STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (“Agreement”) is made
and entered into by and between ZST Digital Networks, Inc. (“Company”), a Delaware
corporation, and Xxxx Xxxx, M.D. (“Participant”),
effective as of ____________________, 20___. (Company and Participant
are sometimes referred to herein as “party” or
collectively as the “parties.”) All
capitalized terms in this Agreement shall have the meaning assigned to them in
this Agreement or in the attached Appendix.
RECITALS
WHEREAS, the Company granted to
Participant an option to purchase Twenty-Five Thousand shares of Common Stock of
the Company pursuant to a Stock Option Agreement dated as of October [__], 2009;
and
WHEREAS, Participant is hereby
exercising as described below the option pursuant to the terms of the Stock
Option Agreement.
NOW, THEREFORE, it is hereby agreed as
follows:
A. PURCHASE
OF SHARES
1. Purchase. Participant
hereby purchases ___________________ shares of Common Stock (the “Purchased Shares”)
pursuant to the provisions of the Option Agreement at the purchase price of
$_____________ per share (the “Purchase
Price”).
2. Payment. Concurrently
with the delivery of this Agreement to the Company, Participant shall pay the
Purchase Price for the Purchased Shares in cash or cash equivalent and shall
deliver a duly-executed blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit I) with
respect to the Purchased Shares.
3. Stockholder
Rights. Until such time as the Company exercises the
Repurchase Right, Participant (or any successor in interest) shall have all
stockholder rights (including voting, dividend and liquidation rights) with
respect to the Purchased Shares, subject, however, to the transfer restrictions
of Articles B and C herein.
B. TRANSFER
RESTRICTIONS
1. Restriction
on Transfer. Except for any Permitted Transfer, Participant
shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.
2. Transferee
Obligations. Each person (other than the Company) to whom the
Purchased Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Company that such person is bound by the provisions of this Agreement and
that the transferred shares are subject to the Repurchase Right to the same
extent such shares would be so subject if retained by Participant.
3. Restrictive
Legends. The stock certificates for the Purchased Shares shall
be endorsed with one or more of the following restrictive legend:
“The
shares represented by this certificate are subject to certain repurchase rights
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity with
the terms of a written agreement dated __________, 20___, between the
Corporation and the registered holder of the shares (or the predecessor in
interest to the shares). A copy of such agreement is maintained at
the Corporation’s principal corporate offices.”
4. Void Transfers. The
Corporation shall not be required (i)
to transfer on its books any Purchased Shares which have been sold or
transferred in violation of the provisions of this Agreement or (ii) to treat as
the owner of the Purchased Shares, or otherwise to accord voting, dividend or
liquidation rights to, any transferee to whom the Purchased Shares have been
transferred in contravention of this Agreement.
C. REPURCHASE
RIGHT
1. Grant. The
Company is hereby granted the right (the “Repurchase Right”),
exercisable at any time during the sixty (60)-day period following the date
Participant ceases for any reason to remain in Service (other than termination
by the Company without Cause or by Participant for Good Reason), to repurchase
at the Repurchase Price any or all of the Purchased Shares in which Participant
is not, at the time of his or her cessation of Service, vested in accordance
with the provisions of the Vesting Schedule set forth in Paragraph C.0 (such
shares to be hereinafter referred to as the “Unvested
Shares”).
2. Exercise
of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The
notice shall indicate the number of Unvested Shares to be repurchased, the
Repurchase Price to be paid per share and the date on which the repurchase is to
be effected, such date to be not more than thirty (30) days after the date of
such notice. The certificates representing the Unvested Shares to be
repurchased shall be delivered to the Company on the closing date specified for
the repurchase. Concurrently with the receipt of such stock
certificates, the Company shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount equal
to the Repurchase Price for the Unvested Shares which are to be repurchased from
Owner.
2
3. Termination
of the Repurchase Right.
(a) The
Repurchase Right shall terminate with respect to any Unvested Shares for which
it is not timely exercised under Paragraph C.0. In addition, the
Repurchase Right shall terminate and cease to be exercisable with respect to any
and all Purchased Shares in which Participant vests in accordance with the
following Vesting Schedule:
(i) Participant
shall vest in fifty percent (50%) of the Purchased Shares, and the Repurchase
Right shall concurrently lapse with respect to those Purchased Shares, upon
Participant’s completion of six (6) months of Service measured from October
[__], 2009.
(ii) Participant
shall vest in the remaining fifty percent (50%) of the Purchased Shares, and the
Repurchase Right shall concurrently lapse with respect to those Purchased
Shares, upon October [__], 2010.
(b) The
Repurchase Right shall automatically terminate in its entirety, and all the
Purchased Shares shall vest in full, immediately if Participant ceases to remain
in Service as a result of Participant’s termination of his employment for Good
Reason or the Company’s termination of Participant’s employment without
Cause.
4. Recapitalization. Any
new, substituted or additional securities or other property (including cash paid
other than as a regular cash dividend) which is by reason of any
Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to
reflect such distribution shall be made to the number and/or class of Purchased
Shares subject to this Agreement and to the Repurchase Price per share to be
paid upon the exercise of the Repurchase Right in order to reflect the effect of
any such Recapitalization upon the Company’s capital structure; provided, however,
that the aggregate Repurchase Price shall remain the same.
D. SPECIAL
TAX ELECTION
1. Section
83(b) Election. Under Code Section 83, the excess of the Fair
Market Value of the Purchased Shares on the date any forfeiture restrictions
applicable to such shares lapse over the Purchase Price paid for those shares
will be reportable as ordinary income on the lapse date. For this
purpose, the term “forfeiture restrictions” includes the right of the Company to
repurchase the Purchased Shares pursuant to the Repurchase
Right. Participant may elect under Code Section 83(b) to be taxed at
the time the Purchased Shares are acquired, rather than when and as such
Purchased Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue
Service within thirty (30) days after the date of this
Agreement. Even if the Fair Market Value of the Purchased Shares on
the date of this Agreement equals the Purchase Price paid (and thus no tax is
payable), the election must be made to avoid adverse tax consequences in the
future.
3
THE FORM FOR MAKING THIS ELECTION IS
ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE
TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN
THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS
LAPSE.
2. FILING
RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES
THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A
TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE
COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
E. GENERAL
PROVISIONS
1. Assignment. The
Company may assign the Repurchase Right to any person or entity selected by the
Board, including (without limitation) one or more stockholders of the
Company.
2. Notices. Any
notice required to be given under this Agreement shall be in writing and shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated below such party’s signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph to all other parties
to this Agreement.
3. No
Waiver. The failure of the Company in any instance to exercise
the Repurchase Right shall not constitute a waiver of any other repurchase
rights that may subsequently arise under the provisions of this Agreement or any
other agreement between the Company and Participant. No waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different
nature.
4. Cancellation
of Shares. If the Company shall make available, at the time
and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall
be deemed purchased in accordance with the applicable provisions hereof, and the
Company shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this
Agreement.
4
F. MISCELLANEOUS
PROVISIONS
1. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without resort to that
State’s conflict-of-laws rules.
2. Participant
Undertaking. Participant hereby agrees to take whatever
additional action and execute whatever additional documents the Company may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Participant or the Purchased
Shares pursuant to the provisions of this Agreement.
3. Agreement
is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the
Employment Agreement and the Option Agreement and shall in all respects be
construed in conformity with the terms of the Employment Agreement
and the Option Agreement.
4. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
5. Successors
and Assigns. The provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Company and its successors and assigns
and upon Participant, Participant’s assigns and the legal representatives, heirs
and legatees of Participant’s estate, whether or not any such person shall have
become a party to this Agreement and have agreed in writing to join herein and
be bound by the terms hereof.
[SIGNATURES
ON FOLLOWING PAGE]
5
WHEREFORE, the parties hereto have
executed this Agreement on the dates indicated below.
|
|
||
|
By:
|
|
|
|
Name:
Xxxxx Xx
|
||
|
Title:
Chief Executive Officer
|
||
|
Address:
|
|
|
|
|
||
|
|
||
|
XXXX
XXXX, M.D.
|
||
|
Address:
|
|
|
|
|
||
|
|
||
6
SPOUSAL
ACKNOWLEDGMENT
The
undersigned spouse of Participant has read and hereby approves the foregoing
Stock Purchase Agreement. In consideration of the Company’s granting
Participant the right to acquire the Purchased Shares in accordance with the
terms of such Agreement, the undersigned hereby agrees to be irrevocably bound
by all the terms of such Agreement, including (without limitation) the right of
the Company (or its assigns) to purchase any Purchased Shares in which
Participant is not vested at the time of his or her cessation of
Service.
|
PARTICIPANT’S
SPOUSE
|
||
|
|
Address:
|
|
EXHIBIT
I
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED
________________ hereby sell(s), assign(s) and transfer(s) unto ZST Digital
Networks, Inc. (the “Company”), ______________ (_____) shares of the Common
Stock of the Company standing in his or her name on the books of the Company
represented by Certificate No. _______________ herewith and do(es) hereby
irrevocably constitute and appoint _________________ Attorney to transfer the
said stock on the books of the Company with full power of substitution in the
premises.
|
Dated: ___________
|
||
|
Signature
|
_________________________________ |
Instruction: Please
do not fill in any blanks other than the signature line. Please sign
exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Company
to exercise the Repurchase Right without requiring additional signatures on the
part of Participant.
EXHIBIT
II
SECTION
83(b) TAX ELECTION
SECTION
83(b) TAX ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
|
(1)
|
The
taxpayer who performed the services is:
|
|
Name:
|
|
|
Address:
|
|
|
Taxpayer
Ident. No.:
|
|
|
(2)
|
The
property with respect to which the election is being made is
______________ shares of the common stock of ZST Digital Networks,
Inc.
|
|
(3)
|
The
property was issued on __________________, _____.
|
|
(4)
|
The
taxable year in which the election is being made is the calendar year
_____.
|
|
(5)
|
The
property is subject to a repurchase right pursuant to which the issuer has
the right to acquire the property at the lower of the purchase
price paid per share or the fair market value per share, if for any reason
taxpayer’s service with the issuer terminates. The issuer’s
repurchase right will lapse in a series of installments over a one
(1)-year period ending on October [__], 2010.
|
|
(6)
|
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) is $_____ per share.
|
|
(7)
|
The
amount paid for such property is $ _______ per share.
|
|
(8)
|
A
copy of this statement was furnished to ZST Digital Networks, Inc. for
whom taxpayer rendered the services underlying the transfer of
property.
|
|
(9)
|
This
statement is executed on _______________,
_____.
|
|
Spouse
(if any)
|
Taxpayer
|
This
election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase
Agreement. This filing should be made by registered or certified
mail, return receipt requested. Participant must retain two (2)
copies of the completed form for filing with his or her Federal and state tax
returns for the current tax year and an additional copy for his or her
records.
APPENDIX
The
following definitions shall be in effect under the Agreement:
A. Agreement
shall mean this Stock Purchase Agreement.
B. Board
shall mean the Company’s Board of Directors or the Compensation Committee or
other similar committee of the Board acting in its capacity.
C. Cause shall mean (i) the
commission of an act or acts of dishonesty, fraud, embezzlement, or
misappropriation of funds or proprietary information by Participant in
connection with his employment duties or responsibilities; or (ii) Participant’s
conviction of, or plea of nolo contendere to, a felony or a crime involving
moral turpitude (other than minor traffic violations); or (iii) Participant
materially breaches his obligations under the Employment Agreement, including
failure to perform his job duties satisfactorily or failure to follow the
Company’s policies or any directive of the Company, if such failure or refusal
is not cured by Participant within ten (10) days after receiving written notice
of such from the Company; or (iv) Participant’s willful or gross misconduct in
connection with his employment duties.
D. Code
shall mean the Internal Revenue Code of 1986, as amended.
E. Common
Stock shall mean the Company’s common stock, $0.0001 par value per
share.
F. Company
shall mean ZST Digital Networks, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of ZST
Digital Networks, Inc.
G. Fair
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Board to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange and published in The Wall Street
Journal. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.
(ii) If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined by
the Board after taking into account such factors as the Board shall deem
appropriate.
A-1
H. Good
Reason shall mean any of the following, without Participant’s written
consent: (a) upon a material breach or default of any term of the Employment
Agreement by the Company, or (b) any material reduction in the Participant’s
duties, position, authority or responsibilities with the Company relative to the
duties, position, authority or responsibilities in effect immediately prior to
such reduction; provided that the Company has not cured or remedied such Good
Reason within fifteen (15) days after written notice of the Good Reason from the
Participant.
I. Owner
shall mean Participant and all subsequent holders of the Purchased Shares who
derive their chain of ownership through a Permitted Transfer from
Participant.
J. Parent
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
K. Participant
shall mean Xxxx Xxxx, M.D.
L. Permitted
Transfer shall mean (i) a gratuitous transfer of the Purchased Shares,
provided and only
if Participant obtains the Company’s prior written consent to such
transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to
Participant’s will or the laws of inheritance following Participant’s death or
(iii) a transfer to the Company in pledge as security for any purchase-money
indebtedness incurred by Participant in connection with the acquisition of the
Purchased Shares.
M. Purchase
Price shall have the meaning assigned to such term in Paragraph
A.1.
N. Purchased
Shares shall have the meaning assigned to such term in
Paragraph A.1.
O. Recapitalization
shall mean any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the Company’s outstanding
Common Stock as a class without the Company’s receipt of
consideration.
P. Repurchase
Price shall mean the lower of (i) the Exercise
Price or (ii) the Fair Market Value per share of Common Stock on the date
of Participant’s cessation of Service.
Q. Repurchase
Right shall mean the right granted to the Company in accordance with
Article 0.
R. SEC
shall mean the Securities and Exchange Commission.
A-2
S. Service
shall mean the Participant’s performance of services for the Company (or any
Parent or Subsidiary) in the capacity of an employee, subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance, a non-employee member of the board of
directors or an independent consultant.
T. Stock
Option Agreement shall mean that certain
stock option agreement dated October [__], 2009 by and between the Company and
Participant.
U. Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Vesting
Schedule shall mean the vesting schedule specified in Paragraph C.3.
pursuant to which Participant is to vest in the Purchased Shares in a series of
installments over the Participant’s period of Service.
W. Unvested
Shares shall have the meaning assigned to such term in Paragraph
C.1.
A-3
