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EXHIBIT 10.7
STOCK RESTRICTION AGREEMENT
This Agreement is made as of the 8th day of April, 1997 (the "Effective
Date"), by and between XXX.XXX, Inc., a Delaware corporation (the
"Corporation"), and Xxxx X. Street ("Founder").
WHEREAS, Founder is the holder of an aggregate of 161,102 shares of the
Corporation's Common Stock (the "Common Stock Shares") and 322,208 shares of the
Corporation's Series A Preferred Stock (the "Series A Shares") (the Common Stock
Shares and the Series A Shares are collectively referred to hereinafter as the
"Stock");
WHEREAS, the Corporation desires to issue and sell shares of its Series
B Preferred Stock to the American Express Travel Related Services Company, Inc.
("TRS");
WHEREAS, TRS has imposed, as a condition to the purchase of such Series
B Preferred Stock, the requirement that Founder enter into an agreement
containing the provisions set forth herein; and
WHEREAS, the purchase of Series B Preferred Stock by TRS is in the best
interests of the Corporation and Founder;.
NOW, THEREFORE, in consideration of the premises set forth herein, the
continued employment of the Founder, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. All shares of Stock shall be subject to the option set forth
in this paragraph 1 ("Purchase Option"):
(a) In the event that Founder voluntarily ceases to be
an employee or director of, or consultant to, the Corporation or (ii) Founder is
terminated for Cause (as defined below) by the Corporation (including a parent
or subsidiary of the Corporation) at any time prior to the earlier of:
(i) the date three years from the date hereof;
(ii) the closing of the Corporation's sale,
lease or other disposition of all or substantially all of its assets;
(iii) the closing of any consolidation or merger
of the Corporation with or into any other corporation or other entity or person,
or any other corporate reorganization, in which the stockholders of the
Corporation immediately prior to such consolidation, merger or reorganization,
own less than 50% of the Corporation's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions in which in excess of fifty percent (50%) of the Corporation's
voting power is transferred;
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(iv) the liquidation, dissolution or winding up
of the Corporation; or
(v) Founder's death or total and permanent
disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended.
then the Corporation (or its assignee) shall have the right at
any time within ninety (90) days after such cessation of employment or service
as a director or consultant (or such longer period as may be determined by the
Corporation if such later repurchase is deemed necessary by the Corporation for
treatment of its stock as Qualified Small Business Stock under Section 1202 of
the Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder), to exercise its option to repurchase from Founder or his personal
representative, as the case may be, any or all of the shares of Stock. Any such
repurchase shall be at a price per share equal to (i) with respect to the Common
Stock Shares, Fifty-Seven Cents ($.57) and (ii) with respect to the Series A
Shares, Four Dollars Seventy-Six Cents ($4.76).
(b) The Corporation shall pay for any of the Stock
purchased pursuant to its Purchase Option in cash.
(c) As used herein, employment with the Corporation shall
include employment with an affiliate of the Corporation.
(d) "CAUSE" as used herein shall mean: (i) dishonesty
which is not the result of an inadvertent or innocent mistake of Founder with
respect to the Corporation or any of its subsidiaries; (ii) willful misfeasance
or nonfeasance of duty by Founder that materially injures the reputation,
business or business relationships of the Corporation or any of its subsidiaries
or any of their respective officers, directors or executives; (iii) any conduct
which would be sufficient to criminally charge Founder with the commission of a
crime involving moral turpitude or a crime other than a vehicle offense which
could reflect in some material fashion unfavorably upon the business or business
relationships of the Corporation or any of its subsidiaries or any of their
respective officers, directors or executives; (iv) willful or prolonged absence
from work by Founder (other than by reason of disability due to physical or
mental illness) or failure, neglect or refusal by Founder to perform his duties
and responsibilities without the same being corrected upon thirty (30) days
prior written notice; or (v) if Founder materially violates any term of this
Agreement or the Corporation's employment policies and procedures (including but
not limited to the Corporation's policies with respect to sexual harassment and
discrimination) and such action or failure is not remedied or reasonable steps
to effect such remedy are not commenced within thirty (30) days of written
notice.
2. The Purchase Option may be exercised by giving written notice
of exercise delivered or mailed as provided in paragraph 11. Upon providing of
such notice and payment or tender of the purchase price, the Corporation shall
become the legal and beneficial owner of the Stock being purchased and all
rights and interests therein or related thereto.
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3. If from time to time during the term of the Purchase Option
there is any stock dividend or liquidating dividend or distribution of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Corporation then, in such event, any and
all new, substituted or additional securities or other property to which Founder
is entitled by reason of his ownership of Stock will be immediately subject to
the Purchase Option and be included in the word "Stock" for all purposes of the
Purchase Option with the same force and effect as the shares of Stock then
subject to the Purchase Option. While the total repurchase price shall remain
the same after each such event, the repurchase price per share of Common Stock
Shares and Series A Shares, as applicable, upon exercise of the Purchase Option
shall be appropriately adjusted.
4. All certificates representing any shares of Stock of the
Corporation subject to the provisions of this Agreement shall have endorsed
thereon legends in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND
THE REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS
CORPORATION. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES
SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS
WRITTEN CONSENT OF THE ISSUER OF THESE SHARES."
5. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Founder's Stock upon
exercise of the Purchase Option herein provided for, Founder agrees, at the
closing hereunder (or as soon thereafter as practicable), to deliver (or have
the Corporation deliver on the Founder's behalf) to and deposit with the
Secretary of the Corporation ("Escrow Agent"), as Escrow Agent in this
transaction, two (2) stock assignments duly endorsed (with the dates and number
of shares left blank) in the forms attached hereto as Exhibit A, together with
the certificate or certificates evidencing all of the Stock subject to the
Purchase Option; said documents are to be held by the Escrow Agent and delivered
by said Escrow Agent pursuant to the Joint Escrow Instructions of the
Corporation and Founder set forth in Exhibit B attached hereto and incorporated
herein by this reference, which instructions shall also be delivered to the
Escrow Agent at the closing hereunder (or as soon thereafter as practicable).
6. Founder shall not sell or transfer any shares of the Stock
then subject to the Purchase Option. Without in any way limiting the foregoing,
Founder further agrees that he shall in no event make any disposition of all or
any portion of the Stock unless and until:
(a) There is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(b) (i) He shall have notified the Corporation of the
proposed disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) he
shall have furnished the Corporation with an opinion of his own counsel to the
effect that such disposition will not require registration of such shares under
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the Act; and (iii) such opinion of his counsel shall have been concurred in by
counsel for the Corporation, such concurrence not to be unreasonably withheld,
and the Corporation shall have advised him of such concurrence.
7. The Corporation shall not be required (i) to transfer on its
books any shares of Stock of the Corporation which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement or
(ii) 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.
8. Subject to the provisions of this Agreement, Founder (but not
any unapproved transferee) shall, during the term of this Agreement, exercise
all rights and privileges of a shareholder of the Corporation with respect to
the Stock.
9. This Agreement is not an employment contract and nothing in
this Agreement shall be deemed to create in any way whatsoever any obligation on
the part of Founder to continue in the employ of the Corporation, or of the
Corporation to continue Founder in the employ of the Corporation.
10. The parties agree to execute such further instruments and to
take such further action as reasonably may be necessary to carry out the intent
of this Agreement.
11. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Office Box, by registered or certified mail
with postage and fees prepaid, addressed to the other party hereto at his
address hereinafter shown below his signature or at such other address as such
party may designate by ten (10) days' advance written notice to the other party
hereto.
12. This Agreement shall bind and inure to the benefit of the
successors and assigns of the Corporation and, subject to the restrictions on
transfer herein set forth, inure to the benefit of and be binding upon Founder,
his heirs, executors, administrators, successors, and assigns. Without limiting
the generality of the foregoing, the Purchase Option of the Corporation
hereunder shall be assignable by the Corporation at any time or from time to
time, in whole or in part.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, as such laws are applied by
Colorado courts to contracts made and to be performed entirely in Colorado by
residents of that State. The parties agree that any action brought by either
party to interpret or enforce any provision of this Agreement shall be brought
in, and each party agrees to, and does hereby, submit to the jurisdiction and
venue of, the appropriate state or federal court for the district encompassing
the Corporation's principal office.
14. The parties acknowledge and agree that TRS shall be a third
party beneficiary to this Agreement, entitled to enforce its terms. In addition,
this Agreement may not be terminated without the prior written consent of TRS.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Restriction Agreement as of the day and year first above written.
XXX.XXX, INC. FOUNDER
By: /s/ XXXX X. STREET /s/ XXXX X. STREET
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Xxxx X. Street
Name: Xxxx X. Street
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Title: President, CEO
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Address: X.X. Xxx 00000
Xxxxxxxx Xxxxxxx,
XX 00000-0000
Attachments
Exhibit A - Stock Assignment Separate from Certificate
Exhibit B - Joint Escrow Instructions
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EXHIBIT A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
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STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ___________ hereby sells, assigns and transfers
unto XXX.XXX, Inc., a Delaware corporation (the "Corporation"), pursuant to that
certain Stock Restriction Agreement, dated __________, 1997, by and between the
undersigned and the Corporation (the "Agreement"),
____________________________________________ (___________) shares of Common
Stock of the Corporation standing in the undersigned's name on the books of the
Corporation represented by Certificate No(s). ________________________ and does
hereby irrevocably constitute and appoint the Corporation's Secretary attorney
to transfer said stock on the books of the Corporation with full power of
substitution in the premises. This Assignment may only be used in connection
with the repurchase of shares of Common Stock issued to the undersigned pursuant
to the Agreement that remain subject to the Corporation's right of repurchase in
accordance with and subject to the terms and conditions of the Agreement.
Dated: _______________
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(Signature)
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(Print Name)
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EXHIBIT B
JOINT ESCROW INSTRUCTIONS
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JOINT ESCROW INSTRUCTIONS
Secretary
XXX.XXX, Inc.
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Dear Sir or Madam:
As Escrow Agent for both XXX.XXX, Inc., a Delaware corporation (the
"Corporation"), and Xxxx X. Street ("Shareholder"), you are hereby authorized
and directed to hold the documents delivered to you pursuant to the terms of
that certain Stock Restriction Agreement ("Agreement") dated as of April 8,
1997, to which a copy of these Joint Escrow Instructions is attached as Exhibit
B, in accordance with the following instructions:
1. If the Corporation shall elect to exercise the Purchase Option set
forth in the Agreement, the Corporation shall give to Shareholder and you a
written notice specifying the number of shares of Stock to be purchased, the
purchase price, and the time for a closing thereunder at the principal office of
the Corporation. Shareholder and the Corporation hereby irrevocably authorize
and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred and (c) to deliver the same, together with the certificate
evidencing the shares of Stock to be transferred, to the Corporation against the
simultaneous delivery to you of the purchase price (by check, cancellation of
all or a portion of any outstanding indebtedness of Shareholder to the
Corporation, or as otherwise may be provided for in the Agreement) for the
number of shares of Stock being purchased pursuant to the exercise of the
Purchase Option.
3. Shareholder irrevocably authorizes the Corporation 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 referred to in the Agreement.
Shareholder does hereby irrevocably constitute and appoint you as his
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 complete any transaction herein contemplated,
including but not limited to any appropriate filing with state or government
officials or bank officials. Subject to the provisions of this paragraph 3,
Shareholder shall exercise all rights and privileges of a shareholder of the
Corporation while the Stock is held by you.
4. This escrow shall terminate upon the exercise in full or expiration
of the Purchase Option, whichever occurs first.
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5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to
Shareholder, you shall deliver all of the same to Shareholder 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 Shareholder 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 of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Corporation or if you shall resign by
written notice to each party. In the event of any such termination, the
Corporation shall appoint your successor as Secretary of the Corporation as
successor Escrow Agent.
12. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
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 and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
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14. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, including
delivery by express courier, upon confirmed transmission by facsimile, or 4 days
after deposit in the United States Post Office, by registered or certified mail
with postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
CORPORATION: XXX.XXX, Inc.
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
SHAREHOLDER: Xxxx X. Street
P.O. Box 62028
Xxxxxxxx Xxxxxxx, XX 00000-0000
ESCROW AGENT: Secretary
XXX.XXX, Inc.
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
15. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
16. 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, you may rely upon the advice of such counsel, and you may
pay such counsel reasonable compensation therefor. The Corporation shall be
responsible for all fees generated by such legal counsel in connection with your
obligations hereunder.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
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18. This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of Delaware, as such laws are applied
by Delaware courts to contracts made and to be performed entirely in Delaware by
residents of that state.
Very truly yours,
XXX.XXX, Inc.
By:
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Name:
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Title:
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SHAREHOLDER
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ESCROW AGENT
XXX.XXX, Inc.
By:
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Secretary
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