EXHIBIT 10.18
DITECH CORPORATION
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 15th day
of September, 1997, by and between DITECH CORPORATION, a California corporation
(the "Company"), and XXXXXXX XXXXXX ("Purchaser").
WHEREAS, the Company desires to issue, and Purchaser desires to acquire,
stock of the Company as herein described, on the terms and conditions
hereinafter set forth;
WHEREAS, the issuance of common stock hereby is in connection with a
compensatory benefit plan for the employees, directors, officers, advisers or
consultants of the Company and is intended to comply with the provisions of Rule
701 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act").
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. PURCHASE AND SALE OF STOCK. Purchaser hereby agrees to purchase from
the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of
one hundred thousand (100,000) shares of the Common Stock of the Company (the
"Stock") at $0.55 per share, for an aggregate purchase price of $55,000, payable
in cash.
The closing hereunder, including payment for and delivery of the Stock
shall occur at the offices of the Company immediately following the execution of
this Agreement, or at such other time and place as the parties may mutually
agree.
2. REPURCHASE OPTION.
(a) In the event Purchaser's relationship as a director of the
Corporation (or a parent or subsidiary of the Company) terminates for any reason
(including death or disability), or for no reason, with or without cause, then
the Company shall have an irrevocable option (the "Repurchase Option"), for a
period of ninety (90) days after said termination, or such longer period as may
be determined by the Company if such later repurchase is deemed necessary by the
Company for treatment of all or part of its stock as Qualified Small Business
Stock under Section 1202 of the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder, to repurchase from Purchaser or
Purchaser's personal representative, as the case may be, at the original price
per share indicated above paid by Purchaser for such Stock ("Option Price"), up
to but not exceeding the number of shares of Stock which have not vested under
the provisions of Section 2b below as of such termination date.
(b) One hundred percent (100%) of the Stock shall initially be
subject to the Repurchase Option. Two Thousand Eighty-Four (2,084) shares of
the Stock shall vest and be released from the Repurchase Option on a monthly
basis measured from the Vesting
1.
Commencement Date (as set forth on the signature page to this Agreement),
until all the Stock is released from the Repurchase Option (provided in each
case that Purchaser's relationship as a director of the Company (or a parent
or subsidiary of the Company) has not been terminated prior to the date of
such release).
3. EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be
exercised by written notice signed by an officer of the Company or by any
assignee or assignees of the Company and delivered or mailed as provided in
Section 16a. Such notice shall identify the number of shares of Stock to be
purchased and shall notify Purchaser of the time, place and date for settlement
of such purchase, which shall be scheduled by the Company within the term of the
Repurchase Option set forth in Section 2a above. The Company shall be entitled
to pay for any shares of Stock purchased pursuant to its Repurchase Option in
cash or by offset against any indebtedness owing to the Company by Purchaser, or
by a combination of both, at the Company's option. Upon delivery of such notice
and payment of the purchase price in any of the ways described above, the
Company shall become the legal and beneficial owner of the Stock 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 Stock being
repurchased by the Company, without further action by Purchaser.
4. ADJUSTMENTS TO STOCK. If, from time to time, during the term of the
Purchase Option there is any change affecting the Company's outstanding Common
Stock as a class that is effected without the receipt of consideration by the
Company (through merger, consolidation, reorganization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating,
dividend, combination of shares, change in corporation structure or other
transaction not involving the receipt of consideration by the Company), then any
and all new, substituted or additional securities or other property to which
Purchaser is entitled by reason of Purchaser's ownership of Stock shall be
immediately subject to the Repurchase Option and be included in the word "Stock"
for all purposes of the Repurchase Option with the same force and effect as the
shares of the Stock presently subject to the Repurchase Option, but only to the
extent the Stock is, at the time, covered by such Repurchase Option. While the
total Option Price shall remain the same after each such event, the Option Price
per share of Stock upon exercise of the Repurchase Option shall be appropriately
adjusted.
5. CORPORATE TRANSACTION. In the event of (a) a sale of substantially
all of the assets of the Company; (b) a merger or consolidation in which the
Company is not the surviving corporation (other than a merger or consolidation
in which shareholders immediately before the merger or consolidation have,
immediately after the merger or consolidation, greater stock voting power); (c)
a reverse merger in which the company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise (other than a reverse merger in which
stockholders immediately before the merger have, immediately after the merger,
greater stock voting power); or (d) any transaction or series of related
transactions in which in excess of 50% of the Company's voting power is
transferred, then the Repurchase Option may be assigned by the Company to any
successor of the Company, and the Repurchase Option shall apply if Purchaser
does not become a director of the Company
2.
(or a Parent or subsidiary of the Company) or the Company shall terminate
Purchaser's relationship as a director of the Company (or a Parent or
subsidiary of the Company). In such case, the references to the Company
shall be deemed to refer to such successor as its Parents and Subsidiaries.
6. TERMINATION OF REPURCHASE OPTION. Sections 2, 3, 4 and 5 of this
Agreement shall terminate upon the exercise in full or expiration of the
Repurchase Option, whichever first occurs.
7. ESCROW OF UNVESTED STOCK. As security for Purchaser's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of Purchaser's Stock upon exercise of the Repurchase Option herein
provided for, Purchaser agrees, at the closing hereunder, to deliver to and
deposit with the Secretary of the Company or the Secretary's designee ("Escrow
Agent"), as Escrow Agent in this transaction, three (3) stock assignments duly
endorsed (with date and number of shares blank) in the form attached hereto as
Exhibit A, together with a certificate or certificates evidencing all of the
Stock subject to the Repurchase Option; said documents are to be held by the
Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit B attached hereto
and incorporated by this reference, which instructions shall also be delivered
to the Escrow Agent at the closing hereunder.
8. RIGHTS OF PURCHASER. Subject to the provisions of Sections 7, 9, 12
and 14 herein, Purchaser shall exercise all rights and privileges of a
shareholder of the Company with respect to the Stock.
9. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the Stock
while the Stock is subject to the Repurchase Option. After any Stock has been
released from the Repurchase Option, Purchaser shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock except in
compliance with the provisions herein and applicable securities laws.
10. RESTRICTIVE LEGENDS. All certificates representing the Stock shall
have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the
parties hereto):
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER,
OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY
SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT
OF THE COMPANY."
3.
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) Any legend required by appropriate blue sky officials.
11. INVESTMENT REPRESENTATIONS. In connection with the purchase of the
Stock, Purchaser represents to the Company the following:
(a) 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 Stock. Purchaser is
purchasing the Stock for investment for 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 Act.
(b) Purchaser understands that the Stock has not been registered
under the Act by reason of a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of Purchaser's investment
intent as expressed herein.
(c) Purchaser further acknowledges and understands that the Stock
must be held indefinitely unless the Stock is subsequently registered under the
Act or an exemption from such registration is available. Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Stock. Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless the
Stock is registered or such registration is not required in the opinion of
counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and 701,
under the Act, as in effect from time to time, which, in substance, permit
limited public resale of "restricted securities" acquired, 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. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of issuance of
the securities, such issuance will be exempt from registration under the Act.
In the event the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the securities
exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter,
subject to the satisfaction of certain of the conditions specified by Rule 144
and the market stand-off provision described in Section 12 below.
In the event that the sale of the Stock does not qualify under Rule 701 at
the time of purchase, then the Stock may be resold by Purchaser in certain
limited circumstances subject to the provisions of Rule 144, which requires,
among other things: (i) the availability of certain public information about the
Company and (ii) the resale occurring following the required
4.
holding period under Rule 144 after the Purchaser has purchased, and made
full payment of (within the meaning of Rule 144), the securities to be sold.
(e) Purchaser further understands that at the time Purchaser wishes
to sell the Stock 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 current information requirements of Rule 144 or
701, and that, in such event, Purchaser would be precluded from selling the
Stock under Rule 144 or 701 even if the minimum holding period requirement had
been satisfied.
(f) Purchaser further warrants and represents that Purchaser has
either (i) preexisting personal or business relationships, with the Company or
any of its officers, directors or controlling persons, or (ii) the capacity to
protect his own interests in connection with the purchase of the Stock by virtue
of the business or financial expertise of himself or of professional advisors to
Purchaser who are unaffiliated with and who are not compensated by the Company
or any of its affiliates, directly or indirectly.
12. MARKET STAND-OFF AGREEMENT. Purchaser shall not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock of the Company held by Purchaser, including the Stock (the
"Restricted Securities"), for a period of time specified by the underwriter(s)
(not to exceed one hundred eighty (180) days) following the effective date of a
registration statement of the Company filed under the Act. Purchaser agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) which are consistent with the foregoing or
which are necessary to give further effect thereto. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to Purchaser's Restricted Securities until the end of such period.
13. SECTION 83(B) ELECTION. Purchaser understands that Section 83(a) of
the Code, taxes as ordinary income the difference between the amount paid for
the Stock and the fair market value of the Stock as of the date any restrictions
on the Stock lapse. In this context, "restriction" includes the right of the
Company to buy back the Stock pursuant to the Repurchase Option set forth in
Section 2a above. Purchaser understands that Purchaser may elect to be taxed at
the time the Stock is purchased, rather than when and as the Repurchase Option
expires, by filing an election under Section 83(b) (an "83(b) Election") of the
Code with the Internal Revenue Service within thirty (30) days from the date of
purchase. Even if the fair market value of the Stock at the time of the
execution of this Agreement equals the amount paid for the Stock, the 83(b)
Election must be made to avoid income under Section 83(a) in the future.
Purchaser understands that failure to file such an 83(b) Election in a timely
manner may result in adverse tax consequences for Purchaser. Purchaser further
understands that an additional copy of such 83(b) Election is required to be
filed with his or her federal income tax return for the calendar year in which
the date of this Agreement falls. Purchaser acknowledges that the foregoing is
only a summary of the effect of United States federal income taxation with
respect to purchase of the Stock hereunder, and does not purport to be complete.
Purchaser further acknowledges
5.
that the Company has directed Purchaser to seek independent advice regarding
the applicable provisions of the Code, the income tax laws of any
municipality, state or foreign country in which Purchaser may reside, and the
tax consequences of Purchaser's death. Purchaser assumes all responsibility
for filing an 83(b) Election and paying all taxes resulting from such
election or the lapse of the restrictions on the Stock.
14. REFUSAL TO TRANSFER. The Company shall not be required (a) to
transfer on its books any shares of Stock of the Company which shall have been
transferred in violation of any of the provisions set forth in this Agreement or
(b) 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.
15. NO EMPLOYMENT RIGHTS. This Agreement is not an employment contract
and nothing in this Agreement shall affect in any manner whatsoever the right or
power of the Company (or a parent or subsidiary of the Company) to terminate
Purchaser's service as a director of the Company (or a Parent or subsidiary of
the Company) for any reason at any time, with or without cause and with or
without notice.
16. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
sent by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at his address hereinafter shown below its signature or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party hereto.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Purchaser,
Purchaser's successors, and assigns. The Repurchase Option of the Company
hereunder shall be assignable by the Company at any time or from time to time,
in whole or in part.
(c) ATTORNEYS' FEES; SPECIFIC PERFORMANCE. Purchaser shall reimburse
the Company for all costs incurred by the Company in enforcing the performance
of, or protecting its rights under, any part of this Agreement, including
reasonable costs of investigation and attorneys' fees. It is the intention of
the parties that the Company, upon exercise of the Repurchase Option and payment
of the Option Price, pursuant to the terms of this Agreement, shall be entitled
to receive the Stock, in specie, in order to have such Stock available for
future issuance without dilution of the holdings of other shareholders.
Furthermore, it is expressly agreed between the parties that money damages are
inadequate to compensate the Company for the Stock and that the Company shall,
upon proper exercise of the Repurchase Option, be entitled to specific
enforcement of its rights to purchase and receive said Stock.
6.
(d) GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. The
parties agree that any action brought by either party to interpret or enforce
any provision of this Agreement shall be brought in, and each party agrees
to, and does hereby, submit to the jurisdiction and venue of, the appropriate
state or federal court for the district encompassing the Company's principal
place of business.
(e) FURTHER EXECUTION. The parties agree to take all such further
action(s) as may reasonably be necessary to carry out and consummate this
Agreement as soon as practicable, and to take whatever steps may be necessary to
obtain any governmental approval in connection with or otherwise qualify the
issuance of the securities that are the subject of this Agreement.
(f) INDEPENDENT COUNSEL. Purchaser acknowledges that this Agreement
has been prepared on behalf of the Company by Xxxxxx Godward LLP, counsel to the
Company and that Xxxxxx Godward LLP does not represent, and is not acting on
behalf of, Purchaser. Purchaser has been provided with an opportunity to
consult with Purchaser's own counsel with respect to this Agreement.
(g) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes and merges all prior agreements or understandings, whether
written or oral. This Agreement may not be amended, modified or revoked, in
whole or in part, except by an agreement in writing signed by each of the
parties hereto.
(h) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
DITECH CORPORATION
By: /s/ Pong Lim
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Title: President and CEO
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Address: 000 Xxxxx Xxxxx
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Xxxxxxxxx, XX 00000
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PURCHASER:
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX XXXXXX
Address:
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VESTING COMMENCEMENT DATE: JULY 9, 1997
ATTACHMENTS:
Exhibit A -- Stock Assignment Separate from Certificate
Exhibit B -- Joint Escrow Instructions
8.
