Exhibit 10.3
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Switchboard Incorporated
Restricted Stock Agreement
Granted Under 1999 Stock Incentive Plan
AGREEMENT made this 4th day of January, 2002, between Switchboard
Incorporated, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx
(the "Participant").
For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Purchase of Shares.
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The Company shall issue and sell to the Participant, and the Participant
shall purchase from the Company, subject to the terms and conditions set forth
in this Agreement and in the Company's 1999 Stock Incentive Plan, as amended
(the "Plan"), 450,000 shares (the "Shares") of common stock, $.01 par value per
share, of the Company ("Common Stock"), at a purchase price of $3.22 per share.
The aggregate purchase price for the Shares shall be paid by the Participant by
check payable to the order of the Company or such other method as may be
acceptable to the Company. Upon receipt by the Company of payment for the
Shares, the Company shall issue to the Participant one or more certificates in
the name of the Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be subject to the
purchase options 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 Participant ceases to be an Eligible Participant
prior to January 4, 2006, the Company shall have the right and option (the
"Purchase Option") to purchase from the Participant, for the lesser of $3.22 per
share or the fair market value of the Unvested Shares on the date of purchase
(the "Option Price"), some or all of the Unvested Shares (as defined below).
"Eligible Participant" means an employee, officer or director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Internal Revenue Code of 1986, as
amended.
"Unvested Shares" means the total number of Shares multiplied by the
Applicable Percentage at the time the Purchase Option becomes exercisable by the
Company. Initially, the "Applicable Percentage" shall be 66.6667%. At the end of
each full twelve-month period succeeding January 4, 2002, the Applicable
Percentage shall be reduced by 16.6667%. Effective January 4, 2006, the
Applicable Percentage shall be 0%.
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(b) In the event of a Change in Control (as defined below) of the Company
(i) during the period ending one year after such Change in Control, the number
of Unvested Shares at any time shall be fifty percent (50%) of the number of
Unvested Shares otherwise determined pursuant to Section 2(a) of this Agreement,
(ii) beginning on the date one year after such Change in Control the number of
Unvested Shares shall be zero, and (iii) if the Participant's employment with
the Company is terminated within 12 months of such Change in Control, or if the
Participant's position, title or responsibilities are materially reduced from
those in effect immediately prior to such Change in Control, the number of
Unvested Shares shall be zero.
For the purposes of this Agreement, a "Change of Control" shall mean an
event or occurrence set forth in any one or more of clauses (i) through (iii)
below:
(i) any person or entity (other than the Company, ePresence,
Inc., any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any corporation
owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their
ownership of stock of the Company) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Securities and Exchange of 1934, as amended), directly or
indirectly, of securities of the Company representing more
than 50% of the combined voting power of the Company's then
outstanding voting securities;
(ii) a merger or consolidation of the Company following which
the voting securities of the Company outstanding immediately
prior thereto do not continue to represent more than 50% of
the combined voting power of the voting securities of the
Company or the entity outstanding immediately after such
merger or consolidation; or
(iii) a sale of all or substantially all of the assets of the Company.
(c) For purposes of this Agreement, employment (or any other status
relating to eligibility as an Eligible Participant) with the Company shall
include employment with a parent or subsidiary of the Company as defined in
Section 424(e) or (f) of the Internal Revenue Code of 1986, as amended.
3. Exercise of Purchase Option and Closing.
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(a) The Company may exercise the Purchase Option, in whole or in part, by
delivering or mailing to the Participant (or his estate), within 90 days after
the Participant ceases to be an Eligible Participant, one or more written
notices of exercise of the Purchase Option. Such notice(s) shall specify the
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number of Shares to be purchased. If and to the extent the Purchase Option is
not so exercised by the giving of such notice(s) within such 90-day period, the
Purchase Option shall automatically expire and terminate effective upon the
expiration of such 90-day period.
(b) Within 10 days after delivery to the Participant by the Company of a
notice of the exercise of the Purchase Option pursuant to Section 3(a) of this
Agreement, the Participant (or his estate) shall, pursuant to the provisions of
the Joint Escrow Instructions referred to in Section 5 of this Agreement, tender
to the Company at its principal offices the certificate or certificates
representing the Shares which the Company has elected to purchase in accordance
with the terms of this Agreement, duly endorsed in blank or with duly endorsed
stock powers attached thereto, all in form suitable for the transfer of such
Shares to the Company. Promptly following its receipt of such certificate or
certificates, the Company shall pay to the Participant the aggregate Option
Price for such Shares (provided that any delay in making such payment shall not
invalidate the Company's exercise of the Purchase Option with respect to such
Shares).
(c) After the time at which any Shares are required to be delivered to the
Company for transfer to the Company pursuant to Section 3(b) of this Agreement,
the Company shall not pay any dividend to the Participant on account of such
Shares or permit the Participant 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 Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Participant to the Company (including, without limitation, that certain secured
promissory note dated January 4, 2002 in the principal amount of $1,449,000 by
the Participant to the Company (the "Note")) or in cash (by check) or both.
(e) The Company 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).
(f) The Company may assign its Purchase Option to one or more persons or
entities.
4. Restrictions on Transfer.
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The Participant shall not sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise (collectively "transfer")
any Shares, or any interest therein, that are subject to the Purchase Option,
except that the Participant may transfer such Shares (i) to or for the benefit
of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any
other relatives approved by the Board of Directors (collectively, "Approved
Relatives") or to a trust established solely for the benefit of the Participant
and/or Approved Relatives, provided that such Shares shall remain subject to
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this Agreement (including without limitation the restrictions on transfer set
forth in this Section 4 and the Purchase Option and such permitted transferee
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shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Agreement), or (ii) as part of the sale of all or
substantially all of the shares of capital stock of the Company (including
pursuant to a merger or consolidation), provided that, in accordance with the
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Plan, the securities or other property received by the Participant in connection
with such transaction shall remain subject to this Agreement.
5. Escrow.
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The Participant shall, pursuant to and in accordance with the provisions of
Section 6.3 of the Collateral Assignment and Pledge Agreement dated January 4,
2002 between the Participant and the Company (the "Pledge Agreement"), execute
Joint Escrow Instructions in the form attached to this Agreement as Exhibit A.
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The Joint Escrow Instructions shall be delivered to the Secretary of the
Company, as escrow agent thereunder. The Participant shall deliver to such
escrow agent a stock assignment duly endorsed in blank, in the form attached to
this Agreement as Exhibit B, and hereby instructs the Company to deliver to such
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escrow agent, on behalf of the Participant, the certificate(s) evidencing the
Shares issued hereunder. Such materials shall be held by such escrow agent
pursuant to the terms of such Joint Escrow Instructions.
6. Restrictive Legends.
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All certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:
"The shares of stock represented by this certificate are
subject to restrictions on transfer and an option to purchase
set forth in a certain Restricted Stock Agreement between the
corporation and the registered owner of these shares (or his
predecessor in interest), and such Agreement is available for
inspection without charge at the office of the Secretary of
the corporation."
7. Provisions of the Plan.
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(a) This Agreement is subject to the provisions of the Plan, a copy of
which is furnished to the Participant with this Agreement. Capitalized terms
used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Plan.
(b) As provided in the Plan, and without limiting in any way the provisions
of Section 2(b) of this Agreement, upon the occurrence of an Acquisition Event
(as defined in the Plan), the repurchase and other rights of the Company
hereunder shall inure to the benefit of the Company's successor and shall apply
to the cash, securities or other property which the Shares were converted into
or exchanged for pursuant to such Acquisition Event in the same manner and to
the same extent as they applied to the Shares under this Agreement. If, in
connection with an Acquisition Event, a portion of the cash, securities and/or
other property received upon the conversion or exchange of the Shares is to be
placed into escrow to secure indemnification or similar obligations, the mix
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between the vested and unvested portion of such cash, securities and/or other
property that is placed into escrow shall be the same as the mix between the
vested and unvested portion of such cash, securities and/or other property that
is not subject to escrow.
8. Withholding Taxes; Section 83(b) Election.
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(a) The Participant acknowledges and agrees that the Company has the right
to deduct from payments of any kind otherwise due to the Participant 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 Participant or the lapse of the
Purchase Option.
(b) The Participant has reviewed with the Participant's own tax advisors
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by this Agreement, including, without limitation,
the Note. The Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The
Participant understands that the Participant (and not the Company) shall be
responsible for the Participant's own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement,
including, without limitation, the Note. The Participant understands that it may
be beneficial in many circumstances to elect to be taxed at the time the Shares
are purchased rather than when and as the Company's Purchase Option expires by
filing an election under Section 83(b) of the Code with the Internal Revenue
Service within thirty (30) days from the date of purchase.
THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, EVEN IF THE PARTICIPANT
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE
PARTICIPANT'S BEHALF.
9. Miscellaneous.
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(a) No Rights to Employment. The Participant acknowledges and agrees that
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the vesting of the Shares pursuant to Section 2 of this Agreement is earned only
by continuing service as an Eligible Participant at the will of the Company (not
through the act of being hired or purchasing shares hereunder). The Participant
further acknowledges and agrees that the transactions contemplated hereunder and
the vesting schedule set forth herein do not constitute an express or implied
promise of continued engagement as an employee, consultant or other Eligible
Participant for the vesting period, for any period, or at all.
(b) 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.
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(c) Waiver. Any provision for the benefit of the Company contained in this
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Agreement may be waived, either generally or in any particular instance, by the
Board of Directors of the Company.
(d) Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Company and the Participant 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.
(e) Notice. All notices required or permitted hereunder shall be in writing
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and deemed effectively given upon personal delivery or five days after deposit
in the United States Post Office, by registered or certified mail, postage
prepaid, addressed to the other party hereto at the address shown beneath his or
its 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 9(e).
(f) 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.
(g) Entire Agreement. This Agreement, the Plan, the Note and the Pledge
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Agreement constitute the entire agreement between the parties, and supersede all
prior agreements and understandings, relating to the subject matter of this
Agreement, the Note and the Pledge Agreement.
(h) Amendment. This Agreement may be amended or modified only by a written
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instrument executed by both the Company and the Participant.
(i) Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to any applicable conflicts of laws.
(j) Participant's Acknowledgments. The Participant acknowledges that he or
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she: (i) has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement, the Note and the Pledge Agreement
by legal counsel of the Participant's own choice or has voluntarily declined to
seek such counsel; (iii) understands the terms and consequences of this
Agreement, the Note and the Pledge Agreement; (iv) is fully aware of the legal
and binding effect of this Agreement, the Note and the Pledge Agreement; and (v)
understands that the law firm of Xxxx and Xxxx LLP is acting as counsel to the
Company in connection with the transactions contemplated by the Agreement, the
Note and the Pledge Agreement and is not acting as counsel for the Participant.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SWITCHBOARD INCORPORATED
By: /s/Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Chairman of the Board
Address: 000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
/s/Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Address: 00 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
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Exhibit A
Switchboard Incorporated
Joint Escrow Instructions
Date:January 4, 2002
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Xxxxxx X. Xxxxxxx
Secretary
Switchboard Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Sir:
As Escrow Agent for Switchboard Incorporated, a Delaware corporation, and
its successors in interest under the Restricted Stock Agreement (the
"Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached (the "Company"), and the undersigned person ("Holder"),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of the Agreement in accordance with the following
instructions:
1. Appointment. Holder irrevocably authorizes the Company to deposit with
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you any certificates evidencing Shares (as defined in the Agreement) to be held
by you hereunder and any additions and substitutions to said Shares. For
purposes of these Joint Escrow Instructions, "Shares" shall be deemed to include
any additional or substitute property. Holder does hereby irrevocably constitute
and appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this paragraph 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.
2. Closing of Purchase.
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(a) Upon any purchase by the Company of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice specifying
the purchase price for the Shares, as determined pursuant to the Agreement, and
the time for a closing hereunder (the "Closing") at the principal office of the
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Company. Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.
(b) At the Closing, you are directed (i) to date the stock assignment form
or forms necessary for the transfer of the Shares, (ii) to fill in on such form
or forms the number of Shares being transferred, and (iii) to deliver same,
together with the certificate or certificates evidencing the Shares to be
transferred, to the Company against the simultaneous delivery to you of the
purchase price for the Shares being purchased pursuant to the Agreement.
3. Withdrawal. The Holder shall have the right to withdraw from this escrow
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any Shares as to which the Purchase Option (as defined in the Agreement) has
terminated or expired.
4. Duties of Escrow Agent.
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(a) Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
(b) 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 of Holder while acting in good faith and in
the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
(c) You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or Company, excepting
only orders or process of courts of law, and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In case you obey
or comply with any such order, judgment or decree of any court, you shall not be
liable to any of the parties hereto or to any other person, firm or Company 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.
(d) You shall not be liable in any respect on account of the identity,
authority 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.
(e) 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 and may rely upon the advice of such counsel.
(f) Your rights and responsibilities as Escrow Agent hereunder shall
terminate if (i) you cease to be Secretary of the Company or (ii) you resign by
written notice to each party. In the event of a termination under clause (i),
your successor as Secretary shall become Escrow Agent hereunder; in the event of
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a termination under clause (ii), the Company shall appoint a successor Escrow
Agent hereunder.
(g) 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.
(h) 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
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment 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.
(i) These Joint Escrow Instructions set forth your sole duties with respect
to any and all matters pertinent hereto and no implied duties or obligations
shall be read into these Joint Escrow Instructions against you.
(j) The Company shall indemnify you and hold you harmless against any and
all damages, losses, liabilities, costs, and expenses, including attorneys' fees
and disbursements, for anything done or omitted to be done by you as Escrow
Agent in connection with this Agreement or the performance of your duties
hereunder, except such as shall result from your gross negligence or willful
misconduct.
5. Notice. Any notice required or permitted hereunder shall be given in
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writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified 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: Switchboard Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
HOLDER: Notices to Holder shall be sent to the address
set forth below Holder's signature below.
ESCROW AGENT: Switchboard Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Secretary
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6. Miscellaneous.
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(a) By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions, and you do not become a
party to the Agreement.
(b) 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,
Date: January 4, 2002 SWITCHBOARD INCORPORATED
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By:/s/Xxxxxx X. Xxxxxxx
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Name:Xxxxxx X. Xxxxxxx
Title: Secretary
Date: January 4, 2002 HOLDER:
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/s/Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Address:
00 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Date: January 4, 2002
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ESCROW AGENT:
/s/ Xxxxxx X. Xxxxxxx
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Secretary
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Exhibit B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I hereby sell, assign and transfer unto Switchboard
Incoprorated Four Hundred Fifty Thouand (450,000) shares of Common Stock, $.01
par value per share, of Switchboard Incorporated (the "Corporation") standing in
my name on the books of said Corporation represented by Certificate(s) Number
SWBD213 herewith, and do hereby irrevocably constitute and appoint Xxxxxx X.
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Orlando, the Secretary of the Corporation, attorney to transfer the said stock
on the books of the within named Corporation with full power of substitution in
the premises.
Dated:
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/s/Xxxxxxx X. Xxxxxxxx
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Print Name: Xxxxxxx X. Xxxxxxxx
IN PRESENCE OF
/s/Xxxxxx X. Xxxxxxx
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Print Name:Xxxxxx X. Xxxxxxx
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NOTICE: The signature(s) to this assignment must correspond with the name
as written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever.
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