Z RESEARCH, INC. STOCK PURCHASE AGREEMENT
Exhibit 99.4
Z RESEARCH, INC.
AGREEMENT made this 30th day of October, 2008 by and between Z Research, Inc., a Delaware corporation, and Anand Babu (“Optionee”).
All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.
| A. | EXERCISE OF OPTION |
1. Exercise. Optionee hereby purchases 2,500,000 shares of Common Stock (the “Purchased Shares”) pursuant to that certain option (the “Option”) granted Optionee on July 6, 2005 (the “Grant Date”) to purchase up to 2,500,000 shares of Common Stock (the “Option Shares”) at the exercise price of $0.001 per share (the “Exercise Price”).
2. Payment. Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for exercise.
3. Stockholder Rights. Until such time as the Corporation exercises its rights, including the First Refusal Right, Optionee (or any successor in interest) shall have all the rights of a Stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.
| B. | SECURITIES LAW COMPLIANCE |
1. Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Optionee in reliance upon the exemption from such registration provided by various rules of the Securities and Exchange Commission and the Purchased Shares have not been registered under the “blue sky” laws of any state, including that the Purchased Shares have not been qualified or a permit obtained for issuance of securities from the California Department of Corporations or any other agency of the State of California. Optionee hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is acquiring the Purchased Shares for investment purposes only and not with a view to resale and is prepared to hold the Purchased Shares for an indefinite period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.
2. Restrictions on Disposition of Purchased Shares. Optionee shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:
(i) Optionee shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.
(ii) Optionee shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.
(iii) Optionee shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.
The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.
3. Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:
“The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”
“The shares represented by this certificate are subject to certain rights, including rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated October 30, 2008 between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation’s principal corporate offices.”
| C. | TRANSFER RESTRICTIONS |
1. Restriction on Transfer. Except for any Permitted Transfer, the Purchased Shares shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off.
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2. Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the First Refusal Right and (ii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Optionee.
3. Market Stand-Off.
(a) In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation’s initial public offering.
(b) Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.
(c) Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.
(d) In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.
| D. | INTENTIONALLY LEFT BLANK |
| E. | RIGHT OF FIRST REFUSAL |
The Optionee hereby grants the Corporation the right of first refusal (the “First Refusal Right”), as described below. The Optionee shall not assign, pledge, or in any manner transfer any of such Purchased Shares of Common Stock or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the requirements hereinafter set forth:
1. If the Optionee desires to sell or otherwise transfer any of Optionee’s Purchased Shares of Common Stock, then the Optionee shall first give written notice thereof to the
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Corporation. The notice shall name the proposed transferee and state the number of shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer.
2. For thirty (30) days following receipt of such notice, the Corporation shall have the option to purchase all or none of the shares specified in the notice at the price and upon the terms set forth in such notice. In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying the full price for the shares, the price shall be deemed to be the fair market value of the stock at such time as determined in good faith by the Board of Directors. In the event the Corporation elects to purchase the shares, it shall give written notice to the transferring Optionee of its election and settlement for said shares shall be made as provided below in Article E, paragraph 4.
3. The Corporation may assign its rights hereunder.
4. In the event the Corporation and/or its assignee(s) elect to acquire the shares of the transferring Optionee as specified in said transferring Optionee’s notice, the secretary of the corporation shall so notify the transferring Optionee and settlement thereof shall be made in cash within thirty (30) days after the secretary of the Corporation receives said transferring Optionee’s notice; provided that if the terms of payment set forth in said transferring Optionee’s notice were other than cash against delivery, the corporation and/or its assignee(s) shall pay for said shares on the same terms and conditions set forth in said transferring Optionee’s notice.
5. Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from the provisions of this Article E:
(a) An Optionee’s transfer of any or all shares held either during such Optionee’s lifetime or on death by will or intestacy to such Optionee’s immediate family or to any custodian or trustee for the account of such Optionee or such Optionee’s immediate family. “Immediate family” as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the Optionee making such transfer.
(b) An Optionee’s bona fide pledge or mortgage of any Purchased Shares with a commercial lending institution, provided that any subsequent transfer of said shares by said institution shall be conducted in the manner set forth herein.
(c) An Optionee’s transfer of any or all of such Optionee’s Purchased Shares to the corporation or to any other Optionee of the corporation.
(d) An Optionee’s transfer of any or all of such Optionee’s Purchased Shares to a person who, at the time of such transfer, is an officer or director of the corporation.
(e) A corporate Optionee’s transfer of any or all of its Purchased Shares pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate Optionee, or pursuant to a sale of all or substantially all of the stock or assets of a corporate Optionee.
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(f) A corporate Optionee’s transfer of any or all of its shares to any or all of its Optionees.
(g) A transfer by a Optionee which is a limited or general partnership to any or all of its partners or former partners.
In any such case, the transferee, assignee, or other recipient shall receive and hold such stock subject to the provisions of this Article E, and there shall be no further transfer of such stock except in accord with this Article E.
6. Any sale or transfer, or purported sale or transfer, of securities of the Corporation shall be null and void unless the terms, conditions, and provisions of this Article E are strictly observed and followed.
7. The foregoing right of first refusal shall terminate on either of the following dates, whichever shall first occur:
(a) On December 15, 2010 or such other date specified in the Corporation’s Bylaws in regards to the termination of the right of first refusal; or
(b) Upon the date securities of the Corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the United States Securities Exchange Commission under the Securities Act of 1933, as amended.
| F. | INTENTIONALLY LEFT BLANK |
| G. | GENERAL PROVISIONS |
1. Assignment. The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more Optionees of the Corporation.
2. At Will Employment. Nothing in this Agreement or in the Option shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.
3. Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.
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4. No Waiver. The failure of the Corporation in any instance to exercise any rights, including the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.
5. Cancellation of Shares. If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.
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| H. | MISCELLANEOUS PROVISIONS |
1. Optionee Undertaking. Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares pursuant to the provisions of this Agreement.
2. Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Option and shall in all respects be construed in conformity with the terms of the Option.
3. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without resort to that State’s conflict-of-laws rules.
4. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
5. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Optionee, Optionee’s permitted assigns and the legal representatives, heirs and legatees of Optionee’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.
| Z RESEARCH, INC. | ||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: |
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| Address: |
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| /s/ Anand Baby ▇▇▇▇▇▇▇▇▇ | ||
| ▇▇▇▇▇ BABU | ||
| Address: | ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ | |
| ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ | ||
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SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement. In consideration of the Corporation’s granting Optionee the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement.
| /s/ Garmia Kapoor | ||
| OPTIONEE’S SPOUSE | ||
| Address: |
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ | |
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Purchase Agreement.
B. Board shall mean the Corporation’s Board of Directors.
C. Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:
(i) a merger, consolidation or other reorganization approved by the Corporation’s Optionees, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction, or
(ii) a Optionee-approved sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s Optionees.
In no event shall any public offering of the Corporation’s securities be deemed to constitute a Change in Control.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation’s common stock.
F. Corporation shall mean Z Research, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Z Research, Inc. which shall by appropriate action adopt the Option.
G. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Option Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Option Administrator after taking into account such factors as the Option Administrator shall deem appropriate.
H. First Refusal Right shall mean the right granted to the Corporation in accordance with Article ▇.
▇. ▇▇▇▇▇ Date shall have the meaning assigned to such term in Paragraph A.1.
▇. ▇▇▇▇▇ Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic terms of the Option.
K. Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.3.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
N. Option shall have the meaning assigned to such term in Paragraph A.1.
O. Option Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Option.
P. Option Agreement shall mean all agreements and other documents evidencing the Option.
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Q. Optionee shall mean the person to whom the Option is granted under the Grant Notice and related documentation.
R. Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Optionee.
S. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
T. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Optionee obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased Shares.
U. Prior Purchase Agreement shall have the meaning assigned to such term in Paragraph D.4.
V. Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.
W. Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.
X. Reorganization shall mean any of the following transactions:
(i) a merger or consolidation in which the Corporation is not the surviving entity,
(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,
(iii) a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.
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Y. SEC shall mean the Securities and Exchange Commission.
Z. Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant.
AA. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
BB. Unvested Shares shall have the meaning assigned to such term in Grant Notice.
CC. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service.
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