EXHIBIT 10.10
RESTRICTED STOCK PURCHASE AGREEMENT
This RESTRICTED STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of October 15, 1997, is made by and between Boatracs, Inc.,
a California corporation ("Company"), and Xxx Xxxxxxx ("Executive"),
with reference to the following facts:
A. Company has appointed Executive as the Chief Executive
Officer of the Company.
B. Company desires to grant to Executive the ability to
purchase and own up to 2,900,000 shares of Company's common
stock on the terms and conditions hereafter set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. Restricted Stock.
(a) Purchase of Restricted Stock. In consideration
of Executive's current and future services during employment with Company,
Company irrevocably agrees to sell, and Executive irrevocably agrees to
purchase, on the date of this Agreement at a purchase price of eighty cents
($0.80) per share, a total of 2,900,000 shares (the "Restricted Shares") of
the Company's common stock, no par value (the "Common Stock"), upon the terms
and conditions set forth in this Agreement, for a total purchase price of two
million three hundred twenty thousand dollars ($2,320,000)
(the "Total Purchase Price").
(b) Consideration to Company. In consideration of the
execution of this Agreement by Company, Executive agrees to render faithful
and efficient services to Company. Nothing in this Agreement shall confer
upon Executive any right to continue in the employ of Company or shall
interfere with or restrict in any way the rights of Executive to resign at
any time or the rights of the Company to discharge Executive at any time for
any reason whatsoever, with or without cause, in any employment agreement
between the Company and Executive.
(c) Payment of Total Purchase Price. The payment of
the Total Purchase Price shall be made on the date hereof and shall be paid
as follows:
(i) Executive shall pay to Company by personal
check an amount equal to three hundred eighty six thousand six hundred
sixty-eight dollars and no cents ($386,668.00), which amount represents
payment in full for four hundred eighty-three thousand three hundred
thirty-five (483,335) Restricted Shares (the "Paid Restricted Shares"),
which shall be fully paid and nonassessable and not subject to the Company's
repurchase obligation described herein below;
(ii) Executive shall pay to Company by personal
check an amount equal to two thousand four hundred sixteen dollars and
sixty-seven cents
($2,416.67), which amount represents payment of one one-thousandth of one
cent ($0.001) per share for two million four hundred sixteen thousand six
hundred sixty-five (2,416,665) Restricted Shares;
(iii) Executive shall execute and deliver to Company
a full recourse
promissory note (the "Promissory Note"), substantially in the form of the
attached Exhibit A, with respect to the balance of the Total Purchase Price,
in an original principal amount of one million nine hundred thirty thousand
nine hundred fifteen dollars and thirty-three cents ($1,930,915.33).
The Promissory Note shall be secured by a security interest in the unvested
Restricted Shares pursuant to a Pledge Agreement, substantially in the form
of Exhibit B hereto, as the same may be amended, modified and supplemented
from time to time (the "Pledge Agreement"); and
(iv) Executive shall pay to Company by personal
check an amount
equal to the amounts which, under federal, state, or local tax law, Company
is required to withhold upon the purchase of Restricted Shares pursuant to
this Agreement.
(d) Issuance of Stock Certificates. Upon execution of this
Agreement and
payment of the Total Purchase Price for the Restricted Shares as described
above, the Company shall issue and deliver to Executive one or more
certificates representing the Paid Restricted Shares. The Company shall also
issue to Executive one or more additional certificates representing the
Unvested Shares (as hereinafter defined), which certificates shall
immediately be delivered to and held by the Company as collateral pursuant to
the Pledge Agreement and shall be released to Executive as provided therein.
All certificates shall bear the legend described in Section 2 below.
2. Investment Representation, Warranties and Acknowledgements of
Executive. Executive represents and warrants to Company as follows:
(a) That Executive is acquiring the Restricted Shares for
investment and for
his own account and not with a present view to, or for sale or any disposition
in connection with, any distribution or other transfer thereof, nor with any
present intention of selling or otherwise transferring the Restricted Shares.
(b) That Executive has such knowledge and experience in
financial and
business matters that he is capable of evaluating the merits and risks of
his investment hereunder, and that he understands and has taken cognizance
of all of the risk factors related thereto.
(c) That Executive's financial condition is such that he
can afford to
bear the economic risk of holding the unregistered Restricted Shares for an
indefinite period of time and suffer a complete loss of his investment
hereunder.
(d) That Executive has been given adequate opportunities
(i) to obtain any
additional information and documents relating to his investment in the
Restricted Shares and (ii) to ask questions and receive answers about such
documents, the Company and its business and prospects; and that these
opportunities have provided the Executive with all additional
information necessary or desirable to an evaluation of the merits and risks
related to his investment hereunder.
(e) Executive acknowledges the following:
(i) That the Restricted Shares have not been
registered under the
Securities Act or under the securities laws of any state and that the Company
is under no obligation to register any of the Restricted Shares except as
provided herein.
(ii) That the certificates representing the Unvested
Shares shall be
held by the Company as collateral for the Promissory Note and only certificates
representing Vested Shares shall be delivered to the Executive.
(iii) That the certificates representing any of the
Restricted Shares
shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF
A RESTRICTED STOCK PURCHASE AGREEMENT DATED AS OF
OCTOBER 15, 1997 (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). IF TRANSFER IS PERMITTED
BY THE TERMS OF SUCH AGREEMENT, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR (B) IF
THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS (1) AN EXEMPT
TRANSACTION UNDER THE ACT OR THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND (2) AN EXEMPT
TRANSACTION UNDER THE APPLICABLE SECURITIES LAWS
OF ANY STATE."
(f) That this Agreement and Executive's employment
agreement with the
Company will not cause or require Executive to breach any obligation to, or
agreement with, any other party.
3. Vesting of Rights to Restricted Shares.
(a) Definitions. For purposes of this Agreement, the
following terms shall
have the meanings provided:
(i) "Cause" means (A) the conviction of a felony
or a crime
involving moral turpitude or fraud; (B) substantial and repeated failure to
perform duties as reasonably directed by the Board of Directors of the
Company; or (C) gross negligence or wilful misconduct which brings the
Company into substantial public disgrace or disrepute.
(ii) "Good Reason" means the occurrence of any of
the following
events without Executive's express written consent: (A) any material adverse
change in Executive's title of Chief Executive Officer, authorities or
responsibilities which were in effect immediately prior to such change;
(B) a reduction by the Company in the base compensation paid to Executive;
(C) the failure by the Company to provide to Executive compensation and
benefits (including without limitation, incentive, bonus and other
compensation plans and any vacation, medical, hospitalization, life
insurance, dental or disability benefit plan), on similar terms and
conditions which are made available to other senior managerial employees of
the Company; or (D) any material breach of this Agreement by the Company
which has not been cured within seven (7) days after notice of such breach
has been delivered by Executive to the Company.
(iii) "Permanent Disability" means the inability of
Executive to
reasonably perform his duties and responsibilities for a period of six (6)
consecutive months due to a medical or mental disability.
(iv) "Unvested Shares" means any Restricted Shares
which are not Vested Shares.
(v) "Vested Shares" means, as of any date, any
Restricted Shares
which have vested on or prior to such date pursuant to the provisions of
Section 3(b).
(b) Vesting. The Unvested Shares shall vest in accordance
with the
following provisions (the "Vesting Schedule"):
(i) On the date of this Agreement and upon payment
therefor as
described in Section 1(c)(i), the Paid Restricted Shares shall become Vested
Shares;
(ii) on the date which is six (6) months after the
date of this
Agreement and upon payment of the first Installment (as defined in the
Promissory Note), an additional four hundred eighty-three thousand three
hundred thirty-three (483,333) Unvested Shares shall become Vested Shares;
(iii) on the date which is twelve (12) months after
the date of this
Agreement and upon payment of the second Installment (as defined in the
Promissory Note), an additional four hundred eighty-three thousand three
hundred thirty-three (483,333) Unvested Shares shall become Vested Shares;
(iv) on the date which is eighteen (18) months
after the date of this
Agreement and upon payment of the third Installment (as defined in the
Promissory Note), an additional four hundred eighty-three thousand three
hundred thirty-three (483,333) Unvested Shares shall become Vested Shares;
(v) on the date which is twenty-four (24) months
after the date of this
Agreement and upon payment of the fourth Installment (as defined in the
Promissory Note), an additional four hundred eighty-three thousand three
hundred thirty-three (483,333) Unvested Shares shall become Vested Shares;
and
(vi) on the date which is thirty (30) months after
the date of this
Agreement and upon payment of the fifth Installment (as defined in the
Promissory Note), the remaining four hundred eighty-three thousand three
hundred thirty-three (483,333) Unvested Shares shall become Vested Shares.
(c) Employment Termination: Option to Repurchase. In the
event
Executive's employment with the Company is terminated (i) by the Company for
Cause; or (ii) due to Executive's voluntary resignation without Good Reason;
the Company shall have the option (the "Company Option") to repurchase all
Unvested Shares from Executive, which option must be exercised within thirty
(30) days of the date of such employment termination. In the event the
Company elects to exercise the Company Option, the repurchase price for the
Unvested Shares shall be equal to the outstanding principal balance and all
accrued but unpaid interest under the Promissory Note as of the date of
exercise of the Company Option, which shall be paid though the cancellation
of the Promissory Note and a deemed satisfaction of all amounts due
thereunder, including without limitation outstanding principal and all accrued
interest. In the event the Company does not exercise the Company Option as
provided herein, the Unvested Shares shall continue to vest in Executive in
accordance with the vesting schedule set forth in Section 3(b) above.
(d) Employment Termination: Executive's Option. In the event
Executive's
employment with the Company is terminated (i) by the Company without Cause;
(ii) by Executive for Good Reason; (iii) due to Executive's death; or
(iv) by the Company due to Executive's Permanent Disability, Executive shall
have the option (the "Executive Option"), exercisable at any time within
ninety (90) days after such termination of employment (the "Executive Option
Period"), to accelerate the vesting of all Unvested Shares by paying all
outstanding principal under the Promissory Note and the accrued but unpaid
interest thereon, calculated to the date the Executive Option is exercised;
provided, however, that in the event of any termination of employment due to
Executive's death or Permanent Disability, the Executive Option shall only
be exercisable if (x) the per share fair market value of the
Common Stock is greater than or equal to three dollars ($3.00) per share
and (y) such termination of employment occurs one (1) year or more after the
date of this Agreement (the foregoing conditions are collectively referred
to as the "Threshold Conditions"). Upon the payment of all principal and
interest under the Promissory Note in accordance with the previous sentence,
all remaining Unvested Shares shall become Vested Shares. In the event
that the Executive Option is not exercised within the Executive Option
Period, or upon written notice from Executive that Executive will not
exercise the Executive Option (the "Executive Notice"), whichever occurs
first, the Company shall have the obligation to repurchase all
Unvested Shares as described in Section 4 below.
4. Obligation to Repurchase Unvested Shares. (i) In the event of
any
termination of Executive's employment with the Company due to Executive's
death or Permanent Disability and the Threshold Conditions have not been met
as of the date of such employment termination, or (ii) in the event the
Executive Option is not exercised by Executive within the Executive Option
Period, Company shall have the obligation ("Repurchase Obligation"), to
repurchase all of the Unvested Shares from Executive. The Repurchase
Obligation shall become effective (the "Repurchase Obligation Effective
Date") immediately upon the earlier of (i) any termination of Executive's
employment with the Company described in Section 3(d) above, (ii) receipt
of the Executive Notice, or (iii) Executive's non-exercise of the Executive
Option within the Executive Option Period. The repurchase price for the
Unvested Shares shall be equal to the outstanding principal balance and all
accrued but unpaid interest under the Promissory Note as of the Repurchase
Obligation Effective Date, which shall be paid though the cancellation of
the Promissory Note and a deemed satisfaction of all amounts due
thereunder, including without limitation outstanding principal and all
accrued interest.
5. Acceleration of Vesting. Anything to the contrary herein
notwithstanding, upon the occurrence of any (i) merger or consolidation
involving the Company whereby the Company is not the surviving entity;
(ii) sale of all or substantially all of the assets of the Company or 50%
or more of the Company's then outstanding voting securities; or (iii) the
liquidation or dissolution of the Company (collectively, "Acceleration
Event"); at Executive's option all Unvested Shares shall become Vested
Shares and all amounts due under the Promissory Note shall become due and
payable as of the date of the closing of the Acceleration Event.
6. Rights as to Unvested Shares. Effective as of the date of this
Agreement,
Executive shall have full rights of ownership with respect to all of the
Restricted Shares, except as expressly limited by the terms of the Pledge
Agreement. Such rights shall include without limitation (i) voting rights
on all matters which the holders of Common Stock are entitled to vote
thereon, and (ii) rights to receive dividends and all distributions of any
type or description made with respect to Common Stock.
7. Registration Rights.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided:
(i) "Registrable Securities" means all Vested
Shares
held by Executive and all other shares of the Company's Common Stock held by
Executive
which are not subject to a repurchase right or option held by a third party.
(ii) "SEC" means the Securities and Exchange
Commission.
(iii) "Securities Act" means the Securities Act of
1933, as amended
from time to time.
(b) Demand Registrations. At any time subsequent to
the first anniversary
of the date of this Agreement, Executive shall have the right to make a
written request to the Company for registration under and in accordance
with the provisions of the Securities Act of all or part of the Registrable
Securities held by Executive (a "Demand Registration"). Such written
request shall specify the aggregate amount of Registrable Securities to be
registered and shall also specify the intended method or methods of
disposition thereof. Within one hundred eighty (180) days of receipt of
such written request, the Company shall make a registration under this
Section 6 on such appropriate registration form of the SEC (x) as shall
be selected by the Company and as shall be reasonably acceptable to
Executive, and (y) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in the written request for such registration. Executive shall
have the right to make up to and including two (2) Demand Registrations.
(i) Expenses. The Company will pay any and all
costs, fees and
expenses relating or incident to the performance of the Company's obligations
pursuant to Demand Registrations; provided, however, that any underwriters
commission or discount shall be borne pro-rata by all holders of securities
being registered under such Demand Registration.
(ii) Effective Registration Statement. The Company
shall be deemed
to have effected a Demand Registration if the registration statement relating
to such Demand Registration is declared effective by the SEC; provided,
however, that no Demand Registration shall be deemed to have been effected
if (x) such registration, after it has become effective, is interfered with
by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court by reason of an act or omission by the
Company or (y) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such
registration are not satisfied because of an act or omission by the Company.
(c) Piggyback Registrations. If, at any time, the Company
determines to
register, whether for its own account or pursuant to a request by any third
party, any of its equity securities (including securities convertible into
equity securities), other than a registration on Form S-4 or S-8 or any
successor form to such Forms, for its own account or for the account of
others under the Securities Act, the Company shall, at each such time,
promptly give Executive written notice of such determination (the "Initial
Notice") and Executive shall be entitled to include in such registration
statement the Registrable Securities held by Executive ("Piggyback
Registration"). The Company shall include in such registration
statement such shares of Registrable Securities for which the Company has
received written requests to register such shares within 15 days after the
date of the Initial Notice. If the total amount of securities that are to
be included by either the Company for its own account or any other person
who is entitled to include securities held by such person in the proposed
registration, exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, then the
Company will include in such registration only the number of securities
which in the opinion of such underwriters can be sold, selected
from the securities to be registered by the Company and the securities
requested to be included by Executive and all other persons holding
securities to be registered pro rata based on the number of securities which
each of them proposes to register. The Company will pay all any
and all costs, fees and expenses relating or incident to the performance of
the Company's obligations pursuant to Piggyback Registrations; provided,
however, that any underwriters commission or discount shall be borne
pro-rata by all holders of securities being registered
under such Piggyback Registration.
8. Restrictions on Transfer. Executive acknowledges and agrees
that any
transfer of the Restricted Shares by Executive shall comply with the
requirements of the Securities Act of 1933, as amended, and the terms and
conditions of this Agreement.
9. Right of First Refusal. If, at any time prior to April 13,
2000,
Executive desires to sell and transfer any Restricted Shares to any person
other than (i) any trust or custodianship, the beneficiaries of which
include only Executive, his spouse, or his lineal
descendants, provided that Executive shall exercise control over such trust
or custodial arrangement; (ii) a corporation or limited liability company or
other entity under the sole control of Executive; (iii) the Company pursuant
to the terms of this Agreement; or (iv) pursuant to the laws of devise and
descent; and further provided in each case that the transferee acknowledges
and agrees to be bound by the terms of this Agreement, Executive
shall give notice of such sale and transfer (the "Transfer Notice") to the
Company. The
Transfer Notice shall state the terms and conditions of such transaction,
including the name of
the prospective purchaser, the number of shares of such Restricted Shares to
be transferred (the
"Offered Shares"), the proposed purchase price for the Offered Shares (the
"Offer Price"),
payment terms and the type of disposition. The Transfer Notice shall further
state that the
Company has the option to acquire, in accordance with the provisions of this
Agreement, any
of the Offered Shares in accordance with the terms and conditions set forth in
the Transfer
Notice, except that (x) the Company may not purchase any of such Offered Shares
unless the
Company purchases all of such Offered Shares, and (y) the Company shall be
extended the
benefits of any credit terms contained in the Transfer Notice provided that the
Company has
substantially the same credit rating as the offeror or the Company posts
security reasonably
acceptable to Executive. The Company shall have a period of fifteen (15)
business days after
receipt of the Transfer Notice (the "Option Period") in which to close the
purchase of Offered
Shares and pay the Offer Price. In the event the Company elects not to exercise
the foregoing
option or if the closing does not take place within the Option Period, Executive
may sell and
transfer such Restricted Shares pursuant to the terms of the Transfer Notice;
provided,
however, that the closing of such sale and transfer must occur within sixty (60)
days of the
date of the Transfer Notice. In the event such closing does not occur within
said period, the
Offered Shares must be re-offered to the Company in the manner described above.
10. Notices. Any notice to be given under the terms of this
Agreement to
Company
shall be addressed to the Secretary of the Company at 0000 Xxxx Xxxx., Xxxxx
X-000, Xxx
Xxxxx, Xxxxxxxxxx 00000, and any notice to be given to Executive shall be
addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section,
either party may hereafter designate a different address for notices to be given
to him. Any
notice shall be deemed duly given: at the time delivered by hand, if personally
delivered; 3
business days after being deposited in the United States mail, first class
postage prepaid, if
mailed; when receipt acknowledged by addressee, if by facsimile transmission;
and on the next
business day if timely delivered to an air courier guaranteeing overnight
delivery.
11. Covenant Regarding 83(b) Election. Executive hereby covenants
and agrees
that he will make an election provided pursuant to Treasury Regulation 1.83-2
with respect to
the purchase of Restricted Shares hereunder; and Executive further covenants and
agrees that
Executive will furnish Company with copies of the forms of election Executive
files with the
Internal Revenue Service within 30 days after the date of such purchase. For
purposes of such
election and any tax returns filed by the Company or Executive relating thereto,
Company and
Executive agree that the fair market value of the Restricted Shares on the date
of this
Agreement is eighty cents ($0.80) per share.
12. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in writing
by the party
against whom enforcement is sought. No waiver by either party hereto at any
time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject
matter hereof have been made by either party which are not expressly set forth
in this
Agreement.
13. Severability. Whenever possible, each provision of this
Agreement shall
be
interpreted in such manner as to be valid and effective under applicable law,
but if any
provision of this Agreement is found to be prohibited or invalid under
applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
14. Entire Agreement. This Agreement, the Promissory Note and the
Pledge
Agreement constitute the entire agreement between the parties hereto and
supersedes all prior
agreement, understandings and arrangements, oral or written between the parties
hereto with
respect to the subject matter hereof.
15. Governing Law. This Agreement shall be governed by and
interpreted in
accordance with the internal laws, excluding conflicts and choice of laws, of
the State of
California.
16. Attorneys' Fees. If any party to this Agreement brings an
action to
enforce its
rights under this Agreement, the prevailing party shall be entitled to recover
its costs and
expenses, including without limitation reasonable attorneys' fees, incurred in
connection with
such action, including any appeal of such action.
17. Counterparts. This Agreement may be executed in several
counterparts,
each of
which shall be deemed to be an original but all of which together will
constitute one and the
same instrument.
18. Captions and Section Headings. Captions and section headings
used herein
are
for convenience only, are not a part hereof and shall not be used in construing
this Agreement.
IN WITNESS WHEREOF, this Restricted Stock Purchase Agreement
has been executed and delivered by the parties hereto as of
the date first written above.
Company: BOATRACS, INC.
a California corporation
By: /S/ XXXXXXX XXXXXXXXX
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman
Executive: Signature: /S/ XXX XXXXXXX
Name: Xxx Xxxxxxx
Address: 0000 Xxxxx Xxx Xxx
Xx Xxxxx, Xx 00000
