LIFEN, INC.
RESTRICTED STOCK ISSUANCE AGREEMENT
This RESTRICTED STOCK ISSUANCE AGREEMENT (this "Agreement") is
made as of this 1st day of November, 2002 (the "Effective Date"), by
and among Lifen, Inc., a Delaware corporation (the "Corporation"),
Xxxxxxxx X. Xxxxx, an individual resident of the State of California
("Individual"), and ______________________, Individual's spouse.
1. PURCHASE OF SHARES
1.1 Purchase. The Corporation hereby issues to Individual,
299,949 shares (the "Shares") of the Corporation's common stock
("Common Stock"), with a vesting start date of November 1, 2002 (the
"Vesting Start Date") in exchange for providing services as an officer
of the Company valued at $2,000.00.
1.2 Endorcement. Concurrently with the execution of this
Agreement, Individual shall deliver to the Corporate Secretary of the
Corporation (the "Secretary") a duly-executed blank Assignment
Separate from Certificate (in the form attached hereto as Exhibit A).
1.3 Delivery of Certificates. The certificates representing the
Shares hereunder shall be held in escrow by the Secretary as provided
in Article 7 hereof.
1.4 Shareholder Rights. Until such time as the Corporation
actually exercises its repurchase right, rights of first refusal or
special purchase right under this Agreement, Individual (or any
successor in interest) shall have all the rights of a stockholder
(including voting and dividend rights) with respect to the Shares,
including the Shares held in escrow under Article 7, subject, however,
to the transfer restrictions of Article 4.
2. SECURITIES LAW COMPLIANCE
2.1 Purchase Entirely for Own Account. This Agreement is made
with Individual in reliance upon Individual's representation to the
Corporation, which by Individual's execution of this Agreement
Individual hereby confirms, that the Shares are being acquired for
investment for Individual's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof,
and that Individual has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing
this Agreement, Individual further represents that Individual does not
have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Shares. Individual
represents that he or she has full power and authority to enter into
this Agreement.
2.2 Exemption from Registration. The Shares have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), and are accordingly being issued to Individual in reliance upon
an exemption from such registration requirements.
2.3 Disclosure of Information. Individual believes he or she has
received all the information necessary or appropriate for deciding
whether to purchase the Shares. Individual further represents that he
or she has had an opportunity to ask questions and receive answers
from the Corporation regarding the terms and conditions of the
offering of the Shares.
2.4 Investment Experience. Individual is an investor in
securities of companies in the development stage and acknowledges that
he or she is able to fend for himself or herself, can bear the
economic risk of this investment and has such knowledge and experience
in financial or business matters that he or she is capable of
evaluating the merits and risks of the investment in the Shares.
2.5 Accredited Investor. Individual is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
2.6 Restricted Securities. Individual hereby confirms that
Individual has been informed that the Shares are restricted securities
under the 1933 Act and may not be resold or transferred unless the
Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly,
Individual hereby acknowledges that Individual is prepared to hold the
Shares for an indefinite period and that Individual is aware that Rule
144 of the Securities and Exchange Commission issued under the 1933
Act is not presently available to exempt the sale of the Shares from
the registration requirements of the 1933 Act.
2.7 Disposition of Shares. Individual hereby agrees that
Individual shall make no disposition of the Shares (other than a
permitted transfer under paragraph 4.1) unless and until there is
compliance with all of the following requirements:
(a) Individual shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and
conditions of the proposed disposition.
(b) Individual shall have complied with all requirements of
this Agreement applicable to the disposition of the Shares.
(c) Individual shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Shares under the 1933 Act or (ii) all appropriate
action necessary for compliance with the registration requirements of
the 1933 Act or of any exemption from registration available under the
1933 Act (including Rule 144) has been taken.
The Corporation shall not be required (i) to transfer on
its books any Shares which have been sold or transferred in violation
of the provisions of this Article 2 nor (ii) to treat as the owner of
the Shares, or otherwise to accord voting or dividend rights to, any
transferee to whom the Shares have been transferred in contravention
of this Agreement.
2.8 Restrictive Legends. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares will
be endorsed with restrictive legends, including, but not limited to,
one or more of the following legends:
(i) "The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares may not
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be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a no action
letter of the Securities and Exchange Commission with respect to such
sale or offer, or (c) satisfactory assurances to the Corporation that
registration under such Act is not required with respect to such sale
or offer."
(ii) "The shares represented by this certificate are
unvested and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the
terms of a written agreement dated October 22, 2002, between the
Corporation and the registered holder of the shares (or the
predecessor in interest to the shares). Such agreement grants certain
repurchase rights to the Corporation (or its assignees) upon the sale,
assignment, transfer, encumbrance or other disposition of the
Corporation's shares or upon termination of service with the
Corporation. The Corporation will upon written request furnish a copy
of such agreement to the holder hereof without charge."
3. SPECIAL TAX PROVISIONS
3.1 Section 83(b) Election. Individual understands that under
Section 83 of the Internal Revenue Code of 1986, as amended (the
"Code"), the excess of the fair market value of the Shares on the date
any forfeiture restrictions applicable to such Shares lapse over the
Purchase Price for such Shares will be reportable as ordinary income
on such lapse date. For this purpose, the term "forfeiture
restrictions" includes the right of the Corporation to repurchase the
Shares pursuant to the Repurchase Right provided under Article 5 of
this Agreement. Individual understands that he/she may elect under
Section 83(b) of the Code to be taxed at the time the Shares are
acquired hereunder, rather than when and as such Shares cease to be
subject to such forfeiture restrictions. Such election must be filed
with the Internal Revenue Service within thirty (30) days after the
date of this Agreement. Even if the fair market value of the Shares
on the date of this Agreement equals the Purchase Price paid (and thus
no tax is payable), the election must be made to avoid adverse tax
consequences in the future. The form for making this election is
attached as Exhibit B hereto. Individual understands that failure to
make this filing within the thirty (30)-day period will result in the
recognition of ordinary income by Individual as the forfeiture
restrictions lapse.
3.2 INDIVIDUAL ACKNOWLEDGES THAT IT IS INDIVIDUAL'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION
UNDER SECTION 83(b), EVEN IF INDIVIDUAL REQUESTS THE CORPORATION OR
ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER BEHALF. This
filing should be made by registered or certified mail, return receipt
requested, and Individual must retain two (2) copies of the completed
form for filing with his/her state and Federal tax returns for the
current tax year and an additional copy for his/her personal records.
4. TRANSFER RESTRICTIONS
4.1 Restriction on Transfer. Individual shall not transfer,
assign, encumber or otherwise dispose of any of the Shares which are
subject to the Corporation's Repurchase Right under Article 5. In
addition, Shares which are released from the Repurchase Right shall
not be transferred, assigned, encumbered or otherwise made the subject
of disposition in contravention of the Corporation's First Refusal
Right under Article 6. Such restrictions on transfer, however, shall
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not be applicable to (i) a gratuitous transfer of the Shares made to
Individual's spouse or issue, including adopted children, or to a
trust for the exclusive benefit of Individual or Individual's spouse
or issue, provided and only if Individual obtains the Corporation's
prior written consent to such transfer, (ii) a transfer of title to
the Shares effected pursuant to Individual's will or the laws of
intestate succession or (iii) a transfer to the Corporation in pledge
as security for any purchase-money indebtedness incurred by Individual
in connection with the acquisition of the Shares.
4.2 Transferee Obligations. Each person (other than the
Corporation) to whom the Shares are transferred by means of one of the
permitted transfers specified in paragraph 4.1 must, as a condition
precedent to the validity of such transfer, acknowledge in writing to
the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to (i) both the
Corporation's Repurchase Right and the Corporation's First Refusal
Right granted hereunder and (ii) the market stand-off provisions of
paragraph 4.4, to the same extent such Shares would be so subject if
retained by Individual.
4.3 Definition of Owner. For purposes of Articles 4, 5, 6, and 7
of this Agreement, the term "Owner" shall include Individual and all
subsequent holders of the Shares who derive their chain of ownership
through a permitted transfer from Individual in accordance with
paragraph 4.1.
4.4 Market Stand-Off Provisions.
A. In connection with any underwritten public offering by
the Corporation of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the
Corporation's initial public offering, Owner shall not sell, make any
short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to,
any Shares without the prior written consent of the Corporation or its
underwriters. Such limitations shall be in effect for such period of
time from and after the effective date of such registration statement
as may be requested by the Corporation or such underwriters; provided,
however, that in no event shall such period exceed one hundred-eighty
(180) days. The limitations of this paragraph 4.4 shall remain in
effect for the three-year period immediately following the effective
date of the Corporation's initial public offering and shall thereafter
terminate and cease to have any force or effect.
B. In the event of any stock dividend, stock split,
recapitalization or other change affecting the Corporation's
outstanding Common Stock effected without receipt of consideration,
then any new, substituted or additional securities distributed with
respect to the Shares shall be immediately subject to the provisions
of this paragraph 4.4, to the same extent the Shares are at such time
covered by such provisions.
C. In order to enforce the limitations of this paragraph 4.4,
the Corporation may impose stop-transfer instructions with respect to
the Shares until the end of the applicable stand-off period.
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5. REPURCHASE RIGHT
5.1 Grant. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day
period following the date Individual ceases for any reason to remain
in Service or (if later) during the sixty (60)-day period following
the execution date of this Agreement, to repurchase at the Purchase
Price all or any portion of the Shares in which Individual has not
acquired a vested interest in accordance with the vesting provisions
of paragraph 5.3 below (such shares to be hereinafter called the
"Unvested Shares"). For purposes of this Agreement, Individual shall
be deemed to remain in "Service" for so long as Individual continues
to render periodic services to the Corporation or any parent or
subsidiary corporation of the Corporation, whether as an employee, a
non-employee member of the Board of Directors, or an independent
contractor or consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall
be exercisable by written notice delivered to the Owner of the
Unvested Shares prior to the expiration of the applicable sixty (60)
day period specified in paragraph 5.1 (the "Repurchase Notice"). The
Repurchase Notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected,
such date to be not more than thirty (30) days after the date of the
Repurchase Notice. To the extent one or more certificates
representing Unvested Shares may have been previously delivered out of
escrow to the Owner, then Owner shall, prior to the close of business
on the date specified for the repurchase, deliver to the Secretary the
certificates representing the Unvested Shares to be repurchased, each
certificate to be properly endorsed for transfer. The Corporation
shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 8.3 or from Owner as
herein provided), pay to Owner in cash or cash equivalents (including
the cancellation of any purchase-money indebtedness), an amount equal
to the Purchase Price previously paid for the Unvested Shares which
are to be repurchased.
5.3 Termination of the Repurchase Right. The Repurchase Right
shall terminate with respect to any Unvested Shares for which it is
not timely exercised under paragraph 5.2. In addition, the Repurchase
Right shall terminate, and cease to be exercisable, with respect to
any and all Shares in which Individual vests in accordance with the
schedule below. Accordingly, as Individual continues in Service,
Individual shall acquire a vested interest in, and the Repurchase
Right shall lapse with respect to, the Shares in installments in
accordance with the following provisions:
(i) Individual shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, Shares in a series of
successive equal monthly installments over each of the forty-
eight (48) months of Service completed by Individual after the
vesting date set forth in Section 1.1 above.
All Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to (i) the First Refusal Right set
forth in Article 6 and (ii) the market stand-off provisions of
Article 4.4.
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5.4 Fractional Shares. No fractional shares shall be repurchased
by the Corporation. Accordingly should the Repurchase Right extend to
a fractional share (in accordance with the vesting computation
provisions of paragraph 5.3) at the time Individual ceases Service,
then such fractional share shall be added to any fractional share in
which Individual is at such time vested in order to make one whole
vested share no longer subject to the Repurchase Right.
5.5 Additional Shares or Substituted Securities. In the event of
any stock dividend, stock split, recapitalization or other change
affecting the Corporation's outstanding Common Stock as a class
effected without receipt of consideration, then any new, substituted
or additional securities or other property (including money paid other
than as a regular cash dividend) which is by reason of any such
transaction distributed with respect to the Shares shall be
immediately subject to the Repurchase Right, but only to the extent
the Shares are at the time covered by such right. Appropriate
adjustments to reflect the distribution of such securities or property
shall be made to the number of Shares at the time subject to the
Repurchase Right hereunder and to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of
any such transaction upon the Corporation's capital structure;
provided, however, that the aggregate Purchase Price shall remain the
same.
5.6 Corporate Transaction.
A. Immediately prior to the consummation of any of the
following stockholder-approved transactions (a "Corporate
Transaction"):
(i) a merger or consolidation in which the Corporation is
not the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by
the Corporation for cash) in or by means of which one or more persons
acting in concert acquire, in the aggregate, more than 50% of the
outstanding shares of the stock of the Corporation,
the Repurchase Right shall automatically lapse in its
entirety except to the extent the Repurchase Right is to be assigned
to the successor corporation (or its parent company) in connection
with such Corporate Transaction.
B. To the extent the Repurchase Right remains in effect
following such Corporate Transaction, such right shall apply to the
new capital stock or other property (including cash) received in
exchange for the Shares in consummation of the Corporate Transaction,
but only to the extent the Shares are at the time covered by such
right. Appropriate adjustments shall be made to the price per share
payable upon exercise of the Repurchase Right to reflect the effect of
the Corporate Transaction upon the Corporation's capital structure;
provided, however, that the aggregate purchase price shall remain the
same.
C. Any Repurchase Rights which remain in effect following
such Corporate Transaction, shall automatically cease to be
exercisable immediately prior to Individual's termination of Service
should Individual's Service subsequently terminate by reason of an
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Involuntary Termination within eighteen (18) months following the
effective date of such Corporate Transaction. Involuntary Termination
shall mean the termination of the Service of Individual which occurs
by reason of Individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or such individual's
voluntary resignation following a reduction in his or her level of
compensation (including base salary, fringe benefits) by more than
fifteen percent (15%) (not including a similar reduction with respect
to all of the Corporation's management) or a relocation of
Individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without Individual's consent. Misconduct shall
mean the commission of any act of fraud, embezzlement or dishonesty by
Individual, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any
parent or subsidiary of the Corporation), or any other intentional
misconduct by such person adversely affecting the business or affairs
of the Corporation (or any parent or subsidiary of the Corporation) in
a material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions which the Corporation (or any
parent or subsidiary of the Corporation) may consider as grounds for
the dismissal or discharge of Individual in the Service of the
Corporation (or any Parent or Subsidiary).
D. This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise make
changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its
business or assets.
6. RIGHT OF FIRST REFUSAL
6.1 Grant. The Corporation is hereby granted a right of first
refusal (the "First Refusal Right"), exercisable in connection with
any proposed transfer of the Shares in which the Owner has vested in
accordance with the vesting provisions of Article 5. For purposes of
this Article 6, the term "transfer" shall include any sale,
assignment, pledge, encumbrance or other disposition for value of the
Shares intended to be made by the Owner, but shall not include any of
the permitted transfers under paragraph 4.1.
6.2 Notice of Intended Disposition. In the event the Owner
desires to accept a bona fide third-party offer for the transfer of
any or all of the Shares (the shares subject to such offer to be
hereinafter called the "Target Shares"), the Owner shall promptly
(i) deliver to the Secretary written notice (the "Disposition Notice")
of the terms and conditions of the offer, including the purchase price
and the identity of the third-party offeror, and (ii) provide
satisfactory proof that the disposition of the Target Shares to such
third-party offeror would not be in contravention of the provisions
set forth in Articles 2 and 4 of this Agreement.
6.3 Exercise of Right. The Corporation shall, for a period of
forty-five (45) days following receipt of the Disposition Notice, have
the right to repurchase any or all of the Target Shares specified in
the Disposition Notice upon the same terms and conditions specified
therein or upon terms and conditions which do not materially vary
from those specified therein. Such right shall be exercisable by
delivery of written notice (the "Exercise Notice") to the Owner prior
to the expiration of the forty-five (45)-day exercise period. If such
right is exercised with respect to all the Target Shares specified in
the Disposition Notice, then the Corporation (or its assignees) shall
effect the repurchase of the Target Shares, including payment of the
purchase price, not more than ten (10) business days after delivery of
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the Exercise Notice; and at such time the Owner shall deliver to the
Corporation the certificates representing the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer.
To the extent any of the Target Shares are at the time held in escrow
under Article 7, the certificates for such shares shall automatically
be released from escrow and delivered to the Corporation for purchase.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation (or its assignees) shall have the right to pay the
purchase price in the form of cash equal in amount to the value of
such property. If the Owner and the Corporation (or its assignees)
cannot agree on such cash value within ten (10) days after the
Corporation's receipt of the Disposition Notice, the valuation shall
be made by an appraiser of recognized standing selected by the Owner
and the Corporation (or its assignees) or, if they cannot agree on an
appraiser within twenty (20) days after the Corporation's receipt of
the Disposition Notice, each shall select an appraiser of recognized
standing and the two appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by the
Owner and the Corporation. The closing shall then be held on the
later of (i) the tenth business day following delivery of the Exercise
Notice or (ii) the tenth business day after such cash valuation shall
have been made.
6.4 Non-Exercise of Right. In the event the Exercise Notice is
not given to Owner within forty-five (45) days following the date of
the Corporation's receipt of the Disposition Notice, Owner shall have
a period of thirty (30) days thereafter in which to sell or otherwise
dispose of the Target Shares to the third-party offeror identified in
the Disposition Notice upon terms and conditions (including the
purchase price) no more favorable to such third-party offeror than
those specified in the Disposition Notice; provided, however, that any
such sale or disposition must not be effected in contravention of the
provisions of Article 2 of this Agreement. To the extent any of the
Target Shares are at the time held in escrow under Article 7, the
certificates for such shares shall automatically be released from
escrow and surrendered to the Owner. The third-party offeror shall
acquire the Target Shares free and clear of the Corporation's
Repurchase Right under Article 5 and the Corporation's First Refusal
Right hereunder, but the acquired shares shall remain subject to
(i) the securities law restrictions of Article 2 and (ii) the market
stand-off provisions of paragraph 4.4. In the event Owner does not
effect such sale or disposition of the Target Shares within the
specified thirty (30)-day period, the Corporation's First Refusal
Right shall continue to be applicable to any subsequent disposition of
the Target Shares by the Owner until such right lapses in accordance
with paragraph 6.7.
6.5 Partial Exercise of Right. In the event the Corporation (or
its assignees) makes a timely exercise of the First Refusal Right with
respect to a portion, but not all, of the Target Shares specified in
the Disposition Notice, the Owner shall have the option, exercisable
by written notice to the Corporation delivered within thirty (30) days
after the date of the Disposition Notice, to effect the sale of the
Target Shares pursuant to one of the following alternatives:
(i) sale or other disposition of all the Target Shares to
the third-party offeror identified in the Disposition Notice, but in
full compliance with the requirements of paragraph 6.4, as if the
Corporation did not exercise the First Refusal Right hereunder; or
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(ii) sale to the Corporation (or its assignees) of the
portion of the Target Shares which the Corporation (or its assignees)
has elected to purchase, such sale to be effected in substantial
conformity with the provisions of paragraph 6.3.
Failure of the Owner to deliver timely notification to the
Corporation under this paragraph 6.5 shall be deemed to be an election
by the Owner to sell the Target Shares pursuant to alternative (i)
above.
6.6 Recapitalization/Merger.
A. In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's
outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or
other property which is by reason of such transaction distributed with
respect to the Shares shall be immediately subject to the
Corporation's First Refusal Right hereunder, but only to the extent
the Shares are at the time covered by such right.
B. In the event of any of the following transactions:
(i) a merger or consolidation in which the Corporation is
not the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the
surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to person or persons
other than those who held such securities immediately prior to the
merger, or
(iv) any transaction effected primarily to change the
state in which the Corporation is incorporated, or to create a
holding company structure,
the Corporation's First Refusal Right shall remain in full
force and effect and shall apply to the new capital stock or other
property received in exchange for the Shares in consummation of the
transaction but only to the extent the Shares are at the time covered
by such right.
6.7 Lapse. The First Refusal Right under this Article 6 shall
lapse and cease to have effect upon the earliest to occur of (i) the
first date on which shares of the Corporation's Common Stock are held
of record by more than five hundred (500) persons, (ii) a
determination is made by the Corporation's Board of Directors that a
public market exists for the outstanding shares of the Corporation's
Common Stock, or (iii) a firm commitment underwritten public offering
pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Corporation's Common Stock in the
aggregate amount of at least $10,000,000. However, the market stand-
off provisions of paragraph 4.4 shall continue to remain in full force
and effect following the lapse of the First Refusal Right hereunder.
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7. ESCROW
7.1 Deposit. Upon issuance, the certificates for any Unvested
Shares purchased hereunder shall be deposited in escrow with the
Corporation to be held in accordance with the provisions of this
Article 7. Each deposited certificate shall be accompanied by a duly
executed Assignment Separate from Certificate in the form of Exhibit A
attached hereto. The deposited certificates, together with any other
assets or securities from time to time deposited with the Corporation
pursuant to the requirements of this Agreement, shall remain in escrow
until such time or times as the certificates (or other assets and
securities) are to be released or otherwise surrendered for
cancellation in accordance with paragraph 7.3. Upon delivery of the
certificates (or other assets and securities) to the Corporation, the
Owner shall be issued an instrument of deposit acknowledging the
number of Unvested Shares (or other assets and securities) delivered
in escrow to the Corporation.
7.2 Recapitalization. All regular cash dividends on the Unvested
Shares (or other securities at the time held in escrow) shall be paid
directly to the Owner and shall not be held in escrow. However, in
the event of any stock dividend, stock split, recapitalization or
other change affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration or in the event of a
Corporate Transaction, any new, substituted or additional securities
or other property which is by reason of such transaction distributed
with respect to the Unvested Shares shall be immediately delivered to
the Corporation to be held in escrow under this Article 7, but only to
the extent the Unvested Shares are at the time subject to the escrow
requirements of paragraph 7.1.
7.3 Release/Surrender. The Unvested Shares, together with any
other assets or securities held in escrow hereunder, shall be subject
to the following terms and conditions relating to their release from
escrow or their surrender to the Corporation for repurchase and
cancellation:
(a) Should the Corporation (or its assignees) elect to
exercise the Repurchase Right under Article 5 with respect to any
Unvested Shares, then the escrowed certificates for such Unvested
Shares (together with any other assets or securities issued with
respect thereto) shall be delivered to the Corporation, concurrently
with the payment to the Owner, in cash or cash equivalent (including
the cancellation of any purchase-money indebtedness), of an amount
equal to the aggregate Purchase Price for such Unvested Shares, and
the Owner shall cease to have any further rights or claims with
respect to such Unvested Shares (or other assets or securities
attributable to such Unvested Shares).
(b) Should the Corporation (or its assignees) elect to
exercise its First Refusal Right under Article 6 with respect to any
vested Target Shares held at the time in escrow hereunder, then the
escrowed certificates for such Target Shares (together with any other
assets or securities attributable thereto) shall, concurrently with
the payment of the paragraph 6.3 purchase price for such Target Shares
to the Owner, be surrendered to the Corporation, and the Owner shall
cease to have any further rights or claims with respect to such Target
Shares (or other assets or securities).
(c) Should the Corporation (or its assignees) elect not to
exercise its First Refusal Right under Article 6 with respect to any
Target Shares held at the time in escrow hereunder, then the escrowed
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certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall be surrendered to the Owner for
disposition in accordance with the provisions of paragraph 6.4.
(d) As the interest of Individual in the Unvested Shares (or
any other assets or securities attributable thereto) vests in
accordance with the provisions of Article 5, the certificates for such
vested shares (as well as all other vested assets and securities)
shall be released from escrow and delivered to the Owner in accordance
with the following schedule:
(i) The initial release of vested shares (or other vested
assets and securities) from escrow shall be effected within thirty
(30) days following the one year anniversary of the Effective Date.
(ii) Subsequent releases of vested shares (or other vested
assets and securities) from escrow shall be effected at semi-annual
intervals thereafter.
(iii) Upon Individual's cessation of Service, any escrowed
Shares (or other assets or securities) in which Individual is at the
time vested shall be promptly released from escrow.
(iv) Upon any earlier termination of the Corporation's
Repurchase Right in accordance with the applicable provisions of
Article 5, the Shares (or other assets or securities) at the time held
in escrow hereunder shall promptly be released to the Owner as fully-
vested shares or other property.
(e) All Shares (or other assets or securities) released from
escrow in accordance with the provisions of subparagraph (d) above
shall nevertheless remain subject to (I) the Corporation's First
Refusal Right under Article 6 until such right lapses pursuant to
paragraph 6.7, (II) the market stand-off provisions of paragraph 4.4
until such provisions terminate in accordance therewith and (III) the
Special Purchase Right under Article 8.
8. MARITAL DISSOLUTION OR LEGAL SEPARATION
8.1 Grant. In connection with the dissolution of Individual's
marriage or the legal separation of Individual and Individual's
spouse, the Corporation shall have the right (the "Special Purchase
Right"), exercisable at any time during the thirty (30)-day period
following the Corporation's receipt of the required Dissolution Notice
under paragraph 8.2, to purchase from Individual's spouse, in
accordance with the provisions of paragraph 8.3, all or any portion of
the Shares which would otherwise be awarded to such spouse in
settlement of any community property or other marital property rights
such spouse may have in such Shares.
8.2 Notice of Decree or Agreement. Individual shall promptly
provide the Secretary with written notice (the "Dissolution Notice")
of (i) the entry of any judicial decree or order resolving the
property rights of Individual and Individual's spouse in connection
with their marital dissolution or legal separation or (ii) the
execution of any contract or agreement relating to the distribution or
division of such property rights. The Dissolution Notice shall be
accompanied by a copy of the actual decree of dissolution or
settlement agreement between Individual and Individual's spouse which
provides for the award to the spouse of one or more Shares in
11
settlement of any community property or other marital property rights
such spouse may have in such Shares.
8.3 Exercise of Special Purchase Right. The Special Purchase
Right shall be exercisable by delivery of a purchase notice by the
Corporation to Individual and Individual's spouse within thirty (30)
days after the Corporation's receipt of the Dissolution Notice (the
"Purchase Notice"). The Purchase Notice shall indicate the number of
shares to be purchased by the Corporation, the date such purchase is
to be effected (such date to be not less than five (5) business days,
nor more than ten (10) business days, after the date of the Purchase
Notice), and the fair market value to be paid for such Shares.
Individual (or Individual's spouse, to the extent such spouse has
physical possession of the Shares) shall, prior to the close of
business on the date specified for the purchase, deliver to the
Secretary the certificates representing the Shares to be purchased,
each certificate to be properly endorsed for transfer. To the extent
any of the Shares to be purchased by the Corporation are at the time
held in escrow under Article 7, the certificates for such shares shall
be promptly delivered out of escrow to the Corporation. The
Corporation shall, concurrently with the receipt of the stock
certificates, pay to Individual's spouse (in cash or cash equivalents)
an amount equal to the fair market value specified for such shares in
the Purchase Notice.
If Individual's spouse does not agree with the fair market
value specified for the shares in the Purchase Notice, then the spouse
shall promptly notify the Corporation in writing of such disagreement
and the fair market value of such shares shall thereupon be determined
by an appraiser of recognized standing selected by the Corporation and
the spouse. If they cannot agree on an appraiser within twenty (20)
days after the date of the Purchase Notice, each shall select an
appraiser of recognized standing, and the two appraisers shall
designate a third appraiser of recognized standing whose appraisal
shall be determinative of such value. The cost of the appraisal shall
be shared equally by the Corporation and Individual's spouse. The
closing shall then be held on the fifth business day following the
completion of such appraisal; provided, however, that if the appraised
value is more than ten percent (10%) greater than the fair market
value specified for the shares in the Purchase Notice, the Corporation
shall have the right, exercisable prior to the expiration of such five
(5) business-day period, to rescind the exercise of the Special
Purchase Right and thereby revoke its election to purchase the Shares
awarded to the spouse.
8.4 Lapse. The Special Purchase Right under this Article 8 shall
lapse and cease to have effect upon the earlier to occur of (i) the
first date on which the First Refusal Right under Article 6 lapses or
(ii) the expiration of the thirty (30)-day exercise period specified
in paragraph 8.3, to the extent the Special Purchase Right is not
timely exercised in accordance with such paragraph.
9. GENERAL PROVISIONS
9.1 Assignment. The Corporation may assign its Repurchase Right
under Article 5, its First Refusal Right under Article 6 and/or its
Special Purchase Right under Article 8 to any person or entity
selected by the Corporation's Board of Directors, including (without
limitation) one or more stockholders of the Corporation.
12
If the assignee of the Repurchase Right is other than a one
hundred percent (100%) owned subsidiary corporation of the Corporation
or the parent corporation owning one hundred percent (100%) of the
Corporation, then such assignee must make a cash payment to the
Corporation, upon the assignment of the Repurchase Right, in an amount
equal to the excess (if any) of (i) the fair market value of the
Unvested Shares at the time subject to the assigned Repurchase Right
over (ii) the aggregate repurchase price payable for Unvested Shares
thereunder.
9.2 No Employment or Service Contract. Nothing in this Agreement
shall confer upon Individual any right to continue in the Service of
the Corporation (or any parent or subsidiary corporation employing or
retaining Individual) for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation
(or any parent or subsidiary corporation employing or retaining
Individual) or Individual, which rights are hereby expressly reserved
by each, to terminate Individual's Service at any time for any reason
whatsoever, with or without cause.
9.3 Notices. Any notice required in connection with (i) the
Repurchase Right, the Special Purchase Right or the First Refusal
Right or (ii) the disposition of any Shares covered thereby shall be
given in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States mail, registered or certified,
postage prepaid and addressed to the party entitled to such notice at
the address indicated below such party's signature line on this
Agreement or at such other address as such party may designate by ten
(10) days advance written notice under this paragraph 9.3 to all other
parties to this Agreement.
9.4 No Waiver. The failure of the Corporation (or its assignees)
in any instance to exercise the Repurchase Right granted under Article
5, or the failure of the Corporation (or its assignees) in any
instance to exercise the First Refusal Right granted under Article 6,
or the failure of the Corporation (or its assignees) in any instance
to exercise the Special Purchase Right granted under Article 8 shall
not constitute a waiver of any other repurchase rights and/or rights
of first refusal that may subsequently arise under the provisions of
this Agreement or any other agreement between the Corporation and
Individual or Individual's spouse. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different
nature.
9.5 Cancellation of Shares. If the Corporation (or its
assignees) shall make available, at the time and place and in the
amount and form provided in this Agreement, the consideration for the
Shares to be repurchased in accordance with the provisions of this
Agreement, then from and after such time, the person from whom such
Shares are to be repurchased shall no longer have any rights as a
holder of such Shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such Shares
shall be deemed purchased in accordance with the applicable provisions
hereof and the Corporation (or its assignees) shall be deemed the
owner and holder of such shares, whether or not the certificates
therefor have been delivered as required by this Agreement.
10. MISCELLANEOUS PROVISIONS
10.1 Individual Undertaking. Individual hereby agrees to take
whatever additional action and execute whatever additional documents
the Corporation may in its judgment deem necessary or advisable in
13
order to carry out or effect one or more of the obligations or
restrictions imposed on either Individual or the Shares pursuant to
the express provisions of this Agreement.
10.2 Agreement is Entire Contract. This Agreement constitutes
the entire contract between the parties hereto with regard to the
subject matter hereof.
10.3 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as
such laws are applied to contracts entered into and performed in such
State without resort to that State's conflict-of-laws rules.
10.4 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
10.5 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and Individual and Individual's legal
representatives, heirs, legatees, distributees, assigns and
transferees by operation of law, whether or not any such person shall
have become a party to this Agreement and have agreed in writing to
join herein and be bound by the terms and conditions hereof.
10.6 Power of Attorney. Individual's spouse hereby appoints
Individual his or her true and lawful attorney in fact, for him or her
and in his or her name, place and xxxxx, and for his or her use and
benefit, to agree to any amendment or modification of this Agreement
and to execute such further instruments and take such further actions
as may reasonably be necessary to carry out the intent of this
Agreement. Individual's spouse further gives and grants unto
Individual as his or her attorney in fact full power and authority to
do and perform every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as he or she might or
could do if personally present, with full power of substitution and
revocation, hereby ratifying and confirming all that Individual shall
lawfully do and cause to be done by virtue of this power of attorney.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first indicated above.
LIFEN, INC.
By: __________________________________________
Xxxxxx Xxxxxxxx, President
Address: 000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
INDIVIDUAL (1)
__________________________________________
Xxxxxxxx X. Xxxxx
Address: __________________________________________
__________________________________________
Tel: __________________________________________
___________________
(1) I have executed the Section 83 (b) election that was attached
hereto as Exhibit B. As set forth in Article 3, I understand that I,
and not the Corporation, will be responsible for completing the form
and filing the election with the appropriate offices of the federal
and state tax authorities and that if such filing is not completed
within thirty (30) days after the date of this Agreement, I will not
be entitled to the tax benefits provided by Section 83(b).
[SIGNATURE PAGE TO RESTRICTED STOCK ISSUANCE AGREEMENT]
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ______________________________ hereby sell(s),
assign(s) and transfer(s) unto Lifen, Inc. (the "Corporation"),
___________________ (__________) shares of the Common Stock of the
Corporation standing in his\her name on the books of the Corporation
represented by Certificate No. ________ and do hereby irrevocably
constitute and appoint _________________________ as Attorney to
transfer the said stock on the books of the Corporation with full
power of substitution in the premises.
Dated: _______________
Signature _____________________________________
Instruction: Please do not fill in any blanks other than the
signature line. The purpose of this assignment is to enable the
Corporation to exercise its Repurchase Right set forth in the
Agreement without requiring additional signatures on the part of the
Optionee.
EXHIBIT A-1
The undersigned spouse of Individual has read and hereby approves
the foregoing Restricted Stock Issuance Agreement. In consideration
of the Corporation's granting Individual the right to acquire the
Shares in accordance with the terms of such Agreement, the undersigned
hereby agrees to be irrevocably bound by all the terms and provisions
of such Agreement, including, (specifically) the right of the
Corporation (or its assignees) to purchase any and all interest or
right the undersigned may otherwise have in such shares pursuant to
community property laws or other marital property rights.
_____________________________________
Individual's Spouse
EXHIBIT A-2
EXHIBIT B
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: _______________________________________________________
Address: ____________________________________________________
Taxpayer Ident. No.: ________________________________________
(2) The property with respect to which the election is being made
is 299,949 shares of the common stock of Lifen, Inc.
(3) The property was issued on November 1, 2002.
(4) The taxable year in which the election is being made is the
calendar year 2002.
(5) The property is subject to a repurchase right pursuant to which
the issuer has the right to acquire the property at the original
purchase price if for any reason taxpayer's employment with the
issuer is terminated. The issuer's repurchase right lapses in a
series of monthly installments over a four (4) year period
ending October 31, 2006.
(6) The fair market value at the time of transfer (determined
without regard to any restriction other than a restriction which
by its terms will never lapse) is $0.007 per share.
(7) The total amount of consideration given for the issuance of the
stock is valued at $2,000.00.
(8) A copy of this statement was furnished to Lifen, Inc. for whom
taxpayer rendered the service underlying the transfer of
property.
(9) This statement is executed as of November ___, 2002.
______________________________ ______________________________
Spouse (if any) Taxpayer
This form must be filed with the Internal Revenue Service Center with
which taxpayer files his/her Federal income tax returns. The filing
must be made within 30 days after the execution date of the Restricted
Stock Issuance Agreement.
EXHIBIT B-1
