EXHIBIT 10.39
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT is entered into and effective as of this 17th day of
August, 1998 (the "Date of Grant"), by and between LifeRate Systems, Inc. (the
"Company") and Xxxxxxx X. Xxxxxxx (the "Grantee").
A. The Company and the Grantee have entered into an agreement, dated the
date hereof, providing for the discharge of certain obligations of the Company
to the Grantee pursuant to Section 5(c) of the Employment Agreement, dated April
26, 1996, between the Company and the Grantee.
B. Such agreement provides that the Company and the Grantee shall enter
into this Agreement.
Accordingly, the parties agree as follows:
1. Grant of Restricted Shares.
The Company hereby grants to the Grantee Two Hundred Thousand (200,000)
restricted shares (the "Restricted Shares") of the Company's common stock, no
par value (the "Common Stock"), according to the terms and subject to the
restrictions and conditions hereinafter set forth. Reference to the Restricted
Shares in this Agreement will be deemed to include the Dividend Proceeds (as
defined in Section 3.3 of this Agreement).
2. Grant Restriction.
2.1 Restriction and Forfeiture. The Grantee's right to retain the
Restricted Shares will be subject to the Company achieving any of the milestone
events set forth in Sections 2.2 and 2.3 (the "Milestones") within five (5)
years of the date of this Agreement. If the Company does not achieve any of the
Milestones within such five-year period all of the Restricted Shares shall be
automatically forfeited and returned to the Company.
2.2 Listing on Exchange or Nasdaq. If the Common Stock of the Company
becomes listed, admitted to unlisted trading privileges or reported on any
national securities exchange, the Nasdaq National Market or the Nasdaq Small Cap
Market within five (5) years of the date of this Agreement, all Restricted
Shares will become immediately fully vested and non-forfeitable.
2.3 Change in Control. If a Change in Control (as defined below) of the
Company occurs within five (5) years of the date of this Agreement, all
Restricted Shares will become immediately fully vested and non-forfeitable. For
purposes of this Agreement, a "Change in Control" is any of the following:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to any person;
(b) a merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to effective date of such
merger or consolidation have "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act) immediately following the effective date of
such merger or consolidation of securities of the surviving company
representing (i) more than 50%, but not more than 80%, of the combined
voting power of the surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of directors, unless such
merger or consolidation has been approved in advance by the Incumbent
Directors, or (ii) 50% or less of the combined voting power of the
surviving corporation's then outstanding securities ordinarily having the
right to vote at elections of directors (regardless of any approval by the
Incumbent Directors);
(c) any person becomes after the effective date of this Agreement
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of (i) 20% or more, but not 50% or more, of the
combined voting power of the Company's outstanding securities ordinarily
having the right to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by the Incumbent
Directors, or (ii) 50% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors (regardless of any approval by the Incumbent
Directors);
(d) the Incumbent Directors cease for any reason to constitute at
least a majority of the Board of Directors of the Company (the "Board");
or
(e) a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is then subject to such reporting
requirements.
2.4 Incumbent Directors. For purposes of this Section 2, the Incumbent
Directors will mean any individuals who are members of the Board on the
effective date of this Agreement, any individual who is elected to the Board
pursuant to the Securities Purchase Agreement, dated as of November 14, 1997,
among the Company and the investors named therein, and any individual who
subsequently becomes a member of the Board whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Directors then in office (either by specific vote or
by approval of the Company's proxy statement in which such individual is named
as a nominee for director without objection to such nomination).
2.5 Special Situations Fund. Notwithstanding any other provision of this
Agreement, if Special Situations Private Equity Fund, L.P., Special Situations
Fund III, L.P. or Special Situations Cayman Fund, L.P. (collectively, "Special
Situations Fund") is or becomes, individually or collectively,
in one or more transactions, the "beneficial owner", of any of the Company's
securities, such ownership, regardless of the percentage of the Company's
combined voting power owned or controlled, shall not constitute a "Change in
Control", whether or not the issuance of such securities by the Company to
Special Situations Fund would be required to be reported pursuant to Section 13
or 15(d) of the Exchange Act.
3. Issuance of Restricted Shares.
3.1 Privileges of a Shareholder; Transferability. As soon as practicable
after the execution and delivery of this Agreement, the Grantee will be recorded
on the books of the Company as the owner of the Restricted Shares, and the
Company will issue one or more duly issued and executed stock certificates
evidencing the Restricted Shares. The Grantee will have all voting, dividend,
liquidation and other rights with respect to the Restricted Shares in accordance
with their terms upon becoming the holder of record of such Restricted Shares;
provided, however, that prior to achievement of either of the Milestones, the
Restricted Shares will not be assignable or transferable by the Grantee, either
voluntarily or involuntarily, and may not be subjected to any lien, directly or
indirectly, by operation of law or otherwise. Any attempt to transfer, assign or
encumber the Restricted Shares other than in accordance with this Agreement will
be null and void.
3.2 Enforcement of Restrictions. To enforce the Restrictions imposed by
this Agreement, the Comp may place a legend on the stock certificates referring
to the restrictions and/or the Milestones and may require the Grantee, until
either of the Milestones has been achieved, to keep the stock certificates
evidencing the Restricted Shares, together with duly endorsed stock powers, in
the custody of the Company or its transfer agent or to maintain evidence of
stock ownership of the Restricted Shares, together with duly endorsed stock
powers, in a certificateless book-entry stock account with the Company's
transfer agent.
3.3 Dividends and Other Distributions. Any dividends or distributions
(other than regular quarterly cash dividends) paid with respect to Restricted
Shares prior to achievement of either of the Milestones ("Dividend Proceeds")
will be subject to the same restrictions as the Restricted Shares to which such
or distributions relate.
4. Withholding Taxes.
The Company may require the Grantee promptly to pay all legally required
amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to the receipt of the
Restricted Shares, the receipt of dividends or distributions on Restricted
Shares, or the lapse or termination of the restrictions applicable to Restricted
Shares. In the event that the Company is unable to withhold such amounts, for
whatever reason, the Grantee agrees to pay to the Company an amount equal to the
amount the Company would otherwise be required to withhold under federal, state
or local law.
5. Adjustments.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering or divestiture (including a spin-off) or
any other change in the corporate structure or shares of the Company, the Board
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation), in order to prevent
dilution or enlargement of the rights of the Grantee, will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities or other property (including cash) subject to this Agreement.
6. Miscellaneous.
6.1 Binding Effect. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.
6.2 Governing Law. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with governed by the laws of the
State of Minnesota, without regard to conflicts of laws provisions. Any legal
proceeding related to this Agreement will be brought in an appropriate Minnesota
court, and the parties to this Agreement consent to the exclusive jurisdiction
of the court for this purpose.
6.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties to this Agreement with respect to the grant and
vesting of the Restricted Shares and supersede all prior agreements,
arrangements, plans and understandings relating to the grant and vesting of the
Restricted Shares.
6.4 Amendment and Waiver. This Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties to this
Agreement or, in the case of a waiver, by the party waiving compliance.
The parties hereto have executed this Agreement effective the day and year
first above written.
LIFERATE SYSTEMS, INC.
By /s/ Xxxxx X. Xxxxxxx
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Its President
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GRANTEE
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
