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EXHIBIT 10.24
RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement (the "Agreement"), is dated as of
March 18, 1999, by and between Digital Entertainment Network, Inc., a
Delaware corporation (the "Company"), and Exodus Communications, Inc., a
California corporation ("Exodus").
WHEREAS, the Company and Exodus have entered into that certain
Internet Data Center Services Agreement, dated as of the date hereof (the
"Services Agreement"), pursuant to which Exodus shall be providing certain
services to the Company; and
WHEREAS, such services shall be provided to the Company at a
discount in the approximate amount of [*] from Exodus' standard rates; and
WHEREAS, in consideration of such discount, the Company is
issuing [*] shares of its Series A Convertible Preferred Stock, valued at $100
per share (the "Convertible Preferred Stock"), to Exodus, all on the terms and
conditions sets forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each
of Company and Exodus agrees as follows:
1. Certain Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Services Agreement.
2. Issuance of Restricted Stock.
(a) Upon the execution and delivery of this Agreement by the
parties hereto, Company shall issue to Exodus [*] shares (the "Shares") of the
Convertible Preferred Stock. Promptly after the execution and delivery of this
Agreement, Company shall deliver or cause to be delivered to Exodus
certificate(s) representing the Shares, registered in Exodus' name.
(b) A copy of this Agreement shall be filed with the Secretary of
the Company and kept with the records of the Company. Each certificate
representing any Shares owned by Exodus shall bear the following legends:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
UNLESS, IN THE OPINION OF
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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COUNSEL TO THE STOCKHOLDER (WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF
SUCH OPINION ARE, SATISFACTORY TO THE ISSUER) SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND FORFEITURE, AS SPECIFIED IN THE RESTRICTED STOCK AGREEMENT, DATED
AS OF March 18, 1999, BETWEEN THE ISSUER AND EXODUS COMMUNICATIONS, INC.
(THE "STOCKHOLDER'S AGREEMENT")." A COPY OF THE STOCKHOLDER'S AGREEMENT IS ON
FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER OF SUCH SHARES UPON WRITTEN REQUEST."
In addition, such certificates will bear such legends as may be required
by any state securities laws.
(c) The Shares shall be subject to the transferability
restrictions (the "Transfer Restrictions") and forfeiture provisions (the
"Forfeiture Provisions," and together with the Transfer Restrictions, the
"Restrictions") set forth in Sections 3 and 4 below.
(d) Simultaneously with the delivery by Company to Exodus of the
certificates representing the Shares, Exodus shall deliver to the Company one or
more stock powers endorsed in blank relating to the Shares. Upon expiration of
the Restrictions applicable to the Shares and receipt by the Company from Exodus
of the certificate(s) representing the Shares, the Company shall deliver or
cause to be delivered to Exodus a new certificate or certificates without the
second legend set forth in subparagraph (b) of this Section 2.
(e) Exodus shall have all rights and privileges with respect to
the Shares as is conferred upon a holder of the Convertible Preferred Stock by
the Certificate of Designation relating to the Convertible Preferred Stock that
was filed with the Secretary of the State of Delaware (as the same may be
amended from time to time), except that the Restrictions shall apply as set
forth in this Agreement to the Shares.
(f) In connection with an initial public offering of the
Company's common stock that results in such stock becoming listed on a national
securities exchange, including without limitation the Nasdaq Stock Market,
Exodus shall enter into such lock-up agreement as may be requested by the
Company's underwriters prohibiting any Transfer (as hereinafter defined)
(including, without limitation, indirect transfers of the economic interest in
the Shares such as hedging transactions) of any of the Shares, or any interest
therein, without the prior written consent of the Company and its underwriters.
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3. Transfer Restrictions. From the date of issuance of the Shares to
Exodus hereunder until the one-year anniversary of the Operational Date, Exodus
may not, directly or indirectly, sell, give, transfer, convey, assign, pledge,
alienate, encumber, hypothecate, or otherwise dispose of or transfer, or offer
to do any of the foregoing (collectively, "Transfer"), any of the Shares, or any
interest therein, without the prior written consent of the Board of Directors of
the Company, which the Board of Directors of the Company may withhold in its
sole and absolute discretion; provided, however, in the event that Exodus is in
default under the Services Agreement, then the Transfer Restrictions shall be
extended past the one-year anniversary of the Operational Date by the amount of
time that such default was continuing. Any attempt to Transfer any of the
Shares, or any interest therein, contrary to the foregoing restriction shall be
null, void and ineffective.
4. Forfeiture. All rights of Exodus with respect to Shares as to which
the Forfeiture Provisions have not previously expired in accordance with Section
5 below shall forthwith terminate and such shares shall be forfeited in their
entirety to the Company for no consideration if the Services Agreement is
terminated on or prior to the first-year anniversary (including any extension)
of the Operational Date by the Company pursuant to Sections 9.2(a)(i) or 9.2(b)
of the Services Agreement. Upon such forfeiture of the Shares, the certificate
or certificates, as the case may be, representing the Shares shall be promptly
delivered by or on behalf of Exodus to the Company for cancellation.
5. Expiration of Forfeiture Provisions. Subject to subsection (f) of
this Section 5, the Forfeiture Provisions shall expire with respect to the
Shares as follows:
(a) [*] of the Shares shall no longer be subject to the
Forfeiture Provisions as of the Operational Date; provided, however, if the
Services Agreement is terminated by Company within three months of the
Operational Date pursuant to Section 9.2(b) thereof, then such Shares, together
with all other Shares, shall be forfeited in their entirety to the Company for
no consideration as set forth in Section 4.
(b) An additional [*] of the Shares shall no longer be subject to
the Forfeiture Provisions on the three-month anniversary of the Operational
Date.
(c) An additional [*] of the Shares shall no longer be subject to
the Forfeiture Provisions on the six-month anniversary of the Operational Date.
(d) An additional [*] of the Shares shall no longer be subject to
the Forfeiture Provisions on the nine-month anniversary of the Operational Date.
(e) The final [*] of the Shares shall no longer be subject to the
Forfeiture Provisions on the one-year anniversary of the Operational Date.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(f) In the event that Exodus is in default under the Services
Agreement, then the respective expiration dates of the applicability of the
Forfeiture Provisions set forth in subparagraphs (a) - (e) immediately above
shall be extended by the amount of time Exodus remains in such default. By way
of example, if Exodus is in default under the Services Agreement commencing on
the first-month anniversary of the Operational Date, and such default is not
cured until the second-month anniversary of the Operational Date (and the
Services Agreement is not terminated by the Company pursuant to Section 9.2(b)
thereof), then the additional [*] Shares described in subparagraph (b) shall
remain subject to the Forfeiture Provisions until the four-month anniversary of
the Operational Date, the next [*] Shares described in subparagraph (c) shall
remain subject to the Forfeiture Provisions until the seven-month anniversary of
the Operational Date, and so on.
6. Arbitration.
(a) Except for the right to seek immediate injunctive and
equitable relief, the parties hereto agree that all disputes, claims and other
matters in controversy arising out of or relating to this Agreement, or the
interpretation, performance or breach thereof, shall be submitted to binding
arbitration in accordance with the provisions and procedures of this Section 6.
(b) The arbitration provided for in this Section 6 shall take
place in Los Angeles County, California, in accordance with the provisions of
Title 9, Sections 1280 et seq. of the California Code of Civil Procedure, except
as provided to the contrary hereunder. The arbitration shall be held before and
decided by a single neutral arbitrator. The single neutral arbitrator shall be
selected in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association (the "AAA"), as effective on
June 1, 1997, or as thereafter amended and currently in force (the "AAA Rules"),
or by a process mutually agreed upon by the parties hereto. If no agreement can
be reached as to the process for selecting the arbitrator or if the agreed
method fails, the arbitrator shall be appointed by the AAA.
(c) The parties hereto shall mutually agree upon the date and
location of the arbitration, subject to the availability of the arbitrator. If
no agreement can be reached as to the date and location of the arbitration, the
arbitrator shall appoint a time and place in accordance with the provisions of
the AAA Rules, except that the arbitrator shall give not less than thirty (30)
days' notice of the hearing unless the parties hereto mutually agree to shorten
time for notice.
(d) The arbitrator shall issue a written reasoned decision
consistent with applicable law. The arbitrator shall not have the authority to
award punitive damages. The decision of the arbitrator may be confirmed pursuant
to the provisions of California Code of Civil Procedure Section 1285, and shall
not be appealable or correctable except to the extent it is inconsistent with
applicable law and/or the express terms of this Agreement, however, it being
understood that a petition to vacate an award for any of the reasons set forth
in California Code of Civil Procedure Section 1286.2(e) shall not be permitted.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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7. Choice of Law, Jurisdiction, Venue.
This Agreement shall be governed and interpreted by the laws of the
State of California (without giving effect to any conflict of law provisions
thereof) applicable to agreements entered into and to be fully performed
therein. Subject to Section 6 of this Agreement, the parties to this Agreement
agree to submit to the exclusive jurisdiction and venue of the Los Angeles
County Superior Court and/or the U.S. District Court for the Central District of
California with respect to disputes arising under or related to this Agreement,
and hereby consent to service by U.S. Mail. In the event either party commences
arbitration or litigation for the judicial interpretation, enforcement, breach
or rescission hereof, the substantially prevailing party shall be entitled to
recover reasonable outside attorneys' fees and court and other costs incurred.
8. Binding Effect; Assignment.
All terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective legal
representatives, successors and permitted assigns. Neither party hereto may
assign any of its rights hereunder, or delegate any of its duties hereunder,
without the prior written consent of the other party.
9. Severability.
In the event that any provision, or portion thereof, of this Agreement
is held to be unenforceable or invalid by any court of competent jurisdiction,
the validity and enforceability of the remaining provisions, or portions
thereof, shall not be affected thereby.
10. Interpretation.
Each party to this Agreement has participated in, cooperated in, or
contributed to the drafting and preparation of this Agreement. In any
construction of this Agreement, the same shall not be construed for, or against,
any party but shall be construed fairly according to its plain meaning.
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11. Captions.
Captions in this Agreement are inserted for convenience of reference
only and do not define, describe or affect the construction or interpretation or
limit the scope or the intent of this Agreement or any of the terms or
provisions hereof.
12. Execution in Counterparts.
This Agreement may be executed in counterparts. When each party has
signed and delivered at least one counterpart, each counterpart shall be deemed
an original and, when taken together with the other counterparts, shall
constitute one agreement which shall be binding on and inure to the benefit of
all parties hereto. Photographic or facsimile copies of such signed counterparts
may be used in lieu of the originals for any purpose.
13. Written Notice.
Unless otherwise specifically provided herein, all notices, demands or
other communications given hereunder shall be in writing and shall be deemed to
have been delivered as of actual personal delivery or as of the third business
day (excluding Saturdays) after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to Exodus, to:
Exodus Communications, Inc.
0000 Xxx Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx, XX 00000
If to Company, to:
Digital Entertainment Network, Inc.
0000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
1999 Avenue of the Stars
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
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14. Completeness of Agreement.
This Agreement (together with the Services Agreement) contains the
entire agreement between the parties hereto relating to the transactions
contemplated hereby, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are superseded
and of no force and effect.
15. Modification of Agreement.
Except as otherwise provided for herein, no modification, waiver,
amendment, discharge or change of this Agreement or any term or representation
therein shall be valid unless the same is in writing and signed by the party
against which the enforcement of such modification, waiver, amendment, discharge
or change is or may be sought.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
EXODUS:
EXODUS COMMUNICATIONS, INC.
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: VP General Counsel
THE COMPANY:
DIGITAL ENTERTAINMENT NETWORK, INC.
By: /s/ XXXX X. XXXXX
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Name: Xxxx X. Xxxxx
Title: General Counsel
Executive VP Operations
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