Exhibit 10.4

 

RESTRICTED STOCK AGREEMENT

 

NEUROMETRIX, INC.

 

AGREEMENT made as of the        day of             , 20XX (the “Grant Date”),
between NeuroMetrix Inc. (the “Company”), a Delaware corporation having its
principal place of business in Waltham, Massachusetts and
                         (the “Participant”).

 

WHEREAS, the Company has adopted the Third Amended and Restated 2004 Stock
Option and Incentive Plan (the “Plan”) to promote the interests of the Company
by providing an incentive for employees, directors and consultants of the
Company or its Subsidiaries;

 

WHEREAS, pursuant to the provisions of the Plan, the Company desires to offer to
the Participant a Restricted Stock Award to purchase shares of the Company’s
common stock, $0.0001 par value per share (“Common Stock”), in accordance with
the provisions of the Plan, all on the terms and conditions hereinafter set
forth;

 

WHEREAS, the Participant wishes to accept said offer; and

 

WHEREAS, the parties hereto understand and agree that any terms used and not
defined herein have the meanings ascribed to such terms in the Plan.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1.             Terms of Restricted Stock Award.  The Participant hereby accepts
the offer of the Company to issue to the Participant, in accordance with the
terms of the Plan and this Agreement,                                 
(            ) Shares of the Company’s Common Stock (such shares, subject to
adjustment pursuant to Section 3(b) of the Plan and Section 2(h) hereof, the
“Granted Shares”) at a purchase price per share of $0.0001 (the “Purchase
Price”), receipt of which is hereby acknowledged by the Participant’s prior
service to the Company and which amount will be reported as income on the
Participant’s W-2 for this calendar year.

 

2.             Forfeiture Provisions.

 

(a)           Lapsing Forfeiture Right.  In the event that for any reason the
Participant is no longer an employee or consultant of the Company or a
Subsidiary prior to             , 20XX (the “Termination”), the Participant
shall, on the date of Termination, immediately forfeit to the Company all of the
Granted Shares which have not yet lapsed in accordance with the schedule set
forth below (the “Lapsing Forfeiture Right”) except as otherwise set forth in
Section 2(b) or (c).  The Company’s Lapsing Forfeiture Right is as follows:

 

The Granted Shares will vest and no longer be subject to the Company’s Lapsing
Forfeiture Right with respect to 25% of the Granted Shares on             , 20XX
and an additional 1/16th of the Granted Shares on each             ,
            ,              and              thereafter until             , 20XX;
provided that the total number of Shares for which the Lapsing Forfeiture Right
expires will be rounded down on each date to the nearest whole Share.

 

Accordingly, for the avoidance of doubt:

 

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(i)            if the Participant’s termination is prior to             , 20XX,
100% of the Granted Shares shall be forfeited to the Company;

 

(ii)           if the Participant’s termination is on or after             ,
20XX, but prior to             , 20XX, 75% of the Granted Shares shall be
forfeited to the Company;

 

(iii)          if the Participant’s termination is on or after             ,
20XX, but prior to             , 20XX, 68.75% of the Granted Shares shall be
forfeited to the Company;

 

(iv)          if the Participant’s termination is on or after             ,
20XX, but prior to             , 20XX, 62.50% of the Granted Shares shall be
forfeited to the Company;

 

(v)           if the Participant’s termination is on or after             ,
20XX, but prior to             , 20XX, 56.25% of the Granted Shares shall be
forfeited to the Company;

 

(vi)          if the Participant’s termination is on or after             ,
20XX, but prior to             , 20XX, 50% of the Granted Shares shall be
forfeited to the Company.

 

And so forth until on or after             , 20XX at which time all Granted
Shares shall no longer be subject to the Company’s Lapsing Forfeiture Right.

 

(B)           TERMINATION DUE TO DEATH.  IF THE PARTICIPANT’S EMPLOYMENT
TERMINATES BY REASON OF DEATH, THE COMPANY’S LAPSING FORFEITURE RIGHT SHALL
TERMINATE AS TO ALL OF THE GRANTED SHARES THEN SUBJECT.

 

(C)           TERMINATION DUE TO DISABILITY.  IF THE PARTICIPANT’S EMPLOYMENT
TERMINATES BY REASON OF DISABILITY (AS DETERMINED BY THE ADMINISTRATOR), THE
COMPANY’S LAPSING FORFEITURE RIGHT SHALL TERMINATE AS TO ALL OF THE GRANTED
SHARES THEN SUBJECT.

 

(D)           EFFECT OF A FOR CAUSE TERMINATION.  NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED IN THIS AGREEMENT, IN THE EVENT THE COMPANY OR A
SUBSIDIARY TERMINATES THE PARTICIPANT’S EMPLOYMENT OR SERVICE FOR “CAUSE” (FOR
PURPOSES HEREOF, “CAUSE” SHALL MEAN A VOTE BY THE BOARD OF DIRECTORS RESOLVING
THAT THE PARTICIPANT SHALL BE DISMISSED AS A RESULT OF (I) ANY MATERIAL BREACH
BY THE PARTICIPANT OF ANY AGREEMENT BETWEEN THE PARTICIPANT AND THE COMPANY;
(II) THE CONVICTION OF OR PLEA OF NOLO CONTENDERE BY THE PARTICIPANT TO A FELONY
OR A CRIME INVOLVING MORAL TURPITUDE; OR (III) ANY MATERIAL MISCONDUCT OR
WILLFUL AND DELIBERATE NON-PERFORMANCE (OTHER THAN BY REASON OF DISABILITY) BY
THE PARTICIPANT OF THE PARTICIPANT’S DUTIES TO THE COMPANY) OR IN THE EVENT THE
BOARD OF DIRECTORS DETERMINES, WITHIN ONE YEAR AFTER THE PARTICIPANT’S
TERMINATION, THAT EITHER PRIOR OR SUBSEQUENT TO THE PARTICIPANT’S TERMINATION
THE PARTICIPANT ENGAGED IN CONDUCT THAT WOULD CONSTITUTE “CAUSE,” ALL OF THE
GRANTED SHARES (REGARDLESS OF WHETHER THEY ARE THEN SUBJECT TO THE COMPANY’S
LAPSING FORFEITURE RIGHT) THEN HELD BY THE PARTICIPANT SHALL BE FORFEITED TO THE
COMPANY IMMEDIATELY AS OF THE TIME THE PARTICIPANT IS NOTIFIED THAT HE OR SHE
HAS BEEN TERMINATED FOR “CAUSE” OR THAT HE OR SHE ENGAGED IN CONDUCT WHICH WOULD
CONSTITUTE “CAUSE”.

 

The Administrator’s determination of the reason for termination of the
Participant’s employment shall be conclusive and binding on the Participant and
his or her representatives or legatees.

 

(e)           Escrow.  The certificates representing all Granted Shares acquired
by the Participant hereunder which from time to time are subject to the Lapsing
Forfeiture Right shall be delivered to the Company and the Company shall hold
such Granted Shares in escrow as provided in this Section 2(e).  Upon the
request of the Participant, the Company shall promptly release from escrow and
deliver to the Participant the whole number of Granted Shares, if any, as to
which the Company’s Lapsing

 

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Forfeiture Right has lapsed and without the legend set forth in Section 5. In
the event of forfeiture to the Company of Granted Shares subject to the Lapsing
Forfeiture Right, the Company shall release from escrow and cancel a certificate
for the number of Granted Shares so forfeited.  Any securities distributed in
respect of the Granted Shares held in escrow, including, without limitation,
shares issued as a result of stock splits, stock dividends or other
recapitalizations, shall also be held in escrow in the same manner as the
Granted Shares.

 

(f)            Prohibition on Transfer.  The Participant recognizes and agrees
that all Granted Shares which are subject to the Lapsing Forfeiture Right may
not be sold, transferred, assigned, hypothecated, pledged, encumbered or
otherwise disposed of, whether voluntarily or by operation of law, other than to
the Company.  The Company shall not be required to transfer any Granted Shares
on its books which shall have been sold, assigned or otherwise transferred in
violation of this Section 2(f), or to treat as the owner of such Granted Shares,
or to accord the right to vote as such owner or to pay dividends to, any person
or organization to which any such Granted Shares shall have been so sold,
assigned or otherwise transferred, in violation of this Section 2(f).

 

(g)           Failure to Deliver Granted Shares to be Forfeited.  In the event
that the Granted Shares to be forfeited to the Company under this Agreement are
not in the Company’s possession pursuant to Section 2(e) above or otherwise and
the Participant fails to deliver such Granted Shares to the Company, the Company
may immediately take such action as is appropriate to transfer record title of
such Granted Shares from the Participant to the Company and treat the
Participant and such Granted Shares in all respects as if delivery of such
Granted 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.

 

3.             Securities Law Compliance.  The Participant specifically
acknowledges and agrees that any sales of Granted Shares shall be made in
accordance with the requirements of the 1933 Act.

 

4.             Rights as a Stockholder.  The Participant shall have all the
rights of a stockholder with respect to the Granted Shares, including voting and
dividend rights, subject to the transfer and other restrictions set forth herein
and in the Plan.

 

5.             Legend.  In addition to any legend required pursuant to the Plan,
all certificates representing the Granted 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 Restricted Stock Agreement dated as of             , 20XX 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.”

 

6.             Incorporation of the Plan.  The Participant specifically
understands and agrees that the Granted Shares issued under the Plan are being
sold to the Participant pursuant to the Plan, a copy of which Plan the
Participant acknowledges he or she has read and understands and by which Plan he
or she agrees to be bound.  The provisions of the Plan are incorporated herein
by reference.

 

7.             Tax Liability of the Participant and Payment of Taxes.  The
Participant acknowledges and agrees that any income or other taxes due from the
Participant with respect to the Granted Shares issued pursuant to this
Agreement, including, without limitation, the Lapsing Forfeiture Right, shall be
the Participant’s responsibility.  Without limiting the foregoing, the
Participant agrees that, to the extent that the lapsing of restrictions on
disposition of any of the Granted Shares or the declaration of dividends on any
such shares before the lapse of such restrictions on disposition results in the
Participant’s being

 

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deemed to be in receipt of earned income under the provisions of the Code, the
Company shall be entitled to immediate payment from the Participant of the
amount of any tax required to be withheld by the Company.

 

In connection with the foregoing, the Participant agrees that if an arrangement
to pay the withholding obligation in cash has not been received by the Company
prior to the date that Granted Shares shall be released from the Lapsing
Forfeiture Right, the Company shall authorize a registered broker (the “Broker”)
to sell on such date such number of Granted Shares otherwise deliverable to the
Participant on that date as the Company instructs the Broker to sell to satisfy
the Company’s withholding obligation, after deduction of the Broker’s
commission, and the Broker shall remit to the Company the cash necessary in
order for the Company to satisfy its withholding obligation.  If such sale is
not sufficient to pay the withholding obligation the Participant agrees to pay
to the Company as soon as practicable, including through additional payroll
withholding, the amounts that are not satisfied by the sale of shares of Common
Stock.  The Participant agrees to hold the Company and the Broker harmless from
all costs, damages or expenses relating to any such sale.  The Participant
acknowledges that the Company and the Broker are under no obligation to arrange
for such sale at any particular price.  In connection with such sale of Granted
Shares, the Participant shall execute any such documents requested by Broker in
order to effectuate the sale of the Granted Shares and payment of the
withholding obligation to the Company.  The Company shall not deliver any of the
Granted Shares to the Participant until all withholdings have been made.  The
Participant acknowledges that this paragraph is intended to comply with
Section 10b5-1(c)(1(i)(B) under the Exchange Act of 1934, as amended. 
Notwithstanding the foregoing, the Company shall have the right to require the
withholding obligation to be made in cash instead of through the sale of shares
of Common Stock if it reasonably believes that the sale of shares would violate
applicable securities laws.

 

Upon execution of this Agreement, the Participant may file an election under
Section 83 of the Code.  The Participant acknowledges that if he does not file
such an election, as the Granted Shares are released from the Lapsing Forfeiture
Right in accordance with Section 2, the Participant will have income for tax
purposes equal to the fair market value of the Granted Shares at such date, less
the price paid for the Granted Shares by the Participant.

 

8.             Equitable Relief.  The Participant specifically acknowledges and
agrees that in the event of a breach or threatened breach of the provisions of
this Agreement or the Plan, including the attempted transfer of the Granted
Shares by the Participant in violation of this Agreement, monetary damages may
not be adequate to compensate the Company, and, therefore, in the event of such
a breach or threatened breach, in addition to any right to damages, the Company
shall be entitled to equitable relief in any court having competent
jurisdiction.  Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for any such breach or threatened
breach.

 

9.             No Obligation to Maintain Relationship.  The Company is not by
the Plan or this Agreement obligated to continue the Participant as an employee
or consultant of the Company or a Subsidiary.  The Participant acknowledges: 
(i) that the Plan is discretionary in nature and may be suspended or terminated
by the Company at any time; (ii) that the grant of the Shares is a one-time
benefit which does not create any contractual or other right to receive future
grants of shares, or benefits in lieu of shares; (iii) that all determinations
with respect to any such future grants, including, but not limited to, the times
when shares shall be granted, the number of shares to be granted, the purchase
price, and the time or times when each share shall be free from a lapsing
forfeiture right, will be at the sole discretion of the Company; (iv) that the
Participant’s participation in the Plan is voluntary; (v) that the value of the
Shares is an extraordinary item of compensation which is outside the scope of
the Participant’s employment contract, if any; and (vi) that the Shares are not
part of normal or expected compensation for purposes of calculating any
severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments.

 

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10.           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:

 

NeuroMetrix, Inc.

62 Fourth Avenue

Waltham, MA 02451

Attn: Stock Administrator

 

If to the Participant:

 

 

 

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 on
the earliest of receipt, one business day following delivery by the sender to a
recognized courier service, or three business days following mailing by
registered or certified mail.

 

11.           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.

 

12.           Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the
conflict of law principles thereof.  For the purpose of litigating any dispute
that arises under this Agreement, whether at law or in equity, the parties
hereby consent to exclusive jurisdiction in Massachusetts and agree that such
litigation shall be conducted in the courts of the Commonwealth of Massachusetts
or the federal courts of the United States for the District of Massachusetts.

 

13.           Severability.  If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, then such
provision or provisions shall be modified to the extent necessary to make such
provision valid and enforceable, and to the extent that this is impossible, then
such provision shall be deemed to be excised from this Agreement, and the
validity, legality and enforceability of the rest of this Agreement shall not be
affected thereby.

 

14.           Entire Agreement.  This Agreement, together with the Plan,
constitutes 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.

 

15.           Modifications and Amendments; Waivers and Consents.  The terms and
provisions of this Agreement may be modified or amended as provided in the
Plan.  Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted,

 

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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.

 

16.           Consent of Spouse/Domestic Partner.  If the Participant has a
spouse or domestic partner as of the date of this Agreement, the Participant’s
spouse or domestic partner shall execute a Consent of Spouse/Domestic Partner in
the form of Exhibit A hereto, effective as of the date hereof.  Such consent
shall not be deemed to confer or convey to the spouse or domestic partner any
rights in the Granted Shares that do not otherwise exist by operation of law or
the agreement of the parties.  If the Participant subsequent to the date hereof,
marries, remarries or applies to the Company for domestic partner benefits, the
Participant shall, not later than 60 days thereafter, obtain his or her new
spouse/domestic partner’s acknowledgement of and consent to the existence and
binding effect of all restrictions contained in this Agreement by having such
spouse/domestic partner execute and deliver a Consent of Spouse/Domestic Partner
in the form of Exhibit A.

 

17.           Counterparts.  This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

18.           Data Privacy.  By entering into this Agreement, the Participant: 
(i) authorizes the Company and each Subsidiary, and any agent of the Company or
any Subsidiary administering the Plan or providing Plan record keeping services,
to disclose to the Company or any of its Subsidiaries such information and data
as the Company or any such Subsidiary shall request in order to facilitate the
grant of Shares and the administration of the Plan; (ii) waives any data privacy
rights he or she may have with respect to such information; and (iii) authorizes
the Company and each Subsidiary to store and transmit such information in
electronic form.

 

[THE NEXT PAGE IS THE SIGNATURE PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

NEUROMETRIX, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

Participant:

 

 

 

 

 

 

 

 

 

Print Name:

 

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EXHIBIT A

 

CONSENT OF SPOUSE/DOMESTIC PARTNER

 

I,                                                         , spouse or domestic
partner of                                                   , acknowledge that
I have read the RESTRICTED STOCK AGREEMENT dated as of             , 20XX (the
“Agreement”) to which this Consent is attached as Exhibit A and that I know its
contents.  Capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Agreement.  I am aware that by its provisions the
Granted Shares granted to my spouse/domestic partner pursuant to the Agreement
are subject to a Lapsing Forfeiture Right in favor of NeuroMetrix, Inc. (the
“Company”) and that, accordingly, I may be required to forfeit to the Company
any or all of the Granted Shares of which I may become possessed as a result of
a gift from my spouse/domestic partner or a court decree and/or any property
settlement in any domestic litigation.

 

I hereby agree that my interest, if any, in the Granted Shares subject to the
Agreement shall be irrevocably bound by the Agreement and further understand and
agree that any community property interest I may have in the Granted Shares
shall be similarly bound by the Agreement.

 

I agree to the Lapsing Forfeiture Right described in the Agreement and I hereby
consent to the forfeiture of the Granted Shares to the Company by my
spouse/domestic partner or my spouse/domestic partner’s legal representative in
accordance with the provisions of the Agreement.  Further, as part of the
consideration for the Agreement, I agree that at my death, if I have not
disposed of any interest of mine in the Granted Shares by an outright bequest of
the Granted Shares to my spouse or domestic partner, then the Company shall have
the same rights against my legal representative to exercise its rights to the
Granted Shares with respect to any interest of mine in the Granted Shares as it
would have had pursuant to the Agreement if I had acquired the Granted Shares
pursuant to a court decree in domestic litigation.

 

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE
AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL
GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT.  I HAVE EITHER SOUGHT SUCH
GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I
WILL WAIVE SUCH RIGHT.

 

Dated as of the                day of                                 , 20XX.

 

 

 

 

 

Print name:

 

A-1

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