EXHIBIT 10.26
HALOZYME THERAPEUTICS, INC.
RESTRICTED STOCK AGREEMENT
     Halozyme Therapeutics, Inc. has granted to the Participant named in the
Notice of Grant of Restricted Stock (the “Grant Notice”) to which this
Restricted Stock Agreement (the “Agreement”) is attached an Award consisting of
Shares subject to the terms and conditions set forth in the Grant Notice and
this Agreement. The Award has been granted pursuant to and shall in all respects
be subject to the terms and conditions of the Halozyme Therapeutics, Inc. 2005
Outside Directors Stock Plan (the “Plan”), as amended to the Date of Grant, the
provisions of which are incorporated herein by reference. By signing the Grant
Notice, the Participant: (a) acknowledges receipt of and represents that the
Participant has read and is familiar with the Grant Notice, this Agreement, the
Plan and a prospectus for the Plan in the form most recently registered with the
Securities and Exchange Commission (the “Plan Prospectus”), (b) accepts the
Award subject to all of the terms and conditions of the Grant Notice, this
Agreement and the Plan and (c) agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board upon any questions arising under
the Grant Notice, this Agreement or the Plan.
     1. Definitions and Construction.
               1.1 Definitions. Unless otherwise defined herein, capitalized
terms shall have the meanings assigned to such terms in the Grant Notice or the
Plan.
               1.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.
     2. Administration.
          All questions of interpretation concerning the Grant Notice and this
Agreement shall be determined by the Board. All determinations by the Board
shall be final and binding upon all persons having an interest in the Award. Any
Officer shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the Officer has apparent
authority with respect to such matter, right, obligation, or election.
     3. The Award.
               3.1 Grant and Issuance of Shares. On the Date of Grant, the
Participant shall acquire and the Company shall issue, subject to the provisions
of this Agreement, a number of Shares equal to the Total Number of Shares set
forth in the Grant Notice. As a condition to the issuance of the Shares, the
Participant shall execute and deliver to the Company along with the Grant Notice
(a) the Joint Escrow Instructions in the form attached to the Grant Notice and
(b) if requested by the Company, the Assignment Separate from Certificate duly
endorsed (with date and number of shares blank) in the form attached to the
Grant Notice.

 

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               3.2 No Monetary Payment Required. The Participant is not required
to make any monetary payment (other than applicable tax withholding, if any) as
a condition to receiving the Shares, the consideration for which shall be past
services actually rendered and/or future services to be rendered to a
Participating Company or for its benefit. Notwithstanding the foregoing, if
required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating
Company or for its benefit having a value not less than the par value of the
Shares issued pursuant to the Award.
               3.3 Beneficial Ownership of Shares; Certificate Registration. The
Participant hereby authorizes the Company, in its sole discretion, to deposit
the Shares with the Company’s transfer agent, including any successor transfer
agent, to be held in book entry form during the term of the Escrow pursuant to
Section 6. Furthermore, the Participant hereby authorizes the Company, in its
sole discretion, to deposit, following the term of such Escrow, for the benefit
of the Participant with any broker with which the Participant has an account
relationship of which the Company has notice any or all Shares which are no
longer subject to such Escrow. Except as provided by the foregoing, a
certificate for the Shares shall be registered in the name of the Participant,
or, if applicable, in the names of the heirs of the Participant.
               3.4 Issuance of Shares in Compliance with Law. The issuance of
the Shares shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. No Shares shall
be issued hereunder if their issuance would constitute a violation of any
applicable federal, state or foreign securities laws or other law or regulations
or the requirements of any stock exchange or market system upon which the Stock
may then be listed. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance of any Shares shall relieve the
Company of any liability in respect of the failure to issue such Shares as to
which such requisite authority shall not have been obtained. As a condition to
the issuance of the Shares, the Company may require the Participant to satisfy
any qualifications that may be necessary or appropriate, to evidence compliance
with any applicable law or regulation and to make any representation or warranty
with respect thereto as may be requested by the Company.
     4. Vesting of Shares.
               4.1 Normal Vesting. Except as provided in Section 4.2, the Shares
shall vest and become Vested Shares as provided in the Grant Notice.
               4.2 Acceleration of Vesting Upon a Change in Control. In the
event of a Change in Control, the vesting of the Shares shall be accelerated in
full and the Total Number of Shares shall be deemed Vested Shares effective as
of the date of the Change in Control, provided that the Participant’s Service
has not terminated prior to such date.
               4.3 Federal Excise Tax Under Section 4999 of the Code.
                    (a) Excess Parachute Payment. In the event that any
acceleration of vesting pursuant to this Agreement and any other payment or
benefit received or to be received by the Participant would subject the
Participant to any excise tax pursuant to Section 4999 of the Code due to the
characterization of such acceleration of vesting, payment or benefit as an
excess parachute payment under Section 280G of the Code, the Participant may
elect, in his or her sole

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discretion, to reduce the amount of any acceleration of vesting called for under
this Agreement in order to avoid such characterization.
                    (b) Determination by Independent Accountants. To aid the
Participant in making any election called for under Section 4.3(a), upon the
occurrence of any event that might reasonably be anticipated to give rise to the
acceleration of vesting under Section 4.2 (an “Event”), the Company shall
promptly request a determination in writing by independent public accountants
selected by the Company (the “Accountants”). Unless the Company and the
Participant otherwise agree in writing, the Accountants shall determine and
report to the Company and the Participant within twenty (20) days of the date of
the Event the amount of such acceleration of vesting, payments and benefits
which would produce the greatest after-tax benefit to the Participant. For the
purposes of such determination, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their required determination. The Company shall bear all fees and expenses
the Accountants may reasonably charge in connection with their services
contemplated by this Section.
     5. Company Reacquisition Right.
               5.1 Grant of Company Reacquisition Right. Except to the extent
otherwise provided in an employment agreement between a Participating Company
and the Participant which refers to this Award, in the event that (a) the
Participant’s Service terminates for any reason or no reason, with or without
cause, or (b) the Participant, the Participant’s legal representative, or other
holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise
dispose of (other than pursuant to an Ownership Change Event), including,
without limitation, any transfer to a nominee or agent of the Participant, any
Shares which are not Vested Shares (“Unvested Shares”), the Company shall
automatically reacquire the Unvested Shares, and the Participant shall not be
entitled to any payment therefor (the “Company Reacquisition Right”).
               5.2 Ownership Change Event. Upon the occurrence of an Ownership
Change Event, any and all new, substituted or additional securities or other
property to which the Participant is entitled by reason of the Participant’s
ownership of Unvested Shares shall be immediately subject to the Company
Reacquisition Right and included in the terms “Shares,” “Stock” and “Unvested
Shares” for all purposes of the Company Reacquisition Right with the same force
and effect as the Unvested Shares immediately prior to the Ownership Change
Event. For purposes of determining the number of Vested Shares following an
Ownership Change Event, credited Service shall include all Service with any
corporation which is a Participating Company at the time the Service is
rendered, whether or not such corporation is a Participating Company both before
and after the Ownership Change Event.
     6. Escrow.
               6.1 Establishment of Escrow. To ensure that Shares subject to the
Company Reacquisition Right will be available for reacquisition, the Participant
agrees to deliver to and deposit with an escrow agent designated by the Company:
(i) the certificate evidencing the Shares and (ii) if requested by the Company,
an Assignment Separate from Certificate with respect to such certificate duly
endorsed (with date and number of shares blank) in the form

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attached to the Grant Notice, to be held by the agent under the terms and
conditions of the Joint Escrow Instructions in the form attached to the Grant
Notice (the “Escrow”). Upon the occurrence of an Ownership Change Event or a
change, as described in Section 8, in the character or amount of any outstanding
stock of the corporation the stock of which is subject to the provisions of this
Agreement, any and all new, substituted or additional securities or other
property to which the Participant is entitled by reason of his or her ownership
of the Shares that remain, following such Ownership Change Event or change
described in Section 8, subject to the Company Reacquisition Right and shall be
immediately subject to the Escrow to the same extent as the Shares immediately
before such event. The Company shall bear the expenses of the escrow.
               6.2 Delivery of Shares to Participant. Whenever the Participant
or the Participant’s legal representative proposes to sell, exchange, transfer,
pledge or otherwise dispose of (other than pursuant to an Ownership Change
Event) any shares of Stock subject to the Escrow, the Participant shall so
notify the Company. As soon as practicable thereafter, the Company shall
determine, in its sole discretion, whether (a) such proposed disposition would
not cause the Company to automatically reacquire such Shares pursuant to the
Company Reacquisition Right and (b) the Participant has made adequate provision
for the tax withholding obligations, if any, pursuant to Section 7. If both
conditions (a) and (b) set forth in the preceding sentence are satisfied, the
Company shall, as soon as practicable, so notify the Participant and give to the
escrow agent a written notice directing the escrow agent to deliver such Shares
to the Participant. As soon as practicable after receipt of such notice, the
escrow agent shall deliver to the Participant the Shares specified in such
notice, and the Escrow shall terminate with respect to such Shares.
     7. Tax Matters.
               7.1 Tax Withholding.
                    (a) In General. At the time the Grant Notice is executed, or
at any time thereafter as requested by a Participating Company, the Participant
hereby authorizes withholding from payroll and any other amounts payable to the
Participant, and otherwise agrees to make adequate provision for, any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Participating Company, if any, which arise in connection with
the Award, including, without limitation, obligations arising upon (a) the
transfer of Shares to the Participant, (b) the lapsing of any restriction with
respect to any Shares, (c) the filing of an election to recognize tax liability,
or (d) the transfer by the Participant of any Shares. The Company shall have no
obligation to deliver the Shares or to release any Shares from the Escrow
established pursuant to Section 6 until the tax withholding obligations of the
Participating Company have been satisfied by the Participant.
                    (b) Withholding in Shares. The Participant may satisfy all
or any portion of a Participating Company’s tax withholding obligations by
requesting the Company to withhold a number of whole, Vested Shares otherwise
deliverable to the Participant or by tendering to the Company a number of whole,
Vested Shares or vested shares acquired otherwise than pursuant to the Award
having, in any such case, a fair market value, as determined by the Company as
of the date on which the tax withholding obligations arise, not in excess of the
amount of such tax withholding obligations determined by the applicable minimum
statutory withholding rates. Any adverse consequences to the Participant
resulting from the procedure

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permitted under this Section, including, without limitation, tax consequences,
shall be the sole responsibility of the Participant.
               7.2 Election Under Section 83(b) of the Code.
                    (a) The Participant understands that Section 83 of the Code
taxes as ordinary income the difference between the amount paid for the Shares,
if anything, and the fair market value of the Shares as of the date on which the
Shares are “substantially vested,” within the meaning of Section 83. In this
context, “substantially vested” means that the right of the Company to reacquire
the Shares pursuant to the Company Reacquisition Right has lapsed. The
Participant understands that he or she may elect to have his or her taxable
income determined at the time he or she acquires the Shares rather than when and
as the Company Reacquisition Right lapses by filing an election under Section
83(b) of the Code with the Internal Revenue Service no later than thirty
(30) days after the date of acquisition of the Shares. The Participant
understands that failure to make a timely filing under Section 83(b) will result
in his or her recognition of ordinary income, as the Company Reacquisition Right
lapses, on the difference between the purchase price, if anything, and the fair
market value of the Shares at the time such restrictions lapse. The Participant
further understands, however, that if Shares with respect to which an election
under Section 83(b) has been made are forfeited to the Company pursuant to its
Company Reacquisition Right, such forfeiture will be treated as a sale on which
there is realized a loss equal to the excess (if any) of the amount paid (if
any) by the Participant for the forfeited Shares over the amount realized (if
any) upon their forfeiture. If the Participant has paid nothing for the
forfeited Shares and has received no payment upon their forfeiture, the
Participant understands that he or she will be unable to recognize any loss on
the forfeiture of the Shares even though the Participant incurred a tax
liability by making an election under Section 83(b).
                    (b) The Participant understands that he or she should
consult with his or her tax advisor regarding the advisability of filing with
the Internal Revenue Service an election under Section 83(b) of the Code, which
must be filed no later than thirty (30) days after the date of the acquisition
of the Shares pursuant to this Agreement. Failure to file an election under
Section 83(b), if appropriate, may result in adverse tax consequences to the
Participant. The Participant acknowledges that he or she has been advised to
consult with a tax advisor regarding the tax consequences to the Participant of
the acquisition of Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE
PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON
WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED.
THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS
THE PARTICIPANT’S SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE
COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
                    (c) The Participant will notify the Company in writing if
the Participant files an election pursuant to Section 83(b) of the Code. The
Company intends, in the event it does not receive from the Participant evidence
of such filing, to claim a tax deduction for any amount which would otherwise be
taxable to the Participant in the absence of such an election.

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     8. Adjustments for Changes in Capital Structure.
          Subject to any required action by the stockholders of the Company, in
the event of any change in the Stock effected without receipt of consideration
by the Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or similar change in the capital structure of the
Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting normal cash
dividends) that has a material effect on the Fair Market Value of shares of
Stock, appropriate adjustments shall be made in the number and kind of shares
subject to the Award, in order to prevent dilution or enlargement of the
Participant’s rights under the Award. For purposes of the foregoing, conversion
of any convertible securities of the Company shall not be treated as “effected
without receipt of consideration by the Company.” Any fractional share resulting
from an adjustment pursuant to this Section shall be rounded down to the nearest
whole number. Such adjustments shall be determined by the Board, and its
determination shall be final, binding and conclusive.
     9. Rights as a Stockholder, Director, Employee or Consultant.
          The Participant shall have no rights as a stockholder with respect to
any Shares subject to the Award until the date of the issuance of a certificate
for such Shares (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company). No adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date such certificate is issued, except as provided in
Section 8. Subject the provisions of this Agreement, the Participant shall
exercise all rights and privileges of a stockholder of the Company with respect
to Shares deposited in the Escrow pursuant to Section 6. If the Participant is
an Employee, the Participant understands and acknowledges that, except as
otherwise provided in a separate, written employment agreement between a
Participating Company and the Participant, the Participant’s employment is “at
will” and is for no specified term. Nothing in this Agreement shall confer upon
the Participant any right to continue in the Service of a Participating Company
or interfere in any way with any right of the Participating Company Group to
terminate the Participant’s Service at any time.
     10. Legends.
          The Company may at any time place legends referencing the Company
Reacquisition Right and any applicable federal, state or foreign securities law
restrictions on all certificates representing the Shares. The Participant shall,
at the request of the Company, promptly present to the Company any and all
certificates representing the Shares in the possession of the Participant in
order to carry out the provisions of this Section. Unless otherwise specified by
the Company, legends placed on such certificates may include, but shall not be
limited to, the following:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER
RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE
REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF THIS CORPORATION.”

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     11. Transfers in Violation of Agreement.
          No Shares may be sold, exchanged, transferred, assigned, pledged,
hypothecated or otherwise disposed of, including by operation of law, in any
manner which violates any of the provisions of this Agreement and, except
pursuant to an Ownership Change Event, until the date on which such shares
become Vested Shares, and any such attempted disposition shall be void. The
Company shall not be required (a) to transfer on its books any Shares which will
have been transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such Shares or to accord the right to vote
as such owner or to pay dividends to any transferee to whom such Shares will
have been so transferred. In order to enforce its rights under this Section, the
Company shall be authorized to give a stop transfer instruction with respect to
the Shares to the Company’s transfer agent.
     12. Miscellaneous Provisions.
          12.1 Termination or Amendment. The Board may terminate or amend the
Plan or this Agreement at any time; provided, however, that no such termination
or amendment may adversely affect the Participant’s rights under this Agreement
without the consent of the Participant unless such termination or amendment is
necessary to comply with applicable law or government regulation. No amendment
or addition to this Agreement shall be effective unless in writing.
               12.2 Nontransferability of the Award. The right to acquire Shares
pursuant to the Award shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. All rights
with respect to the Award shall be exercisable during the Participant’s lifetime
only by the Participant or the Participant’s guardian or legal representative.
               12.3 Further Instruments. The parties hereto agree to execute
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
               12.4 Binding Effect. This Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer set forth herein, be binding upon the Participant and the Participant’s
heirs, executors, administrators, successors and assigns.
               12.5 Delivery of Documents and Notices. Any document relating to
participation in the Plan or any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given (except to the extent
that this Agreement provides for effectiveness only upon actual receipt of such
notice) upon personal delivery, electronic delivery at the e-mail address, if
any, provided for the Participant by a Participating Company, or upon deposit in
the U.S. Post Office or foreign postal service, by registered or certified mail,
or with a nationally recognized overnight courier service, with postage and fees
prepaid, addressed to the other party at the address shown below that party’s
signature to the Grant Notice or at such other address as such party may
designate in writing from time to time to the other party.

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                    (a) Description of Electronic Delivery. The Plan documents,
which may include but do not necessarily include: the Plan, the Grant Notice,
this Agreement, the Plan Prospectus, and any reports of the Company provided
generally to the Company’s stockholders, may be delivered to the Participant
electronically. In addition, the parties may deliver electronically any notices
called for in connection with the Escrow and the Participant may deliver
electronically the Grant Notice to the Company or to such third party involved
in administering the Plan as the Company may designate from time to time. Such
means of electronic delivery may include but do not necessarily include the
delivery of a link to a Company intranet or the internet site of a third party
involved in administering the Plan, the delivery of the document via e-mail or
such other means of electronic delivery specified by the Company.
                    (b) Consent to Electronic Delivery. The Participant
acknowledges that the Participant has read Section 12.5(a) of this Agreement and
consents to the electronic delivery of the Plan documents, the Grant Notice and
notices in connection with the Escrow, as described in Section 12.5(a). The
Participant acknowledges that he or she may receive from the Company a paper
copy of any documents delivered electronically at no cost to the Participant by
contacting the Company by telephone or in writing. The Participant further
acknowledges that the Participant will be provided with a paper copy of any
documents if the attempted electronic delivery of such documents fails.
Similarly, the Participant understands that the Participant must provide the
Company or any designated third party administrator with a paper copy of any
documents if the attempted electronic delivery of such documents fails. The
Participant may revoke his or her consent to the electronic delivery of
documents described in Section 12.5(a) or may change the electronic mail address
to which such documents are to be delivered (if Participant has provided an
electronic mail address) at any time by notifying the Company of such revoked
consent or revised e-mail address by telephone, postal service or electronic
mail. Finally, the Participant understands that he or she is not required to
consent to electronic delivery of documents described in Section 12.5(a).
               12.6 Integrated Agreement. The Grant Notice, this Agreement and
the Plan together with any employment, service or other agreement between the
Participant and a Participating Company referring to the Award shall constitute
the entire understanding and agreement of the Participant and the Participating
Company Group with respect to the subject matter contained herein or therein and
supersedes any prior agreements, understandings, restrictions, representations,
or warranties among the Participant and the Participating Company Group with
respect to such subject matter other than those as set forth or provided for
herein or therein. To the extent contemplated herein or therein, the provisions
of the Grant Notice and the Agreement shall survive any settlement of the Award
and shall remain in full force and effect.
               12.7 Applicable Law. This Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
               12.8 Counterparts. The Grant Notice may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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