EXHIBIT 10.23
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of November 24, 1998 by and between Fresh
Enterprises, Inc., a California corporation (the "Company"), and Xxxxx X.
Xxxxxxxx, a Consultant to the Company (the "Holder").
RECITALS
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WHEREAS, the Company has established the 1998 Stock Plan of Fresh
Enterprises, Inc. (as amended, the "Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock (as defined herein) subject to certain restrictions thereon; and
WHEREAS, the Committee appointed to administer the Plan has determined
that it would be to the advantage and in the best interest of the Company and
its shareholders to grant Restricted Stock to the Holder as provided for herein;
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:
ARTICLE I.
DEFINITIONS
Wherever the following terms are used in this Agreement they shall have
the meanings specified below, unless the context clearly indicates otherwise.
Capitalized terms not defined herein shall have the meanings assigned to such
terms in the Plan.
1.1. Acceleration Event. "Acceleration Event" shall mean any of
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the following transactions:
(a) a "Qualified Initial Public Offering" as defined in
the Shareholders' Agreement or the consummation of any initial public offering
of Common Stock in which the holders of Series A Stock receive proceeds of at
least $10 million; or
(b) a "Change of Control" as defined in the Shareholders'
Agreement; or
(c) the consummation of a merger or consolidation of the
Company with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66-2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 25% of the combined
voting power of the Company's then outstanding securities shall not constitute
an Acceleration Event; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or the consummation of the sale or
disposition by the Company of all or substantially all of the Company's assets.
1.2. California Securities Act. "California Securities Act"
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shall mean the California Corporate Securities Law of 1968, as amended.
1.3. Code. "Code" shall mean the Internal Revenue Code of 1986,
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as amended.
1.4. Committee. "Committee" shall mean the Compensation
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Committee of the Board, or another committee or subcommittee of the Board,
appointed to administer the Plan, unless the Board has assumed the authority
for administration of the Plan generally as provided in the Plan.
1.5. Common Stock. "Common Stock" shall mean the Common Stock
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of the Company, par value per share.
1.6. Company. "Company" shall mean Fresh Enterprises, Inc., a
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California corporation.
1.7. Consultant. "Consultant" shall mean any consultant or
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adviser if:
(a) the consultant or adviser renders bona fide services
to the Company;
(b) the services rendered by the consultant or adviser
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities; and
(c) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.
1.8. Consulting Agreement. "Consulting Agreement" shall mean
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that certain Consulting Agreement dated as of November 24, 1998 by and between
the Holder and the Company.
1.9. Director. "Director" shall mean a member of the Board.
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1.10. Exchange Act. "Exchange Act" shall mean the Securities
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Exchange Act of 1934, as amended.
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1.11. Fair Market Value. "Fair Market Value" of a share of
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Common Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee acting in good faith.
1.12. Plan. "Plan" shall mean the 1998 Stock Plan of Fresh
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Enterprises, Inc.
1.13. Repurchase Right. "Repurchase Right" shall mean the right
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of the Company to repurchase shares of Restricted Stock as set forth in Section
3.1.
1.14. Restricted Stock. "Restricted Stock" shall mean the shares
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of Common Stock issued under the Agreement.
1.15. Restrictions. "Restrictions" shall mean the restrictions
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on sale or other transfer set forth in Section 3.3 and the exposure to
forfeiture set forth in Section 3.1.
1.16. Securities Act. "Securities Act" shall mean the Securities
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Act of 1933, as amended.
1.17. Shareholders' Agreement. "Shareholders' Agreement" shall
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mean that certain Shareholders' Agreement dated as of November 24, 1998 by and
among the Company, the Holder and the other holders of the issued and
outstanding capital stock of the Company listed on Schedule A thereto, as in
effect from time to time.
1.18. Subsidiary. "Subsidiary" shall mean any corporation in an
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unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
1.19. Termination of Consultancy. "Termination of Consultancy"
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shall mean the time when the engagement of the Holder as a Consultant to the
Company or a Subsidiary is terminated for any reason, with or without "just
cause" (as defined in the Consulting Agreement), including, but not by way of
limitation, by resignation, discharge, death, disability or retirement; but
excluding a termination where there is a simultaneous commencement of employment
with the Company or any Subsidiary. All determinations as to the effect of any
Termination of Consultancy shall be as set forth in the Consulting Agreement.
Notwithstanding any other provision of the Plan or this Agreement, the Company
or any Subsidiary has an absolute and unrestricted right to terminate the
Holder's engagement as a Consultant at any time for any reason whatsoever, with
or without just cause, except to the extent expressly provided
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otherwise in the Consulting Agreement or other written agreement between the
Company and the Holder.
ARTICLE II.
ISSUANCE OF RESTRICTED STOCK
2.1. Sale of Stock. The Company hereby agrees to sell to the
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Holder and the Holder hereby agrees to purchase from the Company an aggregate of
80,519 shares of the Company's Common Stock, no par value per share (the
"Restricted Stock"), for an aggregate purchase price of $547,529.20.
2.2. Payment of Purchase Price. The payment of the purchase
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price shall be by execution by the Holder of a secured promissory note in the
form attached hereto as Exhibit A (the "Note") together with a repayment and
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stock pledge agreement in the form attached hereto as Exhibit B (the "Pledge
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Agreement").
ARTICLE III.
REPURCHASE RIGHT AND OTHER RESTRICTIONS ON RESTRICTED STOCK
3.1. Repurchase Right. In the event of the Holder's
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Termination of Consultancy for any reason, including by the Company without
"just cause" (as defined under the Consulting Agreement), before the first
anniversary of the date hereof, the Company shall have an irrevocable, exclusive
right, but not the obligation, for a period of 90 days from such Termination of
Consultancy to repurchase all or any portion of the Unvested Shares (as defined
below in Section 3.2) at the original purchase price per share (the "Repurchase
Price"). The Repurchase Right shall be exercisable by the Company by written
notice to the Holder or the Holder's executor and shall be payable, at the
Company's option, (i) by delivery to the Holder or the Holder's executor with
such notice of a check in the amount of the Repurchase Price for the Unvested
Shares being repurchased, or (ii) by cancellation by the Company of an amount of
the Holder's indebtedness, if any, to the Company equal to the Repurchase Price
for the Unvested Shares being repurchased, or (iii) by a combination of (i) and
(ii) so that the combined payment and cancellation of indebtedness equals the
Repurchase Price times the number of shares to be repurchased (the "Aggregate
Repurchase Price"). Upon delivery of such notice and the payment of the
Aggregate Repurchase Price in any of the ways described above, the repurchased
Restricted Stock shall become available for future grant under the Plan.
3.2. Release of Shares From Repurchase Right.
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(a) As of the date of this Agreement, 40,260 shares of
the Restricted Stock shall be held free of the Company's Repurchase Right. The
remainder of the shares of Restricted Stock shall be released from the
Repurchase Right on the first anniversary of the date of this Agreement
provided the Holder was continuously engaged by the Company as a Consultant
through such date; provided, however, that upon the occurrence of an
Acceleration Event prior to the Holder's Termination of Consultancy, all of the
Restricted Stock shall be released from the Company's Repurchase Right.
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(b) Shares of Restricted Stock which have not been
released from the Repurchase Right pursuant to subsection (a) are referred to
herein as "Unvested Shares."
3.3. Restriction on Transfer. The Holder hereby agrees and
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acknowledges that the shares of Restricted Stock are subject to the provisions
of the Shareholders' Agreement, including, without limitation, the restrictions
on transfer set forth therein. Notwithstanding any provision to the contrary in
this Agreement, none of the Restricted Stock or any beneficial interest therein
shall be transferred, encumbered or otherwise disposed of in any manner other
than in accordance with the provisions of this Agreement, the Shareholders'
Agreement and the Pledge Agreement.
3.4. Voting Arrangements. The Holder hereby agrees and
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acknowledges that the shares of Restricted Stock are subject to certain
restrictions and obligations regarding the voting thereof, as set forth in the
Shareholders' Agreement.
ARTICLE IV.
REPRESENTATIONS, LEGENDS
4.1. Investment Representations. In connection with the purchase
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of the Restricted Stock, the Holder represents to the Company the following:
(a) The Holder 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
Restricted Stock. The Holder is purchasing the Restricted Stock for investment
for the Holder's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act.
(b) The Holder understands that the Restricted Stock has
not been registered under the Securities Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Holder's investment intent as expressed herein. In this
connection, the Holder understands that, in view of the Securities and Exchange
Commission ("Commission"), the statutory basis for such exemption may not be
present if the Holder's representations meant that the Holder's present
intention was to hold the Restricted Stock for a minimum capital gains period
under applicable tax statutes, for a deferred sale, for a market rise, for a
sale if the market does not rise, or for a year or any other fixed period in
the future.
(c) The Holder further acknowledges and understands that
the Restricted Stock must be held indefinitely unless it is subsequently
registered under the Securities Act or an exemption from such registration is
available. The Holder further acknowledges and understands that except as set
forth in that certain Registration Rights Agreement dated as of November 24,
1998 by and among Xxxxxxxxx-Xxxxx Partners III, Grunman Hill III L.P., Oak
Investment Partners VIII, Xxxxxx Xxxxx, Xxxx Xxxxxxxxxx, the Holder,
Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Yonkich, the individuals listed on Schedule
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A attached thereto and the Company, as in effect from time to time, the Company
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is under no obligation to register the Restricted Stock. The Holder understands
that the certificate evidencing the Restricted Stock will be imprinted with a
legend which prohibits the transfer of
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the Restricted Stock unless such shares are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.
4.2. Stock Certificate Legends.
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(a) The share certificate evidencing the Restricted Stock
issued hereunder shall be endorsed with the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF ONE OR MORE AGREEMENTS BETWEEN THE COMPANY
AND THE STOCKHOLDER, COPIES OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
(b) The share certificate evidencing the Restricted Stock
issued hereunder shall also be endorsed with any legend required by any
applicable state securities laws, including, without limitation, the California
Securities Act.
4.3. Market Stand-Off Agreement. The Holder agrees in
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connection with any registration of the Company's securities (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan) that, upon request of the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, pledge or otherwise hypothecate or encumber, grant any option for
the purchase of, or otherwise dispose of any Restricted Stock (other than those
shares included in the registration) without the prior written consent of such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days from the effective date of such registration in the
case of a registration for the Company's initial public offering and ninety (90)
days from the effective date of such registration in the case of other
registrations) as may be requested by such managing underwriters.
4.4. Adjustment for Stock Split. All references to the number
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of shares of Restricted Stock and the purchase price of the Restricted Stock in
this Agreement shall be appropriately adjusted to reflect any stock split,
reverse stock split or stock dividend or other similar change in the Restricted
Stock which may be made by the Company after the date of this Agreement.
4.5. Tax Consequences. The Holder has reviewed with the
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Holder's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Holder is relying solely on such advisors and
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not on any statements or representations of the Company or any of its agents.
The Holder understands that the Holder (and not the Company) shall be
responsible for the Holder's own tax liability that may arise as a result of
this investment or the transactions contemplated by this Agreement. The Holder
understands that Code Section 83 taxes as ordinary income both (i) the
difference between the fair market value of the Restricted Stock when the
Company granted the Holder the right to purchase the Restricted Stock and the
fair market value of the Restricted Stock on the date of this Agreement, and
(ii) the difference between the amount paid for the Restricted Stock and the
fair market value of the Restricted Stock as of the date certain restrictions on
the Restricted Stock lapse, unless the Holder properly makes an election to be
taxed at the time of purchase pursuant to Code Section 83(b). In this context,
"restriction" includes the right of the Company to buy back the Restricted Stock
pursuant to the Repurchase Right. In the event the Company has registered under
the Exchange Act, "restriction" with respect to officers, directors and 10%
stockholders also means the period after the purchase of the Restricted Stock
during which such officers, directors and 10% stockholders could be subject to
suit under Section 16(b) of the Exchange Act.
THE HOLDER ACKNOWLEDGES THAT IT IS THE HOLDER'S SOLE RESPONSIBILITY AND
NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER CODE SECTION 83(b), EVEN IF
THE HOLDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE HOLDER'S BEHALF.
4.6. Indemnification; Right to Offset. The Holder hereby agrees
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to hold the Company, its respective officers, directors, stockholders, agents,
employees, subsidiaries, parents, assigns, successors and predecessors
(collectively, the "Indemnitees") harmless and indemnify and reimburse the
Company and the other Indemnitees for any withholding taxes and interest and
penalties, if any, thereon (the "Taxes") with respect to income, if any,
recognized by the Holder from the transfer of Restricted Stock described herein.
Furthermore, and notwithstanding the foregoing, the Holder hereby agrees and
consents to the Company's right to offset and reduce any payment due to or on
behalf of the Holder by the amount of the Taxes.
ARTICLE V.
GENERAL PROVISIONS
5.1. Not a Contract of Employment or For Services.
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(a) Nothing in this Agreement or in the Plan shall confer
upon the Holder any right to continue as a Consultant to the Company or any
Subsidiary.
(b) THE HOLDER ACKNOWLEDGES AND AGREES THAT THE LAPSING
OF THE REPURCHASE RIGHT PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN "AT WILL" CONSULTANT TO THE COMPANY (AND NOT THROUGH
THE ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER). THE HOLDER FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE REPURCHASE RIGHT SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A CONSULTANT OR
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SERVICE PROVIDER FOR SUCH PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH THE COMPANY'S RIGHT TO TERMINATE HOLDER'S ENGAGEMENT AT ANY
TIME, WITH OR WITHOUT JUST CAUSE.
5.2. Administration. The Committee shall have the power to
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interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. All actions taken
and all interpretations and determinations made by the Committee in good faith
shall be final and binding upon the Holder, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Restricted Stock. In its sole discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under the
Plan and this Agreement except with respect to matters which under Rule 16b-3 or
Section 162(m) of the Code, or any regulations or rules issued thereunder, are
required to be determined in the sole discretion of the Committee.
5.3. Escrow. The Secretary of the Company or such other escrow
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holder as the Committee may appoint shall retain physical custody of the
certificates representing the Restricted Stock until all of the Restrictions
shall lapse or shall have been removed; provided, however, that in no event
shall the Holder retain physical custody of any certificates representing
Unvested Shares.
5.4. Governing Law. This Agreement shall be administered,
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interpreted and enforced under the internal laws of the state of California
without regard to conflicts of laws thereof.
5.5. Entire Agreement. The terms of this Agreement are intended
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by the parties to be the final expression of their agreement with respect to
the purchase of Restricted Stock by the Holder and may not be contradicted by
evidence of any prior or contemporaneous written or oral agreement. This
parties hereto further intend that this Agreement shall constitute the complete
and exclusive statement of its terms and that no extrinsic evidence whatsoever
may be introduced in any judicial, administrative or other legal proceeding to
vary the terms of this Agreement. In the event of any inconsistency between
this Agreement and the Consulting Agreement, the terms of the Consulting
Agreement shall govern.
5.6. Amendments; Waivers. This Agreement may not be modified,
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amended or terminated except by an instrument in writing signed by the Holder
and the Company. Either party's failure to enforce any provision or provisions
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party's right
to assert all other legal remedies available to it under the circumstances.
5.7. Notices. Any notice, demand or request required or
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permitted to be given by either the Company or the Holder pursuant to the terms
of this Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the
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end of this Agreement or such other address as a party may request by notifying
the other in writing.
5.8. Assignment. The rights and benefits of the Company under
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this Agreement shall be transferable to any one or more persons or entities, and
all covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and obligations
of the Holder under this Agreement may only be assigned with the prior written
consent of the Company and any purported transfer otherwise shall be null and
void.
5.9. Cooperation, Assistance of Counsel.
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(a) The Holder agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(b) The Holder has reviewed this Agreement in its
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this Agreement.
5.10. Section 162(m); Section 11.7 of the Plan. The parties
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hereby acknowledge and agree that without the consent of the Holder no
modifications or restrictions to the provisions in this Agreement may be made on
account of Section 162(m) of the Code which would adversely affect any rights of
the Holder hereunder. The parties hereto further acknowledge and agree that
Section 11.7 of the Plan shall not apply to the Restricted Stock.
[signature page follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
FRESH ENTERPRISES, INC. HOLDER:
a California corporation
By: /s/ Xxxxx X. Xxxx, Xx. By: /s/ Xxxxx X. Xxxxxxxx
_______________________________ _________________________________
Xxxxx X. Xxxx, Xx. Xxxxx X. Xxxxxxxx
Title: Secretary
_____________________________
Address: 2392 Waipua
____________________________
Xxxx, XX 00000
_____________________________________
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