EXHIBIT 10.25
IMMEDIATELY EXERCISABLE
DIGIRAD CORPORATION
STOCK PURCHASE AGREEMENT
AGREEMENT made as of this ___ day of __________, 19__, by and among
Digirad Corporation, (the "Corporation"), ___________, the holder of a stock
option (the "Optionee") under the Corporation's 1998 Stock Option/Stock
Issuance Plan and ____________, the Optionee's spouse.
I. EXERCISE OF OPTION
1.1 EXERCISE. Optionee hereby purchases shares
("Purchased Shares") of the Corporation's common stock ("Common Stock")
pursuant to that certain option ("Option") granted Optionee on _____________,
19___ ("Grant Date") to purchase up to ____________ shares of the Common
Stock ("Total Purchasable Shares") under the Corporation's 1998 Stock
Option/Stock Issuance Plan (the "Plan") at an option price of $__________ per
share ("Option Price").
1.2 PAYMENT. Concurrently with the delivery of this
Agreement to the Corporate Secretary of the Corporation, Optionee shall pay
the Option Price for the Purchased Shares in accordance with the provisions
of the agreement between the Corporation and Optionee evidencing the Option
(the "Option Agreement") and shall deliver whatever additional documents may
be required by the Option Agreement as a condition for exercise, together
with a duly-executed blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit I) with respect to the Purchased Shares.
1.3 DELIVERY OF CERTIFICATES. The certificates representing
the Purchased Shares hereunder shall be held in escrow by the Corporate
Secretary of the Corporation in accordance with the provisions of Article VII.
1.4 SHAREHOLDER RIGHTS. Until such time as the Corporation
actually exercises its repurchase right, rights of first refusal or special
purchase right under this Agreement, Optionee (or any successor in interest)
shall have all the rights of a shareholder (including voting and dividend
rights) with respect to the Purchased Shares, including the Purchased Shares
held in escrow under Article VII, subject, however, to the transfer
restrictions of Article IV.
II. SECURITIES LAW COMPLIANCE
2.1 EXEMPTION FROM REGISTRATION. The Purchased Shares have
not been registered under the Securities Act of 1933, as amended (the "1933
Act"), and are accordingly being issued to Optionee in reliance upon the
exemption from such registration provided by Rule 701 of the Securities and
Exchange Commission for stock issuances under compensatory benefit
plans such as the Plan. Optionee hereby acknowledges previous receipt of a
copy of the documentation for such Plan in the form of Exhibit C to the
Notice of Grant of Stock Option (the "Grant Notice") accompanying the Option
Agreement.
2.2 RESTRICTED SECURITIES.
A. Optionee hereby confirms that Optionee
has been informed that the Purchased Shares are restricted securities under
the 1933 Act and may not be resold or transferred unless the Purchased Shares
are first registered under the Federal securities laws or unless an exemption
from such registration is available. Accordingly, Optionee hereby
acknowledges that Optionee is prepared to hold the Purchased Shares for an
indefinite period and that Optionee is aware that Rule 144 of the Securities
and Exchange Commission issued under the 1933 Act is not presently available
to exempt the sale of the Purchased Shares from the registration requirements
of the 1933 Act.
B. Upon the expiration of the ninety
(90)-day period immediately following the date on which the Corporation first
becomes subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Purchased Shares, to the extent
vested under Article V, may be sold (without registration) pursuant to the
applicable requirements of Rule 144. If Optionee is at the time of such sale
an affiliate of the Corporation for purposes of Rule 144 or was such an
affiliate during the preceding three (3) months, then the sale must comply
with all the requirements of Rule 144 (including the volume limitation on the
number of shares sold, the broker/market-maker sale requirement and the
requisite notice to the Securities and Exchange Commission); however, the two
(2)-year holding period requirement of the Rule will not be applicable. If
Optionee is not at the time of the sale an affiliate of the Corporation nor
was such an affiliate during the preceding three (3) months, then none of the
requirements of Rule 144 (other than the broker/market-maker sale requirement
for Purchased Shares held for less than three (3) years following payment in
cash of the Option Price therefor) will be applicable to the sale.
C. Should the Corporation not become subject
to the reporting requirements of the Exchange Act, then Optionee may,
provided he/she is not at the time an affiliate of the Corporation (nor was
such an affiliate during the preceding three (3) months), sell the Purchased
Shares (without registration) pursuant to paragraph (k) of Rule 144 after the
Purchased Shares have been held for a period of three (3) years following the
payment in cash of the Option Price for such shares.
2.3 DISPOSITION OF SHARES. Optionee hereby agrees that
Optionee shall make no disposition of the Purchased Shares (other than a
permitted transfer under paragraph 4.1) unless and until there is compliance
with all of the following requirements:
(a) Optionee shall have notified the Corporation of
the proposed disposition and provided a written summary of the terms
and conditions of the proposed disposition.
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(b) Optionee shall have complied with all
require-ments of this Agreement applicable to the disposition of the
Purchased Shares.
(c) Optionee shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Purchased Shares under the 1933 Act or (ii) all
appropriate action necessary for compliance with the registration
requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.
(d) Optionee shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that the proposed disposition will not result in the
contravention of any transfer restrictions applicable to the Purchased
Shares pursuant to the provisions of the Commissioner Rules identified
in paragraph 2.5.
The Corporation shall not be required (i) to transfer on
its books any Purchased Shares which have been sold or transferred in
violation of the provisions of this Article II nor (ii) to treat as the owner
of the Purchased Shares, or otherwise to accord voting or dividend rights to,
any transferee to whom the Purchased Shares have been transferred in
contravention of this Agreement.
2.4 RESTRICTIVE LEGENDS. In order to reflect the
restrictions on disposition of the Purchased Shares, the stock certificates
for the Purchased Shares will be endorsed with restrictive legends, including
one or more of the following legends:
(i) "The shares represented by this
certificate have not been registered under the Securities Act of 1933. The
shares may not be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a 'no action'
letter of the Securities and Exchange Commission with respect to such sale or
offer, or (c) satisfactory assurances to the Corporation that registration
under such Act is not required with respect to such sale or offer."
(ii) "The shares represented by this
certificate are unvested and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity
with the terms of a written agreement dated ____________, 19__ between the
Corporation and the registered holder of the shares (or the predecessor in
interest to the shares). Such agreement grants certain repurchase rights and
rights of first refusal to the Corporation (or its assignees) upon the sale,
assignment, transfer, encumbrance or other disposition of the Corporation's
shares or upon termination of service with the Corporation. The Corporation
will upon written request furnish a copy of such agreement to the holder
hereof without charge."
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III. SPECIAL TAX ELECTION
3.1 SECTION 83(b) ELECTION APPLICABLE TO THE EXERCISE OF A
NON-STATUTORY STOCK OPTION. If the Purchased Shares are acquired hereunder
pursuant to the exercise of a NON-STATUTORY STOCK OPTION, as specified in the
Grant Notice, then the Optionee understands that under Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), the excess of the
fair market value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Option Price paid for
such shares will be reportable as ordinary income on such lapse date. For
this purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase
Right provided under Article V of this Agreement. Optionee understands that
he/she may elect under Section 83(b) of the Code to be taxed at the time the
Purchased Shares are acquired hereunder, rather than when and as such
Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30)
days after the date of this Agreement. Even if the fair market value of the
Purchased Shares at the date of this Agreement equals the Option Price paid
(and thus no tax is payable), the election must be made to avoid adverse tax
consequences in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS
EXHIBIT II HERETO. OPTIONEE UNDERSTANDS THAT FAILURE TO MAKE THIS FILING
WITHIN THE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY
INCOME BY THE OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE.
3.2 CONDITIONAL SECTION 83(b) ELECTION APPLICABLE TO THE
EXERCISE OF AN INCENTIVE STOCK OPTION. If the Purchased Shares are acquired
hereunder pursuant to the exercise of an INCENTIVE STOCK OPTION under the
Federal tax laws, as specified in the Grant Notice, then the following tax
principles shall be applicable to the Purchased Shares:
A. For regular tax purposes, no taxable income
will be recognized at the time the Option is exercised.
B. The excess of (i) the fair market value of the
Purchased Shares on the date the Option is exercised or (if later) on
the date any forfeiture restrictions applicable to the Purchased Shares
lapse over (ii) the Option Price paid for the Purchased Shares will be
includible in the Optionee's taxable income for alternative minimum tax
purposes.
C. If the Optionee makes a disqualifying disposition
of the Purchased Shares, then the Optionee will recognize ordinary
income in the year of such disposition equal in amount to the excess of
(i) the fair market value of the Purchased Shares on the date the
Option is exercised or (if later) on the date any forfeiture
restrictions applicable to the Purchased Shares lapse over (ii) the
Option Price paid for the Purchased Shares. Any additional gain
recognized upon the disqualifying disposition will be either short-term
or long-term capital gain depending upon the period for which the
Purchased Shares are held prior to the disposition.
D. For purposes of the foregoing, the term
"forfeiture restrictions" will include the right of the Corporation to
repurchase the Purchased Shares pursuant to
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the Repurchase Right provided under Article V of this Agreement. The
term "disqualifying disposition" means any sale or other disposition
(1/) of the Purchased Shares within two (2) years after the Grant Date
or within one (1) year after the execution date of this Agreement.
E. In the absence of final Treasury Regulations
relating to incentive stock options, it is not certain whether the
Optionee may, in connection with the exercise of the Option for any
Purchased Shares at the time subject to forfeiture restrictions, file a
protective election under Section 83(b) of the Code which would limit
(I) the Optionee's alternative minimum taxable income upon exercise and
(II) the Optionee's ordinary income upon a disqualifying disposition,
to the excess of (i) the fair market value of the Purchased Shares on
the date the Option is exercised over (ii) the Option Price paid for
the Purchased Shares. THE APPROPRIATE FORM FOR MAKING SUCH A PROTECTIVE
ELECTION IS ATTACHED AS EXHIBIT II TO THIS AGREEMENT AND MUST BE FILED
WITH THE INTERNAL REVENUE SERVICE WITHIN THIRTY (30) DAYS AFTER THE
DATE OF THIS AGREEMENT. HOWEVER, SUCH ELECTION IF PROPERLY FILED WILL
ONLY BE ALLOWED TO THE EXTENT THE FINAL TREASURY REGULATIONS PERMIT
SUCH A PROTECTIVE ELECTION.
3.3 OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be made by registered
or certified mail, return receipt requested, and Optionee must retain two (2)
copies of the completed form for filing with his or her State and Federal tax
returns for the current tax year and an additional copy for his or her records.
IV. TRANSFER RESTRICTIONS
4.1 RESTRICTION ON TRANSFER. Optionee shall not transfer,
assign, encumber or otherwise dispose of any of the Purchased Shares which
are subject to the Corporation's Repurchase Right under Article V. In
addition, Purchased Shares which are released from the Repurchase Right shall
not be transferred, assigned, encumbered or otherwise made the subject of
disposition in contravention of the Corporation's First Refusal Right under
Article VI. Such restrictions on transfer, however, shall not be applicable
to (i) a gratuitous transfer of the Purchased Shares made to the Optionee's
spouse or issue, including adopted children, or to a trust for the exclusive
benefit of the Optionee or the Optionee's spouse or issue, PROVIDED AND ONLY
IF the Optionee obtains the Corporation's prior written consent to such
transfer, (ii) a
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(1/) Generally, a disposition of shares purchased under an incentive
stock option includes any transfer of legal title, including a transfer by sale,
exchange or gift, but does not include a transfer to the Optionee's spouse, a
transfer into joint ownership with right of survivorship if Optionee remains one
of the joint owners, a pledge, a transfer by bequest or inheritance or certain
tax free exchanges permitted under the Code.
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transfer of title to the Purchased Shares effected pursuant to the Optionee's
will or the laws of intestate succession or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness
incurred by the Optionee in connection with the acquisition of the Purchased
Shares.
4.2 TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of one of
the permitted transfers specified in paragraph 4.1 must, as a condition
precedent to the validity of such transfer, acknowledge in writing to the
Corporation that such person is bound by the provisions of this Agreement and
that the transferred shares are subject to (i) both the Corporation's
Repurchase Right and the Corporation's First Refusal Right granted hereunder
and (ii) the market stand-off provisions of paragraph 4.4, to the same extent
such shares would be so subject if retained by the Optionee.
4.3 DEFINITION OF OWNER. For purposes of Articles IV, V, VI
and VII of this Agreement, the term "Owner" shall include the Optionee and
all subsequent holders of the Purchased Shares who derive their chain of
ownership through a permitted transfer from the Optionee in accordance with
paragraph 4.1.
4.4 MARKET STAND-OFF PROVISIONS.
A. In connection with any underwritten
public offering by the Corporation of its equity securities pursuant to an
effective registration statement filed under the 1933 Act, including the
Corporation's initial public offering, Owner shall not sell, make any short
sale of, loan, hypothecate, pledge, grant any option for the purchase of, or
otherwise dispose or transfer for value or otherwise agree to engage in any
of the foregoing transactions with respect to, any Purchased Shares without
the prior written consent of the Corporation or its underwriters. Such
limitations shall be in effect for such period of time from and after the
effective date of such registration statement as may be requested by the
Corporation or such underwriters; PROVIDED, however, that in no event shall
such period exceed one hundred-eighty (180) days. The limitations of this
paragraph 4.4 shall remain in effect for the two-year period immediately
following the effective date of the Corporation's initial public offering and
shall thereafter terminate and cease to have any force or effect.
B. Owner shall be subject to the market
stand-off provisions of this paragraph 4.4 PROVIDED AND ONLY IF the officers
and directors of the Corporation are also subject to similar arrangements.
C. In the event of any stock dividend, stock
split, recapitalization or other change affecting the Corporation's
outstanding Common Stock effected as a class without receipt of
considera-tion, then any new, substituted or additional securities
distributed with respect to the Purchased Shares shall be immediately subject
to the provisions of this paragraph 4.4, to the same extent the Purchased
Shares are at such time covered by such provisions.
D. In order to enforce the limitations of
this paragraph 4.4, the Corporation may impose stop-transfer instruc-tions
with respect to the Purchased Shares until the end of the applicable
stand-off period.
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V. REPURCHASE RIGHT
5.1 GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date the Optionee ceases for any reason to remain in Service or
(if later) during the sixty (60)-day period following the execution date of
this Agreement, to repurchase at the Option Price all or (at the discretion
of the Corporation and with the consent of the Optionee) any portion of the
Purchased Shares in which the Optionee has not acquired a vested interest in
accordance with the vesting provisions of paragraph 5.3 (such shares to be
hereinafter called the "Unvested Shares"). For purposes of this Agreement,
the Optionee shall be deemed to remain in Service for so long as the Optionee
continues to render periodic services to the Corporation or any parent or
subsidiary corporation, whether as an employee, a non-employee member of the
board of directors, or an independent contractor or consultant.
5.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right
shall be exercisable by written notice delivered to the Owner of the Unvested
Shares prior to the expiration of the applicable sixty (60)-day period
specified in paragraph 5.1. The notice shall indicate the number of Unvested
Shares to be repurchased and the date on which the repurchase is to be
effected, such date to be not more than thirty (30) days after the date of
notice. To the extent one or more certificates representing Unvested Shares
may have been previously delivered out of escrow to the Owner, then Owner
shall, prior to the close of business on the date specified for the
repurchase, deliver to the Secretary of the Corporation the certificates
representing the Unvested Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Corporation shall, concurrently with the
receipt of such stock certificates (either from escrow in accordance with
paragraph 7.3 or from Owner as herein provided), pay to Owner in cash or cash
equivalents (including the cancellation of any purchase-money indebtedness),
an amount equal to the Option Price previously paid for the Unvested Shares
which are to be repurchased.
5.3 TERMINATION OF THE REPURCHASE RIGHT. The Repurchase
Right shall terminate with respect to any Unvested Shares for which it is not
timely exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Purchased
Shares in which the Optionee vests in accordance with the vesting schedule
specified in the Grant Notice. All Purchased Shares as to which the
Repurchase Right lapses shall, however, continue to be subject to (i) the
First Refusal Right of the Corporation and its assignees under Article VI,
(ii) the market stand-off provisions of paragraph 4.4 and (iii) the Special
Purchase Right under Article VIII.
5.4 AGGREGATE VESTING LIMITATION. If the Option is
exercised in more than one increment so that the Optionee is a party to one
or more other Stock Purchase Agreements ("Prior Purchase Agreements") which
are executed prior to the date of this Agreement, then the total number of
Purchased Shares as to which the Optionee shall be deemed to have a
fully-vested interest under this Agreement and all Prior Purchase Agreements
shall not exceed in the aggregate the number of Purchased Shares in which the
Optionee would otherwise at the time be vested, in accordance with the
vesting provisions of paragraph 5.3, had all the Purchased Shares been
acquired exclusively under this Agreement.
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5.5 FRACTIONAL SHARES. No fractional shares shall be
repurchased by the Corporation. Accordingly, should the Repurchase Right
extend to a fractional share (in accordance with the vesting provisions of
paragraph 5.3) at the time the Optionee ceases Service, then such fractional
share shall be added to any fractional share in which the Optionee is at such
time vested in order to make one whole vested share no longer subject to the
Repurchase Right.
5.6 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the
event of any stock dividend, stock split, recapitalization or other change
affecting the Corporation's outstanding Common Stock as a class effected
without receipt of consideration, then any new, substituted or additional
securities or other property (including money paid other than as a regular
cash dividend) which is by reason of any such transaction distributed with
respect to the Purchased Shares shall be immediately subject to the
Repurchase Right, but only to the extent the Purchased Shares are at the time
covered by such right. Appropriate adjustments to reflect the distribution of
such securities or property shall be made to the number of Purchased Shares
and Total Purchasable Shares hereunder and to the price per share to be paid
upon the exercise of the Repurchase Right in order to reflect the effect of
any such transaction upon the Corporation's capital structure; provided,
however, that the aggregate purchase price shall remain the same.
5.7 CORPORATE TRANSACTION.
A. The Repurchase Rights shall automatically
terminate and cease to be exercisable upon the consummation of any Corporate
Transaction, provided that such repurchase right shall not terminate if and
to the extent the Repurchase Rights are assigned to the successor corporation
(or parent thereof) in connection with such Corporate Transaction.
B. Repurchase rights which are assigned in
connection with a Corporate Transaction shall be exercisable with respect to
the property issued to the Optionee upon consummation of such Corporate
Transaction in exchange for the Common Stock held by the Optionee subject to
the repurchase rights immediately prior to the Corporate Transaction.
C. Any Repurchase Rights which are assigned
in a Corporate Transaction and do not otherwise become vested at that time,
shall automatically terminate and cease to be exercisable in the event the
Optionee's Service should subsequently terminate by reason of an Involuntary
Termination within twenty-four (24) months following the effective date of
such Corporate Transaction.
D. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
VI. RIGHT OF FIRST REFUSAL
6.1 GRANT. The Corporation is hereby granted rights of
first refusal (the "First Refusal Right"), exercisable in connection with any
proposed transfer of the Purchased Shares in
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which the Optionee has vested in accordance with the vesting provisions of
Article V. For purposes of this Article VI, the term "transfer" shall include
any sale, assignment, pledge, encumbrance or other disposition for value of
the Purchased Shares intended to be made by the Owner, but shall not include
any of the permitted transfers under paragraph 4.1.
6.2 NOTICE OF INTENDED DISPOSITION. In the event the Owner
desires to accept a bona fide third-party offer for the transfer of any or
all of the Purchased Shares (the shares subject to such offer to be
hereinafter called the "Target Shares"), Owner shall promptly (i) deliver to
the Corporate Secretary of the Corporation written notice (the "Disposition
Notice") of the terms and conditions of the offer, including the purchase
price and the identity of the third-party offeror, and (ii) provide
satisfactory proof that the disposition of the Target Shares to such
third-party offeror would not be in contravention of the provisions set forth
in Articles II and IV of this Agreement.
6.3 EXERCISE OF RIGHT. The Corporation shall, for a period
of forty-five (45) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares specified in the
Disposition Notice upon the same terms and conditions specified therein or
upon terms and conditions which do not materially vary from those specified
therein. Such right shall be exercisable by delivery of written notice (the
"Exercise Notice") to Owner prior to the expiration of the forty-five
(45)-day exercise period. If such right is exercised with respect to all the
Target Shares specified in the Disposition Notice, then the Corporation (or
its assignees) shall effect the repurchase of the Target Shares, including
payment of the purchase price, not more than ten (10) business days after
delivery of the Exercise Notice; and at such time Owner shall deliver to the
Corporation the certificates repre-senting the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer. To the
extent any of the Target Shares are at the time held in escrow under Article
VII, the certificates for such shares shall automatically be released from
escrow and delivered to the Corporation for purchase. Should the purchase
price specified in the Disposition Notice be payable in property other than
cash or evidences of indebtedness, the Corporation (or its assignees) shall
have the right to pay the purchase price in the form of cash equal in amount
to the value of such property. If the Owner and the Corporation (or its
assignees) cannot agree on such cash value within ten (10) days after the
Corporation's receipt of the Disposition Notice, the valuation shall be made
by an appraiser of recognized standing selected by the Owner and the
Corporation (or its assignees) or, if they cannot agree on an appraiser
within twenty (20) days after the Corporation's receipt of the Disposition
Notice, each shall select an appraiser of recognized standing and the two
appraisers shall designate a third appraiser of recognized standing, whose
appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by the Owner and the Corporation. The closing shall
then be held on the later of (i) the tenth business day following delivery of
the Exercise Notice or (ii) the tenth business day after such cash valuation
shall have been made.
6.4 NON-EXERCISE OF RIGHT. In the event the Exercise Notice
is not given to Owner within forty-five (45) days following the date of the
Corporation's receipt of the Disposition Notice, Owner shall have a period
of thirty (30) days thereafter in which to sell or otherwise dispose of the
Target Shares to the third-party offeror identified in the Disposition Notice
upon terms and conditions (including the purchase price) no more favorable to
such third-
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party offeror than those specified in the Disposition Notice; provided,
however, that any such sale or disposition must not be effected in
contravention of the provisions of Article II of this Agreement. To the
extent any of the Target Shares are at the time held in escrow under Article
VII, the certificates for such shares shall automatically be released from
escrow and surrendered to the Owner. The third-party offeror shall acquire
the Target Shares free and clear of the Corporation's Repurchase Right under
Article V and the Corporation's First Refusal Right hereunder, but the
acquired shares shall remain subject to (i) the securities law restrictions
of paragraph 2.2(a) and (ii) the market stand-off provisions of paragraph
4.4. In the event Owner does not effect such sale or disposition of the
Target Shares within the specified thirty (30)-day period, the Corporation's
First Refusal Right shall continue to be applicable to any subsequent
disposition of the Target Shares by Owner until such right lapses in
accordance with paragraph 6.7.
6.5 PARTIAL EXERCISE OF RIGHT. In the event the Corporation
(or its assignees) makes a timely exercise of the First Refusal Right with
respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Owner shall have the option, exercisable by written
notice to the Corporation delivered within thirty (30) days after the date of
the Disposition Notice, to effect the sale of the Target Shares pursuant to
one of the following alternatives:
(i) sale or other disposition of all the
Target Shares to the third-party offeror identified in the Disposition
Notice, but in full compliance with the requirements of paragraph 6.4,
as if the Corporation did not exercise the First Refusal Right
hereunder; or
(ii) sale to the Corporation (or its
assignees) of the portion of the Target Shares which the Corporation
(or its assignees) has elected to purchase, such sale to be effected in
substantial conformity with the provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to
the Corporation under this paragraph 6.5 shall be deemed to be an election by
Owner to sell the Target Shares pursuant to alternative (i) above.
6.6 RECAPITALIZATION/MERGER.
(a) In the event of any stock dividend, stock
split, recapitalization or other transaction affecting the Corporation's
outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property which is by reason of such transaction distributed with respect to
the Purchased Shares shall be immediately subject to the Corporation's First
Refusal Right hereunder, but only to the extent the Purchased Shares are at
the time covered by such right.
(b) In the event of any of the following
transactions:
(i) a merger or consolidation
in which the Corporation is not the surviving entity,
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(ii) a sale, transfer or other
disposition of all or substantially all of the Corporation's assets,
(iii) a reverse merger in which
the Corporation is the surviving entity but in which the Corporation's
outstanding voting securities are transferred in whole or in part to
person or persons other than those who held such securities immediately
prior to the merger, or
(iv) any transaction effected
primarily to change the State in which the Corporation is incorporated,
or to create a holding company structure,
the Corporation's First Refusal Right
shall remain in full force and effect and shall apply to the new capital
stock or other property received in exchange for the Purchased Shares in
consummation of the transaction but only to the extent the Purchased Shares
are at the time covered by such right.
6.7 LAPSE. The First Refusal Right under this Article VI
shall lapse and cease to have effect upon the earliest to occur of (i) the
first date on which shares of the Corporation's Common Stock are held of
record by more than five hundred (500) persons, (ii) a determination is made
by the Corporation's Board of Directors that a public market exists for the
outstanding shares of the Corporation's Common Stock, or (iii) a firm
commitment underwritten public offering pursuant to an effective registration
statement under the 1933 Act, covering the offer and sale of the
Corporation's Common Stock in the aggregate amount of at least $5,000,000.
However, the market stand-off provisions of paragraph 4.4 shall continue to
remain in full force and effect following the lapse of the First Refusal
Right hereunder.
VII. ESCROW
7.1 DEPOSIT. Upon issuance, the certificates for any
Unvested Shares purchased hereunder shall be deposited in escrow with the
Corporate Secretary of the Corporation- to be held in accordance with the
provisions of this Article VII. Each deposited certificate shall be
accompanied by a duly-executed Assignment Separate from Certificate in the
form of Exhibit I. The deposited certificates, together with any other assets
or securities from time to time deposited with the Corporate Secretary
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and securities) are
to be released or otherwise surrendered for cancellation in accordance with
paragraph 7.3. Upon delivery of the certificates (or other assets and
securities) to the Corporate Secretary of the Corporation, the Owner shall be
issued an instrument of deposit acknowledging the number of Unvested Shares
(or other assets and securities) delivered in escrow.
7.2 RECAPITALIZATION. All regular cash dividends on the
Unvested Shares (or other securities at the time held in escrow) shall be
paid directly to the Owner and shall not be held in escrow. However, in the
event of any stock dividend, stock split, recapitalization or other change
affecting the Corporation's outstanding Common Stock as a class effected
without receipt of consideration or in the event of a Corporate Transaction,
any new, substituted or additional
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securities or other property which is by reason of such transaction
distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Article
VII, but only to the extent the Unvested Shares are at the time subject to
the escrow requirements of paragraph 7.1.
7.3 RELEASE/SURRENDER. The Unvested Shares, together with
any other assets or securities held in escrow hereunder, shall be subject to
the following terms and conditions relating to their release from escrow or
their surrender to the Corporation for repurchase and cancellation:
(i) Should the Corporation (or its
assignees) elect to exercise the Repurchase Right under Article V with
respect to any Unvested Shares, then the escrowed certificates for such
Unvested Shares (together with any other assets or securities issued
with respect thereto) shall be delivered to the Corporation
concurrently with the payment to the Owner, in cash or cash equivalent
(including the cancellation of any purchase-money indebtedness), of an
amount equal to the aggregate Option Price for such Unvested Shares,
and the Owner shall cease to have any further rights or claims with
respect to such Unvested Shares (or other assets or securities
attributable to such Unvested Shares).
(ii) Should the Corporation (or its
assignees) elect to exercise its First Refusal Right under Article VI
with respect to any vested Target Shares held at the time in escrow
hereunder, then the escrowed certificates for such Target Shares
(together with any other assets or securities attributable thereto)
shall, concurrently with the payment of the paragraph 6.3 purchase
price for such Target Shares to the Owner, be surrendered to the
Corporation, and the Owner shall cease to have any further rights or
claims with respect to such Target Shares (or other assets or
securities).
(iii) Should the Corporation (or its
assignees) elect not to exercise its First Refusal Right under Article
VI with respect to any Target Shares held at the time in escrow
hereunder, then the escrowed certificates for such Target Shares
(together with any other assets or securities attributable thereto)
shall be surrendered to the Owner for disposition in accordance with
provisions of paragraph 6.4.
(iv) As the interest of the Optionee in
the Unvested Shares (or any other assets or securities attributable
thereto) vests in accordance with the provisions of Article V, the
certificates for such vested shares (as well as all other vested assets
and securities) shall be released from escrow and delivered to the
Owner in accordance with the following schedule:
a. The initial release of
vested shares (or other vested assets and securities) from
escrow shall be effected within thirty (30) days following the
expiration of the initial twelve (12)-month period measured from
the Grant Date.
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b. Subsequent releases of
vested shares (or other vested assets and securities) from
escrow shall be effected at semi-annual intervals thereafter,
with the first such semi-annual release to occur eighteen (18)
months after the Grant Date.
c. Upon the Optionee's
cessation of Service, any escrowed Purchased Shares (or other
assets or securities) in which the Optionee is at the time
vested shall be promptly released from escrow.
d. Upon any earlier
termination of the Corporation-'s Repurchase Right in accordance
with the applicable provisions of Article V, any Purchased
Shares (or other assets or securities) at the time held in
escrow hereunder shall promptly be released to the Owner as
fully-vested shares or other property.
(v) All Purchased Shares (or other
assets or securities) released from escrow in accordance with the
provisions of subparagraph (iv) above shall nevertheless remain subject
to (I) the Corporation's First Refusal Right under Article VI until
such right lapses pursuant to paragraph 6.7, (II) the market stand-off
provisions of paragraph 4.4 until such provisions terminate in
accordance therewith and (III) the Special Purchase Right under Article
VIII.
VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION
8.1 GRANT. In connection with the dissolution of the
Optionee's marriage or the legal separation of the Optionee and the
Optionee's spouse, the Corporation shall have the right (the "Special
Purchase Right"), exercisable at any time during the thirty (30)-day period
following the Corporation's receipt of the required Dissolution Notice under
paragraph 8.2, to purchase from the Optionee's spouse, in accordance with the
provisions of paragraph 8.3, all or any portion of the Purchased Shares which
would otherwise be awarded to such spouse in settlement of any community
property or other marital property rights such spouse may have in such shares.
8.2 NOTICE OF DECREE OR AGREEMENT. The Optionee shall
promptly provide the Secretary of the Corporation with written notice (the
"Dissolution Notice") of (i) the entry of any judicial decree or order
resolving the property rights of the Optionee and the Optionee's spouse in
connection with their marital dissolu-tion or legal separation or (ii) the
execution of any contract or agreement relating to the distribution or
division of such property rights. The Dissolution Notice shall be accompanied
by a copy of the actual decree of dissolution or settlement agreement between
the Optionee and the Optionee's spouse which provides for the award to the
spouse of one or more Purchased Shares in settlement of any community
property or other marital property rights such spouse may have in such shares.
8.3 EXERCISE OF SPECIAL PURCHASE RIGHT. The Special
Purchase Right shall be exercisable by delivery of written notice (the
"Purchase Notice") to the Optionee and the Optionee's spouse within thirty
(30) days after the Corporation's receipt of the Dissolution Notice. The
Purchase Notice shall indicate the number of shares to be purchased by the
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Corporation, the date such purchase is to be effected (such date to be not
less than five (5) business days, nor more than ten (10) business days, after
the date of the Purchase Notice), and the fair market value to be paid for
such Purchased Shares. The Optionee (or the Optionee's spouse, to the extent
such spouse has physical possession of the Purchased Shares) shall, prior to
the close of business on the date specified for the purchase, deliver to the
Corporate Secretary of the Corporation the certificates representing the
shares to be purchased, each certificate to be properly endorsed for
transfer. To the extent any of the shares to be purchased by the Corporation
are at the time held in escrow under Article VII, the certificates for such
shares shall be promptly delivered out of escrow to the Corporation. The
Corporation shall, concurrently with the receipt of the stock certificates,
pay to the Optionee's spouse (in cash or cash equivalents) an amount equal to
the fair market value specified for such shares in the Purchase Notice.
If the Optionee's spouse does not agree with the
fair market value specified for the shares in the Purchase Notice, then the
spouse shall promptly notify the Corporation in writing of such disagreement
and the fair market value of such shares shall thereupon be determined by an
appraiser of recognized standing selected by the Corporation and the spouse.
If they cannot agree on an appraiser within twenty (20) days after the date
of the Purchase Notice, each shall select an appraiser of recognized
standing, and the two appraisers shall designate a third appraiser of
recognized standing whose appraisal shall be determinative of such value. The
cost of the appraisal shall be shared equally by the Corporation and the
Optionee's spouse. The closing shall then be held on the fifth business day
following the completion of such appraisal; PROVIDED, however, that if the
appraised value is more than fifteen percent (15%) greater than the fair
market value specified for the shares in the Purchase Notice, the Corporation
shall have the right, exercisable prior to the expiration of such five
(5)-business-day period, to rescind the exercise of the Special Purchase
Right and thereby revoke its election to purchase the shares awarded to the
spouse.
8.4 LAPSE. The Special Purchase Right under this Article
VIII shall lapse and cease to have effect upon the earlier to occur of (i)
the first date on which the First Refusal Right under Article VI lapses or
(ii) the expiration of the thirty (30)-day exercise period specified in
paragraph 8.3, to the extent the Special Purchase Right is not timely
exercised in accordance with such paragraph.
IX. GENERAL PROVISIONS
9.1 ASSIGNMENT. The Corporation may assign its Repurchase
Right under Article V, its First Refusal Right under Article VI and/or its
Special Purchase Right under Article VIII to any person or entity selected by
the Corporation's Board of Directors, including (without limitation) one or
more shareholders of the Corporation.
If the assignee of the Repurchase Right is other
than a one hundred percent (100%) owned subsidiary corporation of the
Corporation or the parent corporation owning one hundred percent (100%) of
the Corporation, then such assignee must make a cash payment to the
Corporation, upon the assignment of the Repurchase Right, in an amount equal
to the excess (if any) of (i) the fair market value of the Unvested Shares at
the time subject to the
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assigned Repurchase Right over (ii) the aggregate repurchase price payable
for the Unvested Shares thereunder.
9.2 DEFINITIONS. For purposes of this Agreement, the
following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation:
(i) Any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
Corporation shall be considered to be a parent corporation of the
Corporation, provided each such corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
9.3 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement or in the Plan shall confer upon the Optionee any right to continue
in the Service of the Corporation (or any parent or subsidiary corporation of
the Corporation employing or retaining Optionee) for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any parent or subsidiary corporation of the Corporation
employing or retaining Optionee) or the Optionee, which rights are hereby
expressly reserved by each, to terminate the Optionee's Service at any time
for any reason whatsoever, with or without cause.
9.4 NOTICES. Any notice required in connection with (i) the
Repurchase Right, the Special Purchase Right or the First Refusal Right or
(ii) the disposition of any Purchased Shares covered thereby shall be given
in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States mail, registered or certified, postage prepaid
and addressed to the party entitled to such notice at the address indicated
below such party's signature line on this Agreement or at such other address
as such party may designate by ten (10) days advance written notice under
this paragraph 9.4 to all other parties to this Agreement.
9.5 NO WAIVER. The failure of the Corporation (or its
assignees) in any instance to exercise the Repurchase Right granted under
Article V, or the failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article VI, or the
failure of the Corporation (or its assignees) in any instance to exercise the
Special Purchase Right granted under Article VIII shall not constitute a
waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other
agreement between the Corporation and the Optionee or the Optionee's spouse.
No waiver of any breach or condition of this Agreement shall be deemed to be
a waiver of any other or subsequent breach or condition, whether of like or
different nature.
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9.6 CANCELLATION OF SHARES. If the Corporation (or its
assignees) shall make available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Purchased Shares
to be repurchased in accordance with the provisions of this Agreement, then
from and after such time, the person from whom such shares are to be
repurchased shall no longer have any rights as a holder of such shares (other
than the right to receive payment of such consideration in accordance with
this Agreement), and such shares shall be deemed purchased in accordance with
the applicable provisions hereof and the Corporation (or its assignees) shall
be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
X. MISCELLANEOUS PROVISIONS
10.1 OPTIONEE UNDERTAKING. Optionee hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on
either the Optionee or the Purchased Shares pursuant to the express
provisions of this Agreement.
10.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement
constitutes the entire contract between the parties hereto with regard to the
subject matter hereof. This Agreement is made pursuant to the provisions of
the Plan and shall in all respects be construed in conformity with the
express terms and provisions of the Plan.
10.3 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, as such
laws are applied to contracts entered into and performed in such State
without resort to that State's conflict-of-laws rules.
10.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
10.5 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and the Optionee and the Optionee's legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by the
terms and conditions hereof.
10.6 POWER OF ATTORNEY. Optionee's spouse hereby appoints
Optionee his or her true and lawful attorney in fact, for him or her and in
his or her name, place and βββββ, and for his or her use and benefit, to
agree to any amendment or modification of this Agreement and to execute such
further instruments and take such further actions as may reasonably be
necessary to carry out the intent of this Agreement. Optionee's spouse
further gives and grants unto Optionee as his or her attorney in fact full
power and authority to do and perform every act necessary and proper to be
done in the exercise of any of the foregoing powers as fully as he or she
might or could do if personally present, with full power of substitution and
revocation,
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hereby ratifying and confirming all that Optionee shall lawfully do and cause
to be done by virtue of this power of attorney.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first indicated above.
DIGIRAD CORPORATION
By:
------------------------------
Title:
----------------------------
Address:
-----------------------------------
-----------------------------------
-----------------------------------
Optionee (*/)
Address:
The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consider-ation of the Corporation's
granting the Optionee the right to acquire the Purchased Shares in accordance
with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including
(specifically) the right of the Corporation (or its assignees) to purchase any
and all interest or right the undersigned may otherwise have in such shares
pursuant to community property laws or other marital property rights.
-----------------------------------
Optionee's Spouse
Address:
-----------------------------------
-----------------------------------
-------------------
(*/) I have executed the Section 83(b) election that was attached hereto as an
Exhibit. As set forth in Article III, I understand and I, and NOT the
Corporation, will be responsible for completing the form and filing the election
with the appropriate office of the Federal and State tax authorities and that if
such filing is not completed within thirty (30) days after the date of this
Agreement, I will not be entitled to the tax benefits provided by Section 83(b)
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ________________ hereby sell(s), assign(s)
and transfer(s) unto Digirad Corporation (the "Corporation"), ____________
(________) shares of the Common Stock of the Corporation standing in his\her
name on the books of the Corporation represented by Certificate No.
__________________ and do hereby irrevocably constitute and appoint___________as
Attorney to transfer the said stock on the books of the Corporation with full
power of substitution in the premises.
Dated:
------------------
Signature
--------------------------
INSTRUCTION: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise its
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Optionee.
REPURCHASE RIGHTS
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
_______ shares of the common stock of Digirad Corporation.
(3) The property was issued on ______________, 19__.
(4) The taxable year in which the election is being made is the calendar
year 19__.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four year period ending on _________,
19__ .
(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $ ______ per share.
(7) The amount paid for such property is $ _______ per share.
(8) A copy of this statement was furnished to Digirad Corporation for whom
taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed as of: ____________________.
----------------- ----------------------
Spouse (if any) Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Stock Purchase Agreement.
SPECIAL PROTECTIVE ELECTION PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE WITH RESPECT TO PROPERTY ACQUIRED UPON EXERCISE OF AN
INCENTIVE STOCK OPTION
The property described in the above Section 83(b) election is comprised of
shares of common stock acquired pursuant to the exercise of an incentive
stock option under Section 422 of the Code. Accordingly, it is the intent of
the Taxpayer to utilize this election to achieve the following tax results:
1. The purpose of this election is to have the alternative
minimum taxable income attributable to the purchased shares measured by the
amount by which the fair market value of such shares at the time of their
transfer to the Taxpayer exceeds the purchase price paid for the shares. In
the absence of this election, such alternative minimum taxable income would
be measured by the spread between the fair market value of the purchased
shares and the purchase price which exists on the various lapse dates in
effect for the forfeiture restric-tions applicable to such shares. The
election is to be effective to the full extent permitted under the Internal
Revenue Code.
2. Section 421(a)(1) of the Code expressly excludes from
income any excess of the fair market value of the purchased shares over the
amount paid for such shares. Accordingly, this election is also intended to
be effective in the event there is a "disqualifying disposition" of the
shares, within the meaning of Section 421(b) of the Code, which would
otherwise render the provisions of Section 83(a) of the Code applicable at
that time. Consequently, the Taxpayer hereby elects to have the amount of
disqualifying disposition income measured by the excess of the fair market
value of the purchased shares on the date of transfer to the Taxpayer over
the amount paid for such shares. Since Section 421(a) presently applies to
the shares which are the subject of this Section 83(b) election, no taxable
income is actually recognized for regular tax purposes at this time, and no
income taxes are payable, by the Taxpayer as a result of this election.
This form should be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Stock Purchase Agreement.
NOTE: PAGE 2 SHOULD BE ATTACHED ONLY IF YOU ARE EXERCISING AN INCENTIVE
STOCK OPTION.
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