EXHIBIT 10.3
▇▇▇▇▇▇▇▇.▇▇▇, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made effective the 12 day of May, 1999 (the "Effective
Date") between ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company") and
▇▇▇ ▇▇▇▇▇▇▇▇, Jr. (the "Purchaser").
WHEREAS the Purchaser is an employee of the Company and his continued
participation is considered by the Company to be important for the Company's
continued growth; and
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 1,043,111 shares of Common Stock according to the
terms and conditions hereof.
THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser
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and the Purchaser hereby agrees to purchase an aggregate of 1,043,111
shares of the Company's Common Stock (the "Shares"), at the price of $0.20
per share for an aggregate purchase price of $208,622.22 (the "Purchase
Price").
2. Payment of Purchase Price. The Purchase Price for the Shares shall be
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paid by delivery to the Company at the time of execution of this Agreement
of a check or wire transfer.
3. Issuance of Shares. Upon receipt by the Company of the Purchase Price,
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the Company shall issue a duly executed certificate evidencing the Shares
in the name of the Purchaser to be held in escrow until expiration of the
Company's repurchase option as described in this Agreement.
4. Repurchase Option.
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(1) All of the Shares are subject to the Company's repurchase option
defined in this section. In the event of the voluntary or involuntary
termination of the Purchaser's employment with 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
under 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 90 days from such date
to repurchase all or any portion of the Shares which have not been
released from the repurchase option at such time at the original
purchase price per share ($0.01) ("Repurchase Option"). Said
Repurchase Option shall be exercised by the Company by written notice
to the
Purchaser or his executor (with a copy to the Escrow Holder (as
defined below)) and, at the Company's option, (i) by delivery to the
Purchaser or his executor with such notice of a check in the amount of
the repurchase 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 repurchase 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 such
repurchase price. Upon delivery of such notice and the payment of the
repurchase 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.
(2) Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees,
officers, directors or stockholders of the Company or other persons or
organizations to exercise all or a part of the Company's repurchase
rights under this Agreement and purchase all or a part of such Shares.
5. Release of Shares From Repurchase Option.
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(1) 25,000 of the Shares shall be released from the Company's
Repurchase Option at the Effective Date and 6.25% of the remaining
Shares shall be released at the end of each full three-calendar-month
period from the Effective Date until all of the Shares have been
released, provided in each case that, subject to Section 5(2), the
Purchaser's services as an employee of or consultant to the Company
have not been terminated prior to the date of any such release.
(2) (a) Upon the merger or consolidation of the Company with or into
another corporation, entity or person or the sale of all or
substantially all of the Company's assets to another corporation,
entity or person, where after such merger, consolidation or sale of
assets, less than 50% of the capital stock or equity interests in such
other corporation, entity or person are owned by persons who owned in
the aggregate less than 50% of the capital stock of the Company
immediately before such merger, consolidation or sale of assets (a
"Dispositive Transaction"), and if the Purchaser voluntary or
involuntary terminates his employment with or services to the Company
for any or no reason within sixty (60) days of such Dispositive
Transaction, fifty percent (50%) of the previously unvested Shares
shall be immediately released from the Company's Repurchase Option.
(b) Upon the Company's termination of the Purchaser's employment
with or services to the Company without "Cause" (as defined herein),
up to fifty percent (50%) of the previously unvested Shares shall be
immediately released from the
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Company's Repurchase Option; provided, however, that once an aggregate
of 1,410,000 shares have been released from the Company's Repurchase
Option under any provision of this Section 5, no further shares shall
be released under this Section 5(2)(b). For purposes of this Section
5(2)(b), "Cause" is defined as (i) an act of dishonesty made by
Purchaser in connection with his responsibilities as an employee of
the Company, (ii) Purchaser's conviction of, or plea of nolo
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contendere to, a felony, (iii) Purchaser's serious misconduct, (iv)
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Purchaser's continued violations of his employment duties after
Purchaser has received a written demand for performance from the
Company which specifically sets forth the factual basis for the
Company's belief that Purchaser has not substantially performed his
duties, or (v) Purchaser's death or permanent and total disability.
6. Restriction on Transfer. Except for the escrow described in Section 7
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or transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares nor any beneficial interest therein
shall be transferred, encumbered or otherwise disposed of in any way until
the release of such Shares from the Company's Repurchase Option in
accordance with the provisions of this Agreement.
7. Escrow of Shares.
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(1) The Shares issued under this Agreement shall be held by the
Secretary of the Company as escrow holder ("Escrow Holder"), along
with a stock assignment executed by the Purchaser in blank, until the
expiration of the Company's Repurchase Option with respect to such
Shares as set forth above.
(2) The Escrow Holder is hereby directed to permit transfer of the
Shares only in accordance with this Agreement or instructions signed
by both parties. In the event further instructions are desired by the
Escrow Holder, he shall be entitled to rely upon directions executed
by a majority of the authorized number of the Company's Board of
Directors. The Escrow Holder shall have no liability for any act or
omission hereunder while acting in good faith in the exercise of his
own judgment.
(3) If the Company or any assignee exercises its Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such
option exercise from the proposed transferee, shall take all steps
necessary to accomplish such transfer.
(4) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from such
Repurchase Option, upon Purchaser's request the Escrow Holder shall
promptly cause a new certificate to be issued for such released Shares
and shall deliver such certificate to the Purchaser.
(5) Subject to the terms hereof, the Purchaser shall have all the
rights of a stockholder with respect to such Shares while they are
held in escrow, including
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without limitation, the right to vote the Shares and receive any cash
dividends declared thereon. If, from time to time during the term of
the Company's Repurchase Option, there is (i) any stock dividend,
stock split or other change in the Shares, or (ii) any merger or sale
of all or substantially all of the assets or other acquisition of the
Company, any and all new, substituted or additional securities to
which the Purchaser is entitled by reason of his ownership of the
Shares shall be immediately subject to this escrow, deposited with the
Escrow Holder and included thereafter as "Shares" for purposes of this
Agreement and the Company's repurchase option.
8. Legends. The share certificate evidencing the Shares issued
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hereunder shall be endorsed with the following legends:
(1) "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."
(2) "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY
AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY."
(3) Any legend required to be placed thereon by applicable state
securities laws.
9. Investment Representations; Restriction on Transfer.
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(1) In connection with the purchase of the Shares, the Purchaser
represents to the Company the following:
(1) He 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. He is purchasing these securities for investment for his
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 (the "Securities Act").
(2) He 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
his investment intent as expressed herein. In this connection, he
understands that, in view of the Securities and Exchange Commission
(the "Commission"), the statutory basis for such
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exemption may not be present if his representations meant that his
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.
(3) He 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. He
further acknowledges and understands that the Company is under no
obligation to register the securities. He 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 for the Company.
(4) He is aware of the adoption of Rule 144 by the Commission,
promulgated under the Securities Act, which permits limited public
resale of securities acquired in a non-public offering subject to the
satisfaction of certain conditions.
(5) He further acknowledges that in the event all of the requirements
of Rule 144 are not met, compliance with Regulation A or some other
registration exemption will be required; and that although Rule 144 is
not exclusive, the staff of the Commission has expressed its opinion
that persons proposing to sell private placement securities other than
in a registered offering and other than pursuant to Rule 144 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 the brokers who participate in the transactions do so at
their own risk.
(2) The Purchaser agrees, in connection with the Company's initial public
offering of the Company's securities, (i) not to sell, make short sales of,
loan, grant any options for the purchase of, or otherwise dispose of any
shares of Common Stock of the Company held by the Purchaser (other than
those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities for up to one
hundred eighty (180) days from the effective date of such registration and
(ii) further agrees to execute any agreement reflecting (i) above as may be
requested by the underwriters at the time of the public offering.
10. Adjustment for Stock Split. All references to the number of Shares and
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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.
11. General Provisions.
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(1) This Agreement shall be governed by the internal laws of the State of
California. This Agreement represents the entire agreement between the
parties with respect to the
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purchase of Common Stock by the Purchaser, may only be modified or amended
in writing signed by both parties and satisfies all of the Company's
obligations to the Purchaser with regard to the issuance or sale of
securities.
(2) 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.
Any notice to the Escrow Holder shall be sent to the Company's address with
a copy to the other party not sending the notice.
(3) 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.
(4) 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.
(5) 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.
(6) The Purchaser understands that he (and not the Company) shall be
responsible for his own federal, state, local or foreign tax liability and
any of the other tax consequences that may arise as a result of the
transactions contemplated by this Agreement. The Purchaser shall rely
solely on the determinations of his tax advisors or his own determinations,
and not on any statements or representations by the Company or any of its
agents, with regard to all such tax matters. The Purchaser shall notify the
Company in writing if the Purchaser files an election pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended, with the Internal
Revenue Service within thirty (30) days from the date of the sale of the
Shares hereunder. The Company intends, in the event it does not receive
from the Purchaser evidence of such filing, to claim a tax deduction for
any amount which would be taxable to the Purchaser in the absence of such
an election.
(7) THE PURCHASER UNDERSTANDS THAT THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA
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AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART
OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT THIS DOCUMENT REPRESENTS THE
DEFINITIVE AGREEMENT BETWEEN THE PURCHASER AND THE COMPANY WITH REGARD TO THE
ISSUANCE OF COMPANY SECURITIES TO THE PURCHASER AND THAT IT SUPERSEDES ANY OTHER
AGREEMENT, EITHER ORAL OR WRITTEN, RELATING TO THE PURCHASER'S RIGHTS TO COMPANY
SECURITIES. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY AND ALL FUTURE
ISSUANCES OF COMPANY SECURITIES TO THE PURCHASER MUST BE APPROVED BY THE
COMPANY'S BOARD OF DIRECTORS AND EVIDENCED BY AN EXECUTED WRITTEN AGREEMENT IN
ORDER TO BECOME BINDING ON THE COMPANY.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
a Delaware corporation PURCHASER: ▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ /s/▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇, Jr. (Signature)
President
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
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(▇▇▇▇▇▇▇)
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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CONSENT OF SPOUSE
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I, ____________________, spouse of ▇▇▇ ▇▇▇▇▇▇▇▇, Jr. have read and approve the
foregoing Agreement. In consideration of granting of the right to my spouse to
purchase shares of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. Common Stock, 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:____________________
_______________________________
Signature
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, ▇▇▇ ▇▇▇▇▇▇▇▇ Jr. hereby sell, assign and transfer to
_____________________ (________) shares of the Common Stock of ▇▇▇▇▇▇▇▇.▇▇▇,
Inc. (the "Company") standing in my name on the books of the Company represented
by Certificate No. __________ and do hereby irrevocably constitute and appoint
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, attorney, to transfer said stock on the books
of the Company with full power of substitution in the premises.
This Assignment Separate from Certificate may only be used in accordance with
the Restricted Stock Purchase Agreement dated May ___, 1999.
Dated: __________, ____.
Signature:___________________________
Instruction: 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 Right set forth in the Agreement without requiring additional
signature on the part of Purchaser.
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ELECTION UNDER SECTION 83(b)
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OF THE INTERNAL REVENUE CODE OF 1986
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The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Code, to include in his gross income for the current taxable year, the amount of
any compensation taxable to him 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: ▇▇▇ ▇▇▇▇▇▇▇▇, Jr. SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR: 1999
2. The property with respect to which the election is made is described as
follows:
2,820,000 shares of Common Stock (the "Shares"), par value $0.001, of
▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company").
3. The date on which the property was transferred is: May 12, 1999
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4. The property is subject to the following restrictions:
The Company has the right to repurchase a portion of the Shares upon the
happening of certain events. This right of repurchase 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: $208,622.22.
6. The amount (if any) paid for such property: $208,622.22.
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
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except with the consent of the Commissioner.
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Dated: _________________________ /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: _________________________ _______________________________
Spouse of Taxpayer
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