Exhibit 10.12
SOMAXON PHARMACEUTICALS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT ("AGREEMENT") is made as of
August 15, 2003 by and between Somaxon Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and _______________ (the "PURCHASER").
The parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser
and the Purchaser hereby agrees to purchase an aggregate of ________ shares of
the Company's Common Stock (par value $0.0001 per share) at a purchase price of
$0.0001 per share (the "SHARES"), for an aggregate purchase price of
$__________.
2. Payment of Purchase Price. The payment of the purchase price
shall be by cash, check or wire transfer.
3. Repurchase Option. In the event of any voluntary or involuntary
termination of [EXECUTIVE OFFICER ONLY: the Purchaser's employment by, or
services to,] [DIRECTOR ONLY: the service of [Name of Director] (the "DIRECTOR")
as a director of] the Company for any or no reason (including death or
disability) before all of the Shares are released from the Company's Repurchase
Option (as defined below), the Company shall, upon the date of such termination
(as reasonably fixed and determined by the Company), have an irrevocable,
exclusive option, but not the obligation, for a period of 90 days from such date
to repurchase all or any portion of the Unreleased Shares (as defined below in
Section 4) at such time (the "REPURCHASE OPTION") at the original purchase price
per share (the "REPURCHASE PRICE"). The Repurchase Option shall be exercisable
by the Company by written notice to the Purchaser or the Purchaser's executor
and shall be exercisable by delivery to the Purchaser or the Purchaser's
executor of cash, check or wire transfer in an amount equal to the Repurchase
Price times the number of Shares to be repurchased (the "AGGREGATE REPURCHASE
PRICE"). Upon delivery of such notice and the payment of the Aggregate
Repurchase Price, the Company shall become the legal and beneficial owner of the
Shares being repurchased and all rights and interests therein or relating
thereto, and the Company shall have the right to retain and transfer to its own
name the number of Shares being repurchased by the Company. The Repurchase
Option set forth in this Section 3 may be assigned by the Company in whole or in
part in its sole and unfettered discretion.
4. Release of Shares From Repurchase Option.
(a) The Shares shall be released from the Company's Repurchase
Option pursuant to the following schedule:
100% of the Shares (the "RESTRICTED SHARES") shall be
subject to the Repurchase Option as of May 1, 2003 (the
"VESTING COMMENCEMENT DATE"). [EXECUTIVE OFFICER ONLY:
1/48th] [DIRECTOR ONLY: 1/24th] of the Restricted Shares
shall be released from the Repurchase Option on each
monthly anniversary of the Vesting Commencement Date
such that all Restricted Shares shall be released from
the Repurchase Option on the
[EXECUTIVE OFFICER ONLY: four (4)] [DIRECTOR ONLY: two
(2)] year anniversary of the Vesting Commencement Date.
Any of the Shares which, from time to time, have not yet been
released from the Repurchase Option are referred to herein as "Unreleased
Shares." The number of Shares released each month from the Repurchase Option
shall be rounded down to the next whole number of Option Shares, except in the
last month of the [EXECUTIVE OFFICER ONLY: four (4)] [DIRECTOR ONLY: two (2)]
year period when all Unreleased Shares shall be released from the Repurchase
Option
(b) Upon an Acceleration Event (defined below), the Repurchase
Option shall lapse for 100% of the Unreleased Shares (if any). An "ACCELERATION
EVENT" shall mean [EXECUTIVE OFFICER ONLY: any of the following:
(i) The termination by the Company of the Purchaser's
employment with the Company for any reason other than Cause (defined below).
Unless otherwise defined in an employment or services agreement between the
Purchaser and the Company (which definition will control), "CAUSE" shall mean
dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by the Board of
Directors of the Company, and its determination shall be conclusive and binding;
or
(ii) The termination by the Purchaser of the Purchaser's
employment with the Company for Good Reason (defined below). Unless otherwise
defined in an employment or services agreement between the Purchaser and the
Company (which definition will control), "GOOD REASON" shall mean the occurrence
of any of the following events or conditions and the failure of the Successor
Corporation to cure such event or condition within thirty (30) days after
receipt of written notice from the Purchaser:
(1) a change in the Purchaser's position or
responsibilities (including reporting responsibilities) that represents a
substantial reduction in the position or responsibilities as in effect
immediately prior thereto; the assignment to the Purchaser of any duties or
responsibilities that are materially inconsistent with such position or
responsibilities; or any removal of the Purchaser from or failure to reappoint
or reelect the Purchaser to any of such positions, except in connection with the
termination of the Purchaser's employment for Cause, as a result of his or her
disability or death, or by the Purchaser other than for Good Reason;
(2) a material reduction in the Purchaser's annual
base salary, except in connection with a general reduction in the compensation
of all personnel of the Company and its parent and subsidiaries, if any;
(3) the Company requiring the Purchaser (without
the Purchaser's consent) to be based at any place outside a 50-mile radius of
his or her initial place of employment with the Company, except for reasonably
required travel on the Company's business;
(4) the Company's failure to provide the Purchaser
with compensation and benefits substantially equivalent (in terms of benefit
levels and/or reward opportunities) to those provided for under each material
employee benefit plan, program and practice as in effect from time to time; or
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(5) any material breach by the Company of its
obligations to the Purchaser under any applicable employment or services
agreement between the Purchaser and the Company.
(c) In the event of a Change of Control (defined below), the
Repurchase Option shall lapse for (i) 50% of the Unreleased Shares (if any) at
the time of the Change of Control and (ii) the remaining Unreleased Shares (if
any) on the twelve month anniversary of the Change of Control. In the event an
Acceleration Event occurs between the Change of Control and the twelve month
anniversary of the Change of Control the provisions of Section 4(b) above shall
apply.]
[DIRECTOR ONLY: the termination by the Company of the Director's
service as a director of the Company for any reason other than Cause (defined
below). "CAUSE" shall mean dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Board of Directors of the Company, and its determination
shall be conclusive and binding.
(c) In the event of a Change of Control (defined below), the
Repurchase Option shall lapse for 100% of the Unreleased Shares (if any) at the
time of the Change of Control.]
A "CHANGE OF CONTROL" shall mean (1) a merger or consolidation of the Company
with or into any other corporation or other entity or person or (2) a sale,
lease, exchange or other transfer in one transaction or a series of related
transactions of all or substantially all the Company's outstanding securities or
all or substantially all the Company's assets; provided that the following
events shall not constitute a "Change of Control": (A) a merger or consolidation
of the Company in which the holders of the voting securities of the Company
immediately prior to the merger or consolidation hold at least a majority of the
voting securities in the Successor Corporation immediately after the merger or
consolidation; (B) a sale, lease, exchange or other transaction in one
transaction or a series of related transactions of all or substantially all of
the Company's assets to a wholly owned subsidiary corporation; (C) a mere
reincorporation of the Company; or (D) a transaction undertaken for the sole
purpose of creating a holding company that will be owned in substantially the
same proportion by the persons who held the Company's securities immediately
before such transaction.
(d) Subject to Section 7, the Shares which have been released
from the Repurchase Option shall be delivered to the Purchaser at the
Purchaser's request.
5. Restriction on Transfer. Except for the escrow described below in
▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any manner until the release
of such Shares from the Repurchase Option in accordance with the provisions of
this Agreement.
6. Right of First Refusal. Purchaser acknowledges that the Shares
are subject to a Right of First Refusal pursuant to the Company's Bylaws, a copy
of which is available from the Secretary of the Company.
7. Escrow of Shares. Pursuant to the terms of the Joint Escrow
Instructions attached hereto as Exhibit A, the Shares issued under this
Agreement shall be held by the Escrow Agent (as defined in such Joint Escrow
Instructions) along with a stock assignment executed by the Purchaser in blank
in the form attached hereto as Exhibit B. Notwithstanding the monthly vesting
set forth in Section 4 above, neither the Company nor the Escrow Agent shall be
required to release or issue certificates evidencing the Shares to the Purchaser
more frequently than twice in any calendar year.
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8. Investment Representations. In connection with the purchase of
the Shares, the Purchaser represents to the Company the following:
(a) The Shares to be purchased by the Purchaser hereunder will
be acquired for investment for the Purchaser's own account and not with a view
to the public resale or distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "SECURITIES ACT").
(b) The Purchaser has received or has had full access to all
the information the Purchaser considers necessary or appropriate to make an
informed investment decision with respect to the Shares.
(c) The Purchaser understands that the purchase of the Shares
involves substantial risk. The Purchaser: (i) has experience as an investor in
securities of companies in the development stage and acknowledges that the
Purchaser is able to fend for itself, can bear the economic risk of the
Purchaser's investment in the Shares and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of its investment in the Shares and protecting its investment; and/or (ii)
has a preexisting business relationship with the Company and/or certain of its
other officers, directors or controlling persons of a nature and duration that
enables the Purchaser to be aware of the character, business acumen and
financial circumstances of such persons.
(d) [EXECUTIVE OFFICER ONLY: By virtue of the Purchaser's
position as an executive officer of the Company, the] [DIRECTOR ONLY: The]
Purchaser is an accredited investor within the meaning of Regulation D
promulgated under the Securities Act.
(e) The Purchaser understands that the Shares are
characterized as "restricted securities" under the Securities Act, in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. The
Purchaser represents that it is familiar with Rule 144 of the Securities and
Exchange Commission and understands the resale limitations imposed thereby and
by the Securities Act. The Purchaser understands that the Company is under no
obligation to register any of the securities sold hereunder.
9. Stock Certificate Legends. The share certificate evidencing the
Shares issued hereunder shall be endorsed with the following legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
(c) Any legend required by the Company's Bylaws and any
applicable state securities laws.
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10. Market Stand-Off Agreement. The Purchaser hereby agrees, if so
requested by the managing underwriters or the Company in connection with the
initial public offering of the Company's Common Stock, that, without the prior
written consent of such managing underwriters, the Purchaser will not offer,
sell, contract to sell, grant any option to purchase, make any short sale or
otherwise dispose of, assign any legal or beneficial interest in or make a
distribution of any capital stock of the Company held by or on behalf of the
Purchaser or beneficially owned by the Purchaser in accordance with the rules
and regulations of the Securities and Exchange Commission for a period of up to
180 days after the date of the final prospectus relating to the Company's
initial public offering.
11. Adjustment for Stock Split. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be
appropriately adjusted to reflect any stock split, reverse stock split or stock
dividend or other similar change in the Shares which may be made by the Company
after the date of this Agreement.
12. Tax Consequences. The Purchaser has reviewed with the
Purchaser's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Purchaser is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The Purchaser
understands that the Purchaser (and not the Company) shall be responsible for
the Purchaser's own tax liability that may arise as a result of this investment
or the transactions contemplated by this Agreement. The Purchaser understands
that Section 83 of the Internal Revenue Code of 1986, as amended (the "CODE"),
taxes as ordinary income both (i) the difference between the fair market value
of the Shares when the Company granted the Purchaser the right to purchase the
Shares and the fair market value of the Shares on the date of this Agreement,
and (ii) the difference between the amount paid for the Shares and the fair
market value of the Shares as of the date any restrictions on the Shares lapse.
In this context, "restriction" includes the right of the Company to buy back the
Shares pursuant to its repurchase option. In the event the Company has
registered under the Exchange Act, "restriction" with respect to officers,
directors and 10% shareholders also means the period after the purchase of the
Shares during which such officers, directors and 10% shareholders could be
subject to suit under Section 16(b) of the Exchange Act. The Purchaser
understands that the Purchaser may elect to be taxed at the time the Shares are
purchased rather than when and as the Company's repurchase option or 16(b)
period expires by filing an election under Section 83(b) of the Code with the
I.R.S. within 30 days from the date of purchase.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
13. California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
14. General Provisions.
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(a) This Agreement shall be governed by the laws of the State
of California. This Agreement represents the entire agreement between the
parties with respect to the purchase of Common Stock by the Purchaser and may
only be modified or amended in writing signed by both parties.
(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
(c) The rights and benefits of the Company under this
Agreement shall be transferable to any one or more persons or entities, and all
covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and obligations
of the Purchaser under this Agreement may only be assigned with the prior
written consent of the Company and any purported transfer otherwise shall be
null and void.
(d) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE LAPSING OF THE
REPURCHASE OPTION PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING
SERVICE AS AN "AT WILL" EMPLOYEE OF THE COMPANY (AND NOT THROUGH THE ACT OF
BEING HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
REPURCHASE OPTION SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR SUCH PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE COMPANY'S RIGHT TO TERMINATE
PURCHASER'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
(g) Purchaser has reviewed this Agreement in its entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understands all provisions of this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first set forth above.
COMPANY: PURCHASER:
SOMAXON PHARMACEUTICALS, INC.,
a Delaware corporation
By: ______________________________ ________________________________
Name:
Title:
Address: c/o Latham & ▇▇▇▇▇▇▇ LLP Address:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq./
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Schedule to Exhibit 10.12: The form of Restricted Stock Purchase Agreement above
was executed by the following persons or entities with respect to the number of
shares and purchase prices listed:
NUMBER OF SHARES PURCHASE
PURCHASER OF COMMON STOCK PRICE RELATED DIRECTOR
--------- ---------------- -------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 450,000 $ 45.00 N/A
▇▇▇▇▇ ▇. ▇▇▇▇ 450,000 $ 45.00 N/A
▇▇▇▇▇▇▇ ▇▇▇▇▇ 450,000 $ 45.00 N/A
▇▇▇ ▇▇▇▇▇▇▇▇ 150,000 $ 15.00 N/A
▇▇▇▇ Family Trust UTD 2/10/86 1,000,000 $ 100.00 ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ Holdings L.P. 500,000 $ 50.00 ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ Family Trust UTD 10/21/87 250,000 $ 25.00 Cam ▇. ▇▇▇▇▇▇