EXHIBIT 10.7
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 1st day of July, 2002 (the "Agreement")
by and between Zhone Technologies, Inc., a Delaware corporation (the "Company"),
and Xxxxxxxx Xxxxxx, as Trustee of the Xxxxxx Living Trust Dated March 15, 1995
(hereinafter referred to as ("Purchaser").
WHEREAS, in connection with a recapitalization of the Company pursuant
to that certain Exchange Agreement, dated as of July 1, 2002 by and among the
Company, the purchasers of Series AA Preferred Stock of the Company as listed on
Exhibit A to the Exchange Agreement and certain other purchasers listed therein,
the Company desires to issue and sell to the Purchaser, and the Purchaser
desires to purchase from the Company, shares of capital stock of the Company as
herein described according to the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration for the mutual promises and covenants
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Sale and Purchase of Common Stock. The Purchaser hereby agrees
to purchase from the Company and the Company agrees to sell to Purchaser
2,000,000 shares of the Company's Common Stock, $0.001 par value per share (the
"Stock"), at a purchase price of $0.10 per share (the "Purchase Price"), or an
aggregate purchase price of $200,000. The consideration for the Stock will be
Purchaser's delivery of the Promissory Note in the form attached hereto as
Exhibit A. The closing of such purchase shall occur immediately upon execution
of this Agreement.
2. Restrictions on Alienation. Purchaser agrees not to sell,
assign, transfer, hypothecate or otherwise alienate the Stock acquired
hereunder, with or without consideration, unless and until, and only to the
extent that the Stock is released from Purchaser's resale obligations as set
forth in Section 4.
3. Definitions. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "Cause" has the meaning set forth in the Employment
Agreement between Xxxxxxxx Xxxxxx ("Founder") and the Company dated October 20,
1999 (the "Employment Agreement."
(b) "Change in Control Date" shall mean the date on which a
Zhone Liquidation occurs.
(c) "Disability" has the meaning set forth in the Employment
Agreement.
(d) "Good Reason" has the meaning set forth in the
Employment Agreement.
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(e) "Involuntary Termination" means (i) termination of
Founder's Service with the Company other than for Cause, death or Disability or
(ii) Founder's resignation from Service with the Company for Good Reason.
(f) "Person" means a natural person, partnership (whether
limited or general), limited liability company, trust, estate, association,
corporation, custodian, nominee or any other individual or entity in its own or
any representative capacity.
(g) "Service" means the Founder's performance of services
for the Company in accordance with the Employment Agreement.
(h) "Unvested Interest" means, on any relevant date, the
difference between 100% of the Stock and the Vested Interest.
(i) "Vested Interest" means, on any relevant date, the
Vested Percent of the Stock.
(j) "Vested Percent" means, except as provided in the next
sentence, on any relevant date, the percentage determined by multiplying
2.083333% by each full month of Founder's continuous Service with the Company
from and after July 1, 1999 through such date until the Vested Percent equals
100%. In the event of Founder's Involuntary Termination or the occurrence of a
Change in Control Date while Founder is in Service to the Company, the Vested
Percent shall as of the date of any such event or occurrence become 100%. In the
event of Founder's death or Disability, 50% of the Stock that would otherwise be
an Unvested Interest as of the date of such death or Disability pursuant to the
operation of the first sentence of this Section 3(j), shall instead be added to
and included in the Vested Percent as of such date.
(k) "Voluntary Termination" means a termination of Service
with the Company that is not an Involuntary Termination.
(l) "Zhone Board" means the Board of Directors of the
Company.
(m) "Zhone Liquidation." Each of the following transactions
will be deemed a Zhone Liquidation, provided that the "beneficial owners" (as
such term is defined by the Securities Exchange Act of 1934, as amended) of the
stock of the Company immediately prior thereto shall immediately thereafter own
less than fifty percent (50%) of the voting power of the surviving Person or an
entity that holds 80% or more of the beneficial equity interest in such
surviving Person: (i) the merger or consolidation of the Company into or with
another Person, (ii) the issuance by the Company of voting securities to another
Person, (iii) the sale, transfer or other disposition (but not including a
transfer or disposition by pledge or mortgage to a bona fide lender) of all or
substantially all of the assets of the Company or (iv) other transaction. Any of
the foregoing events deemed to constitute a Zhone Liquidation shall be deemed to
so constitute such an event whether accomplished in or through a single
transaction or a series of related transactions.
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4. Company Repurchase Option.
(a) Repurchase Option. In the event of the termination of
the Founder's Service with the Company due to death, Disability or Voluntary
Termination, the Company shall have the option to repurchase from the Purchaser
any or all of the Purchaser's Unvested Interest subject to the terms and
conditions set forth in this Section 4 (the "Repurchase Option").
(b) Exercise of the Repurchase Option. The Company shall
exercise any or all of the Repurchase Option pursuant to Section 4(a) by written
notice to the Purchaser, the Purchaser's legal representative, or other holder
of the Stock, as the case may be, during the Repurchase Period. The "Repurchase
Period" shall be the period commencing as of the date of the Founder's
termination of Service and ending on the date forty-five (45) days after the
Founder's termination of Service. If the Company fails to give notice during the
Repurchase Period, the Repurchase Option shall terminate (unless the Zhone Board
and the Founder or the Founders heirs, administrators, successors or assigns, as
applicable, have agreed to extend the time for the exercise of the Repurchase
Option). Notwithstanding a termination of the Repurchase Option, the remaining
provisions of this Agreement shall remain in full force and effect.
(c) Price and Payment for Repurchased Interest. The
repurchase price for the Unvested Interest being repurchased by the Company
pursuant to the Repurchase Option shall be a dollar amount equal to: (i) the
difference between one-hundred percent (100%) and the Vested Percent, multiplied
by (ii) the dollar value of Purchase Price. Payment of the repurchase price by
the Company to the Purchaser shall be made in cash on or before the expiration
of thirty (30) days from the last day of the Repurchase Period. For purposes of
the foregoing, cancellation of any indebtedness of the Purchaser (or Founder if
Founder is not the Purchaser) to the Company shall be treated as payment to the
Purchaser in cash to the extent of the unpaid principal and any accrued interest
canceled.
5. Legend. Each document representing the Stock shall have endorsed
thereon such legends as counsel for the Company advises are required to protect
the Company with respect to the Repurchase Option and for purposes of federal or
state securities laws.
6. Change in Common Stock. If, at any time prior to the expiration
of the Repurchase Option set forth in Section 4, Purchaser shall receive
property or securities attributable to the Stock (including without limitation
shares of capital stock of the Company), such additional property or securities
shall become subject to the provisions of this Agreement, to the same extent as
if said property or securities originally comprised a part of the Stock;
provided however, that any such property or securities shall be vested to the
same extent as the Stock.
7. No Transfer in Violation of Agreement. The Company shall not be
required: (a) to transfer on its books any of the Stock 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 all or any part of such Stock for any
purpose any transferee to whom any of the Stock shall have been so transferred.
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8. Rights of Purchaser. Subject to the provisions of this
Agreement, Purchaser shall, during the term of this Agreement, exercise all
rights and privileges with respect to the Stock.
9. Execution of Further Instruments. 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.
10. Representations and Warranties. In connection with the
acquisition of the Stock, the Purchaser hereby agrees, represents and warrants
as follows:
(a) The Purchaser is acquiring the Stock for the Purchaser's
own account, and not on behalf of any other person or as a nominee, for
investment and not with a view to, or sale in connection with, any distribution
of the Stock.
(b) The Purchaser was not presented with or solicited by any
form of general solicitation or general advertising, including, but not limited
to, any advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media, or broadcast over television, radio or
similar communications media, or presented at any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
(c) The Purchaser has not relied on any statements or
representations of the Company or any of its agents (other than the
representations and warranties set forth herein) with respect to the federal,
state, local and foreign tax consequences of this investment and the federal,
state local and foreign tax consequences of transactions contemplated by this
Agreement. With respect to such matters, the Purchaser understands that it (and
not the Company) shall be responsible for its own tax liability that may arise
as a result of this investment or the transactions contemplated by this
Agreement.
(d) The Purchaser understands that the Stock acquired
pursuant to this Agreement has not been registered or qualified under applicable
securities laws by reason of specific exemptions therefrom, which exemptions
depend upon, among other things, the bona fide nature of the Purchaser's
representations as expressed herein. The Purchaser understands that the Company
is relying on the Purchaser's representations and warrants that the Company is
entitled to rely on such representations and that such reliance is reasonable.
(e) During the negotiation of the transactions contemplated
herein, the Purchaser and its representatives and legal counsel have been
granted the opportunity to review and inspect the Company's corporate books,
financial statements, records, contracts, documents, offices and facilities,
have been afforded an opportunity to ask such questions of the Company's agents,
accountants and representatives concerning the Company's business, operations,
financial condition, assets, liabilities and other relevant matters as they have
deemed necessary or desirable, and have been given all such information as has
been requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.
(f) The Purchaser and its representatives have been solely
responsible for its own "due diligence" investigation of the Company and its
management and business, for its own analysis of the merits and risks of this
investment and for its own analysis of the fairness and desirability of the
terms of the investment. In taking any action or performing any role relative
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to the arranging of the proposed investment, the Purchaser has acted solely in
its own interest, and has not acted as an agent of the Company. The Purchaser
has such knowledge and experience in financial and business matters that the
Purchaser is capable of evaluating the merits and risks of the acquisition of
the Stock pursuant to the terms of this Agreement and of protecting its interest
in connection therewith.
(g) The Purchaser is an "Accredited Investor" as that term
is defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933. The Purchaser is able to bear the economic risk of the purchase of the
Stock pursuant to the terms of this Agreement, including a complete loss of its
investment in the Company.
(h) The Purchaser has the full right, power and authority to
enter into and perform the Purchaser's obligations under this Agreement, and
this Agreement constitutes the valid and binding obligation of the Purchaser
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and rules
or laws concerning equitable remedies.
(i) No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Purchaser is required in connection with the valid execution, delivery
and performance of this Agreement.
(j) The Purchaser understands that no public market now
exists for the Stock and that the Company has made no assurances that a public
market will ever exist for such interest.
(k) The Purchaser acknowledges that it is not relying upon
any person or entity other than the Purchaser's business advisors and the
Company in making its investment or decision to invest in the Company.
(l) The Purchaser is a revocable trust formed for the
benefit of Founder and/or her family and as such, Founder has the right to
control Purchaser without the consent of a beneficiary of Purchaser or of any
other party.
11. Binding Arbitration. The parties agree that any disputes arising
out of or related to this Agreement shall be settled by binding arbitration, and
judgment upon the award may be entered in any court having jurisdiction. The
arbitration shall be in Palo Alto, California and in accordance with the rules
of the Judicial Arbitration and Mediation Services/Endispute in San Francisco,
California. A single arbitrator shall be selected according to the corresponding
arbitration rules within thirty (30) days of submission of the dispute to the
arbitrator. The arbitrator shall conduct the arbitration in accordance with the
California Evidence Code. Except as expressly provided above, no discovery of
any kind shall be taken by either party without the written consent of the other
party, provided, however, that any party may seek the arbitrator's permission to
take any deposition which is necessary to preserve the testimony of a witness
who either is, or may become, outside the subpoena power of the arbitrator or
otherwise unavailable to testify at the arbitration. The arbitrator shall have
the power to enter any award that could be entered by a Judge of the Superior
Court of the State of California sitting without a jury, and
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only such power, except that the arbitrator shall not have the power to award
punitive damages, treble damages, or any other damages which are not
compensatory, even if permitted under the laws of the State of California or any
other applicable law. The arbitration award may be enforced in any court having
jurisdiction over the parties and the subject matter of the arbitration.
Notwithstanding the forgoing, the parties irrevocably submit to the
non-exclusive jurisdiction of the Superior Court of the State of California,
Santa Xxxxx County, and the United States District Court for the Northern
District of California, Branch nearest to Palo Alto, California, in any action
to enforce an arbitration award.
Notwithstanding the foregoing provisions of this Section 11, Purchaser
agrees that the Company will be entitled to a decree of specific performance of
the terms of Section 4 of this Agreement, said right to be in addition to any
other remedies available to the Company.
12. Miscellaneous.
(a) 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.
(b) Any notice required or permitted hereunder will be given
in writing and will 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 the other party hereto at the address
shown below that party's signature or at such other address as such party may
designate by ten (10) days' advance written notice to the other party hereto.
(c) This Agreement will 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 the Purchaser, Founder and the
Founder's heirs, executors, administrators, successors and assigns; provided,
however, that neither Founder nor the Purchaser may assign its rights or
obligations under this Agreement without the Company's prior written consent,
which shall not be unreasonably withheld.
(d) This Agreement, together with the exhibits hereto, will
be construed under the laws of the State of Delaware without regard to conflicts
of law principles constitutes the entire agreement of the parties with respect
to the subject matter hereof, superseding all prior written or oral agreements,
and no amendment or addition hereto will be deemed effective unless agreed to in
writing by the parties hereto.
(e) No failure on the part of any party to exercise or delay
in exercising any right hereunder will be deemed a waiver thereof, nor will any
such failure or delay, or any single or partial exercise of any such right,
preclude any further or other exercise of such right or any other right.
(f) If any provision of this Agreement, or the application
thereof, is for any reason and to any extent determined by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of this Agreement and
the application of such provision to other persons or circumstances will be
interpreted so as best to reasonably effect the intent of the parties hereto.
The parties agree to use their best efforts to replace such void or
unenforceable
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provision of this Agreement with a valid and enforceable provision which will
achieve, to the greatest extent possible, the economic, business and other
purposes of the void or unenforceable provision.
(g) This Agreement may be executed in counterparts, each of
which will be an original and all of which together will constitute one and the
same agreement.
(h) Any designee of the Zhone Board will have the authority
to act on behalf of the Zhone Board and the Company with respect to any matter,
right, obligation, or election which is the responsibility of or which is
allocated to the Zhone Board herein, provided the designee has apparent
authority with respect to such matter, right, obligation, or election.
(i) The Purchaser will file an election pursuant to Section
83(b) the Internal Revenue Code of 1986, as amended, with respect to the
unvested Stock acquired pursuant to this Agreement and will notify the Company
in writing when such election is filed. Such notice shall be given within thirty
(30) days of the date of the sale herein contemplated.
13. Ownership by a Spouse. In the event that the spouse of Founder
is granted by the Founder or awarded by a court of competent jurisdiction in a
marital dissolution action all or any portion of the Unvested Interest, then the
Zhone Board may, at its election made within thirty (30) days after receiving
notice of such grant or award, direct the Company to acquire the portion of the
Unvested Interest granted or awarded to the spouse of the Founder. Such
acquisition shall be made pursuant to Section 4 as though the Founder's Service
with the Company had terminated as of the date of the grant or award with
respect to the portion of the Unvested Interest granted or awarded to the
spouse.
Founder agrees that if Founder is married, should marry or remarry
subsequent to the date of this Agreement, Founder shall within thirty (30) days
obtain the Founder's spouse's acknowledgment of the existence and binding effect
of all of the restrictions contained in this Agreement in the form attached
hereto as "Exhibit B". Such consent shall not be deemed to confer or convey to
the spouse any rights in the Stock that do not otherwise exist by operation of
law or this Agreement.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ZHONE TECHNOLOGIES, INC.
By:
-----------------------------
Its:
-----------------------------
PURCHASER:
The Xxxxxx Living Trust
Dated March 15, 1995
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
---------------------------------
Xxxxxxxx Xxxxxx, Trustee
FOUNDER:
Accepted and agreed to as to the foregoing
as of the day and year first above written
------------------------------------------
Xxxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
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EXHIBIT A
FORM OF PROMISSORY NOTE
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EXHIBIT B
CONSENT OF SPOUSE
The undersigned, being the spouse of __________________, does hereby
acknowledge reading and being familiar with the provisions of the foregoing
Restricted Stock Agreement (the "Agreement") and hereby agrees thereto and joins
therein to the extent, if any, that such agreement and joinder may be necessary;
and hereby further agrees that "Founder" as defined in the Agreement may join in
any further amendment or modification of the Agreement without any further
signature, acknowledgment or agreement by the undersigned,
Date: ____________________, 20__ ______________________________________
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