EXHIBIT 10.10
STOCK RESTRICTION AGREEMENT
AGREEMENT made as of the 1/st/ day of March, 1999 (the "Effective Date"),
by and between XxxXxxxx.xxx, Inc., a Delaware corporation (the "Corporation"),
and Xxxxxx Xxxxxxx (the "Stockholder").
For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Purchase of Shares. The Stockholder hereby subscribes for and, upon
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acceptance hereof, shall purchase, subject to the terms and conditions set forth
in this Agreement, 89,408 shares (the "Shares") of the Series C Convertible
Preferred Stock, no par value per share, of the Corporation ("Series C Stock"),
at a purchase price of $2.796194 per share. The aggregate purchase price for the
Shares shall be paid by the Stockholder by check payable to the order of the
Corporation or such other method as may be acceptable to the Corporation. Upon
receipt of payment by the Corporation for the Shares, the Corporation shall
issue to the Stockholder one or more certificates in the name of the Stockholder
for that number of Shares purchased by the Stockholder. The Stockholder agrees
that the Shares shall be subject to the Purchase Option set forth in Section 2
of this Agreement and the restrictions on transfer set forth in Section 4 of
this Agreement.
2. Purchase Option.
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(a) In the event that the Stockholder ceases to be employed by the
Corporation, for any reason or for no reason, with or without cause, prior to
the second anniversary of the Effective Date, the Corporation shall have the
right and option (the "Purchase Option") to purchase from the Stockholder, for a
sum of $2.796194 per share (the "Option Price") up to that number of the Shares
which is unvested at the time the Stockholder ceases to be employed by the
Corporation. Forty-four thousand seven hundred four (44,704) of the Shares shall
vest as of the first anniversary of the Effective Date. The remaining Forty-four
thousand seven hundred four Shares shall then vest on a monthly basis at the
rate of Three thousand seven hundred twenty-five (3,725) shares per month for
each full month of employment by the Corporation, with all Shares being fully
vested after twenty-four (24) full months of employment by the Corporation
(beginning as of the Effective Date).
(b) For purposes of this Agreement, employment by the Corporation
shall include employment by a parent or subsidiary of the Corporation.
(c) Notwithstanding the provisions of Section 2(a) hereof, any
unvested portion of the Shares that will vest within twelve (12) months after an
Acceleration Event described below shall immediately vest as of a date prior to
such
Acceleration Event, which date shall be determined by the Board of Directors of
the Corporation. An "Acceleration Event" shall be deemed to have occurred upon
the merger, consolidation corporate reorganization or other transaction in which
all or substantially all of the assets of the Corporation are sold, leased,
transferred or otherwise disposed of (other than a mere reincorporation
transaction or one in which the holders of the capital stock of the Corporation
immediately prior to such merger or consolidation to continue to hold at least a
majority of the voting power of the surviving corporation).
3. Exercise of Purchase Option and Closing.
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(a) The Corporation may exercise the Purchase Option by delivering or
mailing to the Stockholder (or the Stockholder's estate), in accordance with
Section 14, written notice of exercise within sixty (60) days after the
termination of the Stockholder's active participation in the business of the
Corporation. Such notice shall specify the number of Shares to be purchased. If
and to the extent the Purchase Option is not so exercised within such 60-day
period, the Purchase Option shall automatically expire and terminate effective
upon the expiration of such 60-day period.
(b) Within ten (10) days after the Stockholder's receipt of the
Corporation's notice of the exercise of the Purchase Option pursuant to Section
3(a) above, the Stockholder (or the Stockholder's estate) shall tender to the
Corporation at its principal offices the certificate or certificates
representing the Shares which the Corporation has elected to purchase, duly
endorsed in blank by the Stockholder or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to the
Corporation. Upon its receipt of such Shares, the Corporation shall deliver or
mail to the Stockholder (or the Stockholder's estate) a check in the amount of
the aggregate Option Price therefor.
(c) After the time at which any Shares are required to be delivered
to the Corporation for transfer to the Corporation pursuant to Section 3(b)
above, the Corporation shall not pay any dividend to the Stockholder on account
of such Shares or permit the Stockholder to exercise any of the privileges or
rights of a stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Corporation as the owner of such Shares.
(d) The Option Price may be payable, at the option of the
Corporation, in cancellation of all or a portion of any outstanding indebtedness
of the Stockholder to the Corporation or in cash (by check) or both.
(e) The Corporation shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).
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4. Restrictions on Transfer.
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(a) Except as otherwise provided in Section 4(b) or 4(c) below, the
Stockholder shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively "transfer"), any of
the Shares, or any interest therein.
(b) If, at any time or from time to time, the Stockholder proposes to
transfer any Shares not then subject to the Purchase Option (the "Offered
Shares"), the Stockholder shall first give written notice of the proposed
transfer (the "Transfer Notice") to the Corporation. The Transfer Notice shall
name the proposed transferee and state the number of Offered Shares to be
transferred, the price per Offered Share and all other material terms and
conditions of the proposed transfer. The Corporation shall have the option to
purchase all, but not less than all, of the Offered Shares at the purchase price
and upon the other terms and conditions specified in the Transfer Notice. The
Corporation may accept the offer by notifying the Stockholder in writing, within
twenty (20) days after the date of its receipt of the Transfer Notice, of its
acceptance. The closing of the purchase of Offered Shares pursuant to this
Section 4(b) shall occur at the principal offices of the Corporation fifteen
(15) days after receipt by the Stockholder of the Corporation's notice of
acceptance. At the closing, the Stockholder shall tender to the Corporation the
certificate or certificates representing the Offered Shares, duly endorsed in
blank or with duly endorsed stock powers attached thereto, all in form suitable
for the transfer of such Offered Shares, free and clear of all liens,
encumbrances and restrictions (other than those imposed by the Corporation's
Certificate of Incorporation or Bylaws or applicable laws) to the Corporation
against delivery by the Corporation to the Stockholder of a check in the amount
of the aggregate purchase price therefor, provided, that if the terms of the
payment set forth in the Transfer Notice were other than cash against delivery,
the Corporation may, at its option, pay for the Offered Shares on the same terms
and conditions set forth in the Transfer Notice. If the Corporation does not
elect to acquire all of the Offered Shares, the Stockholder may transfer to the
proposed transferee, within the 60-day period following the expiration of the
rights granted to the Corporation pursuant to this Section 4(b), all, but not
less than all, of the Offered Shares, provided, that (i) such transfer shall not
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be on terms and conditions more favorable to the transferee than those contained
in the Transfer Notice, (ii) such transfer shall comply with all applicable
state and federal securities laws, (iii) the Shares so transferred shall remain
subject to this Agreement (including without limitation the restrictions on
transfer set forth in this Section 4) and (iv) such transferee shall, as a
condition to such transfer, deliver to the Corporation a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
(c) Notwithstanding the foregoing, the Stockholder may transfer
Shares (whether or not subject to the Purchase Option) to or for the benefit of
any parent, spouse, child or grandchild, or to a trust or custodial account for
his, her or their benefit, without first offering such Shares to the Corporation
pursuant hereto, provided that (i)
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such transfer shall comply with all applicable state and federal securities
laws, (ii) such Shares shall remain subject to this Agreement (including without
limitation the Purchase Option, if then applicable, and the restrictions on
transfer set forth in this Section 4), and (iii) such permitted transferee
shall, as a condition to such transfer, deliver to the Corporation a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Agreement.
(d) Except as set forth in Section 4(c), the Stockholder may not
transfer any Shares subject to the Purchase Option.
(e) The restrictions on transfer set forth in this Section 4 shall
remain in effect from the date hereof until the date on which the Corporation
(or, in the event of a transaction to which Section 8(b) applies, an Acquiring
Corporation) first becomes subject to the reporting requirements of Section 13
of the Securities and Exchange Act of 1934, as amended (provided, however, that
if the Corporation first becomes subject to such reporting requirements in
connection with the sale of the Corporation's Common Stock in a public offering
registered under the Securities Act of 1933, as amended (the "Securities Act"),
the date determined pursuant to this Section 4(e) shall be deemed to be the date
of the closing of such sale.)
5. Effect of Prohibited Transfer. The Corporation shall not be required
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(a) to transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) to treat as owner of such Shares or to pay dividends to any transferee to
whom any such Shares shall have been so sold or transferred.
6. Restrictive Legend. All certificates representing Shares shall have
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affixed thereto a legend in substantially the following form, in addition to any
other legends that may be required under federal or state securities laws:
"The shares represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth
in a certain Stock Restriction Agreement between the
Corporation and the registered owner of this certificate (or
such owner's predecessor in interest), and such Stock
Restriction Agreement is on file in, and may be examined at,
the principal office of the Corporation."
7. Investment Representations. The Stockholder represents, warrants and
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covenants as follows:
(a) The Stockholder is purchasing the Shares for the Stockholder's
own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act, or any rule or regulation under the Securities Act.
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(b) The Stockholder has had such opportunity as the Stockholder has
deemed adequate to obtain from representatives of the Corporation such
information as is necessary to permit the Stockholder to evaluate the merits and
risks of the Stockholder's investment in the Corporation.
(c) The Stockholder has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such
purchase.
(d) The Stockholder can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
(e) The Stockholder understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(iii) in any event, the exemption from registration under Rule 144 will not be
available for at least two years and even then will not be available unless a
public market then exists for the Corporation's Common Stock, adequate
information concerning the Corporation is then available to the public, and
other terms and conditions of Rule 144 are complied with; and (iv) there is now
no registration statement on file with the Securities and Exchange Commission
with respect to any stock of the Corporation and the Corporation has no
obligation or current intention to register the Shares under the Securities Act.
(f) A legend substantially in the following form will be placed on
the certificate representing the Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such
Act or an opinion of counsel satisfactory to the Corporation
to the effect that such registration is not required."
8. Adjustments for Stock Splits, Stock Dividends, etc.
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(a) If from time to time during the term of the Purchase Option there
is any stock split-up, stock dividend, stock distribution or other
reclassification of the common stock of the Corporation, any and all new,
substituted or additional securities to which the Stockholder is entitled by
reason of the Stockholder's ownership of the Shares shall be immediately subject
to the Purchase Option, the restrictions on transfer and other
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provisions of this Agreement in the same manner and to the same extent as the
Shares, and the Option Price shall be appropriately adjusted.
(b) If the Shares are converted into or exchanged for, or
Stockholders of the Corporation receive by reason of any distribution in total
or partial liquidation, securities of another corporation (an "Acquiring
Corporation"), or other property (including cash), pursuant to any merger of the
Corporation or acquisition of its assets by an Acquiring Corporation, then the
rights of the Corporation under this Agreement shall inure to the benefit of the
Acquiring Corporation and this Agreement shall apply to the securities or other
property received from the Acquiring Corporation upon such conversion, exchange
or distribution in the same manner and to the same extent as the Shares.
9. Withholding Taxes.
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(a) The Stockholder acknowledges and agrees that the Corporation has
the right to deduct from payments of any kind otherwise due to the Stockholder
any federal, state or local taxes of any kind required by law to be withheld
with respect to the purchase of the Shares by the Stockholder.
(b) If the Stockholder elects, in accordance with Section 83(b) of
the Internal Revenue Code of 1986, as amended, to recognize ordinary income in
the year of acquisition of the Shares, the Corporation will require at the time
of such election an additional payment for withholding tax purposes based on the
difference, if any, between the purchase price for such Shares and the fair
market value of such Shares as of the day immediately preceding the date of the
purchase of such Shares by the Stockholder.
10. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
11. Waiver. Any provision contained in this Agreement may be waived,
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either generally or in any particular instance, by the Board of Directors of the
Corporation on behalf of the Corporation.
12. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Corporation and the Stockholder and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.
13. No Rights to Employment. Nothing contained in this Agreement shall be
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construed as giving the Stockholder any right to be retained, in any position,
by the Corporation, whether as an employee of or consultant to the Corporation
or in any other capacity.
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14. Notice. All notices required or permitted hereunder shall be in
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writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by certified mail, postage prepaid, addressed to
the other party hereto at the address shown beneath the Stockholder's or the
Corporation's respective signature to this Agreement, or at such other address
or addresses as either party shall designate to the other in accordance with
this Section 14.
15. Pronouns. Whenever the context may require, any pronouns used in this
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Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
16. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
17. Amendment. This Agreement may be amended or modified only by a written
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instrument executed by both the Corporation and the Stockholder.
18. Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the State of North Carolina.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X.Xxxxxxx
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Title: Chief Financial Officer
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Address: 0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
STOCKHOLDER:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Address: 00000 Xxxxxxxxx Xxxx
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Xxxx, XX 00000
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FIRST AMENDMENT
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TO
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STOCK RESTRICTION AGREEMENT
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FIRST AMENDMENT TO STOCK RESTRICTION AGREEMENT, dated as of April 15 1999
(the "First Amendment"), by and between XxxXxxxx.xxx Inc., a Delaware
corporation (the "Corporation"), and Xxxxxx Xxxxxxx, an individual residing in
Wake County, North Carolina (the "Stockholder").
WHEREAS, the Corporation and the Stockholder are parties to a Stock
Restriction Agreement, dated as of March 1,1999 (the "Stock Agreement'); and
WHEREAS, pursuant to Section 17 of the Stock Agreement, the Corporation and
the Stockholder desire to amend and modify the provisions of the Stock Agreement
in the manner and to the extent set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein,
the Corporation and the Stockholder hereby agree as follows:
1. Amendment of Section 8. The provisions of the Section 8 (Adjustments
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for Stock Splits, Stock Dividends, etc.) are hereby amended by adding the
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following Section 8(c):
(c) If at any time the Shares are converted into shares of common
stock of the Corporation pursuant to the applicable provisions of the
Certificate of Incorporation of the Corporation, then this Agreement
shall apply to the shares of common stock received by the Stockholder
upon such conversion (the "Conversion Shares") in the same manner and
to the same extent as the Shares, and for all purposes hereunder, the
term "Shares" as used herein shall be deemed to refer to such
Conversion Shares.
2. Effect of First Amendment. The provisions of the Stock Agreement are
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hereby amended and modified by the provisions of this First Amendment. If any
of the provisions of the Stock Agreement are materially different from or
inconsistent with the provisions of this First Amendment, the provisions of this
First Amendment shall control, and the provisions of the Stock Agreement shall,
to the extent of such difference or inconsistency, be deemed to be amended and
modified.
3. Single Agreement. This First Amendment and the Stock Agreement, as
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amended and modified by the provisions of this First Amendment, shall constitute
and shall be construed as a single agreement. The provisions of the Stock
Agreement, as
amended and modified by the provisions of this First Amendment, are incorporated
herein by this reference and are ratified and affirmed.
IN WITNESS WHEREOF, this First Amendment has been executed and delivered by
the Corporation and the Stockholder as of the date first written above.
XXXXXXXX.XXX, INC.
By:/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
President
STOCKHOLDER
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
