Document:

Exhibit 10.8(d)

 

NEVRO CORPORATION

 

2007 STOCK INCENTIVE PLAN

 

STOCK PURCHASE RIGHT GRANT NOTICE AND
 RESTRICTED STOCK PURCHASE AGREEMENT

 

Pursuant to its 2007 Stock Incentive Plan (the “Plan”), Nevro Corporation, a Delaware corporation (the “Company”), hereby grants to the Purchaser listed below (“Purchaser”), the right to purchase the number of shares of the Company’s Common Stock set forth below (the “Shares”) at the purchase price set forth below (the “Stock Purchase Right”).  This Stock Purchase Right is subject to all of the terms and conditions set forth herein, in the Plan and in the certain Restricted Stock Purchase Agreement attached hereto as Exhibit A (the “Restricted Stock Purchase Agreement”), each of which is incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Purchase Right Grant Notice (the “Grant Notice”) and the Restricted Stock Purchase Agreement.

 

	
Purchaser:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date   of Grant:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Vesting   Start Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Purchase   Price per Share:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Number   of Shares:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
The   Shares subject to this Share Purchase Right shall vest and be released from   the Company’s Repurchase Option, as set forth in the Restricted Stock Purchase   Agreement, according to the following schedule:

 

[25%   of the Shares shall be released from the Company’s Repurchase Option (as   defined in the Restricted Stock Purchase Agreement) on the first anniversary   of the Vesting Start Date and 1/48th of the total number of Shares shall be   released from the Company’s Repurchase Option thereafter so that 100% of the   Shares shall be released from such Repurchase Option on the fourth (4th) anniversary of the   Vesting Start Date, subject to Purchaser remaining a Service Provider through   each such vesting date.]
    

 

By his or her signature and the Company’s signature below, Purchaser agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Purchase Agreement and this Grant Notice. Purchaser has reviewed the Restricted Stock Purchase Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands the provisions of this Grant Notice, the Restricted Stock Purchase Agreement and the Plan. Purchaser hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Purchase Agreement. If Purchaser is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit D.

 

 

	
NEVRO CORPORATION:
    	
PURCHASER:
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Print   Name:
    	
 
    	
 
    	
Print   Name:
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

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EXHIBIT A

 

TO STOCK PURCHASE RIGHT GRANT NOTICE

 

RESTRICTED STOCK PURCHASE AGREEMENT

 

Pursuant to the Stock Purchase Right Grant Notice (the “Grant Notice”) to which this Restricted Stock Purchase Agreement (this “Agreement”) is attached, Nevro Corporation, a Delaware corporation (the “Company”) has granted to Purchaser (as defined in the Grant Notice) the right to purchase the number of shares of Restricted Stock under the Nevro Corporation 2007 Stock Incentive Plan (the “Plan”) indicated in the Grant Notice.

 

1.                                      General.

 

(a)                                 Defined Terms.  Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.

 

(b)                                 Incorporation of Terms of Plan.  The Shares are subject to the terms and conditions of the Plan, which is incorporated herein by reference.

 

2.                                      Grant of Restricted Stock.

 

(a)                                 Grant of Restricted Stock.  In consideration of Purchaser’s agreement to remain in the employ of the Company or its Subsidiaries, if Purchaser is an Employee, or to continue to provide services to the Company or its Subsidiaries, if Purchaser is a Consultant, or to serve as a Director, if Purchaser is a Director, and for other good and valuable consideration, effective as of the Date of Grant set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants to Purchaser the right to purchase the Shares, upon the terms and conditions set forth in the Plan and this Agreement.

 

(b)                                 Purchase Price.  The purchase price of the Shares shall be as set forth in the Grant Notice, without commission or other charge (the “Purchase Price”). The Purchase Price shall be paid by cash or check.

 

(c)                                  Issuance of Shares.  The issuance of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the parties or on such other date as the Company and Purchaser shall agree (the “Issuance Date”).  Subject to the provisions of Section 3 below, on the Issuance Date, the Company shall issue the Shares (which shall be issued in Purchaser’s name).

 

(d)                                 Conditions to Issuance of Stock Certificates.  The Shares, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company.  Such Shares shall be fully paid and nonassessable.  The Company shall not be required to issue or deliver any Shares prior to fulfillment of all of the following conditions:

 

 

(i)                                     The admission of such Shares to listing on all stock exchanges on which the Company’s Common Stock is then listed; and

 

(ii)                                  The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and

 

(iii)                               The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and

 

(iv)                              The receipt by the Company of full payment for such Shares, including payment of all amounts which, under federal, state or local tax law, the Company (or other employer corporation) is required to withhold upon issuance of such Shares; and

 

(v)                                 The lapse of such reasonable period of time following the Issuance Date as the Administrator may from time to time establish for reasons of administrative convenience.

 

(e)                                  Consideration to the Company.  In consideration of the issuance of the Shares by the Company, Purchaser agrees to render faithful and efficient services to the Company or any Subsidiary.  Nothing in the Plan or this Agreement shall confer upon Purchaser any right to (a) continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge Purchaser, if Purchaser is an Employee, or (b) continue to provide services to the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company or its Subsidiaries, which are hereby expressly reserved, to terminate the services of Purchaser, if Purchaser is a Consultant, at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company and Purchaser.

 

3.                                      Repurchase Option.

 

(a)                                 If Purchaser ceases to be a Service Provider for any reason, the Company or its assignee shall have the right and option to purchase from Purchaser, or Purchaser’s personal representative, as the case may be, all of Purchaser’s Unreleased Shares as of the date on which Purchaser ceases to be a Service Provider at the purchase price paid by Purchaser for such Shares in connection with the Stock Purchase Rights (the “Repurchase Option”).

 

(b)                                 The Company may exercise its Repurchase Option by delivering, personally or by registered mail, to Purchaser (or his or her transferee or legal representative, as the case may be), within ninety (90) days of the date on which Purchaser ceases to be a Service Provider, a notice in writing indicating the Company’s intention to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s office.  At the closing, the holder of the certificates for the Unreleased

 

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Shares being transferred shall deliver the stock certificate or certificates evidencing the Unreleased Shares, and the Company shall deliver the purchase price therefor.

 

(c)                                  At its option, the Company may elect to make payment for the Unreleased Shares to a bank selected by the Company.  The Company shall avail itself of this option by a notice in writing to Purchaser stating the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

 

(d)                                 If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date on which Purchaser ceases to be a Service Provider, the Repurchase Option shall terminate.

 

(e)                                  One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option.  The Shares shall be released from the Repurchase Option in accordance with the Vesting Schedule set forth in the Grant Notice until all Shares are released from the Repurchase Option.  Fractional Shares shall be rounded to the nearest whole share.

 

(f)                                   Any Shares which from time to time have not yet been released from the Company’s Repurchase Option pursuant to Section 3(e) above shall be referred to herein as “Unreleased Shares.”

 

4.                                      Transferability of the Shares; Escrow.

 

(a)                                 Purchaser hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company from time to time, to transfer the Unreleased Shares as to which the Repurchase Option has been exercised from Purchaser to the Company.

 

(b)                                 To insure the availability for delivery of Purchaser’s Unreleased Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 3, Purchaser hereby appoints the Secretary, or any other person designated by the Company from time to time as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unreleased Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other person designated by the Company from time to time, the share certificate(s) representing the Unreleased Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit B.  The Unreleased Shares and stock assignment shall be held by the Secretary, or such other person designated by the Company from time to time, in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit C hereto, until the Company exercises its Repurchase Option as provided in Section 3, until such Unreleased Shares are vested, or until such time as the Repurchase Option no longer is in effect.  As a further condition to the Company’s obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit D.  Upon vesting of the Unreleased Shares, the escrow agent shall promptly deliver to Purchaser the certificate or certificates representing such Shares in the escrow agent’s possession belonging to Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow

 

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agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.

 

(c)                                  The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.

 

(d)                                 Transfer or sale of the Shares is subject to restrictions on transfer imposed by Section 5 of this Agreement and any applicable state and federal securities laws.  Any transferee shall hold such Shares subject to all of the provisions hereof and shall acknowledge the same by signing a copy of this Agreement.  Any transfer or attempted transfer of any of the Shares not in accordance with the terms of this Agreement shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

 

5.                                      Purchaser’s Rights to Transfer Shares.

 

(a)                                 Company’s Right of First Refusal.  Before any Shares held by Purchaser or any permitted transferee (each, a “Holder”) may be sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of (each, a “Transfer”), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares proposed to be Transferred on the terms and conditions set forth in this Section 5 (the “Right of First Refusal”).

 

(i)                                     Notice of Proposed Transfer.  In the event any Holder desires to Transfer any Shares, the Holder shall deliver to the Company a written notice (the “Notice”) stating:  (w) the Holder’s bona fide intention to sell or otherwise Transfer such Shares; (x) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (y) the number of Shares to be Transferred to each Proposed Transferee; and (z) the bona fide cash price or other consideration for which the Holder proposes to Transfer the Shares (the “Offered Price”), and the Holder shall offer such Shares at the Offered Price to the Company or its assignee(s).

 

(ii)                                  Exercise of Right of First Refusal.  Within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may elect in writing to purchase all, but not less than all, of the Shares proposed to be Transferred to any one or more of the Proposed Transferees.  The purchase price shall be determined in accordance with Section 5(a)(iii) hereof.

 

(iii)                               Purchase Price.  The purchase price (“Repurchase Price”) for the Shares repurchased under this Section 5 shall be the Offered Price.  If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board in good faith.

 

(iv)                              Payment.  Payment of the Repurchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times mutually agreed to by the Company and the Holder.

 

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(v)                                 Holder’s Right to Transfer.  If all of the Shares proposed in the Notice to be Transferred are not purchased by the Company and/or its assignee(s) as provided in this Section 5, then the Holder may sell or otherwise Transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other Transfer is consummated within one hundred twenty (120) days after the date of the Notice and provided further that any such sale or other Transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 5 and the Restricted Stock Purchase Agreement, if applicable, shall continue to apply to the Shares in the hands of such Proposed Transferee.  If the Shares described in the Notice are not Transferred to the Proposed Transferee within such 120-day period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal as provided herein before any Shares held by the Holder may be sold or otherwise Transferred.

 

(b)                                 Exception for Certain Family Transfers.  Anything to the contrary contained in this Section 5 notwithstanding, the Transfer of any or all of the Shares during the Purchaser’s lifetime or upon the Purchaser’s death by will or intestacy to the Purchaser’s Immediate Family or a trust for the benefit of the Purchaser’s Immediate Family shall be exempt from the Right of First Refusal.  As used herein, “Immediate Family” shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister or stepchild (whether or not adopted).  In such case, the transferee or other recipient shall receive and hold the Shares so Transferred subject to the provisions of this Agreement, and there shall be no further Transfer of such Shares except in accordance with the terms of this Section 5.

 

(c)                                  Termination of Right of First Refusal.  The Right of First Refusal shall terminate as to all Shares upon a sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (a “Public Offering”).

 

6.                                      Ownership, Voting Rights, Duties.  This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein.

 

7.                                      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, stock dividend or other change in the Shares which may be made by the Company after the date of this Agreement.

 

8.                                      Notices.  Notices required hereunder shall be given in person or by registered mail to the address of Purchaser shown on the records of the Company, and to the Company at its principal executive office.

 

9.                                      Survival of Terms.  This Agreement shall apply to and bind Purchaser and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

 

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10.                               Section 83(b) Election for Unreleased Shares.  Purchaser hereby acknowledges that he or she has been informed that, with respect to the purchase of Unreleased Shares, that unless an election is filed by Purchaser with the Internal Revenue Service and, if necessary, the proper state taxing authorities, within thirty (30) days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions if applicable) to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase, there will be a recognition of taxable income to the Purchaser, measured by the excess, if any, of the fair market value of the Shares, at the time the Company’s Repurchase Option lapses over the purchase price for the Shares.  Purchaser represents that Purchaser has consulted any tax consultant(s) Purchaser deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b) and similar tax provisions.

 

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER’S BEHALF.

 

11.                               Representations.  Purchaser has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Purchaser is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  Purchaser understands that Purchaser (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

 

12.                               Restrictive Legends and Stop-Transfer Orders.

 

(a)                                 Any share certificate(s) evidencing the Shares issued hereunder shall be endorsed with the following legends and any other legends that may be required by state or federal securities laws:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF REPURCHASE IN FAVOR OF NEVRO CORPORATION. (THE “COMPANY”) AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES 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 SECURITIES ACT.

 

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(b)           Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

(c)           The Company shall not be required: (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

 

13.          Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

14.          Conformity to Securities Laws.  Purchaser acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are to be issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. Purchaser shall not transfer in any manner the Shares issued pursuant to this Agreement, without regard to whether such Shares are no longer subject to the Repurchase Option, unless (i) the transfer is pursuant to an effective registration statement under the Securities Act, or the rules and regulations in effect thereunder or (ii) counsel for the Company shall have reasonably concluded that no such registration is required because of the availability of an exemption from registration under the Securities Act.

 

15.          Market Standoff Agreement.  In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, Purchaser shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any of the Shares without the prior written consent of the Company or its underwriters.  Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters.  In no event, however, shall such period exceed 180 days.  The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering.  In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off shall immediately be subject to the Market Stand-Off.  In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period.  The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 15.

 

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16.          Further Instruments.  Purchaser hereby agrees to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement including, without limitation, the Investment Representation Statement, in the form attached to the Grant Notice as Exhibit E.

 

17.          Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

 

18.          Rules Particular To Specific Countries.

 

(a)           Generally.  Generally.  Purchaser shall, if required by the Administrator, enter into an election with the Company or a Subsidiary (in a form approved by the Company) under which any liability to the Company’s (or a Subsidiary’s) Tax Liability, including, but not limited to, National Insurance Contributions (“NICs”) and Fringe Benefit Tax (“FBT”), is transferred to and met by Purchaser.  For purposes of this Section 18, Tax Liability shall mean any and all liability under applicable non-U.S. laws, rules or regulations from any income tax, the Company’s (or a Subsidiary’s) NICs, FBT or similar liability and the Optionee’s NICs, FBT or similar liability under non-U.S. laws that are attributable to: (A) the grant of, or any other benefit derived by the Purchaser from the Shares; (B) the acquisition by Purchaser of the Shares; or (C) the disposal of any Shares acquired.

 

(b)           Tax Indemnity.  Purchaser shall indemnify and keep indemnified the Company and any of its Subsidiaries from and against any Tax Liability.

 

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EXHIBIT B

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED I,                                 , hereby sell, assign and transfer unto                                   (                    ) shares of the Common Stock of Nevro Corporation registered in my name on the books of said corporation represented by Certificate No.            herewith and do hereby irrevocably constitute and appoint                                                                     to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

 

This Assignment Separate from Certificate may be used only in accordance with the Restricted Stock Purchase Agreement between Nevro Corporation and the undersigned dated                             ,           .

 

Dated:                               ,

 

 

	
 
    	
Signature:
    	
 
    

 

 

INSTRUCTIONS:  Please do not fill in any blanks other than the signature line.  The purpose of this assignment is to enable the Company to exercise the Repurchase Option, as set forth in the Restricted Stock Purchase Agreement, without requiring additional signatures on the part of Purchaser.

 

 

EXHIBIT C

 

JOINT ESCROW INSTRUCTIONS

 

                        ,          

 

Secretary

Nevro Corporation

 

 

 

As Escrow Agent for both Nevro Corporatio (the “Company”) and the undersigned purchaser of stock of the Company (the “Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (“Agreement”) between the Company and the undersigned, in accordance with the following instructions:

 

1.             In the event the Company or any entitled parties (referred to collectively for convenience herein as the “Company”) exercises the Company’s Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company.  Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

 

2.             At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or a combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

 

3.             Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement.  Purchaser does hereby irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent for the term of this escrow to execute, with respect to such securities, all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities.  Subject to the provisions of this paragraph 3 and to the terms of the Agreement, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

 

4.             Upon written request of Purchaser, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, you will deliver to Purchaser a certificate or 

 

 

certificates representing the number of shares of stock as are not then subject to the Company’s Repurchase Option.  Within one hundred twenty (120) days after Purchaser ceases to be a Service Provider, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or any other entitled parties pursuant to exercise of the Company’s Repurchase Option.

 

5.             If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder.

 

6.             Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

 

7.             You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.  You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

 

8.             You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

9.             You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

 

10.          You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you.

 

11.          You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

 

12.          Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party.  In the event of any such termination, the Company shall appoint a successor Escrow Agent.

 

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13.          If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

14.          It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

15.          Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at such addresses as a party may designate by written notice to each of the other parties hereto.

 

16.          By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

 

17.          This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

 

18.          These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding that body of law pertaining to conflicts of law.

 

(Signature Page Follows)

 

3

 

IN WITNESS WHEREOF, these Joint Escrow Instructions shall be effective as of the date first set forth above.

 

	
 
    	
NEVRO   CORPORATION.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PURCHASER
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ESCROW   AGENT
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

4

 

EXHIBIT D

 

CONSENT OF SPOUSE

 

I,                                         , spouse of                                         , have read and approve the Restricted Stock Purchase Agreement dated                       ,           , between my spouse and Nevro Corporation.  In consideration of granting of the right to my spouse to purchase shares of Nevro Corporation set forth in the Restricted Stock Purchase Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Restricted Stock Purchase Agreement insofar as I may have any rights in said Restricted Stock Purchase Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Restricted Stock Purchase Agreement.

 

 

Dated:                               ,

 

 

	
 
    	
 
    
	
 
    	
Signature   of Spouse
    

 

 

EXHIBIT E

 

INVESTMENT REPRESENTATION STATEMENT

 

	
PURCHASER
    	
:
    	
 
    
	
 
    	
 
    	
 
    
	
COMPANY
    	
:
    	
Nevro   Corporation
    
	
 
    	
 
    	
 
    
	
SECURITY
    	
:
    	
Common   Stock
    
	
 
    	
 
    	
 
    
	
AMOUNT
    	
:
    	
 
    
	
 
    	
 
    	
 
    
	
DATE
    	
:
    	
 
    

 

In connection with the purchase of the above-listed shares of Common Stock (the “Securities”) of Nevro Corporation, a Delaware corporation (the “Company”), the undersigned (“Purchaser”) represents to the Company the following:

 

1.                                      Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Purchaser is acquiring these Securities for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

2.                                      Purchaser acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.  Purchaser understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Purchaser’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future.  Purchaser further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Purchaser further acknowledges and understands that the Company is under no obligation to register the Securities.  Purchaser understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws or agreements.

 

3.                                      Purchaser is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer 

 

 

qualifies under Rule 701 at the time of the grant of the Stock Purchase Right to the Purchaser, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may under present law be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including:  (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Exchange Act); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

 

In the event that the Company does not qualify under Rule 701 at the time of grant of the Stock Purchase Right, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than six months, or, in the event the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, not less than one year, after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above or, in the case of a non-affiliate who subsequently holds the Securities less than one year, the satisfaction of the conditions set forth in section (2) of the paragraph immediately above..

 

4.                                      Purchaser further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Purchaser understands that no assurances can be given that any such other registration exemption will be available in such event.

 

	
 
    	
Signature   of Purchaser:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Purchaser
    

 

Date:                                               ,

 

2

 

FORM OF 83(B) ELECTION AND INSTRUCTIONS

 

These instructions are provided to assist you if you choose to make an election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the shares of common stock of Nevro Corporation transferred to you.  Please consult with your personal tax advisor as to whether an election of this nature will be in your best interests in light of your personal tax situation.

 

The executed original of the Section 83(b) election must be filed with the Internal Revenue Service not later than 30 days after the date the shares were transferred to you.  PLEASE NOTE: There is no remedy for failure to file on time.  The steps outlined below should be followed to ensure the election is mailed and filed correctly and in a timely manner.  ALSO, PLEASE NOTE:  If you make the Section 83(b) election, the election is irrevocable.

 

Complete Section 83(b) election form (attached as Attachment 1) and make four (4) copies of the signed election form. (Your spouse, if any, should sign the Section 83(b) election form as well.)

 

Prepare the cover letter to the Internal Revenue Service (sample letter attached as Attachment 2).

 

Send the cover letter with the originally executed Section 83(b) election form and one (1) copy via certified mail, return receipt requested to the Internal Revenue Service at the address of the Internal Revenue Service where you file your personal tax returns.  We suggest that you have the package date-stamped at the post office.  The post office will provide you with a certified receipt that includes a dated postmark.  Enclose a self-addressed, stamped envelope so that the Internal Revenue Service may return a date-stamped copy to you.  However, your postmarked receipt is your proof of having timely filed the Section 83(b) election if you do not receive confirmation from the Internal Revenue Service.

 

One (1) copy must be sent to Nevro Corporation for its records and one (1) copy must be attached to your federal income tax return for the applicable calendar year.

 

Retain the Internal Revenue Service file stamped copy (when returned) for your records.

 

Please consult your personal tax advisor for the address of the office of the Internal Revenue Service to which you should mail your election form.

 

 

ATTACHMENT 1

 

ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B)

 

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of shares (the “Shares”) of Common Stock of Nevro Corporation, a Delaware corporation (the “Company”).

 

The name, address and taxpayer identification number of the undersigned taxpayer are:

 

                                                      
                                                       

 

SSN:

 

The name, address and taxpayer identification number of the Taxpayer’s spouse are (complete if applicable):

 

                                                      
                                                       

 

SSN: 

 

Description of the property with respect to which the election is being made:

 

                                     (          ) shares of Common Stock of the Company.

 

The date on which the property was transferred was                             .  The taxable year to which this election relates is calendar year         .

 

Nature of restrictions to which the property is subject:

 

The Shares are subject to repurchase by the Company or its assignee upon the occurrence of certain events.  This repurchase right lapses based upon the continued performance of services by the taxpayer over time.

 

The fair market value at the time of transfer (determined without regard to any lapse restrictions, as defined in Treasury Regulation Section 1.83-3(i)) of the Shares was $                       per Share.

 

The amount paid by the taxpayer for Shares was                   per share.

 

A copy of this statement has been furnished to the Company.

 

	
Dated:                             ,
    	
 
    	
Taxpayer   Signature
    	
 
    

 

 

The undersigned spouse of Taxpayer joins in this election. (Complete if applicable).

 

	
Dated:                             ,
    	
 
    	
Spouse’s   Signature
    	
 
    

 

	
Signature(s)   Notarized by:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

2

 

ATTACHMENT 2

 

SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE

 

                                    ,

 

VIA CERTIFIED MAIL
 RETURN RECEIPT REQUESTED

 

Internal Revenue Service
 [Address where taxpayer files returns]

 

Re:                             Election under Section 83(b) of the Internal Revenue Code of 1986
 Taxpayer:
  Taxpayer’s Social Security Number:
 Taxpayer’s Spouse:
  Taxpayer’s Spouse’s Social Security Number:

 

Ladies and Gentlemen:

 

Enclosed please find an original and one copy of an Election under Section 83(b) of the Internal Revenue Code of 1986, as amended, being made by the taxpayer referenced above. Please acknowledge receipt of the enclosed materials by stamping the enclosed copy of the Election and returning it to me in the self-addressed stamped envelope provided herewith.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

 

Enclosures

 

cc:                                Nevro CorporationExhibit 10.12

 

March 8, 2011

 

Re:                             Offer Letter

 

Dear Michael:

 

On behalf of Nevro Corp. (the “Company”), I am pleased to offer you employment with the Company on the terms set forth in this letter (this “Agreement”).  We have enjoyed our interactions with you and believe that you will provide the Company with the type of leadership that it needs at this time.  We believe the Company represents an extraordinary opportunity for you as well.

 

1.                                      Position and Duties.  Commencing on March 9, 2011 or such other date as shall be mutually agreed between you and the Company (the date you actually commence employment is referred to herein as the “Commencement Date”), you shall serve as the President and Chief Executive Officer of the Company and shall also serve as a member of the Board of Directors of the Company (the “Board”).  In addition, the Board will elect you to the position of Chairman, with such election to be effective on the date six months after the Commencement Date.  You shall report directly to the Board.  Your duties and authority as Chairman, President and Chief Executive Officer shall be prescribed by the Board and shall be commensurate with the duties and authority as are customarily associated with such positions at a company of comparable size and with a similar business as the Company.  Subject to Section 8 below, you agree that while serving as Chairman, President and Chief Executive Officer under this Agreement you shall commit substantially all of your business time and attention to your positions and duties as described in this Section 1.

 

2.                                      Employment at Will.  Both you and the Company shall have the right to terminate your employment with the Company at any time, with or without cause, and without prior notice.

 

3.                                      Compensation and Benefits.  In consideration for your services to the Company hereunder, you shall receive the following compensation and benefits from the Company.

 

(a)                                 Base Salary.  Your base salary shall be $500,000 per year (as may be adjusted in accordance with this Section 3(a), the “Base Salary”), which will be paid in accordance with the Company’s customary payroll practices.  The Board or Compensation Committee of the Board (the “Compensation Committee”) shall review your Base Salary on a periodic basis, consistent with the Company’s compensation review practices.  During the course of such review, the Board or Compensation Committee may modify your Base Salary and other compensation as it deems appropriate, provided, that neither the Board or the Compensation Committee may reduce your Base Salary except to the extent (i) the reduction, together with any prior reductions, does not exceed 20% of your Base Salary as in effect prior to the first of any such reductions and (ii) the reduction affects all senior management employees of the Company proportionally.

 

 

(b)                                 Annual Bonus.   You shall be provided an annual performance bonus opportunity targeted at fifty percent (50%) of your Base Salary (“Target Bonus”) to be earned out based on the achievement of annual performance targets to be determined by the Board or the Compensation Committee (the “Annual Bonus”).  The targets will be established by the Board or the Compensation Committee after consultation with you at the start of each fiscal year (except for the year 2011 in which case the targets will be set within 60 days following the Commencement Date).  Annual Bonus payments for 2011, as well as for future years, will be determined by the Board or the Compensation Committee and will be (i) based on achievement of such performance targets, as determined by the Board or the Compensation Committee, and (ii) except as otherwise provided herein, payable to you at the same time as bonuses for other Company executives are paid and, in any event, prior to March 15 of the year following the year to which such Annual Bonus relates.  Your Annual Bonus will be pro-rated for any partial year of service.

 

(c)                                  Benefits.  You shall be entitled to all rights and benefits for which you are eligible under the terms and conditions of the standard Company benefits and compensation practices that may be in effect from time to time and are provided by the Company to its executive employees generally.

 

(d)                                 Initial Equity Grant.  No later than 45 days following the Commencement Date, the Company shall take such actions as shall be necessary to grant you the right to purchase (the “Stock Purchase Right”) the number of shares of the Company’s common stock (the “Common Stock”) equal to six percent (6%) of the Company’s outstanding capital stock as of the Commencement Date, calculated based on the Fully Diluted Capitalization of the Company (as defined in the next sentence) at a per-share purchase price equal to the per-share fair market value of the underlying shares on the date of grant, as determined reasonably by the Board in good faith.  For the purposes of this Agreement, “Fully Diluted Capitalization” includes all outstanding shares of capital stock plus all shares subject to issuance under outstanding options or warrants plus all shares of capital stock reserved for future issuance under the Company’s 2007 Stock Incentive Plan (the “Plan”) that are not subject to outstanding options or other equity awards plus, to the extent not already included in the foregoing, all shares purchased by you, or subject to your right to purchase, pursuant to this Section 3(d) and Section 3(f).  The Stock Purchase Right will be granted under the Plan.  Any shares of Common Stock purchased upon exercise of the Stock Purchase Right (the “Restricted Stock”) shall be subject to a right of repurchase in favor of the Company at the original purchase price thereof (the “Right of Repurchase”).  The Restricted Stock shall vest, and the Right of Repurchase lapse,  with respect to thirty-three and one-third percent (33 1/3%) of the total shares of Restricted Stock on the first anniversary of the Commencement Date and with respect to 1/36th of such shares of Restricted Stock on each monthly anniversary of the Commencement Date thereafter so that the Restricted Stock shall be fully vested and the Right of Repurchase fully lapsed on the third anniversary of the Commencement Date, in each case, subject to your continued service to the Company hereunder except as otherwise provided herein.  You will be permitted to purchase the shares of Restricted Stock using a full recourse promissory note, equal to the value of the entire purchase, in a form attached hereto as Exhibit A, to the Company bearing an interest rate equal to the Applicable Federal Rate.  The Restricted Stock shall be subject to the terms of the  Plan and a restricted stock purchase agreement (the “Restricted Stock Purchase Agreement”) in the form attached hereto as Exhibit B to be entered into between you and the Company.

 

 

(e)                                  Subsequent Option or Options.  As soon as administratively practicable following a “Subsequent Option Date,” the Company shall take such actions as shall be necessary to grant you an option (a “Subsequent Option” or “Option”) that, collectively with the Stock Purchase Right and any other Subsequent Option previously granted (the “Equity Awards”) shall give you the right to purchase an aggregate number of shares of the Company’s Common Stock based on the “Fully Diluted Capitalization” on the date of grant of such Subsequent Option such that the aggregate number of shares of Common Stock issued or issuable pursuant to the Equity Awards represent six percent (6%) of such Fully Diluted Capitalization.  For purposes of this Section 3(e), “Fully Diluted Capitalization” shall include any Common Stock or capital stock of the Company that may be issued in connection with the financing or other transaction in the process of being carried out at the time of the Subsequent Option Date (up to the aggregate $30 million limit discussed in the sentence that immediately follows) plus any shares issuable under the Subsequent Option then being granted to you under this Section 3(e).  “Subsequent Option Date” shall mean a date on which a financing or other transaction (other than the issuance of stock to you pursuant to this Agreement) occurs subsequent to the Commencement Date in which capital stock of the Company is to be issued and which, together with prior financings or other such transactions in all cases occurring subsequent to the Commencement Date, does not exceed $30 million, or if it does, the amount of Common Stock subject to the Subsequent Option being granted shall be determined based on the amount of $30 million less the amount of such prior financings and other transactions in all cases occurring after the Commencement Date, in each case valued as determined in connection with such prior financings or transactions.  The per-share exercise price for a Subsequent Option shall be equal to the per-share fair market value of the underlying shares on the date of grant, as determined reasonably by the Board in good faith, following its review of a valuation intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be payable using shares otherwise issuable upon exercise of the Subsequent Option.  A Subsequent Option shall vest and become exercisable with respect to thirty-three and one-third percent (33 1/3%) of the shares of the Common Stock subject thereto on the first anniversary of the Commencement Date and with respect to 1/36th of the total number of shares of Common Stock subject to the Subsequent Option on each monthly anniversary of the Commencement Date thereafter such that the Subsequent Option shall be fully vested and exercisable on the third anniversary of the Commencement Date, in each case, subject to your continued service to the Company except as provided hereunder.  A Subsequent Option shall be an “incentive stock option” within the meaning of and to the maximum extent permitted by Section 422 of the Code without having the exercise price exceed fair market value on the date of grant.  A Subsequent Option shall be subject to the terms of the Plan and an option agreement (a “Subsequent Option Agreement”) in the form attached hereto as Exhibit C to be entered into between you and the Company.

 

(f)                                   Preferred Stock.  Subject to your execution of a stock purchase agreement in the form attached hereto as Exhibit D (the “Stock Purchase Agreement”), starting on the Commencement Date you shall be entitled to purchase that number of shares of Company Series A Preferred Stock (the “Preferred Stock”) that represents one percent (1%) of the Fully Diluted Capitalization of the Company as of the Commencement Date, for a purchase price equal to $0.364 per share.  The right to purchase the Preferred Stock will lapse to the extent unexercised, on the three-month anniversary of the Commencement Date.  Any Preferred Stock purchased by you will be fully vested as of the date of purchase.  In connection with the purchase of Preferred Stock, you will be required to enter into the Company’s Amended and Restated Stockholders’ Agreement attached hereto as Exhibit E

 

 

and Amended and Restated Registration Rights Agreement attached hereto as Exhibit F.  For the sake of clarification, your rights as Preferred Stockholder shall be determined in accordance with the terms of the agreements set forth in this Section 3(f) and, except as specifically provided in this Agreement, such determination shall be without reference to this Agreement or your employment thereunder.

 

(g)                                 Expenses.  The Company shall reimburse you for business expenses that are reasonable and necessary for you to perform, and were incurred by you in the course of the performance of your duties pursuant to this Agreement and in accordance with the Company’s general policies.   The Company also shall reimburse you for reasonable legal fees incurred in connection with your entering into this Agreement up to a maximum of $15,000.00.  In addition, the Company shall reimburse or directly pay the costs incurred by you for commuting from the Minneapolis, Minnesota area to the Company’s principal offices in Menlo Park, California.  The expenses referred in this Section 3(g) shall be paid directly by the Company or reimbursed upon your submission of vouchers and an expense report in such form as may be required by the Company consistent with the Company’s policies in place from time-to-time.

 

(h)                                 Indemnification.  You shall be entitled to enter into the Company’s standard form of Indemnification Agreement.  In addition, the Company agrees to maintain Directors and Officers Liability Insurance providing a level of protection of no less than $5,000,000 for so long as you serve as a director and/or officer of the Company.

 

4.                                      Change in Control.  In the event of a Change in Control of the Company, subject to your continued employment through the date of such Change in Control, the Options and Restricted Stock shall become immediately and fully vested and, if applicable, exercisable with respect to one hundred percent (100%) of the unvested shares subject thereto and the Right of Repurchase thereon shall immediately and fully lapse, in each case, as of immediately prior to the occurrence of such Change in Control.  In all events, you shall be able to cash out your equity to the same extent as and on the same basis that other non-employee shareholders cash out their equity, determined on a class-by-class basis.

 

5.                                      Severance.  Upon your termination of employment, you shall receive any accrued but unpaid Base Salary and other accrued and unpaid compensation, including vacation pay.  If the termination of your employment constitutes a termination by the Company without Cause or a Constructive Termination (each, a “Covered Termination”), provided that you first return all Company property in your possession and, within thirty (30) days following the Covered Termination, execute and do not revoke (during any applicable revocation period) a general release of all claims against the Company and its affiliates in the form set forth on Exhibit G (a “Release”), you shall also be entitled to receive the severance benefits set forth in clauses (a), (b) and (c) below.

 

(a)                                 Continued Base Salary and Annual Bonus.  During the Severance Period (as defined below), the Company shall pay you an amount equal to the sum of your annual Base Salary (as in effect immediately prior to any reduction giving rise to your right to resign your employment for a Constructive Termination) plus your Target Bonus, to be paid, subject to Section 6 below, in substantially equal installments in accordance with the Company’s standard payroll practices.  In addition, the Company shall pay you a pro-rated portion of your Target Bonus for the year of termination, such payment to be made as soon as administratively practicable after the Release is no longer subject to revocation.

 

 

(b)                                 COBRA Coverage.  To the extent you elect to continue medical, dental or vision benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) under the Company’s group plans, the Company will directly pay or reimburse you for the cost to continue coverage under COBRA for you and/or your eligible dependents during the period commencing on the date of the Covered Termination and ending upon the last day of the Severance Period (or, if earlier, the date on which you and/or your eligible dependents become eligible for comparable benefits from another employer).

 

(c)                                  Accelerated Vesting.  Your Options and Restricted Stock shall continue to vest and, if applicable, become exercisable and the Right of Repurchase lapse as though you remained employed by the Company during the Severance Period.  In addition, your vested Options, including those that vest pursuant to the preceding sentence, shall remain exercisable until the date that is three months after the date the Severance Period ends.  Notwithstanding the foregoing, in the event that (i) a definitive agreement that results in a Change in Control is entered into by the Company prior to your termination of employment or (ii) a Change in Control occurs during the first six months of the  Severance Period, your Options and Restricted Stock shall vest in full, the Right of Repurcahse shall fully lapse and your Options shall become fully exercisable, as of immediately prior to such Change in Control.

 

6.                                      Section 409A.

 

(a)                                 Separation from Service.  Notwithstanding any provision to the contrary in this Agreement, the date of your “separation from service,” as defined in section 409A of the Code and the Department of Treasury regulations promulgated and other guidance  issued thereunder ( collectively, “Section 409A”),  and as determined by applying the default presumptions in Treas. Reg. § 1.409A-1(h)(1)(ii)), shall be treated as the date of your termination of employment for purposes (but only for the purposes) of determining the time of payment of any amount that becomes payable to you hereunder upon your termination of employment and that is properly treated as a deferral of compensation subject to Section 409A after taking into account all exclusions applicable to such payment under Section 409A. Notwithstanding any other provision herein to the contrary, any amount that becomes payable to you under Section 5(a) upon your termination of employment and that is properly treated as a deferral of compensation subject to Section 409A after taking into account all exclusions applicable to such payment under Section 409A, shall be paid to you, or shall commence to be paid to you, on the 40th day following the date of your separation from service, and for the purposes of Section 5(a), any payments that would have been paid to you prior to such 40th day absent application of this provision shall be paid to you in a cash lump sum on such 40th day.

 

(b)                                 Specified Employee.  Notwithstanding any provision to the contrary in this Agreement, if you are  a “specified employee” (within the meaning of Section 409A and determined pursuant to any policies adopted by the Company consistent with Section 409A (a “Specified Employee”)), at the time of your separation from service and if any portion of the payments or benefits to be received by you upon separation from service would be considered deferred compensation under Section 409A (after taking into account all exclusions applicable to such payments and benefits under Section 409A) and cannot be paid or provided to you without your incurring taxes, interest or penalties under Section 409A, amounts that would otherwise be payable pursuant to this Agreement and benefits that would otherwise be provided pursuant to this Agreement, in each case, during the six-month period

 

 

immediately following your separation from service shall  instead be paid or provided on the first business day after the earlier of (i) the expiration of six months from the date of your  separation from service and (ii) the date of your death (such first business day, the “Delayed Payment Date”).  All payments delayed pursuant to the preceding sentence shall be paid or commence to be paid on the Delayed Payment Date, and on that date, there shall be paid to you or, if you have died, to your estate, in a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.

 

(c)                                  Expense Reimbursements.  To the extent that the reimbursement of any expenses eligible for reimbursement or the provision of any in-kind benefits under any provision of this Agreement would be considered deferred compensation under Section 409A (after taking into account all exclusions applicable to such reimbursements and benefits under Section 409A): (i) reimbursement of any such expense shall be made by the Company as soon as administratively practicable after such expense has been incurred, but in any event by no later than December 31st of the year following the year in which you incur such expense ; (ii) the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, during any calendar year shall not affect the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year ; and (iii) your right to receive such reimbursements or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(d)                                 Installments.  Your right to receive any installment payments under this offer letter, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated for purposes of Section 409A as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Treas. Reg. §1.409A-2(b)(2)(iii).

 

7.                                      Definitions.

 

(a)                                 Cause.  The term “Cause” means (i) theft or falsification of any employment or Company records committed by you that is not trivial in nature; (ii) malicious or willful, reckless disclosure by you of the Company’s confidential or proprietary information; (iii) commission by you of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (A) seriously undermined the ability of the Board to entrust you with important matters or otherwise work effectively with you, (B) contributed to the Company’s loss of significant revenues or business opportunities, or (C) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries; and/or (iv) the willful failure or refusal by you to follow the reasonable and lawful directives of the Board, provided such failure or refusal continues after your receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem.  Anything herein to the contrary notwithstanding, no act, or failure to act, on your part shall be considered “willful” unless it is done, or omitted to be done, by you without a good faith belief that your action or omission was in, or not opposed to, the best interests of the Company.

 

(b)                                 Change in Control.  The term “Change in Control” means the occurrence of any of the following events: (i) any reorganization, consolidation or merger of the Company with or into any other corporation or other entity or person, by means of any

 

 

transaction or series of related transactions, in which the Company’s stockholders as constituted immediately prior to such transaction(s) hold less than fifty percent (50%) of the voting power of the surviving or acquiring entity or (ii) a sale of all or substantially all of the assets of the Company.  Notwithstanding the foregoing, a transaction shall not constitute a “Change in Control” if: (i) its sole purpose is to change the state of the Company’s incorporation; (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; (iii) it constitutes the Company’s initial public offering of its securities or (iv) it is a transaction effected primarily for the purpose of financing the Company with cash (as determined by the Board in its discretion and without regard to whether such transaction is effectuated by a merger, equity financing or otherwise).  For the avoidance of doubt, in no event shall a transaction in which a single person or entity acquires fifty percent (50%) or more of the voting power of the Company be deemed to have been effected primarily for the purpose of financing the Company with cash.

 

(c)                                  Constructive Termination.  The term “Constructive Termination” means your right to resign from employment with the Company after providing written notice to the Company within sixty (60) days after one or more of the following events occurs without your consent provided such event remains uncured thirty (30) days after your delivery to the Company of written notice thereof: (i) failure to grant (or authorize the necessary number of shares) the Stock Purchase Right within 60 days of the Commencement Date or the failure to grant (or authorize the necessary number of shares) a Subsequent Option within 60 days of a Subsequent Option Date; (ii) a reduction in your authority, duties and responsibilities as President and Chief Executive Officer (or after you are appointed Chairman, the removal of you as Chairman), including a material reduction of authority, duties and responsibilities which results from your no longer serving as an officer of the Company; (iii) failure to elect or reelect you as a member of the Board; (iv) a material reduction by the Company in your Base Salary or your Target Bonus in effect immediately prior to such reduction, except in connection with a reduction in salary, which, together with any prior reductions, does not exceed 20% of such salary as in effect prior to the first of any such reductions and which affects all senior management employees of the Company proportionally; (v) the Company’s material breach of any of its obligations under this Agreement , any Option Agreement, the Restricted Stock Agreement, the Stock Purchase Agreement, the Amended and Restated Stockholders’ Agreement or the Amended and Restated Registration Rights Agreement (vi) a requirement that you relocate your current residence or (vii) the failure of any entity that acquires all or substantially all of the assets of the Company in a Change in Control to assume the Company’s obligations under this Agreement.

 

(d)                                 Severance Period.  The term “Severance Period” means the period of time commencing upon the date on which your employment terminates and ending on the earlier of (i) the first anniversary of the date on which your employment terminates or (ii) the date you take any action which, if you were employed by the Company, would breach the terms of your Confidentiality Agreement.

 

8.                                      Covenants.  To the extent that you have not already done so, please disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed.  The Company understands that you have an agreement with a prior employer that restricts your solicitation activities.  The Company agrees that the non-solicitation agreement

 

 

with that prior employer does not conflict with any provisions of this Agreement.  Except for this, it is the Company’s understanding that there is not any other agreement with a prior employer that would restrict you in performing the duties of your position with the Company and you represent that such is the case.  Moreover, you agree that, during the term of your employment by the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to a business involved in the development, manufacturing and/or marketing of a spinal cord neuro-stiumlation for the treatment of pain or any other specific business the Company actively pursues during your employment (a “Competing Business”), nor will you engage in any other activities that materially conflict with your obligations to the Company.  For the avoidance of doubt, the Company acknowledges that you shall not be prevented from being employed or otherwise providing services to a Competing Business following the termination of your employment hereunder, subject to your continuing obligations under the Confidentiality Agreement.  You have discussed with the Company your outside-based activities including board directorships listed in Exhibit H hereto and the Company agrees that those activities do not conflict with your obligations to the Company.  You agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.  Notwithstanding the forgoing, you may serve in any capacity with any civic, educational or charitable organization, and subject to the prior approval of the Board, you may also serve as a member of the board of directors of a company that is not a Competing Business or as a consultant to a venture capital firm, provided that such service does not materially interfere with your duties and responsibilities to the Company hereunder.  For the avoidance of doubt, the Company acknowledges that the board service and consulting arrangements you are currently engaged in and listed on Exhibit H hereto do not currently conflict with your duties and obligations to the Company.

 

9.                                      Confidentiality.  As a condition to your employment hereunder, you must enter into the Company’s standard Proprietary Information and Inventions Agreement (the “Confidentiality Agreement”) attached hereto as Exhibit I, the terms of which are incorporated herein by this reference.  Except as otherwise provided expressly in this Agreement (including the termination of the Severance Period upon the taking of any action that would breach the Confidentiality Agreement) or in the Confidentiality Agreement, there are no restrictions on your activities following the termination of your employment hereunder.

 

10.                               Parachute Payments.  Notwithstanding any other provision of this Agreement, or of any other agreement between you and the Company or any plan maintained by the Company pursuant to which you are entitled to any “Contingent Payments” (as defined in Exhibit J hereto), to the contrary, in the event that the Company undergoes a “280G Change in Control” (as defined in Exhibit J hereto), the provisions set forth in Exhibit J hereto shall apply.

 

11.                               Miscellaneous.

 

(a)                                 Complete Agreement.  This Agreement, collectively with applicable terms of the Plan and the agreements set forth in Exhibits A through G, and I through J, sets forth the terms of your employment by the Company and supersedes any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews, or pre-employment negotiations, whether written or oral.  In the

 

 

event of any conflict between the terms of this Agreement and those of any other plan, program, agreement or other arrangement of the Company relating to you, the terms herein shall prevail.  This Agreement shall remain in full force and effect during your employment with the Company and, in the event of any termination or expiration of this Agreement or your employment, the obligations of the Company shall survive such expiration or termination to the extent necessary to carry out the intentions of the parties as embodied in this Agreement (including, without limitation, your rights to severance upon a termination without Cause or a Constructive Termination and your obligations under the Confidentiality Agreement).

 

(b)                                 Withholding.  You acknowledge that all amounts and benefits payable under this Agreement are subject to withholding requirements under applicable law.

 

(c)                                  Advisors. You acknowledge and agree that you have had the opportunity to seek the advice of independent legal counsel and such other professional advisors as you have deemed necessary or appropriate prior to executing this Agreement.  You have read and understood all of the terms and provisions of this Agreement.

 

(d)                                 Amendments.  This Agreement, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by a duly authorized member of the Board or officer of the Company and you.

 

(e)                                  Counterparts.  This Agreement may be signed in counterparts and the counterparts taken together shall constitute one agreement.

 

(f)                                   Arbitration.  Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be resolved solely and exclusively by final and binding arbitration held in San Mateo County, California through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) in conformity with the then-existing JAMS employment arbitration rules and California law.  However, nothing in this Section is intended to prevent either party from seeking injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  The Company shall bear the costs of any such arbitration.

 

(g)                                 Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators, except that you may not assign your rights or delegate your duties or obligations hereunder without the prior written consent of the Company (provided that if you should die while any payment, benefit or entitlement is due to you hereunder or pursuant to any other agreement, such payment, benefit or entitlement shall be paid or provided to your designated beneficiary, or, if there is no designated beneficiary, to your estate).  In addition, no rights or obligations of the Company under this Agreement may be assigned or transferred by the Company without yoru prior written consent, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and assume the liabilities, obligations and duties of the Company under this Agreement, either contractually or as a matter of law.

 

 

(h)                                 Governing Law.  This Agreement shall be deemed to have been entered into and shall be construed and enforced in accordance with the laws of the State of California as applied to contracts made and to be performed entirely within California.

 

To indicate your acceptance of the terms and conditions herein, please sign and date this letter in the space provided below and return it to me by March 9, 2011.  A duplicate original is enclosed for your records.

 

	
Very truly yours,
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Konstantinos Alataris
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Konstantinos Alataris
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
President and Chief Executive Officer
    	
 
    	
 
    
	
NEVRO CORP.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACCEPTED AND AGREED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Michael DeMane
    	
 
    	
9 March, 2011
    
	
Michael DeMane
    	
 
    	
Date

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