1
EXHIBIT 10.40
WINK COMMUNICATIONS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of May 17, 1999 between Wink Communications,
Inc., a California corporation (the "Company"), and Xxxxxx X. Xxxxxxx
("Purchaser").
WHEREAS Purchaser is an employee of or consultant to the Company whose
continued affiliation with the Company is considered to be important for the
Company's continued growth; and
WHEREAS in order to provide Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for Purchaser to continue to
participate in the affairs of the Company, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of Common Stock according to
the terms and conditions hereof;
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
of this Agreement, the Company hereby agrees to sell to Purchaser and Purchaser
agrees to purchase from the Company 250,000 shares of the Company's Common Stock
(the "Stock") at a price of $8.00 per share, for an aggregate purchase price of
$2,000,000.00. The purchase price for the Stock shall be paid by a full recourse
promissory note in substantially the form attached hereto as Exhibit A (the
"Note"). Purchaser shall be required to execute and deliver a Security Agreement
in the form attached hereto as Exhibit B. The Note shall be secured by a pledge
of the Stock purchased by the Note pursuant to the Security Agreement. Upon such
payment, the Company shall issue a duly executed certificate evidencing the
Stock in the name of Purchaser to be held pursuant to the escrow described in
Section 7 hereof.
2. REPURCHASE OPTION AND RELEASE OF SHARES.
(a) REPURCHASE OPTION.
(i) In the event of any voluntary or involuntary
termination of Purchaser's employment by or consulting services to the Company
(including as a result of death or disability) before all shares of the Stock
are released from the Company's repurchase option under Section 2(b) below, 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
twenty-four (24) months from such date to repurchase all or any portion of the
Stock which has not been released from the repurchase option described in this
Section 2 (the "Repurchase Option") at the time of such termination at the
original purchase price per share. The Repurchase Option shall be exercised by
the Company by written notice to Purchaser or his/her executor (with a copy to
the Escrow Agent described in Section 7 hereof) and, at the Company's option,
(A) by delivery to Purchaser or his/her executor with such notice of a check in
the amount of the aggregate repurchase price for the Stock being repurchased,
(B) by cancellation by the Company of an amount of Purchaser's indebtedness to
the Company equal to the aggregate repurchase price for the Stock being
repurchased, or (C) by a combination of (A) and (B) so that the combined
2
payment and cancellation of indebtedness equals such aggregate repurchase price.
Upon delivery of such notice and the payment of the aggregate repurchase 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 interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of shares of the Stock being repurchased by
the Company.
(ii) Whenever the Company shall have the right to
repurchase shares of the Stock hereunder, 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 or a part of the Company's
repurchase rights under this Agreement and to purchase all or a part of such
Stock; provided that if the aggregate fair market value of the Stock to be
repurchased on the date of such designation or assignment ("Repurchase FMV")
exceeds the aggregate repurchase price of the Stock to be repurchased, then each
such designee or assignee shall pay the Company cash equal to the difference
between the Repurchase FMV and the aggregate repurchase price of the Stock which
such designee or assignee shall have the right to repurchase.
(b) RELEASE OF SHARES FROM REPURCHASE OPTION.
(i) One-fourth (1/4th) of the Stock shall be
released from the Company's Repurchase Option on May 17, 2000 and 1/48th of the
Stock shall be released from the Company's Repurchase Option on each monthly
anniversary of May 17, 2000 until all shares of the Stock have been released;
provided in each case that there has not been any voluntary or involuntary
termination prior to each such date of release.
(ii) This Agreement shall not confer upon Purchaser
any right with respect to employment by the Company, nor shall it interfere with
or affect in any manner the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment or consulting
relationship with the Company, which right is hereby reserved.
(c) SPECIAL TERMINATION OF REPURCHASE OPTION. In the event
0of any of the following transactions (a "Corporate Transaction"):
(i) A merger or acquisition in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(ii) The sale, transfer or other disposition of all
or substantially all of the assets of the Company; or
(iii) Any reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those who held
the stock immediately prior to such merger,
-2-
3
then the Repurchase Option shall automatically lapse as to 50% of the number of
shares then still subject to the Repurchase Option, and Purchaser shall acquire
a vested interest in such Shares, effective upon the consummation of such
Corporate Transaction; provided, however, that Purchaser's employment or
consulting services shall not have terminated prior to the consummation of such
Corporate Transaction.
3. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
(a) There is any stock dividend or liquidating dividend of
cash and/or property, stock split or other change in the character or amount of
any of the outstanding securities of the Company; or
(b) Subject to Section 2(c) hereof, there is any
consolidation, merger or sale of all, or substantially all, of the assets of the
Company; then, in such event, any and all new, substituted or additional
securities or other property to which Purchaser is entitled by reason of
Purchaser's ownership of the Stock shall be immediately subject to this
Agreement and be included in the word "Stock" for all purposes with the same
force and effect as the shares of Stock currently subject to the Repurchase
Option and other terms of this Agreement. While the aggregate repurchase price
payable upon execution of the Repurchase Option shall remain the same after each
such event, the repurchase price per share of Stock shall be appropriately
adjusted.
4. RESTRICTION ON TRANSFER. Purchaser shall not sell, transfer,
pledge, hypothecate or otherwise dispose of any shares of the Stock which remain
subject to the Repurchase Option. The Company shall not be required (i) to
transfer on its books any shares of Stock which shall have purportedly 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 purported transferee to whom such
shares shall have been purportedly transferred.
5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The share certificate evidencing the Stock
issued hereunder shall be endorsed with the following legends (in addition to
any legends required under applicable state securities laws):
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.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN
-3-
4
THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY.
(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order
to ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
6. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection with
the purchase of the Stock, Purchaser hereby represents and warrants to the
Company as follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS.
Purchaser is purchasing the Stock solely for Purchaser's own account for
investment and not with a view to or for sale in connection with any
distribution of the Stock or any portion thereof and not with any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Stock or any portion thereof. Purchaser also represents that the entire
legal and beneficial interest of the Stock is being purchased, and will be held,
for Purchaser's account only, and neither in whole or in part for any other
person. Purchaser either (i) has a pre-existing business or personal
relationship with the Company or at least one of its officers, directors or
controlling persons, or (ii) by reason of Purchaser's business or financial
experience (or the business or financial experience of Purchaser's professional
advisors who are unaffiliated with and who are not compensated by the Company or
any affiliate or selling agent of the Company, directly or indirectly), can be
reasonably assumed to have the capacity to evaluate the merits and risks of an
investment in the Company and to protect Purchaser's own interests in connection
with this transaction.
(b) RESIDENCE. Purchaser's principal residence is within the
State of California and is located at the address indicated beneath Purchaser's
signature below.
(c) INFORMATION CONCERNING COMPANY. Purchaser has discussed
the Company and its plans, operations and financial condition with the Company's
officers and has received all such information as Purchaser has deemed necessary
and appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock. Purchaser has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
(d) ECONOMIC RISK. Purchaser realizes that the purchase of
the Stock will be a highly speculative investment and involves a high degree of
risk. Purchaser is able, without impairing Purchaser's financial condition, to
hold the Stock for an indefinite period of time and to suffer a complete loss on
Purchaser's investment.
(e) RESTRICTED SECURITIES. Purchaser understands and
acknowledges that:
(i) The Stock has not been registered under the
Securities Act of 1933, as amended, in reliance upon a specific exemption
therefrom, which exemption depends upon, among
-4-
5
other things, the bona fide nature of Purchaser's investment intent as expressed
herein. In this connection, Purchaser understands that, in the view of the
Securities and Exchange Commission ("SEC"), the statutory basis for such
exemption may be unavailable if Purchaser's representation was predicated solely
upon a present intention to hold the Stock 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 Stock, or for a period of one year or any
other fixed period in the future.
(ii) The Stock must be held indefinitely unless it is
subsequently registered under the Securities Act or unless an exemption from
such registration is otherwise available. Purchaser further acknowledges and
understands that the Company is under no obligation to register the Stock. In
addition, Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless it
is registered or such registration is not required in the opinion of counsel
satisfactory to the Company.
(f) DISPOSITION UNDER RULE 144. Purchaser understands that:
(i) The shares of Stock are restricted securities
within the meaning of Rule 144 promulgated under the Securities Act; that the
exemption from registration under Rule 144 will not be available in any event
for at least one (1)) year from the date of purchase and payment of the Stock,
and even then will not be available unless (i) a public trading market then
exists for the Common Stock of the Company, (ii) adequate information concerning
the Company is then available to the public, and (iii) other terms and
conditions of Rule 144 are complied with; and that any sale of the Stock may be
made only in limited amounts in accordance with such terms and conditions of
Rule 144;
(ii) That at the time Purchaser wishes to sell the
Stock there may be no public market upon which to make such a sale; 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,
Purchaser would be precluded from selling the Stock under Rule 144 even if the
one (1) year minimum holding period had been satisfied; and
(iii) In the event all of the requirements of Rule 144
are not satisfied, registration under the Securities Act or compliance with
Regulation A or another registration exemption will be required; 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 or 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.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting Purchaser's representations set forth above, Purchaser further agrees
that Purchaser shall in no event make any disposition of all or any portion of
the Stock unless and until:
-5-
6
(i) Either:
(A) There is then in effect a Registration
Statement under the Securities Act covering such proposed disposition, and such
disposition is made in accordance with said Registration Statement; or
(B) (1) Purchaser shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition;
(2) Purchaser shall have furnished the Company with an opinion of Purchaser's
counsel to the effect that such disposition will not require registration of
such shares under the Securities Act; and (3) such opinion of Purchaser's
counsel shall have been concurred in by counsel for the Company, and the Company
shall have advised Purchaser of such concurrence; and,
(ii) The shares of Stock proposed to be transferred
are no longer subject to the Repurchase Option set forth in Section 2 hereof,
and Purchaser shall have complied with the Standoff Agreement set forth in
Section 9 hereof.
(h) VALUATION OF COMMON STOCK.
(i) Purchaser understands that the Stock has been
valued by the Company's Board of Directors and that the Company believes this
valuation represents a fair attempt at reaching an accurate appraisal of its
worth. Purchaser understands, however, that the Company can give no assurances
that such price is in fact the fair market value of the Stock, and that it is
possible that, with the benefit of hindsight, the Internal Revenue Service would
successfully assert that the value of the Stock on the date of purchase is
substantially greater than so determined.
(ii) If the Internal Revenue Service were to succeed
in a tax determination that the Stock had a value greater than that upon which
this transaction is based, the additional value would constitute ordinary income
to Purchaser as of the date of its receipt. The additional taxes (and interest)
due would be payable by Purchaser. There is no provision for the Company to
reimburse Purchaser for that tax liability, and Purchaser assumes all
responsibility therefor. Furthermore, in the event such additional value
represents more than twenty-five percent (25%) of Purchaser's gross income for
the year in which the value of the shares would be taxable, the Internal Revenue
Service would have six (6) years from the due date for filing the return for
such year (or the actual filing date of the return if filed thereafter) within
which to assess Purchaser the additional tax and interest which would then be
due.
(iii) The Company would have the benefit, in any such
transaction, if a determination was made prior to the three (3) year statute of
limitations period affecting the Company, of an increase in its deduction for
compensation paid, which would offset its operating profits, or, if the Company
were not profitable at such time, would create net operating loss carry-forwards
arising from operations in that year.
-6-
7
(i) SECTION 83(b) ELECTION.
(i) Purchaser understands that Purchaser (and not
the Company) is responsible for Purchaser's own federal, state, local or foreign
tax liability and any other tax consequences that may arise as a result of the
transactions contemplated by this Agreement. Purchaser agrees to rely solely on
the determinations of Purchaser's tax advisors or Purchaser's own
determinations, and not on any statements or representations by the Company or
any of its attorneys or agents, with regard to all tax matters.
(ii) Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (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. (In the event the Company has registered any
of its shares under the Securities Exchange Act of 1934, "restriction" with
respect to officers, directors and ten percent (10%) shareholders also means the
period after the purchase of the Stock during which such officer, director and
ten percent (10%) shareholders could be subject to suit under Section 16(b) of
the Securities Exchange Act.)
(iii) Purchaser understands that Purchaser may elect
to be taxed at the time the Stock is purchased rather than when and as the
Repurchase Option (or Section 16(b) restrictions) lapse by filing an election
under Section 83(b) of the Code with the Internal Revenue Service within thirty
(30) days after the date of purchase of the Stock. The form for making this
election is attached hereto as Exhibit C. PURCHASER ACKNOWLEDGES THAT IT IS
PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE
ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PURCHASER REQUESTS THAT THE
COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON PURCHASER'S BEHALF.
7. ESCROW. As security for the faithful performance of the terms of
this Agreement and to ensure the availability for delivery of the Stock upon
exercise of the Repurchase Option, Purchaser agrees to deliver to and deposit
with the Secretary of the Company, or such other person designated by the
Company, as escrow agent in this transaction ("Escrow Agent"), two Stock
Assignments duly endorsed (with date and number of shares blank) in the form
attached hereto as Exhibit D, together with the certificate or certificates
evidencing the Stock. Such documents are to be held by the Escrow Agent and
delivered by the Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Purchaser set forth in Exhibit E attached hereto and incorporated by
this reference, which instructions shall also be delivered to the Escrow Agent
upon execution hereof.
8. ARBITRATION.
(a) ELECTION OF ARBITRATION. At the option of either party,
any and all disputes or controversies whether of law or fact and of any nature
whatsoever arising from or respecting this
-7-
8
Agreement shall be decided by arbitration by the American Arbitration
Association in accordance with the rules and regulations of that Association.
(b) SELECTION OF ARBITRATORS. 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 the two arbitrators so
selected shall select the third arbitrator. The Company reserves the right to
object to any individual arbitrator who shall be employed by or affiliated with
a competing organization.
(c) CONDUCT OF ARBITRATION. Arbitration shall take place in
San Francisco, California or any other location mutually agreeable to the
parties. 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, and such
persons or their authorized representatives shall have the right to attend
and/or participate in all the arbitration hearings in such manner as the law
shall require.
(d) SECRECY OF PROCEEDINGS. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or 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.
(e) RELIEF. The arbitrators, who shall act by majority vote,
shall be able to decree any and all relief of an equitable nature (including
without limitation such relief as temporary restraining orders or temporary
and/or permanent injunctions), and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
9. STANDOFF AGREEMENT. Purchaser agrees, in connection with an
initial public offering of the Company's equity securities, upon request of the
Company or the underwriters managing such offering, (i) not to sell, make any
short sale of, loan, grant any option for the purchase of or otherwise dispose
of any shares of Stock (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, and (ii) to execute any agreement regarding (i)
above as may be requested by the Company or underwriters at the time of the
public offering; provided, that the officers and directors of the Company who
own stock of the Company also agree to such restrictions.
10. RIGHT OF FIRST REFUSAL.
(a) RIGHT. Purchaser hereby grants the Company a right of
first refusal (the "First Refusal Right") in connection with any proposed sale
or other transfer of Stock which is no longer subject
-8-
9
to the Repurchase Option. For purposes of this Section 10, the term "transfer"
shall include any assignment, pledge, encumbrance or other disposition for the
value of Stock intended to be made by Purchaser. Nothing in this Section 10
shall be construed to confer upon Purchaser the right to transfer any shares
that remain subject to the Repurchase Option.
(b) NOTICE OF DISPOSITION. In the event Purchaser desires to
accept a bona fide third-party offer for any or all Stock which is no longer
subject to the Repurchase Option (the shares subject to such offer to be
hereinafter called, for the purpose of this Section 10, the "Target Shares"),
Purchaser shall promptly (i) deliver to the Secretary of the Company written
notice (the "Disposition Notice") of the offer, which notice shall describe the
basic terms and conditions thereof, including the proposed purchase price, and
(ii) provide satisfactory proof that the disposition of the Target Shares to the
third-party offeror would not be in contravention of the provisions of this
Agreement, including without limitation, Section 6 hereof.
(c) EXERCISE OF RIGHT. The Company (or its assignees) shall,
for a period of thirty (30) days following receipt of the Disposition Notice,
have the right to repurchase all, but not less than all, of the Target Shares
upon substantially the same terms and conditions specified therein. Such right
shall be exercisable by written notice (the "Exercise Notice") delivered to
Purchaser prior to the expiration of the thirty day exercise period. If such
right is exercised with respect to the Target Shares, then the Company (or its
assignees) shall effect the repurchase of the Target Shares, including payment
of the purchase price, not more than five (5) business days after the delivery
of the Exercise Notice; and at such time Purchaser shall deliver to the Company
the certificates representing the Target Shares to be repurchased, each
certificate properly endorsed for transfer. To the extent any of the Target
Shares are at the time remain in escrow under Section 7 even though they are not
longer subject to the Repurchase Option, the certificates for such shares shall
automatically be released from escrow and surrendered to the Company for
cancellation. The Target Shares so purchased shall thereupon be cancelled and
cease to be issued and outstanding shares of the Company's Common Stock.
(d) NON-CASH CONSIDERATION. Should the purchase price
specified in the Disposition Notice be payable in property other than cash or
evidences of indebtedness, the Company (or its assignees) shall have the right
to pay the purchase price in the form of cash equal in amount to the value of
such property. If Purchaser and the Company (or its assignees) cannot agree on
such cash value within ten (10) days after the Company's receipt of the
Disposition Notice, the valuation shall be made by an appraiser of recognized
standing selected by Purchaser and the Company (or its assignees). If Purchaser
and the Company cannot agree on an appraiser within twenty (20) days after the
Company's receipt of the Disposition Notice, each shall select an appraiser of
recognized standing, and the two appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such value. The
cost of such appraisal shall be shared equally by Purchaser and the Company. The
closing of the purchase of the Targeted Shares by the Company shall then be held
on the later of (i) the fifth business day following delivery of the Exercise
Notice, or (ii) the 15th day after such cash valuation shall have been made.
-9-
10
(e) DISPOSITION OF TARGET SHARES. In the event an Exercise
Notice is not given to Purchaser within thirty (30) days following the date of
the Company's receipt of the Disposition Notice, Purchaser shall have a period
of thirty (30) days thereafter, in which to sell or otherwise dispose of the
Target Shares upon terms and conditions (including the purchase price) no more
favorable to a third-party purchaser than those specified in the Disposition
Notice; provided, however, that any such sale or disposition must not be
effected in contravention of the provisions of this Agreement, including without
limitation, Section 6 hereof. In the event Purchaser does not sell or otherwise
dispose of all Target Shares within the specified thirty (30) day period, the
First Refusal Right shall continue to be applicable to any subsequent
disposition of the Target Shares by Purchaser until such right lapses in
accordance with Section 10(g).
(f) STOCK SPLITS, ETC. In the event of any stock dividend,
stock split, recapitalization or other transaction affecting the Company's
outstanding Common Stock as a class effected without receipt of consideration,
then any new, substituted or additional securities or other property which is by
reason of such transaction distributed with respect to the Stock shall be
immediately subject to the First Refusal Right.
(g) LAPSE OF RIGHT. The First Refusal Right shall lapse and
cease to have effect upon the occurrence of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act, covering the offer and sale of the Company's Common Stock in the
aggregate amount of at least $10,000,000.
11. GOVERNING LAW. This Agreement shall be governed and construed by
the laws of the State of California as applied to agreements made and performed
in California by residents of the State of California.
12. MISCELLANEOUS.
(a) RIGHTS AS SHAREHOLDER. Subject to the provisions and
limitations hereof, Purchaser may, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Company with respect to the
Stock deposited in escrow pursuant to Section 7 hereof.
(b) FURTHER ASSURANCES. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
(c) NOTICES. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery (including by express courier) or upon deposit in the United States
Post Office, by First Class mail with postage and fees prepaid, addressed to
Purchaser at his/her address shown on the Company's employment records and to
the Company at the address of its principal corporate offices (attention:
President) or at such other address as such party may designate by ten (10)
days' advance written notice to the other party.
-10-
11
(d) ASSIGNMENT. The Company may assign its rights and
delegate its duties under this Agreement, including Section 2 hereof. 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, his/her heirs, executors, administrators, successors and
assigns. The rights of Purchaser under this Agreement may be assigned only with
the prior written consent of the Company.
(e) AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes
and directs the Secretary or transfer agent of the Company to transfer the Stock
as to which the Repurchase Option has been exercised from Purchaser to the
Company or the Company's assignees.
(f) NO EFFECT ON EMPLOYMENT/CONSULTING RELATIONSHIP.
PURCHASER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREUNDER DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS EMPLOYEE OR CONSULTANT OF THE COMPANY FOR ANY PERIOD OR
AT ALL. NOTHING IN THIS AGREEMENT SHALL AFFECT IN ANY MANNER WHATSOEVER OR
INTERFERE WITH THE RIGHT OR POWER OF THE COMPANY, OR A PARENT OR SUBSIDIARY OF
THE COMPANY, TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP WITH
THE COMPANY AT ANY TIME, FOR ANY OR NO REASON, WITH OR WITHOUT CAUSE.
(g) 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.
(h) ADVICE OF COUNSEL. Purchaser has reviewed this Agreement
in its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions hereof.
(h) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
together shall constitute one instrument.
(i) ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the purchase of Common Stock by
Purchaser, may be modified or amended only in writing signed by both parties,
and satisfies all of the Company's obligations to Purchaser with regard to the
issuance or sale of securities.
-11-
12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WINK COMMUNICATIONS, INC., XXXXXX X. XXXXXXX
a California corporation
By: /s/ Xxxxxx Xxxxxxxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------------- ----------------------------------------
(Signature)
Title: President & CEO
-------------------------------
-12-
13
CONSENT OF SPOUSE
I, __________________________, spouse of Xxxxxx X. Xxxxxxx, have read
and approve the foregoing Agreement. In consideration of the granting to my
spouse of the right to purchase shares of Wink Communications, 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 the
Agreement or in 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
Agreement.
Dated: ____________________
----------------------------------------
(Signature of Spouse)
-13-
14
EXHIBIT A
PROMISSORY NOTE
$2,000,000.00 Alameda, California
May 17, 1999
FOR VALUE RECEIVED, Xxxxxx X. Xxxxxxx promises to pay to Wink
Communications, Inc., a California corporation (the "Company"), or order, the
principal sum of Two Million Dollars ($2,000,000.00), together with interest on
the unpaid principal hereof from the date hereof at the rate of 6.4% per annum,
compounded annually.
Principal and interest shall be due and payable on May 17, 2009. Should
the undersigned fail to make full payment of principal or interest for a period
of 10 days or more after the due date thereof, the whole unpaid balance on this
Note of principal and interest shall become immediately due at the option of the
holder of this Note. Payments of principal and interest shall be made in lawful
money of the United States of America.
The undersigned may at any time prepay without penalty all or any
portion of the principal or interest owing hereunder.
This Note is subject to the terms of the Restricted Stock Purchase
Agreement, dated as of May 17, 1999. This Note is secured by a pledge of the
Company's Common Stock under the terms of a Security Agreement of even date
herewith and is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned. This Note shall be governed and construed in accordance with the
laws of the State of California.
----------------------------------------
Xxxxxx X. Xxxxxxx
-14-
15
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of May 17, 1999 between Wink
Communications, Inc., a California corporation ("Pledgee"), and Xxxxxx X.
Xxxxxxx ("Pledgor").
Recitals
Pursuant to Pledgor's purchase of Stock under the Restricted Stock
Purchase Agreement dated May 17, 1999, between Pledgor and Pledgee, and
Pledgor's election to pay for such Stock with her promissory note (the "Note"),
Pledgor has purchased 250,000 shares of Pledgee's Common Stock (the "Shares") at
a price of $8.00 per share, for a total purchase price of $2,000,000.00. The
Note and the obligations thereunder are as set forth in Exhibit B to the
Restricted Stock Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration
of the transfer of the Shares to Pledgor under the Restricted Stock Purchase
Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number C-402, duly endorsed in blank or with
executed stock powers, and herewith delivers said certificate to the Secretary
of Pledgee ("Pledgeholder"), who shall hold said certificate subject to the
terms and conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and the Pledgeholder shall not
encumber or dispose of such Shares except in accordance with the provisions of
this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to Pledgee,
its successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal
sum of the Note secured hereby, together with interest thereon, at the time and
in the manner provided in the Note.
b. Encumbrances. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.
c. Margin Regulations. In the event that Pledgee's Common
Stock is now or later becomes margin-listed by the Federal Reserve Board and
Pledgee is classified as a "lender" within the meaning of the regulations under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"),
Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to comply with such
regulations.
16
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee, all new, substituted and
additional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee under the terms of this Security
Agreement in the same manner as the Shares originally pledged hereunder. In the
event of substitution of such securities, Pledgor, Pledgee and Pledgeholder
shall cooperate and execute such documents as are reasonable so as to provide
for the substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the pledged Shares, such rights and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth
in the Restricted Stock Purchase Agreement or contained in this Security
Agreement for a period of 10 days after written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.
-2-
17
9. Term. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
stock shall be promptly delivered to Pledgor, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree
that the enforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
-3-
18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By:
-------------------------------------
Xxxxxx X. Xxxxxxx
Address:
----------------------------------------
----------------------------------------
"PLEDGEE" WINK COMMUNICATIONS, INC.
a California corporation
By:
-------------------------------------
Title:
----------------------------------
"PLEDGEHOLDER"
----------------------------------------
Secretary of
Wink Communications, Inc.
-4-
19
EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
The undersigned taxpayer hereby elects, pursuant to the above-referenced
Internal Revenue Code Section, to include in his/her gross income for the
current taxable year, the amount of any compensation taxable to him/her in
connection with his/her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME :TAXPAYER: Xxxxxx X. Xxxxxxx SPOUSE:__________
ADDRESS :TAXPAYER: SPOUSE:__________
IDENTIFICATION # :TAXPAYER:___________________ SPOUSE:__________
TAXABLE YEAR :TAXPAYER:___________________ SPOUSE:__________
2. The property with respect to which the election is made is described as
follows:
250,000 shares of Common Stock of Wink Communications, Inc., a
California corporation (the "Company").
3. The date on which the property was transferred is: May 17, 1999.
4. The property is subject to the following restrictions:
Restriction on sale or transfer of the stock in accordance with Common
Stock Purchase Agreement with the Company dated May 17, 1999.
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: $2,000,000.00.
6. The amount (if any) paid for such property: $2,000,000.00.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: __________________, 19___
----------------------------------------
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: __________________, 19___
----------------------------------------
Spouse of Taxpayer
20
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement dated as of May 17, 1999 (the "Agreement"), Xxxxxx X. Xxxxxxx
("Purchaser") hereby sells, assigns and transfers
unto________________________________________________ (______________) shares of
the Common Stock of Wink Communications, Inc., a California corporation,
standing in the undersigned's name on the books of said corporation represented
by certificate no. _______ herewith, and does hereby irrevocably constitute and
appoint ___________________ attorney to transfer the said stock on the books of
the said corporation with full power of substitution in the premises. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS
THERETO.
Dated ________________ XXXXXX X. XXXXXXX
----------------------------------------
Signature
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the corporation to exercise its
"Repurchase Option" set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
21
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
May 17, 1999
Secretary
Wink Communications, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Dear Sir:
As Escrow Agent for both Wink Communications, Inc., California
corporation ("Company"), and the undersigned purchaser of stock of the Company
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, to which a copy
of these Joint Escrow Instructions is attached as Exhibit C, in accordance with
the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") exercises the
Repurchase Option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing such purchase at
the principal office of the Company. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of such notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, in accordance with the Agreement, against the simultaneous delivery to
you of the purchase price (by check, wire transfer or promissory note) for the
number of shares of stock being purchased pursuant to the exercise of the
Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser hereby irrevocably constitutes and appoints you as Purchasers
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with the Department of Corporations of
the State of California of an Application for Consent to Transfer Securities
Subject to Legend or Escrow Condition pursuant to Section 25151 of the
California Corporation Securities Law of 1968. Subject to the provisions of this
paragraph 3, Purchaser shall exercise all rights and privileges of a shareholder
of the Company while the stock is held by you.
22
4. Upon written request of Purchaser, but no more than once per
calendar year, unless the Repurchase Option has been exercised, you will deliver
to Purchaser a certificate or certificates representing so many shares of stock
as are not then subject to the Repurchase Option. Within two months after the
Company's Repurchase Option expires, you will deliver to Purchaser a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Company or its assignees
pursuant to exercise of the Repurchase Option.
5. If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged of
all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely, and shall be protected in
relying or refraining from acting, on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and of any
arbitrator provided for in the Agreement, and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court and of any such
arbitrator. In case you obey or comply with any such order, judgment or decree,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under
the Statute of Limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
-2-
23
12. Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be an officer of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of any
arbitrator provided for in the Agreement or of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but you
shall be under no duty whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery (including
by express courier) or upon deposit in the United States Post Office, by First
Class mail with postage and fees prepaid, addressed to each of the other parties
thereunto entitled at the following addresses, or at such other addresses as a
party may designate by ten days' advance written notice to each of the other
parties hereto.
COMPANY: Wink Communications, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: President
PURCHASER: Xxxxxx X. Xxxxxxx
ESCROW AGENT: Secretary
Wink Communications, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions. You do not become
a party to the Agreement.
-3-
24
17. This instrument shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns.
Very truly yours,
WINK COMMUNICATIONS, INC.
a California corporation
By:
-------------------------------------
Its:
-------------------------------------
XXXXXX X. XXXXXXX
----------------------------------------
(Signature)
ESCROW AGENT:
-----------------------------------
-4-
