EXHIBIT 10.3
RESTRICTED STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made as of the ____ day of September 1998, by and
between CityAuction, Inc., a California corporation (the "Company"), and Xxxxxx
Xxxxxx (the "Purchaser").
In consideration of the mutual covenants and representations herein
set forth, the Company and Purchaser agree as follows:
1. Purchase and Sale of Stock. Subject to the terms and conditions
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of this Agreement, the Company hereby agrees to sell to Purchaser and Purchaser
agrees to purchase from the Company at the Closing an aggregate of 2,106,000
shares of the Company's Common Stock (the "Stock") at a price of $.001 per
share, for an aggregate purchase price of $2,106.
2. Closing. The purchase and sale of the Stock shall occur at a
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Closing to be held on the date hereof (the "Closing Date"). The Closing will
take place at the principal office of the Company or at such other place as
shall be designated by the Company. At the Closing, the Company will issue the
Stock registered in the name of Purchaser.
3. Purchase Option.
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3.1 Grant of Purchase Option. Beginning on the Closing Date, the
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Stock shall be subject to the right and option of the Company to repurchase the
Stock (the "Purchase Option") as set forth in this Section 3. In the event
Purchaser's employment or consulting relationship with the Company (including a
parent or subsidiary of the Company) shall cease for any reason, or no reason,
with or without cause, including death, disability or involuntary termination
("Termination"), the Company shall have the right, as provided in Section 3.2
hereof, to purchase from Purchaser or its personal representative, as the case
may be, at the purchase price of $.01 per share (the "Option Price"), all of the
Stock that has not been released from the Purchase Option in accordance with the
following schedule:
(i) On the date of this Agreement, 745,975 shares will be released
from the Purchase Option.
(ii) On the first day of each month commencing with October 1, 1998,
an additional one forty-eighth (1/48th) of the shares of Stock (43,875)
will be released from the Purchase Option.
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Notwithstanding the foregoing, in the event of a Change in Control of
the Company, the lesser of (i) 25% of the shares of Stock or (ii) all remaining
shares of Stock will be released from the Purchase Option. For the purposes of
this Section 3.1 "Change in Control" means the occurrence of any of the
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following events:
(A) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), excluding
existing beneficial owners as of the date of this Agreement, is or becomes
the "beneficial owner" (as defined in Section 13d-3 of said Act), directly
or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding voting
securities;
(B) The shareholders of the Company approve 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) at least 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, or the
shareholders of the Company approve 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;
(C) Any other provision of this subsection notwithstanding, the
term Change in Control shall not include either of the following events
undertaken at the election of the Company:
(i) Any transaction, the sole purpose of which is to change the
state of the Company's incorporation; or
(ii) A transaction, the result of which is to sell all or
substantially all of the assets of the Company to another corporation
(the "surviving corporation") provided that the surviving corporation
is owned directly or indirectly by the shareholders of the company
immediately following such transaction in substantially the same
proportions as their ownership of the Company's common stock
immediately preceding such transaction.
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3.2 Exercise of Purchase Option. Within ninety (90) days following
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Termination, the Company shall notify Purchaser by written notice delivered or
mailed as provided in Section 9.3 as to whether it wishes to purchase the Stock
pursuant to exercise of the Purchase Option. If the Company (or its assignees)
elects to purchase the Stock hereunder, it shall specify a date (which shall not
be later than thirty (30) days from the date of the above described notice) and
a place for the closing of the transaction. At such closing, the Company (or its
assignees) shall tender payment for the Stock and the certificates representing
the Stock so purchased shall be cancelled. Purchaser hereby authorizes and
directs the Secretary or Transfer Agent of the Company to transfer the Stock as
to which the Purchase Option has been exercised from Purchaser to the Company
(or its assignees). The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding indebtedness of
Purchaser to the Company, or by check, or both.
3.3 No Limit on Rights. Nothing in this Agreement shall affect in any
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manner whatsoever the right or power of the Company, or a parent or subsidiary
of the Company, to terminate Purchaser's employment or consulting relationship,
for any reason, with or without cause, subject to Section 3.4 below.
3.4 Escrow of Stock. Purchaser agrees at the Closing hereunder, to
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deliver to and deposit with the Escrow Agent named in the Escrow Agreement of
even date and delivered herewith, the certificate or certificates evidencing the
Stock and the duly executed Assignments. Such documents are to be held by the
Escrow Agent until delivered pursuant to the terms of such Escrow Agreement.
Shares of the Stock which are subject to the Purchase Option shall not be
transferable by the Purchaser.
4. Restriction on Transfer; Rights of First Refusal.
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4.1 Rights of First Refusal. Before any shares of Stock registered in
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the name of Purchaser may be sold or transferred (including transfer by
operation of law other than as excepted pursuant to Section 4.2 hereof),
Purchaser must first obtain the written consent of the Company. If such written
consent is not given, then the Company or, if the Company desires, the other
shareholders of the Company, shall have a right of first refusal to purchase
such shares for the same price and on the same terms and conditions offered to
such prospective purchaser, in accordance with the procedures set forth below
(the "Rights of First Refusal").
If the proposed price per share is to be other than in cash, then an
equivalent cash value shall be determined in good faith by the Board of
Directors of the Company. If a transfer other than a voluntary sale is proposed
to be made, then the price per share for purposes of the Rights of First Refusal
shall be determined by the mutual agreement of Purchaser and the Company or, if
no agreement can be reached,
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the price shall be the fair market value of such shares, as determined in good
faith by the Company's Board of Directors.
Prior to any sale or transfer of any shares of the Stock, Purchaser,
or the legal representative of Purchaser, shall promptly deliver to the
Secretary of the Company a written notice of the price and other terms and
conditions of the offer by the prospective purchaser, the identity of the
prospective purchaser, and, in the case of a sale, Purchaser's bona fide
intention to sell or dispose of such shares together with a copy of a written
agreement between Purchaser and the prospective purchaser conditioned only upon
the satisfaction of the procedures set forth in these Rights of First Refusal.
If the Company does not give its written consent to such transfer, then the
Company (or its assignees) shall, for thirty (30) days after such notice from
Purchaser, have the right under this Section 4 to purchase some or all such
shares, as set forth herein. After the expiration of the Rights of First
Refusal, or upon the written consent of the Company to the proposed transfer,
Purchaser may sell or transfer the shares specified in the notice to the
Company, on the terms and conditions specified in such notice; provided,
however, that the sale must be consummated within three (3) months after the
date of the notice and that all shares sold or transferred shall remain subject
to the provisions and restrictions of this Agreement and shall carry a legend to
that effect.
If the Rights of First Refusal under this Section 4 are not exercised
but Purchaser fails to consummate such sale on the same terms and conditions as
set forth in the notice to the Company within three (3) months after the date of
the notice, then such Rights of First Refusal shall be reinstated.
4.2 Termination; Exceptions. The provisions of this Section 4 shall
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terminate on the closing date of an underwritten public offering of Common Stock
of the Company. The provisions of Section 4.1 shall not apply to a transfer of
any shares of Stock by Purchaser to the assignees or successors of Purchaser;
provided, in each such case a transferee shall receive and hold such shares
subject to the provisions and restrictions on transfer of this Agreement and
there shall be no further transfer of such shares except in accordance herewith.
4.3 Effect of Transfers Not in Compliance. The Company shall not be
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required to transfer on its books any shares of Stock of the Company which shall
have been sold or transferred in violation of any of the provisions set forth in
this Agreement or the Security Agreement, or to treat as owner of such shares,
or to accord the right to vote as such owner or to pay dividends to, any
transferee to whom such shares shall have been so transferred.
5. Stock Splits, etc. If, from time to time during the term of the
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Purchase Option or Rights of First Refusal as provided in Sections 3 and 4
hereof,
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there is any stock dividend, stock split or other change in the character or
amount of any of the outstanding securities of the Company or if there is any
consolidation, merger or sale of all, or substantially all, of the assets of the
Company, then in such event any and all new, substituted or additional
securities to which Purchaser is entitled by reason of its ownership of Stock
shall be immediately subject to the Purchase Option and Rights of First Refusal
and be included in the term "Stock" for all purposes of this Agreement with the
same force and effect as the shares of Stock presently subject to this
Agreement.
6. Legends. All certificates representing any shares of Stock of the
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Company subject to the provisions of this Agreement shall have endorsed thereon
substantially the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS UPON AND OBLIGATIONS WITH RESPECT TO TRANSFER AND
RIGHTS OF REPURCHASE AND RIGHTS OF FIRST REFUSAL AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL REGISTERED HOLDER, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
(b) "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) Any legend required under applicable state securities laws.
7. Investment Intent; Covenant. In purchasing the Stock, Purchaser
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represents to the Company as follows:
(a) Purchaser has had an opportunity to discuss the business prospects
and business plan of the Company with the officers and directors of the Company.
Purchaser has a preexisting personal or business relationship with the Company
or one of its officers, directors or controlling persons and/or by reason of its
business or financial experience it has the capacity to protect its own
interests in connection with the transactions contemplated by this Agreement.
Purchaser further acknowledges that the Stock is highly speculative and involves
a high degree of risk, and represents and warrants that it is able, without
impairing its financial condition, to
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hold the Stock for an indefinite period of time and suffer a complete loss of
its investment therein.
(b) Purchaser is acquiring the Stock for investment and not with a
view to or for sale in connection with any distribution of said Stock or with
any present intention of distributing or selling said Stock and it does not
presently have reason to anticipate any change in circumstances or any
particular occasion or event which would cause it to sell said Stock. Purchaser
understands that the Stock has not been registered under the Securities Act of
1933, as amended, (the "Act") and may not be sold or otherwise disposed of
except pursuant to an effective Registration Statement filed under the Act or
pursuant to an exemption from the registration requirements of such Act.
Purchaser acknowledges that the Company is under no obligation to register the
Stock under the Act on its behalf. Purchaser represents and warrants that it
understands that the Stock constitutes restricted securities within the meaning
of Rule 144 promulgated under the Act; that the exemption from registration
under Rule 144 will not be available in any event for at least one year from the
date of purchase and payment for the Stock, and even then will not be available
unless the terms and conditions of Rule 144 are complied with and will be
subject to the limitations on amount set forth therein.
(c) Without limiting the representations and warranties set forth
above, Purchaser agrees it will not make any transfer of all or any part of the
Stock unless (i) there is a Registration Statement under the Act in effect with
respect to such transfer and such transfer is made in accordance therewith, or
(ii) Purchaser has furnished the Company an opinion of counsel satisfactory to
the Company and its counsel to the effect that such transfer will not require
registration under the Act. Purchaser agrees that, prior to the closing of the
Company's initial public offering registered under the Act, it will not transfer
any of such securities in a public offering without the Company's prior consent,
even if it is otherwise permitted to transfer them pursuant to Rule 144(k) under
the Act.
8. Lock-up Agreement. In the event the Company sells any of its
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securities in an underwritten initial public offering pursuant to a registration
filed pursuant to the Act, Purchaser agrees (but only if each officer and
director of the Company also agrees), upon request from the Company or the
managing underwriter of such initial or other public offering, not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of, any of the Stock, without the prior written consent of the Company
or such underwriter, as the case may be, for such period of time (not to exceed
one hundred eighty (180) days) from the effective date of such registration as
the Company or the underwriter may specify. Purchaser further agrees that the
Company may place stop-transfer notations with the transfer agent of the Stock
to enforce this provision.
9. Miscellaneous.
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9.1 Further Assurances. The parties agree to execute such further
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instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
9.2 Entire Agreement. This Agreement, including any exhibits, is the
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entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior oral and written understandings of the parties.
9.3 Notices. Any notice required or permitted hereunder shall be
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given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States Post Office, by registered or certified mail
with postage and fees prepaid, addressed to Purchaser at its address shown on
the Company's employment records and to the Company at the address of its
principal corporate offices (attention: President) or at such other address as
such party may designate by ten (10) days' advance written notice to the other
party hereto.
9.4 Assignment of Rights: Binding Upon Successors. The Company may
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assign its rights and delegate its duties under Sections 3 and/or 4 hereof. 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, its heirs, executors, administrators, successors and
assigns.
9.5 Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of California as applied to contracts
between California residents to be wholly performed within the State of
California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CITY AUCTION, INC.
a California corporation
By: /s/ Xxxxxx Xxxxxx
Title: President
PURCHASER
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Xxxxxx Xxxxxx
By: /s/ Xxxxxx Xxxxxx
Title: individually
Address:
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ASSIGNMENT SEPARATE FROM CERTIFICATE
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FOR VALUE RECEIVED, I, _______________________________, hereby sell,
assign and transfer unto, _____________________________________ (_____________)
shares of the Common Stock of CITY AUCTION, INC. standing in my name on the
books of said corporation represented by Certificate No.__________ herewith and
do hereby irrevocably constitute and appoint __________________________________
to transfer said stock on the books of the within-named corporation with full
power of substitution in the premises.
Dated: ____________________
Signature:
By: /s/ Xxxxxx Xxxxxx
This Assignment Separate from Certificate was executed in conjunction with
the terms of a Restricted Stock Purchase Agreement between the above assignor
and CITYAUCTION, INC. dated September _____, 1998.
INSTRUCTION: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
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ESCROW AGREEMENT
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September ____, 1998
General Counsel Associates LLP
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Dear Sir or Madam:
As Escrow Agent for both CITY AUCTION, INC., a California corporation
("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 of even date herewith, in accordance with the
following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") exercises the Purchase
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 (i) to date the stock assignments
necessary for the transfer in question, (ii) to fill in the number of shares
being transferred, and (iii) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check or by cancellation
of any debt owed by Purchaser to the Company) for the number of shares of stock
being purchased pursuant to the exercise of the Purchase 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 its 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 the Department of Corporations of the State of
California of an Application for Consent to Transfer Securities Subject to
Legend or Escrow Condition Pursuant to Section 25151 of the California Corporate
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Securities Law of 1968, if required. Subject to the provisions of this paragraph
3, Purchaser shall exercise all rights and privileges of a stockholder of the
Company while the stock is held by you.
4. Upon written request of Purchaser after each successive one-year
period from the date of the Agreement, unless the Purchase Option has been
exercised, you will deliver to Purchaser a certificate or certificates
representing so many shares of stock as are not then subject to the Purchase
Option. Ninety days after cessation of Purchaser's service to the Company, you
will deliver to Purchaser a certificate or certificates representing the
aggregate number of shares sold and issued pursuant to the Agreement and not
purchased by the Company or its assignees pursuant to exercise of the Purchase
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 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
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
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.
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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 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.
11. Your responsibilities and rights as Escrow Agent hereunder shall pass
to any successor of the Company.
12. If you reasonably require other or further instruments in connection
with this Escrow Agreement or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.
13. 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 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, but
you shall be under no duty whatsoever to institute or defend any such
proceedings.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to Purchaser at its address shown on the Company's
employment records and to you and the Company at the address of its principal
corporate offices (attention Secretary and attention: President, respectively)
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties hereto.
15. By signing this Escrow Agreement, you become a party hereto only for
the purpose of said Escrow Agreement; you do not become a party to the
Agreement.
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16. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
Very truly yours,
COMPANY
CITY AUCTION, INC.
a California corporation
By: /s/ Xxxxxx Xxxxxx
Title: President
PURCHASER
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
ESCROW AGENT
GENERAL COUNSEL ASSOCIATES LLP
By: /s/ Xxxx X. Xxxxxxxxxx
Title: Partner
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ELECTION UNDER SECTION 83(b) OF
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THE INTERNAL REVENUE CODE OF 1986
---------------------------------
The undersigned Taxpayer hereby elects, pursuant to the provisions of the
federal income tax law noted above, to include in gross income for the
Taxpayer's current taxable year, as compensation for services, the excess, if
any, of the fair market value of the property described below at the time of
transfer over the amount paid for such property.
1. Taxpayer's Name: Xxxxxx Xxxxxx
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Taxpayer's Address: 00 Xxxxx Xx Xxx Xxxxxxxxx XX 00000
_________________________________________
_________________________________________
_________________________________________
Federal Tax I.D.#: ###-##-####
__________________________________________
2. The property with respect to which the election is made is described as
follows: 1,360,025 shares of Common Stock of CITY AUCTION, INC., California
---------
corporation (the "Company"), which is Taxpayer's employer or the
corporation for whom the Taxpayer has performed services.
3. The date on which the shares were transferred was September ____, 1998, and
this election is made for calendar year 1998.
4. The shares are subject to the following restrictions:
The Company may repurchase all or a portion of the shares at the
Taxpayer's original purchase price under certain conditions at the
time of Taxpayer's termination of employment or services.
5. The fair market value of the shares (without regard to restrictions other
than restrictions which by their terms will never lapse) was $.001 per
share at the time of transfer.
6. The amount paid for such shares was $.001 per share.
7. The Taxpayer has submitted a copy of this statement to the Company as the
Taxpayer's employer or the corporation for whom the Taxpayer has performed
services.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS") (AT THE
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS) WITHIN 30 DAYS AFTER
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THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR ABOVE STATED. THE ELECTION CANNOT BE
REVOKED WITHOUT THE CONSENT OF THE IRS.
Dated: September ____, 1998
TAXPAYER:
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
AMENDMENT NO. 1 TO RESTRICTED STOCK PURCHASE AGREEMENT
This Amendment No. 1 to Restricted Stock Purchase Agreement dated September
_____, 1998 by and between CityAuction, Inc., a California corporation (the
"Company"), and Xxxxxx Xxxxxx (the "Purchaser") (the "Agreement") is made as of
March 29, 1999.
--
In consideration of the mutual covenants and representations herein set
forth, the Company and Purchaser agree as follows:
1. Amendment to Section 3. Section 3 of the Agreement is amended and
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restated in its entirety to read as follows:
"3. Purchase Option.
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3.1 Grant of Purchase Option. Beginning on the Closing Date, the Stock
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shall be subject to the right and option of the Company or any affiliate (as the
term "affiliate" is defined in Rule 501 of Regulation D of the Securities Act of
1933, as amended) to repurchase the Stock (the "Purchase Option") as set forth
in this Section 3. In the event Purchaser's employment or consulting
relationship with the Company (including a parent or subsidiary of the Company)
shall cease for any reason, or no reason, with or without cause, including
death, disability or involuntary termination ("Termination"), the Company shall
have the right, as provided in Section 3.2 hereof, to purchase from Purchaser or
its personal representative, as the case may be, at the purchase price of $.001
per share (the "Option Price"), all of the Stock that has not been released from
the Purchase Option in accordance with the following schedule:
(i) On the date of this Agreement, 745,975 shares will be released
from the Purchase Option.
(ii) On the first day of each month commencing with October 1, 1998,
an additional one forty-eighth (1/48th) of the shares of Stock (43,875)
will be released from the Purchase Option.
Notwithstanding the foregoing, in the event of an Acquisition Event (as defined
below), 1/8th of the shares of the Stock (263,250 shares) shall be released
from the Purchase Option, along with any additional compensation or acceleration
granted to other Company stockholders and optionholders in their capacity as
such as a result of the Acquisition Event. For purposes of this Section 3.1, an
Acquisition Event shall mean the sale of all or substantially all of the
assets of the Company (or any successor), a merger or consolidation of the
Company (or any successor) with or into any other corporation or corporations,
or the merger of any other corporation or corporations into the Company (or any
successor), or any other corporate reorganization, in which sale of assets,
consolidation, reorganization or merger the stockholders of the Company (or any
successor) receive distributions in cash or securities of another corporation or
corporations as a result of such sale of assets, consolidation, reorganization
or merger, unless the shareholders of the Company (or any successor) hold as a
result of their stock holdings in the Company (or any successor) more than fifty
percent (50%) of the voting equity securities of the successor or surviving
corporation immediately following such merger, sale of assets, reorganization or
consolidation. Neither the transaction contemplated by that Agreement and Plan
of Reorganization dated January 8, 1999, by and among Purchaser, the Company,
Ticketmaster Online - CitySearch, Inc., Nero Acquisition Corporation and Xxxxxx
Xxx (the "Merger") nor the transaction contemplated by that agreement dated
February 9, 1999 by and among USA Networks, Inc., Lycos, Inc. and Ticketmaster
Online - City Search, Inc. relating to the combination of Ticketmaster Online -
CitySearch, Inc. Company, Lycos and certain businesses of USAI shall be an
Acquisition Event; provided, however, that notwithstanding the foregoing, upon
the effective time of the Merger, 50% of the shares of Stock shall be released
from the Purchase Option and the remaining 50% of the shares of Stock shall be
released from the Purchase Option at the rate of one twenty-fourth (1/24th) of
the shares of Stock (43,875) on each monthly anniversary of February 15, 1999
subject to his continuing his employment or consulting relationship with the
Company as set forth above."
2. Amendment to Section 4. Section 4 of the Agreement is amended and
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restated in its entirety to read as follows:
"4. [This Section is intentionally left blank.]"
3. Amendment to Section 8. Section 8 of the Agreement is amended and
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restated in its entirety to read as follows:
"1. Lock-up Agreement. In the event Ticketmaster Online - CitySearch, Inc.
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sells any of its securities in an underwritten public offering pursuant to a
registration filed pursuant to the Act, Purchaser agrees (but only if each
executive officer and director of Ticketmaster Online - CitySearch, Inc. also
agrees), upon request from Ticketmaster Online - CitySearch, Inc. or the
managing underwriter of such public offering, not to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of, any of
the Stock, without the prior written consent of Ticketmaster Online -
CitySearch, Inc. or such underwriter, as the case may be, for such period of
time (not to exceed one hundred eighty (180) days) from the effective date of
such registration as Ticketmaster Online - CitySearch, Inc. or the underwriter
may specify. Purchaser further agrees that Ticketmaster Online - CitySearch,
Inc. may place stop-transfer notations with the transfer agent of the Stock to
enforce this provision."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Agreement as of the day and year first above written.
CITY AUCTION, INC.
a California corporation
By: /s/ Xxxxxx Xxxxxx
Title: President
PURCHASER
Xxxxxx Xxxxxx
By: /s/ Xxxxxx Xxxxxx
