Document:

Common Stock Issuance Agreement

 EXHIBIT 10.3 
  
 COMMON STOCK 
 ISSUANCE AGREEMENT 
  
 THIS AGREEMENT (this “Agreement”) is made as of October 31, 2002 (the “Effective Date”), by and between CYPRESS BIOSCIENCE, INC., a
Delaware corporation having a principal place of business at 4350 Executive Drive, Suite 325, San Diego, California 92121 (“Cypress”), and COLLEGIUM PHARMACEUTICAL, INC., a Delaware corporation
(“Collegium”) having a principal place of business at 349 Lincoln Street, Hingham, Massachusetts 02043. 
  
 RECITALS 
  
 WHEREAS, Cypress and Collegium have entered into that certain
Reformulation and New Product Agreement dated August 22, 2002 (the “Reformulation Agreement”); and 
  
 WHEREAS, in connection with the Reformulation Agreement, Cypress may issue shares of its Common Stock, par value $0.02 per share (the “Common Stock”), to Collegium on the terms and subject to the
conditions set forth in this Agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally
bound, do hereby agree as follows: 
  
 1.    AUTHORIZATION OF ISSUANCE OF THE
SECURITIES.    Subject to the terms and conditions of this Agreement, Cypress has authorized the issuance of up to 1,800,000 shares of Common Stock at the Milestone Closings (as defined below). 
  
 2.    AGREEMENT TO ISSUE THE MILESTONE SHARES. 
  

2.1    Issuance of Shares.    At a Milestone Closing, if Collegium has elected to receive a milestone payment
that is due and payable under Section 4.4(a) of the Reformulation Agreement with Common Stock in accordance with the terms of Section 4.4(b) of the Reformulation Agreement, but subject to Section 4.4(c) of the Reformulation Agreement, Cypress will
issue to Collegium, and Collegium will accept from Cypress, the number of shares of Common Stock determined pursuant to Section 4.4 of the Reformulation Agreement (the “Milestone Shares”), as payment in full of such milestone
payment. 
  
 3.    CLOSING AND DELIVERY. 
  
 3.1    Milestone Closings.    Each closing of the issuance of Milestone Shares
pursuant to this Agreement (each a “Milestone Closing” and collectively the “Milestone Closings”) shall be held within 30 days following receipt of a Collegium Notice (as defined in the Reformulation
Agreement) in which Collegium has elected to receive payment of a milestone payment due and payable under Section 4.4(a) of the Reformulation Agreement with Common 

 
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 Stock. The date on which a Milestone Closing takes place shall be referred to herein as a “Milestone Closing Date.”

  
 3.2    Delivery of the Milestone Shares at the Milestone
Closing.    At a Milestone Closing, Cypress shall deliver to Collegium a stock certificate registered in the name of Collegium, representing the Milestone Shares issuable in accordance with this Agreement and the
Reformulation Agreement as payment in full for achievement of the applicable milestone under the Reformulation Agreement. 
  
 4.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLLEGIUM. 
  
 4.1    Collegium represents and warrants to, and covenants with, Cypress that: 
  
 (a)  Collegium is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the issuance
of the Milestone Shares, and has requested, received, reviewed and considered, all information Collegium deems relevant in making an informed decision with respect to the investment in the Milestone Shares. 
  
 (b)  In the event that Collegium elects to receive any Milestone Shares, Collegium would be acquiring the Milestone
Shares pursuant to this Agreement in the ordinary course of its business and for its own account for investment only and at the time of such acquisition, with no present intention of distributing any of such Milestone Shares and without any
arrangement or understanding with any other persons regarding the distribution of such Milestone Shares. 
  
 (c)  Collegium will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the securities acquired
hereunder except in compliance with the Securities Act of 1933, as amended (the “Securities Act”), applicable blue sky laws, and the rules and regulations promulgated thereunder. 
  
 (d)  Collegium is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act. 
  
 (e)  Collegium has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. Upon the execution and delivery of this Agreement by Collegium, this
Agreement shall constitute a valid and binding obligation of Collegium, enforceable in accordance with its terms. 
  
 (f)  Collegium has not engaged and will not engage in any short sales of Common Stock of Cypress or other hedging transactions involving Common Stock of Cypress for so long as Collegium has the right to receive
Milestone Shares or holds such Milestone Shares. 
  
 (g)  Collegium understands that Cypress has
not provided any legal, tax or investment advice and that independent legal counsel has reviewed this Agreement on 

 
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 Collegium’s behalf. Collegium has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with entering into this Agreement. 
  
 5.    SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND AGREEMENTS.    Notwithstanding any investigation made by Cypress, all covenants, agreements, representations and warranties made by Collegium herein shall survive the execution of this
Agreement, the Milestone Closings, and the delivery to Collegium of the Milestone Shares. 
  
 6.    CONDITIONS TO CYPRESS’ OBLIGATIONS AT MILESTONE CLOSINGS.    Cypress’ obligation to complete the issuance of the Milestone Shares and deliver the Milestone Shares
to Collegium at each Milestone Closing shall be subject to the following conditions to the extent not waived by Cypress: 
  
 6.1    Receipt of Consideration and Election.    The applicable milestone (as set forth in Section 4.4(a) of the Reformulation Agreement) shall have been achieved and Collegium
shall have elected to receive the Milestone Shares (as set forth in Section 4.4(b) of the Reformulation Agreement) in connection with the delivery of the Collegium Notice (as defined in the Reformulation Agreement). 
  
 6.2    Representations, Warranties and Covenants.    The representations and
warranties made by Collegium in Section 4 hereof shall be true and correct on each applicable Milestone Closing Date. Collegium shall have performed and complied with all obligations and conditions required to be performed and completed by Collegium
under this Agreement on or prior to each applicable Milestone Closing Date. Collegium shall deliver a duly executed certificate to the effect of the foregoing to Cypress on each Milestone Closing Date. 
  
 7.    RESTRICTIONS ON TRANSFER. 
  
 7.1    Restrictions on Transfer. 
  
 (a)  Collegium agrees not to make any disposition of all or any portion of the Milestone Shares unless and until, (A) except in connection with a sale exempt from registration under Rule 144, the transferee
has agreed in writing to be bound by the terms of this Agreement, (B) Collegium shall have notified Cypress of the proposed disposition and shall have furnished Cypress with a detailed statement of the circumstances surrounding the proposed
disposition, and (C) if reasonably requested by Cypress, Collegium shall have furnished Cypress with an opinion of counsel, reasonably satisfactory to Cypress, that such disposition will not require registration of such shares under the Securities
Act, provided that Cypress will not require an opinion of counsel for transactions pursuant to Rule 144 except in unusual circumstances. 
  
 (b)  Each certificate representing the Milestone Shares shall be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state
securities laws): 
  
 “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 
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 THEY MAY NOT BE OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 7.2    “Market Stand-Off” Agreement.    If requested by Cypress or the
representative of the underwriters of Common Stock (or other securities) of Cypress, Collegium shall not sell or otherwise transfer or dispose of any Common Stock (or other securities) of Cypress held by Collegium for a period specified by the
representative of the underwriters, in any case not to exceed 90 days following any registered offering of the Common Stock of Cypress, provided that all officers and directors of Cypress enter into similar agreements (subject to customary
exceptions). The obligations described in this Section 7.2 shall not apply to a registration relating solely to employee benefit plans on Form S-8. Cypress may impose stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of the applicable 90-day period. 
  
 8.    NO BROKER’S FEE.    Cypress and Collegium hereby represent that, there are no brokers or finders entitled to compensation in connection with the issuance of the
Milestone Shares, and shall indemnify each other for any such fees for which they are responsible. 
  
 9.    NOTICES.    All notices, requests, consents and other communications hereunder shall be in writing, shall be sent by confirmed facsimile or mailed by first-class registered
or certified airmail, or nationally recognized overnight express courier, postage prepaid, and shall be deemed given when so sent in the case of facsimile transmission, or when so received in the case of mail or courier, and addressed as follows:

  
 
	 (a)
 	  	 if to Cypress, to:
 
	 
	  	  	 Cypress Bioscience, Inc.
 
	  	  	 4350 Executive Drive, Suite 325
 San Diego, California 92121
 Attention: Chief Executive Officer
 
	 
	  	  	 with a copy to:
 
	 
	  	  	 Cooley Godward LLP
 4401 Eastgate Mall
 San Diego, California 92121-9109
 Attention: Kay Chandler, Esq.
 

 
  
 or to such other person at such other place as Cypress shall designate to Collegium in
writing; and 

 
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	 (b)
 	  	 if to Collegium, to:
 
	 
	  	  	 Collegium Pharmaceutical, Inc.
 349 Lincoln
Street
 Hingham, Massachusetts, 02043
 Attention: Chief Executive Officer
 

 
  
 10.    MISCELLANEOUS.

  
 10.1    Waivers and Amendments.    Neither this Agreement
nor any provision hereof may be changed, waived, discharged, terminated, modified or amended except upon the written consent of Cypress and Collegium. 
  
 10.2    Headings.    The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement. 
  
 10.3    Severability.    In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired thereby. 
  
 10.4    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of California as applied to contracts entered into and
performed entirely in California by California residents, without regard to conflicts of law principles. 
  
 10.5    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall
constitute one instrument, and shall become effective when one or more counterparts have been signed by both Collegium and Cypress. 
  
 10.6    Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of Collegium and Cypress. 
  
 10.7    Entire Agreement.    This Agreement and the Reformulation Agreement, including the exhibits, constitute the full and entire understanding and agreement between Collegium
and Cypress with regard to the subjects hereof and thereof. 
  
 10.8    Payment of Fees
and Expenses.    Each of Cypress and Collegium shall bear its own expenses and legal fees incurred on its behalf with respect to this Agreement and the transactions contemplated hereby. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

  

 
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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first above written. 
  
 
	 CYPRESS BIOSCIENCE, INC.
 
	 
	 By:
 	 	 /s/    JAY KRANZLER        
 

	  	 	 Dr. Jay Kranzler
 Chief Executive Officer
 

 
  
 
	 COLLEGIUM PHARMACEUTICAL, INC
 
	 
	 By:
 	 	 /s/    MICHAEL HEFFERNAN       
 

	 Name:
 Title:
 	 	 Michael Heffernan
 President
 

 
  
  
 .

 
 6Employment Offer Letter

  
 EXHIBIT 10.1 
  
 * Confidential Treatment Requested Under 
 17 C.F.R. §§200.80(b)(4), 200.83
and 240.24b-2 
 WFI 
 4810 Eastgate Mall 
 San Diego, CA 92121 
 (858) 228-2000 
  
 August 04, 2002 

 
 Gregory M. Jacobsen 
 3 Prairie Falcon Lane 
 Littleton, CO 801227 
  
 Email: Gjacob1039@aol.com 
 Fax: 303
972 7842 
  
 Dear Gregory: 
  
 We are pleased to offer you the position of Corporate Executive Vice President, President of Outsourcing reporting to Masood Tayebi, Chief Executive Officer. This letter is our formal offer of
employment and requires your written acceptance. If you accept this offer, we expect you to begin work at WFI on or before July 30, 2002. 
  
 The specific terms of your employment are listed on the attached “Additional Terms and Conditions.” The terms of this letter, including the attached Additional Terms and Conditions, will become effective only upon execution
by both you and WFI. 
  
 Your employment is on an “at-will” basis. Therefore, you may terminate your employment, and WFI may
terminate or alter the conditions of your employment at any time, for any reason, with or without cause and with or without notice. General terms of your employment are described in the WFI Employee Handbook, as revised from time to time. WFI
expects that you will read and abide by all guidelines set forth in the Employee Handbook, plus any other policies and practices adopted by WFI from time to time. 
  
 This letter (together with the Additional Terms and Conditions) and the enclosed Proprietary Information and Innovations Agreement are the entire agreement between you and WFI regarding your
employment. This letter and the Proprietary Information and Innovations Agreement supersede all prior or contemporaneous agreements*, promises, communications and/or understandings between you and WFI, whether written or oral. These agreements may
be modified or changed only with the Vice President of Human Resources’ written approval. 
  
 Greg, we look forward to you joining the
WFI team. Please do not hesitate to contact me at 858-228-2398 if you have any questions. 
  
 
	 Very truly yours,
 Wireless Facilities, Inc.
 	 	 Accepted and Agreed
 
	 
	 /s/    Naomi Whitacre
 
	 	 /s/    Greg Jacobsen        
 

	 Naomi Whitacre
 Vice President, Human Resources & Corp Ops
 	 	 Greg
Jacobsen                                       
     7-30-02
 New Employee Name
                                  Date
 

 
  
 *It is expected that you will finalize the Proprietary Information and Innovations
Agreement by August 16, 2003 and should there be any changes to your offer letter as approved by Masood Tayebi they will be completed at the same time. 
  
 Please sign and fax back this letter, including the attached Additional Terms and Conditions, to Naomi Whitacre at 858-228-2030 immediately. Upon receipt of your signed letter we will send you a complete employment
package. Your employment or continued employment is contingent upon successfully passing our standard background investigation. 
  
 Page 1 of 4 

  
 Additional Terms and Conditions of Employment 
  
 Compensation and Benefits 
  
 In accordance with WFI’s standard payroll policies you will be compensated on a bi-weekly basis at $7,692.31, per payroll, which is an annualized salary of $200,000. Your Exempt position is not eligible to receive
overtime wages. You will receive a one-time sign-on bonus of $40,000 paid 30 days following your date of hire. Your performance and contribution to the success of WFI will determine the amount of your base salary increase in 2003 and thereafter. You
may be eligible to participate in the Company’s profit sharing and other bonus programs at the sole discretion of the Company. You must be on the active payroll at the time of payment in the year it is distributed to qualify for payment. As
part of the Company’s annual review of compensation for the Executive Team, which occurs in January of each year, your compensation package will be reviewed and agreed to with Masood Tayebi, your base compensation will be increased in January
2003. 
  
 Stock Options 
  
 Subject to Board approval, you will be granted options to purchase 200,000 shares of WFI Common Stock, at the market price on the date of grant subject to the terms and conditions of the Stock Option
Plan pursuant to which the options were granted. Initial grant of 200,000 options, set at the lowest price possible based on the several-week window around start date. These options vest over 4 years, with 1⁄4 vesting after year 1, and the
remainder vesting monthly over the following 36 months. As part or the Executive Team, the Compensation Committee of the Board of Directors will review you for additional options each year. 
  
 2002 Bonus Opportunity 
  
 There are
three specific objectives, which if achieved before 1/01/03, will result in additional option grants. 
  

	 	A.
	 
	[...***...] 
 

  

	 	B.
	 
	[...***...] 
 

  

	 	C.
	 
	[...***...] 
 

  
 If either
“A” or “B” is achieved, then you will be granted 50,000 options at the then-current price. If both “A” and “B” are achieved, then you will be granted an additional 20,000 option grant. If “C” is
achieved at any time before year end, you will receive a grant of 20,000 options. All of these options will vest immediately upon receipt. 
  
 2003 Bonus Opportunity 
  
 Starting in 2003 and each year thereafter, you will be
eligible to earn additional performance based compensation (“bonus compensation”) under a Bonus Plan. This bonus compensation will be equal to between 75% and 100% of the then current base salary at full achievement of the Bonus Plan. The
Bonus Plan, the specific goals, MBO’s, and the specific    % of bonus reward paid out in cash or equity will be mutually agreed upon by Masood Tayebi, CEO and you within three (3) months from your date of hire. The Bonus
Plan will be revised and defined at the beginning of each fiscal year, but generally, the Bonus Plan will set forth goals to be achieved each year, such as 1) Company revenue; 2) Company EBITDA; 3) [...***...]; and 4) other such factors. A sliding
scale will be used to measure and administer each goal down to a floor below which no payment will be made. All monies earned by you under the Bonus Plan will be paid within 60 days from the end of the fiscal year. In the event of termination of
your employment for any reason other than cause, any bonus will be prorated for the length of your employment during the fiscal year and paid within 60 days from the end of the fiscal year. 
  
 Page 2 of 4 
  
 ***
Confidential Treatment Requested 

  
 Change of Control 
  
 Upon Change of Control, 50% of the remaining portion of the original option grant will immediately vest. The balance of the original grant will vest over the
following 18 months, with 1/6 vesting every 3 months. However, this 18 month schedule only applies to equity that has a longer vesting period than 18 months. Whatever portion of the original option grant that is set to vest within that 18 month time
frame continues to vest according to the original vesting schedule. 
  
 Severance

  
 You will receive six (6) months base salary if terminated without cause. If terminated within year one (1), this severance will include
the amount of equity options that correspond to the number of days of employment. (So, if terminated without cause on the four (4) month anniversary, then 4/48ths of the original option grant will vest, or roughly 16,666.67 shares.) 

 
 For purposes of this offer, “cause” condition only occurs if the Company terminates you after you: (a) shall have been convicted of any
felony including, but not limited to, a felony involving fraud, theft, misappropriation, dishonesty, or embezzlement; (b) shall have committed intentional acts of gross misconduct that materially impairs the goodwill or business of the Company or
cause material damage to its property, goodwill, or business; or (c) shall have refused to, or willfully failed to, perform his material duties, provided, however, that no termination under this subparagraph shall be effective unless you do not cure
such refusal or failure to the Company’s satisfaction as soon as practicable after the Company gives you written notice identifying such refusal or failure (and, in any event, within thirty (30) calendar days after receipt of such written
notice). No act or failure to act on the part of you shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that this action or omission was in the best interests of the
Company. 
  
 Relocation 
  
 There is no immediate relocation made as part of this new hire offer. However, if/when it is mutually agreed to by the Company and the President of the Outsourcing Group that a move to San Diego is in
the best interests of the business, then WFI will provide a one-time lump sum payment to assist you with your relocation to San Diego. 
  
 Miscellaneous 
  
 As you will be working in a home office, you will be reimbursed for
a normal business and fax telephone line, long distance charges, DSL and ISP access. Other expenses will be reimbursed in accordance with the Company’s standard Expense Reimbursement Policy and the Business Use and Reimbursement for Cell
Phones, Pagers and other Telecom Devices. 
  
 Proprietary Information and Innovation

  
 WFI expects that, during and after the term of your employment, you will not disclose to third parties, utilize for your own
benefit, or otherwise make use of any of the WFI’s trade secrets or other confidential or proprietary information concerning WFI, except to the extent necessary to carry out your obligations to WFI. Please sign and return the enclosed
Proprietary Information and Innovations Agreement, which contains, among others, your promise not to recruit any employees of WFI, or, through the use of improper means, its clients and contractors for a period of one year following the termination
of your employment relationship with WFI. In addition, by signing this letter, you represent that your acceptance of this offer and your employment with WFI does not and will not violate or otherwise conflict with any other agreement to which you
may be party. 
  
 Page 3 of 4 

 Dispute Resolution 
  
 Except for certain employment discrimination clams brought under federal law, and except for claims for which injunctive relief would be permitted under the provisions of the Proprietary Information
and Innovations Agreement, any controversy or claim arising out of, or relating to your employment relationship with WFI, and any agreements hereafter entered into between you and WFI in connection with your employment relationship, shall be settled
by binding arbitration in accordance with the then current Employment Dispute Resolution Rules (the “Rules”) of the American Arbitration Association (the “AAA”), to the extent such rules do not conflict with any provision of this
paragraph. Such Arbitration shall be held in San Diego, California, before a single neutral arbitrator selected in accordance with the Rules. WFI will pay the arbitrator’s fee and any costs directly associated with the use of arbitration that
are imposed by the AAA. Any award, order or judgment pursuant to arbitration under this paragraph must be in writing, and shall be deemed final and binding and may be entered and enforced in any state or federal court of competent jurisdiction. Both
you and WFI agree to submit to the jurisdiction of any such court for purposes of the enforcement or any such award, order or judgment. 
  
 Return of Company Property; Payroll Deductions 
  
 Your acceptance of this offer
constitutes your authorization to offset any amount that you owe WFI, including advances and reimbursements for equipment not returned, after written demand made by, from any amount that the company may owe you, including wages, commissions, bonuses
payable or pending expense reimbursements. 
  
 Transfer of Personal Information to Third
Parties 
  
 Upon confirmation of your acceptance of this offer, WFI will forward information to the following companies, unless you
indicate that you do not want us to do so. Personal information to be forwarded includes your name, address, social security number, telephone number, birthdate, etc., and will be used for the following purposes: 
  
 E*TRADE Business Solutions: stock option administration 
  
 ProBusiness Solutions: payroll and payroll tax processing 
  
 Outside Benefits Administrator: health and life insurance benefits 
  
 Each of these third parties must maintain the confidentiality of your personal data and use it only for the above-stated purposes. 
  
 Effect 
  
 These Additional Terms and
Conditions form an integral part of your offer of employment, but nothing herein is intended to change the at-will nature of your employment. 
  
 Page 4 of 4

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