Exhibit 10.26
ZAPME! CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made by
and between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("PURCHASER") and ZapMe! Corporation, a Delaware
corporation (the "COMPANY") effective September 13, 1999.
In consideration of the mutual covenants and representations herein set
forth, the Company and Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF SHARES. Purchaser hereby purchases from the
Company, and the Company hereby issues and sells to Purchaser, an aggregate of
300,000 shares of Common Stock (as hereinafter defined) (the "Shares"), at a
price of $5.00 per share or an aggregate purchase price of $1,500,000. The
Company shall, promptly after execution of this Agreement, issue a certificate
representing the Shares registered in the name of Purchaser, which certificate
shall be held in escrow pursuant to the provisions of Section 6 hereof. In
return, the Purchaser shall deliver to the Company (a) an executed counterpart
of this Agreement, and (b) the purchase price of the Shares in the form of (i) a
check payable to the Company, (ii) a wire transfer of immediately available
funds to an account designated by the Company, (iii) a full-recourse promissory
note, or (iv) any combination of the foregoing.
2. ADJUSTMENTS. All references to the number of Shares and the purchase
price of the Shares in this Agreement shall be appropriately adjusted to reflect
any further stock split, stock dividend or other change in the Shares which may
be made by the Company after the date of this Agreement.
3. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(i) the approval by stockholders of the Company of a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
(ii) any approval by the stockholders of the Company
of a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(iii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMON STOCK" means the Common Stock of the Company.
(e) "CONSULTANT" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Company, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its
Subsidiaries or its successor. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of a change in status from
Employee to Consultant, or vice versa.
(g) "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company,
PROVIDED that the payment of a director's fee by the Company shall not, in and
of itself, be sufficient to constitute "employment" by the Company.
(h) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) if the Common Stock is listed on any established
stock exchange or a national market system, including, without limitation, the
Nasdaq National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") Stock Market, its Fair Market Value shall be the
closing sale price for such stock (or the closing bid, if no sales were
reported, as quoted on such system or exchange, for the last market trading day
prior to the time of determination) as reported in the WALL STREET JOURNAL or
such other source as the Board deems reliable;
(ii) if the Common Stock is quoted on the Nasdaq Stock
Market (but not on the Nasdaq National Market thereof) or regularly quoted by
a recognized securities dealer but
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selling prices are not reported, its Fair Market Value shall be the mean
between the high and low asked prices for the Common Stock; or
(iii) in the absence of an established market for the
Common Stock, Fair Market Value thereof shall be determined in good faith by the
Board.
(i) "INVOLUNTARY TERMINATION" means (i) without the
Purchaser's express written consent, a significant reduction of the Purchaser's
duties, position or responsibilities relative to the Purchaser's duties,
position or responsibilities in effect immediately prior to such reduction, or
the removal of the Purchaser from such position, duties and responsibilities,
unless the Purchaser is provided with comparable duties, position and
responsibilities; provided, however, that a reduction in duties, position or
responsibilities solely by virtue of the Company being acquired and made part of
a larger entity (as, for example, when the Chief Executive Officer of the
Company remains as such following a Change of Control but is not made Chief
Executive Officer of the acquiring corporation) shall not constitute an
"Involuntary Termination"); (ii) without the Purchaser's express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Purchaser immediately prior to such reduction; (iii) a reduction by the
Company of the Purchaser's base salary as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or level of
employee benefits to which the Purchaser is entitled immediately prior to such
reduction with the result that the Purchaser's overall benefits package is
significantly reduced; or (v) without the Purchaser's express written consent,
the relocation of the Purchaser to a facility or a location more than fifty (50)
miles from his current location; (vi) any purported termination of the Purchaser
by the Company which is not effected for Cause or for which the grounds relied
upon are not valid.
(j) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(k) "SUBSIDIARY" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
(l) "UNVESTED SHARES" means those Shares that, as of any
particular date, have not vested in accordance with the vesting schedule set
forth in Section 4 below.
(m) "VESTED SHARES" means those Shares that, as of any
particular date, have vested in accordance with the vesting schedule set forth
in Section 4 below.
4. VESTING.
The Shares shall vest and be released from the Company's
Repurchase Option (as hereinafter defined) in accordance with the following
provisions:
(a) One-third (1/3) of the Shares shall vest twelve (12)
months after the date hereof, and one-third (1/3) of the Shares shall vest at
the end of each year thereafter, so that all the Shares shall be Vested Shares
on September 13, 2002.
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(b) Vesting under this subsection shall cease in the event
that Purchaser's Continuous Status as an Employee or Consultant terminates. At
such times, the repurchase provisions of Section 5 hereof shall apply to all
Shares that are Unvested Shares as of the date of such termination.
(c) Notwithstanding anything contained in this Agreement to
the contrary, if the Purchaser's employment with the Company terminates as a
result of an Involuntary Termination at any time within twelve (12) months after
a Change of Control, then 100% of the Shares shall become Vested Shares and the
repurchase provisions of Section 5 shall immediately lapse.
5. REPURCHASE OPTION.
(a) If Purchaser's Continuous Status as an Employee or
Consultant terminates for any or no reason, including for cause, death, or
disability, the Company shall have the right and option to purchase from
Purchaser all of Purchaser's Shares which are Unvested Shares as of the date of
such termination, at the price paid by Purchaser for such Shares (the
"REPURCHASE OPTION").
(b) Upon the occurrence of such termination, the Company may
exercise its Repurchase Option by delivering personally, by registered or
certified mail, or by overnight courier, to Purchaser (or Purchaser's transferee
or legal representative, as the case may be) and to the Escrow Agent (as
hereinafter defined), within sixty (60) days of such termination, a notice in
writing indicating the Company's intention to exercise the Repurchase Option and
setting forth a date for closing not later than fifteen (15) days from the date
of such notice. The closing shall take place at the Company's office. At the
closing, the holder of the certificates for the Unvested Shares being
transferred shall deliver the stock certificate or certificates evidencing the
Unvested Shares, and the Company shall deliver the purchase price (the
"REPURCHASE PRICE") therefor.
(c) Payment of the Repurchase Price may be made, at the option
of the Company, in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of Purchaser to the Company or by any combination
thereof. If the Company elects to pay the entire Repurchase Price by check, it
may make such payment to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser which states the name
and address of the bank, the date of closing, and waives the closing at the
Company's office.
(d) If the Company does not elect to exercise the Repurchase
Option conferred above by giving the requisite notice within sixty (60) days
following the termination, the Repurchase Option shall terminate.
6. TRANSFER OF SHARES; ESCROW.
(a) Purchaser hereby authorizes and directs the Secretary of
the Company, or such other person designated by the Company, to transfer any
Unvested Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.
(b) To ensure the availability for delivery of Purchaser's
Unvested Shares upon repurchase by the Company pursuant to the Repurchase
Option under Section 5 above, Purchaser
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hereby appoints the Corporate Secretary of the Company, or any other person
designated by the Company, as escrow agent (the "ESCROW AGENT") and as
Purchaser's attorney-in-fact to sell, assign and transfer unto the Company
such Unvested Shares, if any, as may be repurchased by the Company pursuant
to the Repurchase Option and shall, upon execution of this Agreement, deliver
and deposit with the Escrow Agent the share certificates representing the
Unvested Shares, together with two stock assignments duly endorsed in blank
and in the form attached hereto as EXHIBIT A-1. The Unvested Shares and stock
assignment shall be held by the Escrow Agent in escrow pursuant to Joint
Escrow Instructions in the form attached hereto as EXHIBIT A-2, until (i) the
Company exercises its Repurchase Option as provided in Section 5 above, (ii)
such Unvested Shares become Vested Shares, or (iii) such time as this
Agreement no longer is in effect. Upon vesting of the Unvested Shares, the
Escrow Agent shall promptly deliver to Purchaser the certificate or
certificates representing such Shares in the Escrow Agent's possession
belonging to Purchaser, and the Escrow Agent shall be discharged of all
further obligations hereunder. Notwithstanding any of the foregoing, however,
the Escrow Agent shall nevertheless retain such certificate or certificates
as Escrow Agent if so required pursuant to other restrictions imposed
pursuant to this Agreement.
(c) The Escrow Agent shall not be liable for any act it may do
or omit to do with respect to holding the Shares in escrow and while acting in
good faith and in the exercise of its judgment.
(d) Transfer or sale of the Shares is subject to restrictions
on transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and shall
acknowledge the same by signing a copy of this Agreement.
(e) No Shares may be sold, pledged, hypothecated or otherwise
transferred by Purchaser until such Shares have become Vested Shares and are no
longer subject to any security agreement for the benefit of the Company.
7. OWNERSHIP, VOTING RIGHTS, DUTIES. This Agreement shall not affect in
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein. Purchaser shall enjoy rights as a
stockholder until such time as Purchaser disposes of the Shares or the Company
and/or its assignee(s) exercises either the Repurchase Option or the Right of
First Refusal hereunder. Upon any such exercise, Purchaser shall have no further
rights as a holder of the Shares so purchased except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Purchaser or the Escrow Agent, as the case may be, shall
forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee (either being sometimes referred to herein as the
"HOLDER") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "NOTICE") stating: (i) the
Holder's bona fide intention to sell or
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otherwise transfer such Shares; (ii) the name of each proposed purchaser or
other transferee ("PROPOSED TRANSFEREE"); (iii) the number of Shares to be
transferred to each Proposed Transferee; and (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Shares (the
"OFFERED PRICE"), and the Holder shall offer the Shares at the Offered Price
to the Company or its assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) PURCHASE PRICE. The purchase price for the Shares
purchased by the Company or its assignee(s) under this Section shall be the
Offered Price. If the Offered Price includes consideration other than cash, the
cash equivalent value of the non-cash consideration shall be determined by the
Board in good faith.
(d) PAYMENT. Payment of the purchase price shall be made, at
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within ninety (90) days after the date of the Notice and
provided further that any such sale or other transfer is effected in accordance
with any applicable securities laws and the Proposed Transferee agrees in
writing that the provisions of this Section shall continue to apply to the
Shares held by such Proposed Transferee. If the Shares described in the Notice
are not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during Purchaser's lifetime or on Purchaser's death by will or
intestacy to Purchaser's Immediate Family or a trust for the benefit of
Purchaser's immediate family shall be exempt from the provisions of this
Section. "IMMEDIATE FAMILY" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal shall terminate as to any Shares upon (i) the first sale of Common
Stock of the Company to the general
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public pursuant to a registration statement filed with and declared effective
by the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or (ii) a merger of the Company with a
corporation whose stock is publicly traded on a national exchange.
9. RESTRICTIVE LEGENDS; STOP-TRANSFER ORDERS; MARKET STANDOFF.
(a) LEGENDS. Purchaser understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, RIGHTS OF REPURCHASE,
RIGHTS OF FIRST REFUSAL AND OTHER RESTRICTIONS FOR THE
BENEFIT OF THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN A
RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE ISSUER AND
THE ORIGINAL HOLDER OF THESE SHARES, COPIES OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS, RIGHTS OF REPURCHASE, RIGHTS OF FIRST REFUSAL
AND OTHER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE
SHARES.
(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) MARKET STANDOFF. Purchaser hereby agrees that, if so
requested by the Company or any representative of the underwriters in
connection with any registration of the offering of any securities of the
Company under the Securities Act, Purchaser shall not sell or otherwise
transfer any Shares or other securities of the Company during the 180-day
period (or such other period as may be requested in writing by the
representative of the underwriters and agreed to in writing by the Company)
following the effective date of a registration statement of the Company filed
under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company
to the public in an underwritten public offering under the Securities Act.
The
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Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such market standoff
period.
(d) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
10. REPRESENTATIONS.
(a) INVESTMENT REPRESENTATION. Purchaser represents to the
Company the following:
(i) Purchaser either (1) has a preexisting personal
or business relationship with the Company or any of its officers, directors or
controlling persons, or (2) by reason of Purchaser's business or financial
experience or the business or financial experience of Purchaser's professional
advisors who are unaffiliated with and who are not compensated by the Company or
any affiliate or selling agent of the Company, directly or indirectly, could be
reasonably assumed to have the capacity to protect Purchaser's own interests in
connection with the purchase of the Shares.
(ii) Purchaser is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. Purchaser is acquiring these Shares for investment for Purchaser's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act.
(iii) Purchaser acknowledges and understands that the
Shares constitute "restricted securities" under the Securities Act and have not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. In this connection,
Purchaser understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Purchaser's representation was predicated solely upon a present intention to
hold these Shares for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Shares, or for a period of one year or any other fixed
period in the future. Purchaser further understands that the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Purchaser further acknowledges
and understands that the Company is under no obligation to register the Shares.
Purchaser understands that the certificate evidencing the Shares shall be
imprinted with a legend which prohibits the transfer of the Shares unless they
are registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend enumerating the restrictions on transfer
of the Shares, and any other legend required under applicable state securities
laws.
(iv) Purchaser is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities"
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acquired, directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions.
(v) Purchaser further understands that in the event
all of the applicable requirements of Rule 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required, and that, notwithstanding the fact that
Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.
(b) TAX REPRESENTATIONS. Purchaser has reviewed with its own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. 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.
11. SECTION 83(B) ELECTIONS. Purchaser understands that Section 83 of
the Code, taxes as ordinary income the difference between the amount paid for
the Shares and the fair market value of the Shares as of the date any
restrictions on the Shares lapse. In this context, "restriction" means the right
of the Company to buy back the Shares pursuant to the Repurchase Option. In the
event the Company has registered equity securities under the Securities Exchange
Act of 1934 (the "EXCHANGE ACT"), "restriction" with respect to officers,
directors, and 10% stockholders also includes the six-month period after the
purchase of the Shares during which sales of certain securities by such
officers, directors, and 10% stockholders would give rise to liability under
Section 16(b) of the Exchange Act. Purchaser understands that he or she may
elect to be taxed at the time the Shares are purchased rather than when any
restrictions applicable to the Shares lapse, by filing an election under Section
83(b) of the Code with the Internal Revenue Service within 30 days from the date
of purchase. Even if the fair market value of the Shares equals the amount paid
for the Shares, the election may be made to avoid adverse tax consequences in
the future. Purchaser understands that failure to make this filing in a timely
manner shall result in the recognition of ordinary income by Purchaser, as any
restrictions applicable to the Shares lapse, on any difference between the
purchase price and the fair market value of the Shares at the time such
restrictions lapse. A form of Election under Section 83(b) is attached to the
Agreement as EXHIBIT A-3 for reference.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY
AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE
CODE, EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE
THIS FILING ON PURCHASER'S BEHALF.
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12. ADDITIONAL ACTIONS. The parties shall execute such further
instruments and take such further action as may reasonably be necessary to carry
out the intent of this Agreement.
13. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, or (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid, and shall be
addressed (i) if to Purchaser, at Purchaser's address as set forth beneath
Purchaser's signature to this Agreement, or at such other address as Purchaser
shall have furnished to the Company in writing, (ii) if to the Company, to
ZapMe! Corporation with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:, or at such other
address as the Company shall have furnished to Purchaser, or (iii) if to the
Escrow Agent, to the Corporate Secretary, at ZapMe! Corporation, or at such
other address as the Escrow Agent shall have furnished to the parties.
14. ASSIGNMENT. The Company may assign its rights and delegate its
duties under this Agreement. If any such assignment or delegation requires
consent of the California Department of Corporations, the parties agree to
cooperate in requesting such consent. This Agreement shall 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 Purchaser, Purchaser's heirs,
executors, administrators, successors and assigns.
15. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Joint Escrow
Instructions executed in connection herewith constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
16. ARBITRATION. At the option of either party, any and all disputes or
controversies, whether of law or fact, and of any nature whatsoever arising from
or respecting this Agreement, unless otherwise expressly provided herein, shall
be decided by arbitration by the American Arbitration Association in accordance
with the rules and regulations of that Association.
(a) The arbitrators shall be selected as follows: In the event
the Company and Purchaser agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. In the event the Company and Purchaser do not so
agree, the Company and Purchaser shall each select one independent, qualified
arbitrator and these two arbitrators shall select a third arbitrator. The
Company reserves the right to reject any individual arbitrator who shall be
employed by or affiliated with a competing organization.
(b) Arbitration shall take place in San ▇▇▇▇▇ County, California,
or any other location mutually agreeable to the parties. At the request of
either party, arbitration proceedings shall be conducted in secrecy. In such
case all documents, testimony, and records shall be received,
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heard, and maintained by the arbitrators in secrecy under seal, available for
inspection only by the Company and Purchaser and their respective attorneys
and their respective experts who shall agree in advance and in writing to
receive all such information confidentially and to maintain such information
in secrecy until such information shall become generally known. The
arbitrator, who shall act by majority vote, shall be able to decree any and
all relief of an equitable nature, including but not limited to such relief
as a temporary restraining order, a temporary or a permanent injunction, or
both, and shall also be able to award damages, with or without an accounting,
costs, and reasonable attorneys' fees. The decree or judgment of an award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
(c) Reasonable notice of the time and place of arbitration
shall be given to all persons, other than the parties, as shall be required by
law, in which case such persons or their authorized representatives shall have
the right to attend and participate in all the arbitration hearings to the
extent and in such manner as the law shall require.
17. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California as they
apply to contracts entered into and wholly to be performed within such state.
Purchaser represents that Purchaser has read this Agreement and
is familiar with its terms and provisions. Purchaser hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under this Agreement.
18. NO EFFECT ON EMPLOYMENT/CONSULTING RELATIONSHIP. PURCHASER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREUNDER DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT OF THE COMPANY FOR ANY PERIOD OR AT ALL.
NOTHING IN THIS AGREEMENT SHALL AFFECT IN ANY MANNER WHATSOEVER OR INTERFERE
WITH THE RIGHT OR POWER OF THE COMPANY, OR A PARENT OR SUBSIDIARY OF THE
COMPANY, TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE
COMPANY AT ANY TIME, FOR ANY OR NO REASON, WITH OR WITHOUT CAUSE.
19. ADVICE OF COUNSEL. Purchaser has reviewed this Agreement in its
entirety, has had an opportunity to obtain the advice of independent counsel
prior to executing this Agreement and fully understands all provisions hereof.
20. AUTHORIZATION OF TRANSFER. Purchaser hereby authorizes and directs
the Secretary or transfer agent of the Company to transfer the Stock as to which
the Repurchase Option has been exercised from Purchaser to the Company or the
Company's assignees.
21. WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
-11-
IN WITNESS WHEREOF, this Agreement is deemed made as of the date first
set forth above.
ZAPME! CORPORATION
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
PURCHASER
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
ADDRESS:
-------------------------------------
-------------------------------------
-------------------------------------
[SIGNATURE PAGE FOR RESTRICTED STOCK PURCHASE AGREEMENT]
-12-
CONSENT OF SPOUSE
I, ___________________________, spouse of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, have read
and approve the foregoing Agreement. In consideration of the granting to my
spouse of the right to purchase shares of ZapMe! Corporation, as set forth in
the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights under the Agreement and agree to be bound by
the provisions of the Agreement insofar as I may have any rights in the
Agreement or in any shares issued pursuant thereto under the community
property laws of the State of California or similar laws relating to marital
property in effect in the state of our residence as of the date of the
signing of the Agreement.
Dated:
------------------------------ ----------------------------------
(SIGNATURE OF SPOUSE)
PROMISSORY NOTE
$1,500,000.00 September 13, 1999
For value received, the undersigned promises to pay to ZapMe! Corporation a
Delaware corporation (the "Company"), or order, at its principal office the
principal sum of $1,500,000.00 with interest thereof at the rate of 5.98% per
annum, compounded annually, on the unpaid balance of the principal sum. Said
principal shall be due on the earlier to occur of the fourth anniversary of the
date of this Note, thirty (30) days after termination other than for death or
disability, or one year after termination for death or disability. Said interest
shall be paid as it accrues by means of regular payroll deductions in the case
of an employee and by such other means as the Board may approve in the case of a
member of the Board.
Should the undersigned fail to make full payment of principal or interest for a
period of ten (10) days or more after the due date thereof, the whole unpaid
balance on this Note of principal and interest shall become immediately due at
the option of the holder of this Note.
This Note is subject to the terms of a Stock Purchase Agreement, dated as of
September 13, 1999. This Note is secured by a pledge of the Company's Common
Stock under the terms of a Security Agreement of even date herewith and is
subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned
personally for failure to pay the Note as and when due.
The principal is payable in lawful money of the United States of America. The
privilege is reserved to prepay any portion of the Note at any time.
If the undersigned shall default in the payment of amounts hereunder when due,
the holder of this Note shall be entitled to payment by the undersigned of all
costs of collection, including, without limitation, reasonable attorneys' fees
and costs incurred in connection with such collection efforts, whether or not
suit on this Note is filed. The maker waives presentment for payment, protest,
notice of protest and notice of non-payment of this Note. This Note shall be
governed by the laws of the State of California as they apply to contracts
entered into and wholly to be performed within such state.
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-2-
SECURITY AGREEMENT
This Security Agreement is made as of September 13, 1999 between ZapMe!
Corporation, a Delaware corporation ("Pledgee"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Pledgor"),
and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of Pledgee, as the agent of Pledgee and holder of
the Securities pledged hereunder ("Pledgeholder").
RECITALS
Pursuant to the Restricted Stock Purchase Agreement dated September 13, 1999
(the "Agreement"), between Pledgor and Pledgee and Pledgor's election under the
terms of the Agreement to pay for such shares with Pledgor's promissory note
(the "Note"), Pledgor has purchased 300,000 shares of Pledgee's Common Stock
(the "Shares") at a price of five dollars ($5.00) per share, for a total
purchase price of five million dollars ($1,500,000.00).
NOW, THEREFORE, it is agreed as follows:
1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration
of the transfer of the Shares to Pledgor under the Agreement, Pledgor,
pursuant to the California Uniform Commercial Code, hereby pledges all of
such Shares (herein sometimes referred to as the "Collateral") represented by
certificate number ______, and herewith delivers said certificate to
Pledgeholder, who shall hold said certificate on behalf of Pledgee subject to
the terms and conditions of this Security Agreement.
The Shares (together with an executed blank stock assignment or
assignments) shall be held by Pledgeholder on behalf of Pledgee as security
for the repayment of the Note, and any extensions or renewals thereof, to be
executed by Pledgor pursuant to the terms of the Agreement, and Pledgeholder
shall not encumber or dispose of such Shares except in accordance with the
provisions of this Security Agreement.
2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:
(a) PAYMENT OF INDEBTEDNESS. Pledgor will pay the principal
sum of the Note secured hereby, and interest thereon, at the time and in the
manner provided in the Note.
(b) ENCUMBRANCES. The Shares are free of all other adverse
claims, encumbrances, defenses and liens (other than restrictions on transfer
imposed by applicable securities laws), except for (i) Pledgee's rights to
repurchase Shares pursuant to Section 5 of the Agreement and (ii) the pledge of
the Shares hereunder as security for payment of the Note, and Pledgor will not
further encumber the Shares without the prior written consent of Pledgee.
(c) MARGIN REGULATIONS. In the event that Pledgee's Common Stock
is now or later becomes margin-listed by the Federal Reserve Board and
Pledgee is classified as a "lender"
within the meaning of the regulations under Part 207 of Title 12 of the Code
of Federal Regulations ("Regulation G"), Pledgor agrees to cooperate with
Pledgee in making any amendments to the Note or providing any additional
collateral as may be necessary to comply with such regulations.
3. VOTING RIGHTS. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. STOCK ADJUSTMENTS. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. OPTIONS AND RIGHTS. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. DEFAULT. Pledgor shall be deemed to be in default of the Note and
of this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of ten (10) days or more; or
(b) Pledgor fails to perform any of the covenants set forth in
the Agreement or contained in this Security Agreement for a period of ten (10)
days after written notice thereof from Pledgee; or
(c) A bankruptcy or insolvency proceeding is instituted by or
against Pledgor, or if a receiver is appointed for the property of Pledgor; or
(d) Pledgor makes an assignment for the benefit of creditors.
In the case of a default, as set forth above, Pledgee shall have the
right to accelerate payment of the entire amount on the Note, and Pledgee
shall thereafter be entitled to pursue its remedies under the California
Uniform Commercial Code.
7. RELEASE OF COLLATERAL. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder here-
-2-
under upon payments of the principal of the Note. The number of the pledged
Shares which shall be released shall be that number of full Shares which
bears the same proportion to the initial number of Shares pledged hereunder
as the payment of principal bears to the initial full principal amount of the
Note. Notwithstanding the foregoing, upon any release of pledged Shares
hereunder any such Shares which shall continue to constitute Unreleased
Shares as defined in the Agreement shall continue to be held in escrow
pursuant to Sections 5 and 6 of the Agreement.
8. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. TERM. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, subject to the provisions for prior release
of a portion of the Collateral as provided in paragraph 7 above.
10. PLEDGEHOLDER LIABILITY.
(a) Pledgeholder shall not be liable to any party for any of
his acts, or omissions to act, as Pledgeholder unless Pledgeholder is proved to
have acted in bad faith. Any act done or omitted pursuant to the advice of legal
counsel, other than an act or omission involving gross or willful negligence,
shall be deemed to be done or omitted in good faith.
(b) Pledgeholder shall be entitled to employ such legal
counsel and other experts as Pledgeholder may deem necessary properly to advise
Pledgeholder in connection with its obligations hereunder, and Pledgeholder may
rely upon the advice of such counsel. Such counsel's reasonable fees and costs
shall be borne 50% by Pledgor and 50% by Pledgee.
(c) 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 Pledgeholder hereunder, Pledgeholder is authorized and
directed to retain in Pledgeholder's possession as agent of Pledgee without
liability to anyone all or any part of said securities until such disputes shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of the arbitrator provided for in Section
16 of the Agreement or of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but Pledgeholder shall be
under no duty whatsoever to institute or defend any such proceedings.
In addition, upon any dispute Pledgeholder should be entitled to
engage legal counsel, one-half of whose fees and expenses shall be borne by
Pledgor and one-half by Pledgee.
11. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee
agree that the enforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
12. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term
-3-
"Pledgor" and the term "Pledgee" as used herein shall be deemed to include,
for all purposes, the respective designees, successors, assigns, heirs,
executors and administrators.
13. GOVERNING LAW. This Security Agreement shall be interpreted
and governed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
(Signature)
-------------------------------------
-------------------------------------
(Address)
"PLEDGEE" ZapMe! Corporation
a Delaware corporation
By:
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, President and Chief Executive Officer
-4-
EXHIBIT A-1
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ hereby sells, assigns and
transfers unto ZapMe! Corporation, an aggregate of Three Hundred Thousand
(300,000) shares of the Common Stock of ZapMe! Corporation standing in the
undersigned's name on the books of said corporation represented by
Certificate No. _____, and does hereby irrevocably constitute and appoint
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to transfer the said stock on the books of
the within named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the
Restricted Stock Purchase Agreement between ZapMe! Corporation and the
undersigned dated ____________________, 1999.
Dated:
--------------------
--------------------------------------
(to be signed exactly as name is to
appear on stock certificate)
INSTRUCTIONS: Please do not fill in the blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
EXHIBIT A-2
JOINT ESCROW INSTRUCTIONS
, 1999
----------------
ZapMe! Corporation
Attn: Corporate Secretary
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Corporate Secretary:
As Escrow Agent for both ZapMe! Corporation, a Delaware corporation
(the "COMPANY"), and the undersigned purchaser of stock of the Company
("PURCHASER"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("AGREEMENT"), dated as of September 13, 1999, between the Company and
the undersigned, in accordance with the following instructions:
1. In the event that the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "COMPANY") exercises the
Company's repurchase option set forth in the Agreement, the Company shall give
to Purchaser and you a written notice specifying the number of shares of stock
to be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser 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.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate evidencing the shares of stock to be transferred, to the Company
or its assignee, against the simultaneous delivery to you of the purchase
price (by cash, a check, or some combination thereof) for the number of
shares of stock being purchased pursuant to the exercise of the Company's
repurchase option.
3. Purchaser irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and
any additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with
respect to such securities all documents necessary or appropriate to make
such securities negotiable and to complete any transaction herein
contemplated, including but not limited to the filing with any applicable
state blue sky authority of any required applications for consent to, or
notice of transfer of, the securities. Subject to the provisions of this
paragraph 3, Purchaser shall exercise all rights and privileges of a
shareholder of the Company while the stock is held by you.
4. Upon written request of Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
shall deliver to Purchaser a certificate or
certificates representing so many shares of stock as are not then subject to
the Company's repurchase option. Within sixty (60) days after cessation of
Purchaser's continuous employment by or services to the Company, or any
parent or subsidiary of the Company, you shall deliver to Purchaser a
certificate or certificates representing the aggregate number of shares held
or issued pursuant to the Agreement and not purchased by the Company or its
assignees pursuant to exercise of the Company's repurchase option.
5. If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. 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 for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, 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, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation 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.
9. You shall not be liable in any respect on account of the identity,
authorities 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.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. 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, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
-2-
13. 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.
14. 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 disputes 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.
15. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, or (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid, and shall be
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: ZapMe! Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
PURCHASER: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ESCROW AGENT: ZapMe! Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
-3-
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California as they
apply to contracts entered into and wholly to be performed within such state.
Very truly yours,
ZAPME! CORPORATION
-----------------------------------
PURCHASER:
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
ESCROW AGENT:
-----------------------------------
Corporate Secretary
-4-
EXHIBIT A-3
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the
above-referenced Federal Tax Code, to include in taxpayer's gross income for the
current taxable year, the amount of any compensation taxable to taxpayer in
connection with his receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME : TAXPAYER: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR: Calendar Year 1999
2. The property with respect to which the election is made is described as
follows: 300,000 shares (the "Shares") of the Common Stock of ZapMe!
Corporation, a Delaware corporation (the "Company").
3. The date on which the property was transferred is: , 1999.
-------------
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on
certain events. This right lapses with regard to a portion of the
Shares based on the continued performance of services by the taxpayer
over time.
5. 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, of such property is: $1,500,000.
6. The amount (if any) paid for such property is: $1,500,000.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.
Dated: , 1999
--------------------- ------------------------------------
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: , 1999
--------------------- ------------------------------------
Spouse of Taxpayer
