1
EXHIBIT 10.9
GADZOOX MICROSYSTEMS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this 15th day of April between Gadzoox
Microsystems, Inc., a California corporation (the "Company") and K. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (the "Purchaser").
In consideration of the mutual covenants and representations herein set
forth, the Company and the Purchaser agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase an aggregate of 600,000 shares of the
Company's Common Stock (the "Shares"), at the price of $.15 per Share for an
aggregate purchase price of $90,000.
2. Payment of Purchase Price. The purchase price for the Shares shall
be paid by delivery to the Company at the time of execution of this Agreement
of a check in the amount of the purchase price or a promissory note in form
satisfactory to the Company and secured by the Shares.
3. Limitations on Transfer. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's repurchase option, right of first refusal except in compliance
with the provisions of this Section 3.
(a) Repurchase Option
(i) In the event of the voluntary or involuntary termination of
employment of Purchaser with the Company for any reason, with or without cause
(including death or disability) (a "Termination") as well as under the
circumstances described in subsection (ii)(x) below, the Company shall, upon the
date of such termination or as described in such subsection (ii)(x), have an
irrevocable, exclusive option (the "Repurchase Option") for a period of 90 days
from such date to repurchase from Purchaser, at the original purchase price per
Share (the "Repurchase Price"), all or any portion of the Shares held by
Purchaser as of such date, to the extent such Shares have not yet been released
from the Company's Repurchase Option. The Repurchase Option shall be exercised
by the Company by written notice to Purchaser or his executor and, at the
Company's option, (x) by delivery to the Purchaser or his executor, with such
Notice, of a check in the amount of the purchase price for the Shares being
repurchased, or (y) in the event the Purchaser is indebted to the Company, by
cancellation by the Company of an amount of such indebtedness equal to the
Repurchase Price for the Shares being repurchased, or (2) by a combination of
(x) and (y) so that the combined payment and cancellation of indebtedness equals
such Repurchase Price. Upon delivery of such notice and 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 interest therein or related thereto, and the Company shall have the right to
transfer to its own name the number of Shares being repurchased by the Company,
without further action by Purchaser.
(ii) The Repurchase Option shall terminate as follows:
2
(x) With respect to 60,000 of the Shares the Repurchase
Option shall apply to 100% of such 60,000 shares if a Termination occurs prior
to March 31, 1997 and thereafter such Repurchase Option shall terminate based
upon achievement of the revenues set forth in the 1997 Revenue Plan to be
hereafter developed by management and approved by the Board of Directors on or
before September 30, 1996 pursuant to a formal resolution of the Board. On or
before June 30, 1997, the Company shall determine in accordance with generally
accepted accounting principles consistently applied its actual revenues
recognized during the fiscal year ended March 31, 1997, such revenues to be
audited by an accounting firm of national reputation ("Actual Revenues"). If
the Actual Revenues are between 0% and 100% of the 1997 Revenue Plan, the
Company shall multiply the applicable percentage of the 1997 Revenue Plan by
100,000 and thereafter shall subtract from such number, 40,000. The resulting
number is hereinafter referred to as the "Revenue Shares". If the 1997 Revenue
Plan is achieved by more than 100%, the number of Revenue Shares shall be
60,000. If less than 100% of the 1997 Revenue Plan is achieved, the Company
shall be entitled to exercise the Repurchase Option with respect to a number of
shares equal to the difference between 60,000 and the number of Revenue Shares
at any time prior to July 31, 1997 in accordance with the procedure set forth
in subsection (i) above. The purchase price of such shares shall be the
Repurchase Price. For example, if the Company achieved 60% of the 1997 Revenue
Plan, the formula would be:
.60 (100,000) - 40,000 = 20,000 = Revenue Shares
The remaining 40,000 shares would be subject to the Repurchase Option.
The Repurchase Option shall apply to 100% of the 60,000
shares until March 31, 1997 as of which time 12/48ths of the Revenue Shares (as
thereafter actually calculated) shall be released. Thereafter, 1/48th of the
Revenue Shares shall be released from the Repurchase Option on the last day of
each calendar month thereafter, provided in each case the Purchaser is an
employee of the Company on the date of each said release. Fractional shares
shall be rounded to the nearest whole share.
(y) With respect to 540,000 of the Shares (the "Immediately
Vesting Shares"), if a Termination occurs at any time after April 8, 1996 and
prior to April 7, 1997 (the "Initial Period"), the Repurchase Option shall
apply to 100% of the Immediately Vesting Shares. On the last day of the Initial
Period, 12/48ths of the Immediately Vesting Shares (135,000 shares) shall be
released from the Repurchase Option and 1/48th of the Immediately Vesting
Shares (11,250 shares) shall be released from the Repurchase Option on each
monthly anniversary thereafter, provided in each case the Purchaser is an
employee of the Company on the date of each said release. Fractional shares
shall be rounded to the nearest whole share.
(b) Right of First Refusal. Before any Shares may be sold or
transferred (including transfer by operation of law), such Shares shall first
be offered to the Company (the "Right of First Refusal").
2
3
(i) In the event the Purchaser wishes to sell the Shares,
Purchaser shall deliver a notice ("Notice") to the Company stating (A) his bona
fide intention to sell or transfer such Shares, (B) the number of such Shares
to be sold or transferred, (C) the price for which he proposes to sell or
transfer such Shares, and (D) the name of the proposed purchaser or transferee.
(ii) Within thirty (30) days after receipt of the Notice, the
Company or its assignee may elect to purchase all or none of the Shares to
which the Notice refers, at the price per Share specified in the Notice. The
purchase of the Shares in either such event shall occur at a closing held at
the Company's principal office at a mutually agreed upon time which in no event
shall be more than thirty (30) days following the end of the time period in
which the Company had to elect to purchase such Shares.
(iii) If all of the Shares to which the Notice refers are not
elected to be purchased, as provided in Section 3(b) hereof, Purchaser may sell
the Shares to any person named in the Notice at the price specified in the
Notice or at a higher price, provided that such sale or transfer is consummated
within one hundred twenty (120) days of the date of said Notice to the Company,
and provided, further, that any such sale is in accordance with all the terms
and conditions hereof.
(c) Termination of Restrictions. Notwithstanding the provisions of
Section 3(b) above, the Company's Right of First Refusal shall terminate
immediately as to all Shares upon the occurrence of the first to occur of the
following events:
(i) the acquisition of the Company by another entity by means of
the merger or consolidation of the Company with or into another corporation in
which the stockholders of the Company own less than 50% of the voting
securities of the surviving entity,
(ii) the sale of all or substantially all of the assets of the
Company, or
(iii) the date upon which a public market exists for the Company's
capital stock (or any other stock issued to purchasers in exchange for the
Shares purchased under this Agreement). For the purpose of this Agreement, a
"Public Market" shall be deemed to exist if (i) such stock is listed on a
national securities exchange (as that term is used in the Securities Exchange
Act of 1934) or (ii) such stock is traded on the over-the-counter market and
prices are published daily on business days in a recognized financial journal.
(d) Assignment. Whenever the Company shall have the right to purchase
Shares under this Section 3, the Company may designate and assign one or more
employees, officers, directors or shareholders of the Company or other persons
or organizations to exercise all of the Company's purchase rights under this
Agreement and purchase all of such Shares; provided that if the fair market
value of the Shares to be purchased on the date of such designation or
assignment (the "Repurchase FMV") exceeds the purchase price of the Shares
(determined as described hereinabove) to be purchased, then each such designee
or assignee shall pay the Company cash equal to the difference between the
Repurchase FMV and the purchase price of the Shares which such designee or
assignee shall have the right to purchase.
3
4
(e) Exempt Transfers. The provisions of this Section 3 shall not
apply to a transfer of any Shares by Purchaser, either during his lifetime or
on death by will or intestacy to his ancestors, descendants or spouse, or any
custodian or trustee for the account of Purchaser or Purchaser's ancestors,
descendants or spouse; provided, in each such case that the transferee shall
receive and hold such Shares subject to all of the provisions of this Section 3
and there shall be no further transfer of such Shares except in accordance
herewith.
4. Standoff Agreement. Purchaser agrees, in connection with the Company's
initial public offering of its equity securities, not to sell, make any short
sale of, loan, grant any option for the purchase of or otherwise dispose of any
Shares (other than those included in the registration, if any) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the Company or such
underwriters, provided, that the officers and directors of the Company who own
stock of the Company also agree to such restrictions.
5. No Transfer Except in Compliance with the Restrictions Herein. The
Company shall not be required (i) to transfer on its books any Shares which
shall have been sold or transferred in violation of any of the provisions set
forth in this Agreement, or (ii) to treat as owner of such Shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
such Shares shall have been so transferred. Purchaser shall not sell, transfer,
pledge, hypothecate or otherwise dispose of any shares which remain subject to
the restrictions on transfer set forth in Section 3 hereof.
6. LEGENDS. All certificates representing any of the Shares subject to
the provisions of this Agreement shall have endorsed thereon 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 to be placed thereon by the applicable blue
sky laws of any state.
4
5
7. Escrow.
(a) The Shares issued under this Agreement shall be held by an
escrow holder designated by the Company (the "Escrow Holder"), along with a
stock assignment executed by the Purchaser in blank, until the expiration of
the Company's options and right of first refusal with respect to such Shares as
set forth above.
(b) 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.
(c) If the Company or any assignee exercises its Repurchase Option
or Right of First Refusal hereunder, the Escrow Holder, upon receipt of written
notice of such exercise from the proposed transferee, shall take all steps
necessary to accomplish such transfer.
(d) When the Repurchase Option or Right of First Refusal have been
exercised or expire unexercised or a portion of the Shares has been released
from the provisions of Section 3 hereof, 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.
(e) 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 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 provisions of Section 3, 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 or Right of
First Refusal.
8. Investment Representations. In connection with the purchase of the
Shares, the Purchaser shall, concurrently with the purchase of the Shares,
deliver to the Company his Investment Representation Statement attached hereto
as Exhibit A.
9. 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.
10. 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
5
6
contemplated by this Agreement (including any tax consequences that may result
under recently enacted tax legislation). 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 Internal Revenue
Code, as amended (the "Code"), taxes as ordinary income both (i) the difference
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 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 certain of its rights
under Section 3.
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.
11. Termination of Employment. PURCHASER UNDERSTANDS AND ACKNOWLEDGES
THAT PURCHASER'S EMPLOYMENT RELATIONSHIP WITH THE COMPANY IS AT THE WILL OF
EITHER PARTY AND THAT NOTHING IN THIS AGREEMENT, SHALL CONFER ANY RIGHT UPON
PURCHASER WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. THIS AGREEMENT DOES NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT FOR ANY PERIOD.
12. General Provisions.
(a) Governing Law. This Agreement shall be governed by the laws of
the State of California. 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) Notices. 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.
6
7
(c) Assignment. 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.
(d) Waiver. 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.
(e) Additional Actions. 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.
(f) Arbitration. At the option of either party, any and all disputes or
controversies, whether of law or in equity, and of any nature whatsoever
arising from or respecting this Agreement, unless otherwise expressly provided
herein, shall be decided by arbitration by the American Arbitration Association
in accordance with the rules and regulations of that Association.
(i) The arbitrators shall be selected as follows: In the event the
Company and Purchaser agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. In the event the Company and Purchaser do not so
agree, the Company and Purchaser shall each select one independent, qualified
arbitrator and these two arbitrators shall select a third arbitrator. The
Company reserves the right to reject any individual arbitrator who shall be
employed by or affiliated with a competing organization.
(ii) Arbitration shall take place at Palo Alto, California, or any
other location mutually agreeable to the parties. At the request of either
party, arbitration proceedings will be conducted in secrecy. In such case all
documents, testimony, and records shall be received, heard, and maintained by
the arbitrators in secrecy under seal, available for inspection only by the
Company and the Purchaser and their respective attorneys and their respective
experts who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known. The arbitrators, who shall act
by majority vote, shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary or a permanent injunction, or both, and shall also be able
to award damages (with or without an accounting), costs, and reasonable
attorneys' fees. The decree or judgment of an award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
(iii) Reasonable notice of the time and place of arbitration shall be
given to all personS, other than the parties, as shall be required by law, in
which case such persons or their
7
8
authorized representatives shall have the right to attend and participate in all
the arbitration hearings to the extent and in such manner as the law shall
require.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
GADZOOX MICROSYSTEMS, INC. PURCHASER:
a California corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------- -------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby assigns all of his right, title and interest in
and to the shares hereinabove purchased to K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇,
Trustees UTA dated July 16, 1992 (the "Trustees") and the Trustees hereby agree
to be bound by and comply in all respects with the terms of the foregoing
agreement and acknowledge that the shares shall be subject in all respects to
the Repurchase Option, the Right of First Refusal and other restrictions set
forth in the foregoing agreement. The Company hereby consents to such
assignment on the foregoing terms.
Dated: April 15, 1996
/s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ GADZOOX MICROSYSTEMS, INC.
---------------------------
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
8
9
CONSENT OF SPOUSE
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, spouse of K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, have read and approve
the foregoing Agreement. In consideration of granting of the right to my spouse
to purchase shares of Gadzoox Microsystems, Inc., 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: April 15, 1996
Signature: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
9
10
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees,
hereby sell, assign and transfer unto _______________________ (________) shares
of the Common Stock of Gadzoox Microsystems, Inc. standing in my name of the
books of said corporation represented by Certificate No. ______ herewith and do
hereby irrevocably constitute and appoint Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
attorney, 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 Gadzoox Microsystems, Inc. and the undersigned
dated April 15, 1996.
Dated: ________, 199__
Signature: /s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
---------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
10
11
EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
COMPANY : GADZOOX MICROSYSTEMS, INC.
SECURITY : COMMON STOCK
AMOUNT: : 600,000 shares
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am sufficiently aware of the Company's business affairs and
financial condition to reach an informed and knowledgeable decision to acquire
the Securities. I am purchasing these Securities for my own account for
investment purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof for purposes of the Securities Act
of 1933, as amended (the "Securities Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that,
in the view of the Securities and Exchange Commission (the "SEC"), the
statutory basis for such exemption may be unavailable if my representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future.
(c) I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available (such as Rule 144 or the
resale provisions of Rule 701 under the Securities Act). Moreover, I understand
that the Company is under no obligation to register the Securities. In addition,
I understand 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.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired,
1
12
directly or indirectly, from the issuer thereof (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions, including, among other things: (1) The availability of certain
public information about the Company, (2) the resale occurring not less than
two years after the party has purchased, and made full payment for, within the
meaning of Rule 144, the securities to be sold; and, in the case of an
affiliate, or of a non-affiliate who has held the securities less than three
years, (3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker, as said term is
defined under the Securities Exchange Act of 1934 (the "Exchange Act") and the
amount of securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable. The Purchaser further
understands that the resale provisions of Rule 701 will not apply until 90 days
after the Company becomes subject to the reporting obligations under the
Exchange Act (typically upon the effective date of a company's initial public
offerings). There can be no assurances that the requirements of Rule 144 or
Rule 701 will be met, or that the Securities will ever be saleable.
(e) I further understand that at the time I wish to sell the
Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that,
in such event, I would be precluded from selling the Securities under Rule 144
even if the two-year minimum holding period had been satisfied.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, or that the resale provisions of
Rule 701 are not available, registration under the Securities Act, compliance
with Regulation A, compliance with some other registration exemption or the
notification to the Company of the proposed disposition by me and the
furnishing to the Company of (i) detailed information regarding the
disposition, and (ii) and opinion of my counsel to the effect that such
disposition will not require registration (I understand such counsel's opinion
shall concur with the opinion by counsel for the Company and I shall have been
informed of such compliance) will be required and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise 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 their
respective brokers who participate in such transactions do so at their own risk.
Signature of Purchaser:
/s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Date: April 15, 1996
-2-
13
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 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: K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SPOUSE: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ADDRESS : ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IDENTIFICATION NO. OF TAXPAYER: ###-##-#### SPOUSE: ###-##-####
FILE JOINTLY UNDER THIS TAX ID. NO.
TAXABLE YEAR: 1996
2. The property with respect to which the election is made is described as
follows:
600,000 shares (the "Shares") of the Common Stock of Gadzoox Microsystems,
Inc., (the "Company").
3. The date on which the property was transferred is: April 15, 1996.
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.
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: $.15 per share
6. The amount (if any) paid for such property is: $90,000
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: April 15, 1996 /s/ K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------- --------------------------------
K. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Taxpayer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Spouse