EXHIBIT 10.25
ZAPME! CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT is made by and between ZapMe!
Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Purchaser").
WHEREAS, in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Company is willing to sell to the Purchaser
and the Purchaser desires to purchase shares of Common Stock according to the
terms and conditions contained herein.
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES. The Company hereby agrees to
sell to the Purchaser and the Purchaser hereby agrees to purchase an
aggregate of 1,000,000 shares of the Company's Common Stock (the "Shares"),
at the price of $5.00 per share for an aggregate purchase price of
$5,000,000.00, such offer to sell the Shares subject to expiration on
September 30, 1999.
2. PAYMENT OF PURCHASE PRICE.
(a) The purchase price for the Shares may be paid by
delivery to the Company at the time of execution of this Agreement of cash,
check, duly executed full recourse promissory note in the form attached
hereto as EXHIBIT A (the "Note"), or any combination thereof.
(b) With respect to the Note, the parties agree to the
following:
(1) The Note shall become payable in full upon
the earlier of four (4) years from the date of this Agreement, thirty (30)
days following termination of Purchaser's employment with or services to the
Company except for death or disability, or one (1) year following termination
as a result of death or disability.
(2) The Purchaser shall deliver to an escrow
holder designated by the Company (the "Escrow Holder") all certificates
representing the Shares and two executed blank stock assignments, in the form
attached hereto as EXHIBIT B, for use in transferring all or a portion of
said Shares to the Company, as required under this Section 2(b) or under any
other provision of this Agreement including Section 4, and shall enter into a
set of Joint Escrow Instructions in the form attached hereto as EXHIBIT C.
(3) As security for the payment of the Note and
any renewal, extension or modification thereof, the Purchaser hereby grants
to the Company, pursuant to the Security Agreement attached hereto as EXHIBIT
D, a security interest in and pledges with and delivers to the Company the
certificate or certificates representing the Shares.
(4) In the event of any foreclosure of the
security interest, the Company may sell the Shares at a private sale or may
itself repurchase any or all of the Shares. The parties acknowledge that,
prior to the establishment of a public market for the Shares of the Company,
the securities laws applicable to the sale of the Shares make a public sale
of the Shares commercially unreasonable. The parties agree that the
repurchasing of said Shares by the Company, or by any person to whom the
Company may have assigned its rights hereunder, is commercially reasonable if
made at any of the following prices: (i) a price determined by the Board of
Directors in its discretion, fairly exercised, representing what would be the
fair market value of the Shares diminished by any limitation on
transferability, whether due to the size of the block of Shares or the
restrictions of applicable securities laws, or (ii) the book value per Share
as recorded on the Company's books at the end of the last fiscal quarter
prior to the date of sale of the Shares upon foreclosure (whether or not such
book value per share is unaudited and subject to adjustment), or (iii) the
price at which the Shares were originally purchased by the Purchaser.
(5) In the event of default in payment when due
of any indebtedness under the Note, the Company may elect then, or at any
time thereafter, to exercise all rights available to a secured party under
the California Commercial Code, including the right to sell the Shares at a
private or public sale or repurchase the Shares as provided above. The
proceeds of any sale shall be applied in the following order:
(i) To pay all reasonable expenses of the
Company in enforcing this Agreement,
including without limitation
reasonable attorneys' fees and legal
expenses incurred by the Company.
(ii) In satisfaction of the remaining
indebtedness under the Note.
(iii) To the Purchaser, any remaining
proceeds.
(6) Upon full payment by the Purchaser of all
amounts due on Purchaser's Note, the Escrow Holder shall deliver to the
Purchaser the certificate or certificates representing the Shares in the
Escrow Holder's possession belonging to the Purchaser, the blank stock
assignment and the executed original of the Note marked "canceled" by the
Company, and the Escrow Holder shall be discharged of all further obligations
hereunder; provided, however, that the Escrow Holder shall nevertheless
retain said certificate or certificates and stock assignment as escrow agent
if so required pursuant to other restrictions imposed pursuant to this
Agreement.
3. VESTING. The Shares shall vest and be released from the
Company's Repurchase Option (as hereinafter defined) in accordance with the
following provisions:
Subject to your continued full time employment by the Company,
twenty-five percent (25%) of the Shares purchased pursuant to this Restricted
Stock Purchase Agreement shall vest on September 7, 2000, and one
forty-eighth (approximately 2.08%) of the Shares shall vest at the end of
each month thereafter, so that all of the Shares shall become fully vested on
September 7, 2003,
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provided you shall continue to be a full time Employee of the Company. In
addition, the Shares will become vested in the event of a Change of Control,
as more fully described in your employment offer letter dated September 7,
1999.
4. REPURCHASE OPTION. In the event of any voluntary or
involuntary termination of the Purchaser's employment by or services to the
Company for any or no reason (including death or disability) before all of
the Shares are released from the Company's repurchase option (see Section 5),
the Company shall, upon the date of such termination (as reasonably fixed and
determined by the Company) have an irrevocable, exclusive option for a period
of ninety (90) days from such date to repurchase all (but not less than all)
of the Shares that shall constitute the Unreleased Shares (as defined in
Section 5) at such time, at the original purchase price of $5.00 per share
(the "Repurchase Price"). Such option shall be exercised by the Company by
written notice to the Purchaser or the Purchaser's executor (with a copy to
the Escrow Holder) and, at the Company's option, (i) by delivery to the
Purchaser or the Purchaser's executor with such notice of a check in the
amount of the purchase price for the Shares being repurchased, or (ii) by
cancellation by the Company of an amount of the Purchaser's indebtedness to
the Company equal to the purchase price for the Shares being repurchased, or
(iii) by a combination of (i) and (ii) so that the combined payment and
cancellation of indebtedness equals the aggregate Repurchase Price. Upon
delivery of such notice and the payment of the purchase price in any of the
ways described above, the Company shall become the legal and beneficial owner
of the Shares being repurchased and all rights and interests therein or
relating thereto, and the Company shall have the right to retain and transfer
to its own name the number of Shares being repurchased by the Company.
5. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) Shares shall be released from the Company's
repurchase option as set forth in Section 4, above.
(b) Any of the Shares which have not yet been released
from the Company's repurchase option are referred to herein as "Unreleased
Shares".
(c) The Shares which (i) have been released from the
Company's repurchase option, (ii) have been paid for in full, and (iii) no
longer secure Shares not yet paid for in full, shall be delivered to the
Purchaser at the Purchaser's request (see Section 7).
6. RESTRICTION ON TRANSFER. None of the Shares or any beneficial
interest therein shall be transferred, encumbered or otherwise disposed of in
any manner, except for the deposit of the Shares into escrow pursuant to Section
2 and 7 hereof or the release of the Shares to the Company pursuant to such
provisions, until the release of such Shares from the Company's repurchase
option in accordance with the provisions of this Agreement.
7. ESCROW OF SHARES. The Shares issued under this Agreement
shall be held by the Escrow Holder, along with a stock assignment executed by
the Purchaser in blank in the form
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attached hereto as EXHIBIT B, pursuant to the terms of the Joint Escrow
Instructions attached hereto as EXHIBIT C and the Security Agreement attached
hereto as EXHIBIT D.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held
by Optionee or any transferee (either being sometimes referred to herein as
the "Holder") may be sold or otherwise transferred (including transfer by
gift or operation of law), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth
in this Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the
Shares shall deliver to the Company a written notice (the "Notice") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer such
Shares; (ii) the name of each proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) 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 the Shares at the Offered Price to the Company or
its assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase
all, but not less than all, of the Shares proposed to be transferred to any
one or more of the Proposed Transferees, at the purchase price determined in
accordance with subsection (c) below.
(c) PURCHASE PRICE. The purchase price ("Purchase
Price") for the Shares purchased by the Company or its assignee(s) under this
Section shall be (i) the Offered Price in the case of Shares that are Vested
Shares, or (ii) in the case of Shares that are not Vested Shares, the lower
of the Offered Price or the Repurchase Price as defined in subsection (c)
hereof. If the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith.
(d) PAYMENT. Payment of the Purchase 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 set forth in the
Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in this
Section, 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 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 shall
continue to apply to the Shares
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in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such 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 before any Shares
held by the Holder may be sold or otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything
to the contrary contained in this Section notwithstanding, the transfer of
any or all of the Shares during the Optionee's lifetime or on the Optionee's
death by will or intestacy to the Optionee's immediate family or a trust for
the benefit of the Optionee's immediate family shall be exempt from the
provisions of this Section. "Immediate Family" as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister.
In such case, the transferee or other recipient shall receive and hold the
Shares so transferred subject to the provisions of this Section, and there
shall be no further transfer of such Shares except in accordance with the
terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall terminate as to any Shares ninety (90) days after the
first 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 1933 Act.
9. INVESTMENT REPRESENTATIONS. In connection with the
purchase of the Shares, the Purchaser represents to the Company the following:
(a) The 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. The Purchaser is purchasing these securities for investment for
the 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").
(b) The Purchaser understands that the securities have
not been registered under the Securities Act by reason of a specific
exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the Purchaser's investment intent as expressed herein. In
this connection, the Purchaser understands that, in view of the Securities
and Exchange Commission (the "Commission"), the statutory basis for such
exemption may not be present if the Purchaser's representations meant that
the Purchaser's present intention was to hold these securities for a minimum
capital gains period under the tax statutes, for a deferred sale, for a
market rise, for a sale if the market does not rise, or for a year or any
other fixed period in the future.
(c) The Purchaser further acknowledges and 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. The Purchaser further acknowledges and understands that the
Company is under no obligation to register the securities. The Purchaser
understands that the certificate evidencing the securities will be imprinted
with a legend which prohibits the transfer of
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the securities unless they are registered or such registration is not
required in the opinion of counsel satisfactory to the Company.
10. STOCK CERTIFICATE LEGENDS. The share certificate
evidencing the Shares issued hereunder shall be endorsed with the following
legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(c) Any legend required by any applicable state
securities laws.
11. MARKET STAND-OFF AGREEMENT. The Purchaser hereby agrees,
if so requested by the managing underwriters in such offering, that, without
the prior written consent of such managing underwriters, the Purchaser will
not offer, sell, contract to sell, grant any option to purchase, make any
short sale or otherwise dispose of or make a distribution of any capital
stock of the Company held by or on behalf of the Purchaser or beneficially
owned by the Purchaser in accordance with the rules and regulations of the
Securities and Exchange Commission for a period of up to 180 days after the
date of the final prospectus relating to the Company's initial public
offering.
12. 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.
13. TAX CONSEQUENCES. The Purchaser has reviewed with the
Purchaser's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Purchaser is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The
Purchaser understands that the Purchaser (and not the Company) shall be
responsible for the Purchaser's own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement. The
Purchaser understands that Section 83 of the Code taxes as ordinary income
both (i) the difference
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between the fair market value of the Shares when the Company granted the
Purchaser the right to purchase the Shares and the fair market value of the
Shares on the date of this Agreement, and (ii) the difference between the
amount paid for the Shares and the fair market value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to its
repurchase option. In the event the Company has registered under the Exchange
Act, "restriction" with respect to officers, directors and 10% shareholders
also means the period after the purchase of the Shares during which such
officers, directors and 10% shareholders could be subject to suit under
Section 16(b) of the Exchange Act. The Purchaser understands that the
Purchaser may elect to be taxed at the time the Shares are purchased rather
than when and as the Company's repurchase option or the Section 16(b) period
expires by filing an election under Section 83(b) of the Code with the I.R.S.
within thirty (30) days from the date of purchase.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
14. ADMINISTRATION. The Board of Directors of the Company
shall have all authority to make determinations deemed necessary or advisable
for administering this Agreement. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
this Agreement shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
15. GENERAL PROVISIONS.
(a) This Agreement shall be governed by the laws of
the State of California as they apply to contracts entered into and wholly to
be performed in such state. This Agreement represents the entire agreement
between the parties with respect to the purchase of Common Stock by the
Purchaser and may only be modified or amended in writing signed by both
parties.
(b) Any dispute, claim or controversy of any kind
(including but not limited to tort, contract and statute) arising under, in
connection with, or relating to this Agreement shall at the request of either
party be resolved exclusively by binding arbitration in San Ramon, California
in accordance with the Commercial rules of the American Arbitration
Association then in effect. The Purchaser and the Company agree to waive any
objection to personal jurisdiction or venue in any forum located in San
Ramon, California. Judgment may be entered on the arbitrator's award in any
court having jurisdiction.
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(c) Any notice, demand or request required or
permitted to be given by either the Company or the Purchaser pursuant to the
terms of this Agreement shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. mail, First Class with postage
prepaid, and addressed to the parties at the addresses of the parties set
forth at the end of this Agreement or such other address as a party may
request by notifying the other in writing.
(d) The rights and benefits of the Company under this
Agreement shall be transferable to any one or more persons or entities, and
all covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and
obligations of the Purchaser under this Agreement may only be assigned with
the prior written consent of the Company.
(e) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights
granted both parties herein are cumulative and shall not constitute a waiver
of either party's right to assert all other legal remedies available to it
under the circumstances.
(f) The Purchaser agrees upon request to execute any
further documents or instruments necessary or desirable to carry out the
purposes or intent of this Agreement.
(g) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING
OF SHARES PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE
AS A FULL TIME EMPLOYEE AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED AT THIS DATE, AND NOT THROUGH PURCHASING SHARES HEREUNDER).
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH
OR WITHOUT CAUSE.
(h) Purchaser has reviewed this Agreement in its
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first set forth above.
ZAPME! CORPORATION PURCHASER:
a Delaware corporation
By:_______________________________ _______________________________________
(Signature)
Title:___________________________
(Type or Print Name) _______________________________________
_______________________________________
(Address)
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CONSENT OF SPOUSE
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I, ____________________, spouse of ▇▇▇▇ ▇▇▇▇▇▇▇, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement").
In consideration of the offer to my spouse to purchase shares of ZapMe!
Corporation, a Delaware Corporation (the "Company") as set forth in the
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 Agreement insofar as I may have any rights in said
Agreement or any shares issued pursuant thereto under the community property
laws of the State of California 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 Agreement.
Dated: September 13, 1999
Signed: _________________________________
EXHIBIT A
PROMISSORY NOTE
September 13, 1999
$5,000,000.00
For value received, the undersigned promises to pay to ZapMe! Corporation a
Delaware corporation (the "Company"), or order, at its principal office the
principal sum of $5,000,000.00 with interest thereof at the rate of 5.98% per
annum, compounded annually, on the unpaid balance of the principal sum. Said
principal shall be due on the earlier to occur of the fourth anniversary of the
date of this Note, thirty (30) days after termination other than for death or
disability, or one year after termination for death or disability. Said interest
shall be paid as it accrues by means of regular payroll deductions in the case
of an employee and by such other means as the Board may approve in the case of a
member of the Board.
Should the undersigned fail to make full payment of principal or interest for a
period of ten (10) days or more after the due date thereof, the whole unpaid
balance on this Note of principal and interest shall become immediately due at
the option of the holder of this Note.
This Note is subject to the terms of a Stock Purchase Agreement, dated as of
September 13, 1999. This Note is secured by a pledge of the Company's Common
Stock under the terms of a Security Agreement of even date herewith and is
subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned
personally for failure to pay the Note as and when due.
The principal is payable in lawful money of the United States of America. The
privilege is reserved to prepay any portion of the Note at any time.
If the undersigned shall default in the payment of amounts hereunder when due,
the holder of this Note shall be entitled to payment by the undersigned of all
costs of collection, including, without limitation, reasonable attorneys' fees
and costs incurred in connection with such collection efforts, whether or not
suit on this Note is filed. The maker waives presentment for payment, protest,
notice of protest and notice of non-payment of this Note. This Note shall be
governed by the laws of the State of California as they apply to contracts
entered into and wholly to be performed within such state.
_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT B
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, ▇▇▇▇ ▇▇▇▇▇▇▇, hereby sell, assign and transfer unto
ZapMe! Corporation one million (1,000,000) shares of the Common Stock of ZapMe!
Corporation standing in my name of 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 Stock Assignment may be used only in accordance with the Restricted Stock
Purchase Agreement between ZapMe! Corporation and the undersigned dated
September 13, 1999.
Dated: September 13, 1999
__________________________________________
(to be signed exactly as name is to appear
on stock certificate)
EXHIBIT C
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JOINT ESCROW INSTRUCTIONS
September 13, 1999
Corporate Secretary
ZapMe! Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Corporate Secretary:
As Escrow Agent for both ZapMe! Corporation, a Delaware corporation (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 the Restricted Stock Purchase
Agreement (the "Agreement") between the Company and the undersigned, in
accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(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 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, cancellation of indebtedness or some 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, Purchaser shall exercise all rights and
privileges of a shareholder of the Company while the stock is held by you.
4. Upon written request of the 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 so many
shares of stock as are not then subject to the Company's repurchase option,
provided that such shares have been fully paid for and do not secure an
unpaid promissory note or shares not fully paid for. Within ninety (90) days
after cessation of Purchaser's continuous employment by the Company or any
parent or subsidiary of the Company except for death or disability and within
one year after cessation for death or disability, 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 its assignees 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.
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10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations 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.
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 the following addresses or at such other addresses as a party may
designate by ten (10) days' advance written notice to each of the other
parties hereto.
COMPANY: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
ZapMe! Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
ESCROW AGENT: Corporate Secretary
ZapMe! Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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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.
Very truly yours,
ZapMe! Corporation
By: ____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
PURCHASER
________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
ESCROW AGENT:
____________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Corporate Secretary
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EXHIBIT D
---------
SECURITY AGREEMENT
This Security Agreement is made as of September 13, 1999 between ZapMe!
Corporation, a Delaware corporation ("Pledgee"), ▇▇▇▇ ▇▇▇▇▇▇▇ ("Pledgor"), and
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of Pledgee, as the agent of Pledgee and holder of the
Securities pledged hereunder ("Pledgeholder").
RECITALS
Pursuant to the Restricted Stock Purchase Agreement dated September 13, 1999
(the "Agreement"), between Pledgor and Pledgee and Pledgor's election under the
terms of the Agreement to pay for such shares with Pledgor's promissory note
(the "Note"), Pledgor has purchased 1,000,000 shares of Pledgee's Common Stock
(the "Shares") at a price of five dollars ($5.00) per share, for a total
purchase price of five million dollars ($5,000,000.00). The Note and the
obligations thereunder are as set forth in EXHIBIT A to the Agreement.
NOW, THEREFORE, it is agreed as follows:
1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration of
the transfer of the Shares to Pledgor under the Agreement, Pledgor, pursuant
to the California Uniform Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, and herewith delivers said certificate to Pledgeholder, who
shall hold said certificate on behalf of Pledgee subject to the terms and
conditions of this Security Agreement.
The Shares (together with an executed blank stock assignment or assignments)
shall be held by Pledgeholder on behalf of Pledgee as security for the repayment
of the Note, and any extensions or renewals thereof, to be executed by Pledgor
pursuant to the terms of the Agreement, and Pledgeholder shall not encumber or
dispose of such Shares except in accordance with the provisions of this Security
Agreement.
2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee,
its successors and assigns, as follows:
(a) PAYMENT OF INDEBTEDNESS. Pledgor will pay the principal sum of
the Note secured hereby, and interest thereon, at the time and in the manner
provided in the Note.
(b) ENCUMBRANCES. The Shares are free of all other adverse claims,
encumbrances, defenses and liens (other than restrictions on transfer imposed
by applicable securities laws), except for (i) Pledgee's rights to repurchase
Shares pursuant to Section 4 of the Agreement and (ii) the
pledge of the Shares hereunder as security for payment of the Note, and
Pledgor will not further encumber the Shares without the prior written
consent of Pledgee.
(c) MARGIN REGULATIONS. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee
is classified as a "lender" within the meaning of the regulations under Part
207 of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor
agrees to cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to comply with such
regulations.
3. VOTING RIGHTS. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the
terms of the Note, Pledgor shall have the right to vote all of the Shares
pledged hereunder.
4. STOCK ADJUSTMENTS. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee, all new, substituted
and additional shares or other securities issued by reason of any such change
shall be delivered to and held by the Pledgee under the terms of this
Security Agreement in the same manner as the Shares originally pledged
hereunder. In the event of substitution of such securities, Pledgor, Pledgee
and Pledgeholder shall cooperate and execute such documents as are reasonable
so as to provide for the substitution of such Collateral and, upon such
substitution, references to "Shares" in this Security Agreement shall include
the substituted shares of capital stock of Pledgor as a result thereof.
5. OPTIONS AND RIGHTS. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then
held by Pledgeholder shall be immediately delivered to Pledgeholder, to be
held under the terms of this Security Agreement in the same manner as the
Shares pledged.
6. DEFAULT. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of ten (10) days or more; or
(b) Pledgor fails to perform any of the covenants set forth in the
Agreement or contained in this Security Agreement for a period of ten (10)
days after written notice thereof from Pledgee; or
(c) A bankruptcy or insolvency proceeding is instituted by or
against Pledgor, or if a receiver is appointed for the property of Pledgor; or
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(d) Pledgor makes an assignment for the benefit of creditors.
In the case of a default, as set forth above, Pledgee shall have the right to
accelerate payment of the entire amount on the Note, and Pledgee shall
thereafter be entitled to pursue its remedies under the California Uniform
Commercial Code.
7. RELEASE OF COLLATERAL. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal
of the Note. The number of the pledged Shares which shall be released shall
be that number of full Shares which bears the same proportion to the initial
number of Shares pledged hereunder as the payment of principal bears to the
initial full principal amount of the Note. Notwithstanding the foregoing,
upon any release of pledged Shares hereunder any such Shares which shall
continue to constitute Unreleased Shares as defined in the Agreement shall
continue to be held in escrow pursuant to Sections 4 and 7 of the Agreement.
8. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. TERM. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, subject to the provisions for prior
release of a portion of the Collateral as provided in paragraph 7 above.
10. PLEDGEHOLDER LIABILITY.
(a) Pledgeholder shall not be liable to any party for any of his
acts, or omissions to act, as Pledgeholder unless Pledgeholder is proved to
have acted in bad faith. Any act done or omitted pursuant to the advice of
legal counsel, other than an act or omission involving gross or willful
negligence, shall be deemed to be done or omitted in good faith.
(b) Pledgeholder shall be entitled to employ such legal counsel and
other experts as Pledgeholder may deem necessary properly to advise
Pledgeholder in connection with its obligations hereunder, and Pledgeholder
may rely upon the advice of such counsel. Such counsel's reasonable fees and
costs shall be borne 50% by Pledgor and 50% by Pledgee.
(c) 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 Pledgeholder hereunder, Pledgeholder is authorized and
directed to retain in Pledgeholder's possession as agent of Pledgee 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 the arbitrator provided
for in Section 15 of the Agreement or of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but
Pledgeholder shall be under no duty whatsoever to institute or defend any
such proceedings.
-3-
In addition, upon any dispute Pledgeholder should be entitled to engage
legal counsel, one-half of whose fees and expenses shall be borne by Pledgor and
one-half by Pledgee.
11. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee agree that the
enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
12. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
13. GOVERNING LAW. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By: ▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
(Signature)
___________________________________
___________________________________
(Address)
"PLEDGEE" ZapMe! Corporation
a Delaware corporation
By: ____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman
"PLEDGEHOLDER" By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Secretary of Pledgee
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ELECTION UNDER SECTION 83(b)
----------------------------
OF THE INTERNAL REVENUE CODE OF 1986
------------------------------------
The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Tax Code, to include in taxpayer's gross income for the current taxable year,
the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year
of the undersigned are as follows:
NAME: TAXPAYER: ▇▇▇▇ ▇▇▇▇▇▇▇ SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is
described as follows: 1,000,000 shares (the "Shares") of the Common
Stock of ZapMe! Corporation (the "Company").
3. The date on which the property was transferred is: SEPTEMBER 13, 1999
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on certain
events. This right lapses with regard to a portion of the Shares over time.
5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its
terms will never lapse, of such property is:
$5,000,000.00
6. The amount (if any) paid for such property is:
$5,000,000.00
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.
Dated: ______________, 1999 ________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ______________, 1999 ________________________________________
Spouse of Taxpayer