Exhibit 4.04
XXXXXXXX.XXX, INC.
EARLY EXERCISE RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (this "Agreement") is made as of
the 30th day of November, 1999, by and between Xxxxxxxx.xxx, Inc., a California
corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Purchaser").
Whereas, pursuant to Section 408 of the California General Corporation Law,
the Company desires to issue, and Purchaser desires to acquire, common stock of
the Company as herein described, on the terms and conditions hereinafter set
forth;
Whereas, the issuance of common stock hereby is intended to comply with the
provisions of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act") and Section 25102(f) of
the California Corporations Code.
Now, Therefore, It Is Agreed between the parties as follows:
1. Purchase and Sale of Stock. Purchaser hereby agrees to purchase from
the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of
350,000 shares of the common stock, $0.001 par value, of the Company (the
"Stock") at two dollars ($2.00) per share, for an aggregate purchase price of
$700,000.00, payable by Purchaser's (i) payment in cash in the amount of
$100,000.00 and (ii) execution of a Promissory Note in the form set forth in
Exhibit A in the amount of $600,000.00 (the "Note"), and subject to a pledge in
the form set forth in Exhibit B.
The closing hereunder, including payment for and delivery of the Stock,
shall occur at the offices of the Company immediately following the execution of
this Agreement, or at such other time and place as the parties may mutually
agree.
2. Repurchase Option. The Company shall have an irrevocable option (the
"Repurchase Option") to repurchase from Purchaser or Purchaser's personal
representative, as the case may be, at the original price per share indicated
above paid by Purchaser for such Stock ("Option Price"), up to but not exceeding
the number of shares of Stock that have not vested in accordance with the
provisions of the Stock Option Agreement under which the Stock is being
purchased.
3. Exercise of Repurchase Option. The Repurchase Option shall be
exercised by written notice signed by an officer of the Company or by any
assignee or assignees of the Company and delivered or mailed as provided in
Section 16(a). Such notice shall identify the number of shares of Stock to be
purchased and shall notify Purchaser of the time, place and date for settlement
of such purchase, which shall be scheduled by the Company within the term of the
Repurchase Option set forth in Section 2(a) above. The Company shall be entitled
to pay for any shares of Stock purchased pursuant to its Repurchase Option at
the Company's option in cash or by offset against any indebtedness owing to the
Company by Purchaser (including without limitation any note given in payment for
the Stock), or by a combination of both. Upon delivery
of such notice and payment of the purchase price in any of the ways described
above, the Company shall become the legal and beneficial owner of the Stock
being repurchased and all rights and interest therein or related thereto, and
the Company shall have the right to transfer to its own name the Stock being
repurchased by the Company, without further action by Purchaser.
4. Adjustments to Stock. If, from time to time, during the term of the
Repurchase Option there is any change affecting the Company's outstanding common
stock as a class that is effected without the receipt of consideration by the
Company (through merger, consolidation, reorganization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating,
dividend, combination of shares, change in corporation structure or other
transaction not involving the receipt of consideration by the Company), then any
and all new, substituted or additional securities or other property to which
Purchaser is entitled by reason of Purchaser's ownership of Stock shall be
immediately subject to the Repurchase Option and be included in the word "Stock"
for all purposes of the Repurchase Option with the same force and effect as the
shares of the Stock presently subject to the Repurchase Option, but only to the
extent the Stock is, at the time, covered by such Repurchase Option. While the
total Option Price shall remain the same after each such event, the Option Price
per share of Stock upon exercise of the Repurchase Option shall be appropriately
adjusted.
5. Termination of Repurchase Option. Sections 2, 3 and 4 of this
Agreement shall terminate upon the exercise in full or expiration of the
Repurchase Option, whichever first occurs.
6. Escrow of Unvested Stock. As security for Purchaser's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of Purchaser's Stock upon exercise of the Repurchase Option herein
provided for, Purchaser agrees, at the closing hereunder, to deliver to and
deposit with the Secretary of the Company or the Secretary's designee ("Escrow
Agent"), as Escrow Agent in this transaction, three (3) stock assignments duly
endorsed (with date and number of shares blank) in the form attached hereto as
Exhibit C, together with a certificate or certificates evidencing all of the
Stock subject to the Repurchase Option. Said documents are to be held by the
Escrow Agent and delivered by the Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit D attached hereto
and incorporated by this reference, which instructions shall also be delivered
to the Escrow Agent at the closing hereunder.
7. Rights of Purchaser. Subject to the provisions of Sections 6, 8, 11
and 13 herein, Purchaser shall exercise all rights and privileges of a
shareholder of the Company with respect to the Stock deposited in escrow.
Purchaser shall be deemed to be the holder for purposes of receiving any
dividends that may be paid with respect to such shares of Stock and for the
purpose of exercising any voting rights relating to such shares of Stock, even
if some or all of such shares of Stock have not yet vested and been released
from the Repurchase Option.
8. Limitations on Transfer. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the Stock
while the Stock is subject to the Repurchase Option. After any Stock has been
released from the Repurchase Option, Purchaser shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock except in
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compliance with the provisions herein and applicable securities laws.
Furthermore, the Stock shall be subject to any right of first refusal in favor
of the Company or its assignees that may be contained in the Company's Bylaws.
9. Restrictive Legends. All certificates representing the Stock shall
have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the
parties hereto):
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER,
OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY
SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT
OF THE COMPANY."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, RIGHT OF REPURCHASE AND RIGHT OF
FIRST REFUSAL OPTIONS HELD IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS SET
FORTH IN AN EARLY EXERCISE RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE
COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH PUBLIC SALE AND TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING UPON TRANSFEREES OF THESE
SHARES."
(d) Any legend required by appropriate blue sky officials.
10. Investment Representations. In connection with the purchase of the
Stock, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Stock. Purchaser is
purchasing the Stock for investment for Purchaser's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Act.
(b) Purchaser understands that the Stock has not been registered under
the Act by reason of a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of Purchaser's investment intent
as expressed herein.
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(c) Purchaser further acknowledges and understands that the Stock must
be held indefinitely unless the Stock is subsequently registered under the Act
or an exemption from such registration is available. Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Stock. Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless the
Stock is registered or such registration is not required in the opinion of
counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and 506
under the Act, as in effect from time to time, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer) in a
non-public offering subject to the satisfaction of certain conditions. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the securities may be resold by
Purchaser in certain limited circumstances subject to the provisions of Rule
144, which requires, among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the
required holding period under Rule 144 after the Purchaser has purchased, and
made full payment of (within the meaning of Rule 144), the securities to be
sold.
(e) Purchaser further understands that at the time Purchaser wishes to
sell the Stock there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that, in
such event, Purchaser would be precluded from selling the Stock under Rule 144
even if the minimum holding period requirement had been satisfied.
(f) Purchaser further warrants and represents that Purchaser has
either (i) preexisting personal or business relationships, with the Company or
any of its officers, directors or controlling persons, or (ii) the capacity to
protect his own interests in connection with the purchase of the Stock by virtue
of (a) the business or financial expertise of himself or (b) of a purchaser
representative advising Purchaser who is unaffiliated with and who is not
compensated by the Company or any of its affiliates, directly or indirectly in
connection with the provision of such advice. Purchaser further warrants that he
is an "accredited investor" within the meaning of Regulation D promulgated under
the Act.
11. Market Stand-Off Agreement. Purchaser shall not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any common stock or other securities of the Company held by Purchaser, including
the Stock (the "Restricted Securities"), for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of a registration statement of the Company filed under the Act.
Purchaser agrees to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) which are
consistent with the foregoing or which are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to Purchaser's Restricted Securities
until the end of such period.
12. Section 83(b) Election. Purchaser understands that Section 83(a) of
the Internal Revenue Code (the "Code") taxes as ordinary income the difference
between the amount
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paid for the Stock and the fair market value of the Stock as of the date any
restrictions on the Stock lapse. In this context, "restriction" includes the
right of the Company to buy back the Stock pursuant to the Repurchase Option set
forth in Section 2(a) above. Purchaser understands that Purchaser may elect to
be taxed at the time the Stock is purchased, rather than when and as the
Repurchase Option expires, by filing an election under Section 83(b) (an "83(b)
Election") of the Code with the Internal Revenue Service within thirty (30) days
from the date of purchase. Even if the fair market value of the Stock at the
time of the execution of this Agreement equals the amount paid for the Stock,
the 83(b) Election must be made to avoid income under Section 83(a) in the
future. Purchaser understands that failure to file such an 83(b) Election in a
timely manner may result in adverse tax consequences for Purchaser. Purchaser
further understands that an additional copy of such 83(b) Election is required
to be filed with his or her federal income tax return for the calendar year in
which the date of this Agreement falls. Purchaser acknowledges that the
foregoing is only a summary of the effect of United States federal income
taxation with respect to purchase of the Stock hereunder, and does not purport
to be complete. Purchaser further acknowledges that the Company has directed
Purchaser to seek independent advice regarding the applicable provisions of the
Code, the income tax laws of any municipality, state or foreign country in which
Purchaser may reside, and the tax consequences of Purchaser's death. Purchaser
assumes all responsibility for filing an 83(b) Election and paying all taxes
resulting from such election or the lapse of the restrictions on the Stock. A
form of a Section 83(b) Election has been attached hereto as Exhibit E.
13. Refusal to Transfer. The Company shall not be required (a) to transfer
on its books any shares of Stock of the Company which shall have been
transferred in violation of any of the provisions set forth in this Agreement or
(b) 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.
14. No Employment Rights. This Agreement is not an employment contract and
nothing in this Agreement shall affect in any manner whatsoever the right or
power of the Company (or a parent or subsidiary of the Company) to terminate
Purchaser's employment for any reason at any time, with or without cause and
with or without notice.
15. Miscellaneous.
(a) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or sent
by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at his address hereinafter shown below its signature or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the benefit
of the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, Purchaser's successors,
and assigns. The Repurchase Option of the Company hereunder shall be assignable
by the Company at any time or from time to time, in whole or in part.
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(c) Attorneys' Fees; Specific Performance. Purchaser shall reimburse
the Company for all costs incurred by the Company in enforcing the performance
of, or protecting its rights under, any part of this Agreement, including
reasonable costs of investigation and attorneys' fees. It is the intention of
the parties that the Company, upon exercise of the Repurchase Option and payment
of the Option Price, pursuant to the terms of this Agreement, shall be entitled
to receive the Stock, in specie, in order to have such Stock available for
future issuance without dilution of the holdings of other shareholders.
Furthermore, it is expressly agreed between the parties that money damages are
inadequate to compensate the Company for the Stock and that the Company shall,
upon proper exercise of the Repurchase Option, be entitled to specific
enforcement of its rights to purchase and receive said Stock.
(d) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. 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 Company's principal place of
business.
(e) Further Execution. The parties agree to take all such further
action(s) as may reasonably be necessary to carry out and consummate this
Agreement as soon as practicable, and to take whatever steps may be necessary to
obtain any governmental approval in connection with or otherwise qualify the
issuance of the securities that are the subject of this Agreement.
(f) Independent Counsel. Purchaser acknowledges that this Agreement
has been prepared on behalf of the Company by Fenwick & West llp, counsel to the
Company and that Fenwick & West llp does not represent, and is not acting on
behalf of, Purchaser. Purchaser has been provided with an opportunity to consult
with Purchaser's own counsel with respect to this Agreement.
(g) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes and merges all prior agreements or understandings, whether written or
oral. This Agreement may not be amended, modified or revoked, in whole or in
part, except by an agreement in writing signed by each of the parties hereto.
(h) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
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(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, the parties hereto have executed this Early Exercise
Restricted Stock Purchase Agreement as of the day and year first above written.
Xxxxxxxx.xxx, Inc.
By: /s/ Xxxx Xxxx
Xxxx Xxxx,
President and Chief Executive Officer
Address: 000 Xxxxxxxxx Xxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Purchaser:
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Address:
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Exhibit A
PROMISSORY NOTE
FULL RECOURSE PROMISSORY NOTE
$600,000.00 November 30, 1999
For Value Received, the undersigned hereby unconditionally promises to pay
to the order of Xxxxxxxx.xxx, Inc. (the "Company"), at 000 Xxxxxxxxx Xxxx Xxxx.,
Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, or at such other place as the holder hereof
may designate in writing, in lawful money of the United States of America and in
immediately available funds, the principal sum of Six Hundred Thousand Dollars
($600,000.00) together with interest accrued from the date hereof on the unpaid
principal at the rate of 6.08% per annum compounded monthly, or the maximum rate
permissible by law (which under the laws of the State of California shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans), whichever is less, as follows:
1. Principal Repayment. The outstanding principal amount and any accrued
interest hereunder shall be due and payable in full on November 30, 2003.
2. Interest Payments. Interest shall be payable annually in arrears and
shall be calculated monthly beginning November 30, 1999 on the basis of a 360-
day year for the actual number of days elapsed.
3. Prepayment. This Note may be prepaid at any time without penalty. All
money paid toward the satisfaction of this Note shall be applied first to the
payment of interest as required hereunder and then to the retirement of the
principal.
4. Security. The full amount of this Note is secured by a pledge of
shares of common stock of the Company, and is subject to all of the terms and
provisions of the Stock Pledge Agreement, dated of even date herewith between
the undersigned and the Company. Upon any default of the undersigned under this
Note, the Company shall have, in addition to its rights and remedies under the
Stock Pledge Agreement, full recourse against any real, personal, tangible or
intangible assets of the undersigned.
5. Nature of Debt. The undersigned hereby represents and agrees that the
amounts due under this Note are not consumer debt, and are not incurred
primarily for personal, family or household purposes, but are for business and
commercial purposes only.
6. Waiver. The undersigned hereby waives presentment, protest and notice
of protest, demand for payment, notice of dishonor and all other notices or
demands in connection with the delivery, acceptance, performance, default or
endorsement of this Note.
7. Costs and Expenses. The holder hereof shall be entitled to recover,
and the undersigned agrees to pay when incurred, all costs and expenses of
collection of this Note, including without limitation, reasonable attorneys'
fees.
8. Governing Law. This Note shall be governed by, and construed, enforced
and interpreted in accordance with, the laws of the State of California,
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.
Signed:/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
NOTICE OF EXERCISE
Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxx Xxxx., Xxx. 0000 Date of Exercise: November 30, 1999
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Type of option (check one): Nonstatutory (350,000)
Stock option dated: October 20, 1999
Number of shares as
to which option is
exercised: 350,000
Certificates to be
issued in name of: Xxxxx X. Xxxxxxx
Total exercise price: $2.00 per share (post-split)
Cash payment delivered
herewith: $100,000.00
Promissory Note (attached): $600,000.00
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Nonstatutory Stock Option Agreement,
including without limitation an executed Early Exercise Restricted Stock
Purchase Agreement, and (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option.
I hereby make the following certifications and representations with respect
to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and are deemed to constitute
"control securities" under Rule 144 promulgated under the Securities Act. I
warrant and represent to the Company that I have no present intention of
distributing or selling said Shares, except as permitted under the Securities
Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares after
the stock of the Company becomes publicly traded (i.e., subject to the reporting
requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934), unless Rule 144 is available to
me and I am aware that more restrictive conditions apply to affiliates of the
Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Certificate of Incorporation, Bylaws, the
Non-Statutory Stock Option Agreement, dated October 20, 1999, Early Exercise
Restricted Stock Purchase Agreement, dated November 30, 1999, and/or applicable
securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, I will not
sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the
Company filed under the Securities Act as may be requested by the Company or the
representative of the underwriters. I further agree that the Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
Very truly yours,
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
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Exhibit B
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Pledge Agreement") is made by Xxxxx X.
Xxxxxxx, an individual with a residence at Xxx Xxxxxxx #0, Xxx Xxxxx, XX 00000,
("Pledgor"), in favor of Xxxxxxxx.xxx, Inc., a California corporation with its
principal place of business at 000 Xxxxxxxxx Xxxx Xxxx., Xxxxx 0000, Xxx
Xxxxxxxxx, XX 00000 ("Pledgee").
Whereas, Pledgor has concurrently herewith executed that certain Promissory
Note (the "Note") in favor of Pledgee in the amount of $600,000.00 in partial
payment of the purchase price of 350,000 shares of the common stock of Pledgee;
and
Whereas, Pledgee is willing to accept the Note from Pledgor, but only upon
the condition, among others, that Pledgor shall have executed and delivered to
Pledgee this Pledge Agreement and the pledged Collateral (as defined below):
Now, Therefore, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, Pledgor hereby agrees as
follows:
1. As security for the full, prompt and complete payment and performance
when due (whether by stated maturity, by acceleration or otherwise) of all
indebtedness of Pledgor to Pledgee created under the Note (all such indebtedness
being the "Liabilities"), together with, without limitation, the prompt payment
of all expenses, including, without limitation, reasonable attorneys' fees and
legal expenses, incidental to the collection of the Liabilities and the
enforcement or protection of Pledgee's lien in and to the collateral pledged
hereunder, Pledgor hereby pledges to Pledgee, and grants to Pledgee, a first
priority security interest in all of the following (collectively, the "Pledged
Collateral"):
(a) 350,000 shares of common stock of Pledgee represented by
Certificate(s) numbered ___________ (the "Pledged Shares"), and all dividends,
cash, instruments, and other property or proceeds from time to time received,
receivable, or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;
(b) all voting trust certificates held by Pledgor evidencing the right
to vote any Pledged Shares subject to any voting trust; and
(c) all additional shares and voting trust certificates from time to
time acquired by Pledgor in any manner (which additional shares shall be deemed
to be part of the Pledged Shares), and the certificates representing such
additional shares, and all dividends, cash, instruments, and other property or
proceeds from time to time received, receivable, or otherwise distributed in
respect of or in exchange for any or all of such shares.
The term "indebtedness" is used herein in its most comprehensive sense and
includes any and all advances, debts, obligations and Liabilities heretofore,
now or hereafter made, incurred or created, whether voluntary or involuntary and
whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether recovery
upon such indebtedness may be or hereafter becomes unenforceable.
2. At any time, without notice, and at the expense of Pledgor, Pledgee in
its name or in the name of its nominee or of Pledgor may, but shall not be
obligated to: (1) collect by legal proceedings or otherwise all dividends
(except cash dividends other than liquidating dividends), interest, principal
payments and other sums now or hereafter payable upon or on account of said
Pledged Collateral; (2) enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any agreement in any way relating to or
affecting the Pledged Collateral, and in connection therewith may deposit or
surrender control of such Pledged Collateral thereunder, accept other property
in exchange for such Pledged Collateral and do and perform such acts and things
as it may deem proper, and any money or property received in exchange for such
Pledged Collateral shall be applied to the indebtedness or thereafter held by it
pursuant to the provisions hereof; (3) insure, process and preserve the Pledged
Collateral; (4) cause the Pledged Collateral to be transferred to its name or to
the name of its nominee; (5) exercise as to such Pledged Collateral all the
rights, powers and remedies of an owner, except that so long as no default
exists under the Note or hereunder Pledgor shall retain all voting rights as to
the Pledged Shares.
3. Pledgor agrees to pay prior to delinquency all taxes, charges, liens
and assessments against the Pledged Collateral, and upon the failure of Pledgor
to do so, Pledgee at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same.
4. At the option of Pledgee and without necessity of demand or notice,
all or any part of the indebtedness of Pledgor shall immediately become due and
payable irrespective of any agreed maturity, upon the happening of any of the
following events: (1) failure to keep or perform any of the terms or provisions
of this Pledge Agreement; (2) failure to pay any installment of principal or
interest on the Note when due; (3) the levy of any attachment, execution or
other process against the Pledged Collateral; or (4) the insolvency, commission
of an act of bankruptcy, general assignment for the benefit of creditors, filing
of any petition in bankruptcy or for relief under the provisions of Title 11 of
the United States Code of, by, or against Pledgor.
5. In the event of the nonpayment of any indebtedness when due, whether
by acceleration or otherwise, or upon the happening of any of the events
specified in the last preceding paragraph, Pledgee may then, or at any time
thereafter, at its election, apply, set off, collect or sell in one or more
sales, or take such steps as may be necessary to liquidate and reduce to cash in
the hands of Pledgee in whole or in part, with or without any previous demands
or demand of performance or notice or advertisement, the whole or any part of
the Pledged Collateral in such order as Pledgee may elect, and any such sale may
be made either at public or private sale at its place of business or elsewhere,
or at any broker's board or securities exchange, either for cash or upon credit
or for future delivery; provided, however, that if such disposition is at
private sale, then the purchase price of the Pledged Collateral shall be equal
to the public market price then in effect, or, if at the time of sale no public
market for the Pledged Collateral exists, then, in recognition of the fact that
the sale of the Pledged Collateral would have to be registered under the
Securities Act of 1933 and that the expenses of such registration are
commercially unreasonable for the type and amount of collateral pledged
hereunder, Pledgee and Pledgor hereby agree that such private sale shall be at a
purchase price mutually agreed to by
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Pledgee and Pledgor or, if the parties cannot agree upon a purchase price, then
at a purchase price established by a majority of three independent appraisers
knowledgeable of the value of such collateral, one named by Pledgor within 10
days after written request by the Pledgee to do so, one named by Pledgee within
such 10 day period, and the third named by the two appraisers so selected, with
the appraisal to be rendered by such body within 30 days of the appointment of
the third appraiser. The cost of such appraisal, including all appraiser's fees,
shall be charged against the proceeds of sale as an expense of such sale.
Pledgee may be the purchaser of any or all Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of Pledgor or right of
redemption. Demands of performance, notices of sale, advertisements and presence
of property at sale are hereby waived, and Pledgee is hereby authorized to sell
hereunder any evidence of debt pledged to it. Any sale hereunder may be
conducted by any officer or agent of Pledgee.
6. The proceeds of the sale of any of the Pledged Collateral and all sums
received or collected by Pledgee from or on account of such Pledged Collateral
shall be applied by Pledgee to the payment of expenses incurred or paid by
Pledgee in connection with any sale, transfer or delivery of the Pledged
Collateral, to the payment of any other costs, charges, attorneys' fees or
expenses mentioned herein, and to the payment of the indebtedness or any part
hereof, all in such order and manner as Pledgee in its discretion may determine.
Pledgee shall then pay any balance to Pledgor.
7. Upon the transfer of all or any part of the indebtedness Pledgee may
transfer all or any part of the Pledged Collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such Pledged
Collateral so transferred, and the transferee shall be vested with all the
rights and powers of Pledgee hereunder with respect to such Pledged Collateral
so transferred; but with respect to any Pledged Collateral not so transferred
Pledgee shall retain all rights and powers hereby given.
8. Until all indebtedness shall have been paid in full the power of sale
and all other rights, powers and remedies granted to Pledgee hereunder shall
continue to exist and may be exercised by Pledgee at any time and from time to
time irrespective of the fact that the indebtedness or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
Pledgor may have ceased.
9. Pledgee agrees that so long as no default exists under the Note or
hereunder, the Pledged Shares shall, upon the request of Pledgor, be released
from pledge as the indebtedness is paid. Such releases shall be at the rate of
one share for each One Dollar ($1.00) of principal amount of indebtedness paid.
Release from pledge, however, shall not result in release from the provisions of
those certain Joint Escrow Instructions, if any, of even date herewith among the
parties to this Pledge Agreement and the Escrow Agent named therein.
10. Pledgee may at any time deliver the Pledged Collateral or any part
thereof to Pledgor and the receipt of Pledgor shall be a complete and full
acquittance for the Pledged Collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefor.
11. The rights, powers and remedies given to Pledgee by this Pledge
Agreement shall be in addition to all rights, powers and remedies given to
Pledgee by virtue of any statute or rule of law. Any forbearance or failure or
delay by Pledgee in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy
3
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of Pledgee shall continue in full force and effect until such
right, power or remedy is specifically waived by an instrument in writing
executed by Pledgee.
12. If any provision of this Pledge Agreement is held to be unenforceable
for any reason, it shall be adjusted, if possible, rather than voided in order
to achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Pledge Agreement shall be deemed valid and enforceable
to the full extent possible.
13. This Pledge Agreement shall be governed by, and construed in
accordance with the laws of the State of California as applied to contracts made
and performed entirely within the State of California by residents of such
State.
Dated: November 30, 1999
Pledgor
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
4
Exhibit C
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
For Value Received, ______________ hereby sells, assigns and transfers unto
Xxxxxxxx.xxx, Inc., a California corporation (the "Company"), pursuant to the
Repurchase Option under that certain Early Exercise Restricted Stock Purchase
Agreement, dated November 30, 1999 by and between the undersigned and the
Company (the "Agreement"), _______________ (_______________) shares of Common
Stock of the Company standing in the undersigned's name on the books of the
Company represented by Certificate No(s). _______________ and does hereby
irrevocably constitute and appoint the Company's Secretary attorney to transfer
said Common Stock on the books of the Company with full power of substitution in
the premises. This Assignment may be used only in accordance with and subject to
the terms and conditions of the Agreement, in connection with (i) the repurchase
of shares of Common Stock issued to the undersigned pursuant to the Agreement,
and only to the extent that such shares remain subject to the Company's
Repurchase Option under the Agreement and (ii) the exercise by the Company of
its rights under the Pledge Agreement entered into in connection with the
Agreement.
Dated:____________________________
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Instruction: Please do not fill in any blanks other than the signature line.
The purpose of this Assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional
signatures on the part of Purchaser.
Exhibit D
JOINT ESCROW INSTRUCTIONS
JOINT ESCROW INSTRUCTIONS
Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
Dear Sir/Madam:
As Escrow Agent for both Xxxxxxxx.xxx, Inc., a California corporation
("Company"), and the undersigned purchaser of Common Stock of the Company
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Early Exercise Restricted
Stock Purchase Agreement ("Agreement"), dated November 30, 1999 to which a copy
of these Joint Escrow Instructions is attached as Exhibit D in accordance with
the following instructions:
In the event the Company or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement or its rights under the Pledge
Agreement, the Company or its assignee will give to Purchaser and you a written
notice specifying the number of shares of Common Stock to be purchased, the
purchase price, and the time for a closing hereunder at the principal office of
the Company. Purchaser and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with the
terms of said notice.
1. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of Common Stock to be transferred, to the Company against
the simultaneous delivery to you of the purchase price (which may include
suitable acknowledgment of cancellation of indebtedness) of the number of shares
of Common Stock being purchased or sold pursuant to the exercise of the
Repurchase Option or pursuant to the Pledge Agreement.
2. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of Common Stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as the Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
3. This escrow shall terminate upon the later of (i) expiration or
exercise in full of the Repurchase Option or (ii) release of the shares of
Common Stock from the security interest as set forth in the Pledge Agreement.
4. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Company that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Company.
5. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
6. 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 or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
7. 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.
8. You shall not be liable in any respect on account of the identity,
authority 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.
9. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
10. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall resign by written notice to each party. In the event of any such
termination, the Company may appoint any officer or assistant officer of the
Company as successor Escrow Agent and Purchaser hereby confirms the appointment
of such successor or successors as the Purchaser's attorney-in-fact and agent to
the full extent of your appointment.
11. 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.
12. 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, you
are authorized and directed
2
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.
13. 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 or five 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 hereunto 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:
Company: Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Purchaser: Xxxxx X. Xxxxxxx
Xxx Xxxxxxx #0
Xxx Xxxxx, XX 00000
Escrow Agent: Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Secretary
14. 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.
15. You shall be entitled to employ such legal counsel and other experts
(including without limitation the firm of Fenwick & West llp) 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 may pay such counsel
reasonable compensation therefor. The Company shall be responsible for all fees
generated by such legal counsel in connection with your obligations hereunder.
16. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
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17. This Agreement shall be governed by and interpreted and determined in
accordance with the laws of the State of California, as such laws are applied by
California courts to contracts made and to be performed entirely in California
by residents of that state.
Very truly yours,
Xxxxxxxx.xxx, Inc.
By /s/ Xxxx Xxxx
-------------
Xxxx Xxxx
President and Chief Executive Officer
Purchaser:
/s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Escrow Agent:
/s/ Xxxxxxx Xxxxx
-----------------
Secretary,
Xxxxxxxx.xxx, Inc.
4
Exhibit E
SECTION 83(B) ELECTION
5
Election Under Section 83(b) of the Internal Revenue Code
---------------------------------------------------------
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in gross income for the Taxpayer's current
taxable year the excess, if any, of the fair market value of the property
described below at the time of transfer over the amount paid for such property,
as compensation for services.
1. TAXPAYER'S NAME: __________________________________________________
TAXPAYER'S ADDRESS: __________________________________________________
__________________________________________________
SOCIAL SECURITY NUMBER: __________________________________________________
2. The property with respect to which the election is made is described as
follows: _______ shares of Common Stock, par value $0.001 per share of
Xxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), which is
-------
Taxpayer's employer or the corporation for whom the Taxpayer performs
services.
3. The date on which the shares were transferred was _______ and this election
is made for calendar year _____.
4. The shares are subject to the following restrictions: The Company may
repurchase all or a portion of the shares at the Taxpayer's original
purchase price under certain conditions at the time of Taxpayer's
termination of employment or services.
5. The fair market value of the shares (without regard to restrictions other
than restrictions which by their terms will never lapse) was $_____ per
share at the time of transfer.
6. The amount paid for such shares was $____ per share.
7. The Taxpayer has submitted a copy of this statement to the Company.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"), AT THE
---
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER
--------------
THE DATE OF TRANSFER OF THE PROPERTY, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED
WITHOUT THE CONSENT OF THE IRS.
Dated: ________________________ ______________________________________
Taxpayer's Signature
