Name:
Title:
OXFORD BIOSCIENCE PARTNERS (GS-ADJUNCT) II, L.P.
By: OBP MANAGEMENT II L.P.
By: _________________________________________________
Name:
Title:
HEALTHCARE VENTURES V L.P.
By: _________________________________________________
Name:
Title:
XXXXXX TRUST
By: _________________________________________________
Name:
Title:
VENROCK ASSOCIATES
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: General Partner
VENROCK ASSOCIATES II, L.P.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: General Partner
ALTA EMBARCADERO PARTNERS II LLC
By: _________________________________________________
Name:
Title:
GLSLP INVESTMENT I Ltd.
By: _________________________________________________
Name:
Title:
S.R. ONE LIMITED
By: _________________________________________________
Name:
Title:
ALEXANDRIA REAL ESTATE EQUITIES, L.P.
By: _________________________________________________
Name:
Title:
PHARMA/W HEALTH
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: General Partner, OrbiMed Advisors LLC
FINSBURY WORLDWIDE PHARMACEUTICAL TRUST
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: General Partner, OrbiMed Advisors LLC
XXXXX XXXXX WORLDWIDE HEALTH SCIENCES PORTFOLIO
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: General Partner, OrbiMed Advisors LLC
ARTAL SERVICES N.V.
By: _________________________________________________
Name:
Title:
VENROCK ENTREPRENEUERS FUND, L.P.
By: _________________________________________________
Name:
Title:
MEDICA II INVESTMENT (ISRAEL), LP
By: _________________________________________________
Name:
Title:
MEDICA II INVESTMENT (INTERNATIONAL), LP
By: _________________________________________________
Name:
Title:
GIMV
By: _________________________________________________
Name:
Title:
MEMORIES PLUS, LLC
By: _________________________________________________
Name:
Title:
M&G EQUITIES
By: _________________________________________________
Name:
Title:
_____________________________________________________
Xxxxxxx X. Xxxxxx
_____________________________________________________
Xxxxx Xxxxxx
HARE & CO., FAO FINSBURY WORLDWIDE PHARMACEUTICAL
TRUST PLC
By: _________________________________________________
Name:
Title:
ADVIESBEHEER GIMV LIFE SCIENCES
By: _________________________________________________
Name:
Title:
BIOVEDA FUND PTE LTD
By: _________________________________________________
Name:
Title:
BY: BIOVEDA CAPITAL PTE LTD, ITS INVESTMENT MANAGER
By: _________________________________________________
Name:
Title:
MEDICA II INVESTMENTS (P.F.)(ISRAEL) L.P.
By: _________________________________________________
Name:
Title:
OXFORD BIOSCIENCE PARTNERS II (ANNEX) L.P.
By: OBP MANAGEMENT II L.P.
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxxx
Title:
THE YASUDA ENTERPRISE DEVELOPMENT I LIMITED
PARTNERSHIP
By: _________________________________________________
Name:
Title:
XXXX GHOST, LLC
By: _________________________________________________
Name:
Title:
MITSUBISHI CORPORATION
By: _________________________________________________
Name:
Title:
MITSUBISHI INTERNATIONAL CORPORATION
By: _________________________________________________
Name:
Title:
CZ VENTURE OPERATIONS, INC.
By: _________________________________________________
Name:
Title:
_____________________________________________________
Xxxxxxx X. Xxxxxxxx, Ph.D.
_____________________________________________________
Xxxx-Xxxxxx Xxxx, Ph.X.
XXXXXX, DIVINCENT, ALLESSI, INC.
By: _________________________________________________
Name:
Title:
XX XXXXX VENTURES II, LP
By: SOCIETE GENERALE INVESTMENT CORPORATION, ITS
GENERAL PARTNER
By: _________________________________________________
Name:
Title:
XXXXXXXXX XXXXXXXXX, M.D.
RHO MANAGEMENT TRUST II
By: RHO CAPITAL PARTNERS, INC., INVESTMENT ADVISOR
By: _________________________________________________
Name:
Title:
YAMANOUCHI VENTURE CAPITAL, LLC
By: _________________________________________________
Name:
Title:
ALTA CALIFORNIA PARTNERS II, L.P.
By: ALTA CALIFORNIA MANAGEMENT PARTNERS II, LLC, ITS
GENERAL PARTNER
By: _________________________________________________
Name:
Title:
BIOMEDICINE L.P.
By: INTERNATIONAL BM BIOMEDICINE HOLDINGS (CAYMAN)
LTD., ITS GENERAL PARTNER
By: _________________________________________________
Name:
Title:
NEW ENGLAND PARTNERS CAPITAL, L.P.
By: NEP CAPITAL, LLC, ITS GENERAL PARTNER
By: _________________________________________________
Name:
Title:
XXXXXX XXXXXXXXX MIDDLEGATE VENTURES, LLC
By: _________________________________________________
Name:
Title:
_____________________________________________________
Xxxxx X. Xxxxx
_____________________________________________________
Xxxxx X. Xxxxxx
_____________________________________________________
Xxxxx Xxxxxx
_____________________________________________________
Xxxxx Xxxxxx
_____________________________________________________
Xxxxxxx X. Xxxxxxxxx
_____________________________________________________
Xxxxxxxxx X. Xxxxxxxxx
_____________________________________________________
Xxxxx Xxxxx
_____________________________________________________
Xxxxxx Xxxxx
_____________________________________________________
Xxxxxxx Xxxxx
_____________________________________________________
Xxxxxx Xxxxx
XXXXXXXX-XX XXXXX INC.
By: _________________________________________________
Name:
Title:
EXHIBIT A
TO THE AGREEMENT DATED AS OF DECEMBER 18, 2003
FORM OF STOCK OPTION AGREEMENT
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR XXXX X. XXXXXX
MEMORY PHARMACEUTICALS CORP.
AGREEMENT made as of __________, between Memory Pharmaceuticals Corp.
(the "Company"), a Delaware corporation having a principal place of business in
Montvale, New Jersey, and Xxxx X. Xxxxxx of Riverdale, New York (the
"Participant").
WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, $.001 par value per share (the "Shares"),
under and for the purposes set forth in the Company's 1998 Employee, Director
and Consultant Stock Option Plan, as amended (the "Plan");
WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to the Participant the right and option to
purchase all or any part of an aggregate of _______________ (_____) Shares, on
the terms and conditions and subject to all the limitations set forth herein and
in the Plan, which is incorporated herein by reference. The Participant
acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be
___________ ($_____) per Share, subject to adjustment, as provided in the Plan,
in the event of a stock split, reverse stock split or other events affecting the
holders of Shares. Payment shall be made in accordance with Paragraph 7 of the
Plan.
3. EXERCISABILITY OF OPTION.
Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall be fully vested and shall be exercisable
immediately.
4. TERM OF OPTION.
The Option shall terminate ten (10) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in
the Plan.
If the Participant ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than the death or
Disability of the Participant or termination of the Participant for "cause" (as
defined in the Plan), the Option may be exercised, if it has not previously
terminated, within three (3) months after the date the Participant ceases to be
an employee, director or consultant of the Company or an Affiliate, or within
the originally prescribed term of the Option, whichever is earlier, but may not
be exercised thereafter. In such event, the Option shall be exercisable only to
the extent that the Option has become exercisable and is in effect at the date
of such cessation of employment, directorship or consultancy.
Notwithstanding the foregoing, in the event of the Participant's
Disability or death within three (3) months after the termination of employment,
directorship or consultancy, the Participant or the Participant's Survivors may
exercise the Option within one (1) year after the date of the Participant's
termination of employment, directorship or consultancy, but in no event after
the date of expiration of the term of the Option.
In the event the Participant's employment, directorship or consultancy
is terminated by the Company or an Affiliate for "cause" (as defined in the
Plan), the Participant's right to exercise any unexercised portion of this
Option shall cease as of such termination, and this Option shall thereupon
terminate. Notwithstanding anything herein to the contrary, if subsequent to the
Participant's termination, but prior to the exercise of the Option, the Board of
Directors of the Company determines that, either prior or subsequent to the
Participant's termination, the Participant engaged in conduct which would
constitute "cause," then the Participant shall immediately cease to have any
right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the Participant's termination of service or, if earlier, within the term
originally prescribed by the Option. In such event, the Option shall be
exercisable:
(a) to the extent exercisable but not exercised as of the date of
Disability; and
(b) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights to exercise the Option as would have accrued
had the Participant not become Disabled prior to the end of
the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of
days during the accrual period prior to the date of
Disability.
2
In the event of the death of the Participant while an employee,
director or consultant of the Company or of an Affiliate, the Option shall be
exercisable by the Participant's Survivors within one (1) year after the date of
death of the Participant or, if earlier, within the originally prescribed term
of the Option. In such event, the Option shall be exercisable:
(x) to the extent exercisable but not exercised as of the date of
death; and
(y) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights to exercise the Option as would have accrued
had the Participant not died prior to the end of the accrual
period which next ends following the date of death. The
proration shall be based upon the number of days during the
accrual period prior to the Participant's death.
5. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Company at its principal executive office,
in substantially the form of Exhibit A attached hereto. Such notice shall state
the number of Shares with respect to which the Option is being exercised and
shall be signed by the person exercising the Option. Payment of the purchase
price for such Shares shall be made in accordance with Paragraph 7 of the Plan.
The Company shall deliver a certificate or certificates representing such Shares
as soon as practicable after the notice shall be received, provided, however,
that the Company may delay issuance of such Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws). The certificate or certificates for the Shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Participant and if the Participant shall so request in the notice exercising the
Option, shall be registered in the name of the Participant and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Section 4 hereof, by any person
or persons other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
6. PARTIAL EXERCISE.
Exercise of this Option to the extent above stated may be made in part
at any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
7. LIMITATIONS ON ASSIGNABILITY.
The Option shall not be transferable by the Participant except (a) by
will or by the laws of descent and distribution, (b) pursuant to a qualified
domestic relations order as defined by the
3
Code or Title I of the Employee Retirement Income Security Act or the rules
thereunder or (c) to the Participant's spouse, siblings, children,
children-in-law and grandchildren; provided that the Option and any Shares shall
remain subject to this agreement (including, without limitation, the provisions
of Section 12), and each such transferee shall so acknowledge in writing to the
Company as a condition precedent to the effectiveness of such transfer; and
provided further that either the Participant or such transferee provides the
Company with the transferee's address for notices sufficient for the Company to
comply with Section 14. Except as provided in the previous sentence, the Option
shall be exercisable, during the Participant's lifetime, only by the Participant
(or, in the event of legal incapacity or incompetency, by the Participant's
guardian or representative) and shall not be assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
The Participant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Participant. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers. Provisions in the Plan
for adjustment with respect to stock subject to Options and the related
provisions with respect to successors to the business of the Company are hereby
made applicable hereunder and are incorporated herein by reference.
10. TAXES.
The Participant acknowledges that upon exercise of the Option the
Participant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement. The Participant
acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the
Participant's responsibility.
The Participant agrees that the Company may withhold from the
Participant's remuneration, if any, the appropriate amount of federal, state and
local withholding taxes attributable to such amount that is considered
compensation includable in such person's gross income. At the Company's
discretion, the amount required to be withheld may be withheld in cash from such
remuneration, or in kind from the Shares otherwise deliverable to the
Participant on exercise of the Option. The Participant further agrees that, if
the Company does not withhold
4
an amount from the Participant's remuneration sufficient to satisfy the
Company's income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount under-withheld.
11. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933
Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing the Shares issued pursuant
to such exercise:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws;" and
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the 1933 Act without
registration thereunder. Without limiting the generality of
the foregoing, the Company may delay issuance of the Shares
until completion of any action or obtaining of any consent,
which the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky"
laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Participant pursuant to the
exercise of the Option granted hereby shall not be transferred by the
Participant except as permitted herein.
12.2 In the event of the Participant's termination of service for
any reason, the Company shall have the option, but not the obligation, to
repurchase all or any part of the Shares issued pursuant to this Agreement
(including, without limitation, Shares purchased after termination of
employment, Disability or death in accordance with Section 4 hereof). In the
5
event the Company does not, upon the termination of service of the Participant
(as described above), exercise its option pursuant to this Section 12.2, the
restrictions set forth in the balance of this Agreement shall not thereby lapse,
and the Participant for himself or herself, his or her heirs, legatees,
executors, administrators and other successors in interest, agrees that the
Shares shall remain subject to such restrictions. The following provisions shall
apply to a repurchase under this Section 12.2:
(i) The per share repurchase price of the Shares to be sold to the
Company upon exercise of its option under this Section 12.2
shall be equal to the Fair Market Value of each such Share
determined in accordance with the Plan as of the date of
termination of service.
(ii) The Company's option to repurchase the Participant's Shares in
the event of termination of service shall be valid for a
period of eighteen (18) months commencing with the date of
such termination of service.
(iii) In the event the Company shall be entitled to and shall elect
to exercise its option to repurchase the Participant's Shares
under this Section 12.2, the Company shall notify the
Participant, or in case of death, his or her representative,
in writing of its intent to repurchase the Shares. Such
written notice may be mailed by the Company up to and
including the last day of the time period provided for in
Section 12.2(ii) for exercise of the Company's option to
repurchase.
(iv) The written notice to the Participant shall specify the
address at, and the time and date on, which payment of the
repurchase price is to be made (the "Closing"). The date
specified shall not be less than ten (10) days nor more than
sixty (60) days from the date of the mailing of the notice,
and the Participant or his or her successor in interest with
respect to the Shares shall have no further rights as the
owner thereof from and after the date specified in the notice.
At the Closing, the repurchase price shall be delivered to the
Participant or his or her successor in interest and the Shares
being purchased, duly endorsed for transfer, shall, to the
extent that they are not then in the possession of the
Company, be delivered to the Company by the Participant or his
or her successor in interest.
12.3 It shall be a condition precedent to the validity of any sale or
other transfer of any Shares by the Participant that the following restrictions
be complied with (except as hereinafter otherwise provided):
(i) No Shares owned by the Participant may be sold, pledged or
otherwise transferred (including by gift or devise) to any
person or entity, voluntarily, or by operation of law, except
in accordance with the terms and conditions hereinafter set
forth.
(ii) Before selling or otherwise transferring all or part of the
Shares, the Participant shall give written notice of such
intention to the Company, which notice shall include the name
of the proposed transferee, the proposed purchase price per
6
share, the terms of payment of such purchase price and all
other matters relating to such sale or transfer and shall be
accompanied by a copy of the binding written agreement of the
proposed transferee to purchase the Shares of the Participant.
Such notice shall constitute a binding offer by the
Participant to sell to the Company such number of the Shares
then held by the Participant as are proposed to be sold in the
notice at the monetary price per share designated in such
notice, payable on the terms offered to the Participant by the
proposed transferee (provided, however, that the Company shall
not be required to meet any non-monetary terms of the proposed
transfer, including, without limitation, delivery of other
securities in exchange for the Shares proposed to be sold).
The Company shall give written notice to the Participant as to
whether such offer has been accepted in whole by the Company
within sixty (60) days after its receipt of written notice
from the Participant. The Company may only accept such offer
in whole and may not accept such offer in part. Such
acceptance notice shall fix a time, location and date for the
closing on such purchase ("Closing Date") which shall not be
less than ten (10) nor more than sixty (60) days after the
giving of the acceptance notice. The place for such closing
shall be at the Company's principal office. At such closing,
the Participant shall accept payment as set forth herein and
shall deliver to the Company in exchange therefor certificates
for the number of Shares stated in the notice accompanied by
duly executed instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Participant shall be free to sell all, but not less than all,
of the Shares set forth in his or her notice to the designated
transferee at the price and terms designated in the
Participant's notice, provided that (i) such sale is
consummated within six (6) months after the giving of notice
by the Participant to the Company as aforesaid, and (ii) the
transferee first agrees in writing to be bound by the
provisions of this Section 12 so that such transferee (and all
subsequent transferees) shall thereafter only be permitted to
sell or transfer the Shares in accordance with the terms
hereof. After the expiration of such six (6) months, the
provisions of this Section 12.3 shall again apply with respect
to any proposed voluntary transfer of the Participant's
Shares.
(iv) The restrictions on transfer contained in this Section 12.3
shall not apply to (a) transfers by the Participant to his or
her spouse, siblings, children, children-in-law and
grandchildren or to a trust for the benefit of any such
person, (b) transfers by the Participant to his or her
guardian or conservator, and (c) or transfers by the
Participant, in the event of his or her death, to his or her
executor(s) or administrator(s) or to trustee(s) under his or
her will (collectively, "Permitted Transferees"); provided
however, that in any such event the Shares so transferred in
the hands of each such Permitted Transferee shall remain
subject to this Agreement, and each such Permitted Transferee
shall so acknowledge in writing to the Company as a condition
precedent to the effectiveness of such transfer.
7
(v) The provisions of this Section 12.3 may be waived by the
Company. Any such waiver may be unconditional or based upon
such conditions as the Company may impose.
12.4 In the event that the Participant or his or her successor in
interest fails to deliver the Shares to be repurchased by the Company under this
Agreement, the Company may elect (a) to establish a segregated account in the
amount of the repurchase price, such account to be turned over to the
Participant or his or her successor in interest upon delivery of such Shares,
and (b) immediately to take such action as is appropriate to transfer record
title of such Shares from the Participant to the Company and to treat the
Participant and such Shares in all respects as if delivery of such Shares had
been made as required by this Agreement. The Participant hereby irrevocably
grants the Company a power of attorney which shall be coupled with an interest
for the purpose of effectuating the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock split
on or with respect to any of its Common Stock, or otherwise distribute
securities of the Company to the holders of its Common Stock, the number of
shares of stock or other securities of Company issued with respect to the shares
then subject to the restrictions contained in this Agreement shall be added to
the Shares subject to the Company's rights to repurchase pursuant to this
Agreement. If the Company shall distribute to its stockholders shares of stock
of another corporation, the shares of stock of such other corporation,
distributed with respect to the Shares then subject to the restrictions
contained in this Agreement, shall be added to the Shares subject to the
Company's rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of the Company, or if the Company shall be a party to a merger,
consolidation or capital reorganization, there shall be substituted for the
Shares then subject to the restrictions contained in this Agreement such amount
and kind of securities as are issued in such subdivision, combination,
reclassification, merger, consolidation or capital reorganization in respect of
the Shares subject immediately prior thereto to the Company's rights to
repurchase pursuant to this Agreement.
12.7 The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Agreement.
12.8 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate
upon the effective date of the registration of the Shares pursuant to the
Securities Exchange Act of 1934.
12.9 If, in connection with a registration statement filed by the
Company pursuant to the Securities Act, the Company or its underwriter so
requests, the Participant will agree not to
8
sell any Shares for a period not to exceed 180 days following the effectiveness
of such registration.
12.10 The Participant acknowledges and agrees that neither the Company,
its shareholders nor its directors and officers, has any duty or obligation to
disclose to the Participant any material information regarding the business of
the Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Participant by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.
12.11 All certificates representing the Shares to be issued to the
Participant pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in a Non-Qualified Stock Option Agreement
dated ______________ with this Company, a copy of which Agreement is available
for inspection at the offices of the Company or will be made available upon
request."
13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.
The Company is not by the Plan or this Option obligated to continue the
Participant as an employee, director or consultant of the Company.
14. NOTICES.
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company: Memory Pharmaceuticals Corp.
000 Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
With a copy to: Xxxxx Xxxxxx Xxxxx Tischman Xxxxxxx & Xxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxx X. Xxxxxxxxx, Esq
If to the Participant: Xx. Xxxx X. Xxxxxx
0 Xxxxx Xxxxx
Xxxxxxxxx, XX 000000
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
9
15. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with the
law of the State of Delaware, without giving effect to the conflict of law
principles thereof.
16. BENEFIT OF AGREEMENT.
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
17. ENTIRE AGREEMENT.
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
18. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
19. WAIVERS AND CONSENTS.
Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
10
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Participant has hereunto set
his or her hand, all as of the day and year first above written.
MEMORY PHARMACEUTICALS CORP.
By:
--------------------------------------
Name:
Title:
-----------------------------------------
Participant: Xxxx X. Xxxxxx, M.D.
Exhibit A
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
[FORM FOR UNREGISTERED SHARES]
To: Memory Pharmaceuticals Corp.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase __________
shares (the "Shares") of the common stock, $.001 par value, of Memory
Pharmaceuticals Corp. (the "Company"), at the exercise price of $_____ per
share, pursuant to and subject to the terms of that certain Non-Qualified Stock
Option Agreement between the undersigned and the Company dated _____________.
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informed
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares or (2) the Company receives an opinion of
my legal counsel (concurred in by legal counsel for the Company) stating that
such transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the
Company has no obligation to me to register the sale of the Shares with the SEC
and has not represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the
Shares set forth in the 1998 Employee, Director and Consultant Stock Option Plan
and the Non-Qualified Stock Option Agreement, both of which I have carefully
reviewed. I consent to the placing of a legend on my certificate for the Shares
referring to such restriction and the placing of stop transfer orders until the
Shares may be transferred in accordance with the terms of such restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
___________________________________
Please issue the stock certificate for the Shares (check one):
[ ] to me; or
[ ] to me and ________________, as joint tenants with right of
survivorship
and mail the certificate to me at the following address:
________________________________
________________________________
________________________________
My mailing address for shareholder communications, if different from
the address listed above is:
________________________________
________________________________
________________________________
Very truly yours,
___________________________________
Participant (signature)
___________________________________
Print Name
___________________________________
Date
___________________________________
Social Security Number
Exhibit A
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
[FORM FOR REGISTERED SHARES]
TO: Memory Pharmaceuticals Corp.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase _________
shares (the "Shares") of the common stock, $.001 par value, of Memory
Pharmaceuticals Corp. (the "Company"), at the exercise price of $________ per
share, pursuant to and subject to the terms of that certain Non-Qualified Stock
Option Agreement between the undersigned and the Company dated
____________________.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
___________________________________
Please issue the stock certificate for the Shares (check one):
[ ] to me; or
[ ] to me and ____________________________, as joint tenants with right
of survivorship,
and mail the certificate to me at the following address:
___________________________________
___________________________________
___________________________________
My mailing address for shareholder communications, if different from
the address listed above, is:
___________________________________
___________________________________
___________________________________
Very truly yours,
___________________________________
Participant (signature)
___________________________________
Print Name
___________________________________
Date
___________________________________
Social Security Number
EXHIBIT B
TO THE AGREEMENT DATED AS OF DECEMBER 18, 2003
OPTION GRANT ADJUSTMENTS
Number of shares Number of
of Common Stock Number of shares additional shares
actually issued to issuable to issuable to
Date of Grant Consultant Consultant Consultant
----------------- ------------------ ---------------- -----------------
April 24, 1998 52,631 52,631 0
July 22, 1998 5,263 5,263 0
December 22, 1998 315,790 315,790 0
February 24, 1999 7,525 7,409 (116)
June 21, 2000 427,791 427,791 0
August 1, 2000 99,000 99,000 0
April 1, 2002 926,585 1,027,202 100,617
--------- --------- -------
Total 1,834,585 1,935,086 100,501
========= ========= =======
