Exhibit 4.32
September 29, 2005
PAUL ASHTON
DEAR DR. ASHTON:
As you know, Control Delivery Systems, Inc. (the "Company") is
contemplating certain strategic transactions, including a possible sale or
merger involving the Company and pSvida Ltd. (the "Potential Acquiror"). There
is no assurance that the Company will enter into an agreement with respect to
any such transaction or consummate any such transaction even if such an
agreement is reached. However, the Company has been advised that the prospects
of a combination with the Potential Acquiror would be advanced if you and
certain other key personnel were to agree to certain undertakings designed to
assure the continuation of your services to the Company for at least a
transition period following any such combination. The Company believes that the
terms of this letter agreement (this "Retention Agreement") will be in the best
interests both of you and the shareholders of the Company by assisting in the
realization of the proposed combination.
The terms of this Retention Agreement set forth herein are as follows:
The Company and you are parties to a restricted stock award agreement or
agreements (the "Stock Agreements") pursuant to which you currently hold 20,000
shares of common stock of the Company that is subject to a substantial risk of
forfeiture (the "Restricted Stock"). Schedule A hereto lists the Restricted
Stock shares that you hold and the dates on which those shares were awarded to
you. Notwithstanding the provisions of the Stock Agreements or any other
agreement between you and the Company to the contrary, you hereby agree that the
following vesting and forfeiture rules shall apply:
(a) Except as hereinafter provided, the Restricted Stock subject to
the Stock Agreements, including your rights to any cash or property paid
with respect thereto or exchanged therefor in connection with a Liquidity
Event, or thereafter, (the Restricted Stock and such other securities,
cash, property or other rights, if any, being herein referred to as the
"Restricted Property") shall vest on the date that is six (6) months after
the Liquidity Event Date if you are then employed by the Company or its
successor (or a parent or subsidiary thereof) (the "Employer"); provided,
that if there has been no Liquidity Event Date by December 31, 2005, the
Restricted Property shall vest on June 30, 2006 if you are then still
employed by the Employer. The applicable vesting date described in the
preceding sentence is hereinafter referred to as the "Scheduled Vesting
Date." For purposes of this Retention Agreement, the terms "Liquidity
Event" and "Liquidity Event Date" shall have the meaning set forth in the
Stock Agreements.
(b) On the Liquidity Event Date relating to the transaction with the
Potential Acquiror you will be granted shares (American Depository Shares
or American Depository Receipts, hereinafter "ADSs") of the common equity
of the Potential Acquiror traded in the U.S. having a fair market value on
the date of closing equal to $110,000.00 (the "Additional Shares"). The
Additional Shares shall be subject to the
same restrictions as the Restricted Property and shall be treated for all
purposes of this Retention Agreement as the Restricted Property. For
purposes of this Retention Agreement, "fair market value" means the average
of the closing price of pSivida ADSs on the Nasdaq National Market for each
of the ten (10) trading days ending on the trading day that is four (4)
full trading days prior to the Liquidity Event Date.
(c) Subject to the following sentence, if your employment with the
Employer terminates for any reason prior to the Scheduled Vesting Date all
of your Restricted Property shall be automatically and immediately
forfeited or vested to the extent provided in the Stock Agreements, Amended
and Restated Control Delivery Systems Change of Control Agreement dated
August 17, 2004 (the "Change of Control Agreement") and Severance Agreement
dated February 20, 2004, as amended (the "Severance Agreement"), except
that in applying the provisions of such agreements the Restricted Property
shall not be deemed to be vested merely because the Stock Agreements would
have provided for scheduled vesting earlier than the Scheduled Vesting
Date. Notwithstanding the foregoing, if your employment with the Employer
is (i) involuntarily terminated, other than for "Cause" as hereinafter
defined, by the Employer, or (ii) terminated by the Participant for "Good
Reason" as hereinafter defined, in either case prior to the Scheduled
Vesting Date, all of your Restricted Property shall be treated for all
purposes as having vested in full immediately prior to such termination of
employment. For purposes of the preceding sentence, "Cause" and "Good
Reason" shall have the meanings assigned to them in your Change of Control
Agreement.
Upon the occurrence of the Liquidity Event Date the sections of your Stock
Agreements captioned "Restrictions on Transfer of Vested Shares" (paragraph (a)
only), "Right of First Refusal on Dispositions of Vested Shares" and "Right of
Repurchase of Vested Shares" shall be of no further force and effect.
Except as expressly provided in this Retention Agreement, the terms of your
Stock Agreements, Change of Control Agreement, Severance Agreement and other
agreements, if any, with the Employer shall remain in full force and effect.
Nothing in this Retention Agreement shall be construed as either limiting
or expanding such rights, if any, as you may have to continued employment with
the Employer.
This Retention Agreement shall be binding on and enforceable against the
Company and its successors and assigns and upon and against you and your heirs
and assigns.
This Retention Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, except for the conflicts of laws provisions
thereof.
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If you agree with the terms of this Retention Agreement, please so indicate
by signing the enclosed copy of this Retention Agreement in the space indicated
below and returning the enclosed copy to Cristin Rothfuss, whereupon this
Retention Agreement shall take effect as of the date first set forth above as an
agreement under seal.
CONTROL DELIVERY SYSTEMS, INC.
By: /s/ Michael J. Soja
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/s/ Paul Ashton
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Paul Ashton
The undersigned pSvida Limited hereby
acknowledges its obligations
hereunder as the Potential Acquiror
in the event that a Liquidity Event
involving pSivida occurs and agrees
to be bound by this Agreement and to
perform such obligations upon and
after the closing of a Liquidity
Event involving pSivida.
PSIVIDA LIMITED
By: /s/ Gavin Rezos
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Name: Gavin Rezos
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Title: Managing Director
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SCHEDULE A
Restricted Stock
A. 20,000 Shares Issued on 08/16/04
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