Exhibit 10.38
STOCK REPURCHASE AGREEMENT
THIS AGREEMENT is made on the 18th day of April, 1997 by and between
Bluestone Software, Inc., a Delaware corporation (the "Company"), and Xxx Xxxxxx
(the "Stockholder").
BACKGROUND
WHEREAS, the Stockholder is the holder of 9,000,000 shares (the "Base
Shares") of common stock, $.001 par value per share, of the Company ("Common
Stock");
WHEREAS, certain investors (the "Investors") and the Stockholder are
acquiring an aggregate of approximately $5,250,000 worth of shares of Series A
Convertible Preferred Stock, $.001 par value per share, of the Company
("Preferred Stock") pursuant to the terms of a Series A Preferred Stock Purchase
Agreement dated the date hereof among the Company, the Investors and the
Stockholder (the "Purchase Agreement"); and
WHEREAS, it is a condition to the obligations of the Investors under
the Purchase Agreement that this Agreement be executed by the parties hereto,
and the parties are willing to execute this Agreement;
TERMS
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and intending to be legally bound hereby, the
parties agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"CONTINGENT SHARES" as of any date shall mean the number of
shares of Common Stock that are held by the Stockholder and that are designated
as "Contingent Shares" on the table set forth in Exhibit A attached hereto;
provided that no additional Contingent Shares shall become Vested Shares after
the date upon which the Stockholder shall cease to be employed by the Company
and its subsidiaries. The numbers of Shares referred to in the preceding
sentence shall be appropriately adjusted in the event of any stock split, stock
dividend or the like affecting the number of issued and outstanding shares of
Common Stock.
"VESTED SHARES" as of any date shall mean the number of shares
of Common Stock that are held by the Stockholder, that were formerly Contingent
Shares and that are designated as "Vested Shares" under the table in Exhibit A;
provided that no additional Contingent Shares shall become Vested Shares after
the date upon which the Stockholder shall
cease to be employed by the Company and its subsidiaries. The numbers of Vested
Shares referred to in the preceding sentence shall be appropriately adjusted in
the event of any stock split, stock dividend or the like affecting the number of
issued and outstanding shares of Common Stock.
"OTHER SHARES" shall mean any shares of the capital stock of
the Company that are held by the Stockholder and that are neither Contingent
Shares nor Vested Shares.
Section 2. PROHIBITED TRANSFERS. The Stockholder shall not sell,
assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose
of any or all of the Contingent Shares without the prior written consent of
Company in its sole discretion. The preceding sentence shall not restrict any
Vested Shares or Other Shares; provided that any transfer by the Stockholder of
Vested Shares or Other Shares shall be made subject to and in accordance with
the provisions of the Purchase Agreement, a certain Voting Agreement of even
date herewith among the Company and the Investors, the Stockholder and the other
stockholders listed therein (the "Voting Agreement"), and a certain First
Refusal and Co-Sale Agreement of even date herewith among the Company, the
Investors, the Stockholder and the other parties thereto (the "First Refusal
Agreement").
Section 3. OPTION OF COMPANY UPON TERMINATION OF EMPLOYMENT.
a If the Stockholder ceases to be an employee of the Company and its
subsidiaries for any reason other than the death or disability of
the Stockholder, then the Company may, within sixty (60) days from
the date upon which the Stockholder shall so cease to be employed,
exercise the Company's option under this Section 3 to purchase
from the Stockholder all, but not less than all, of the Contingent
Shares as of the date upon which the Stockholder shall so cease to
be employed (the "Termination Date"). For the purposes of this
Agreement, "disability" shall have the meaning ascribed to such
term in the Executive Employment Agreement dated April __, 1997
between the Stockholder and the Company.
b The purchase price per share of the Contingent Shares for which
the Company exercises its option under this Section 3 (the "Option
Price") shall be the price per share that the Board of Directors
of the Company determines is the fair market value per share of
the Common Stock in connection with granting of stock options in
the Company to the employees of the Company on or about the date
hereof (such price being subject to equitable adjustment for any
stock split, stock dividend, combination of shares or the like and
based upon Common Stock).
c If the Company desires to exercise the Company's option to
purchase, then the Company shall do so by communicating in writing
the Company's election to purchase to the Stockholder, which
communication shall state the then current number of Contingent
Shares to be purchased by the Company and the aggregate
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Option Price and shall be given to the Stockholder in accordance
with Section 8(a) below within the 60-day period provided for in
Section 3(a). The sale of the Contingent Shares to be sold to the
Company pursuant to this Section 3 shall be made at the offices of
the Company on the 20th day following the date of the Company's
written election to purchase (or if such 20th day is not a
business day, then on the next succeeding business day). Such sale
shall be effected by the Stockholder's delivery to the Company of
a certificate or certificates evidencing the Contingent Shares to
be purchased by the Company, duly endorsed for transfer to the
Company, against payment to the Stockholder by the Company in cash
in an amount equal to (i) the Option Price, multiplied by (ii) the
number of Contingent Shares to be purchased by the Company (the
"Purchase Price").
d Any action requiring the consent or election by the Company under
this Agreement shall require the approval of a majority of the
Board of Directors of the Company.
Section 4. TERM.
a The rights of the Company under this Agreement and the correlative
obligations of the Stockholder with respect to the Company shall
terminate upon the first to occur of:
(i) the fourth (4th) anniversary of this Agreement, provided
that the Stockholder is employed by the Company or one of its subsidiaries on
such date; or
(ii) at such time as the Stockholder shall no longer be the
owner of any Contingent Shares.
Section 5. FAILURE TO DELIVER SHARES. If the Stockholder becomes
obligated to sell the Contingent Shares to the Company under this Agreement and
fails to deliver the Contingent Shares in accordance with the terms of this
Agreement, then the Company may, at the Company's option and in addition to all
other remedies the Company may have, send to the Stockholder the Purchase Price
for the Contingent Shares as is herein specified. Thereupon, the Company upon
written notice to the Stockholder (a) shall cancel on the Company's books the
certificate or certificates representing the Contingent Shares to be sold and
(b) shall issue to the Stockholder a certificate or certificates evidencing the
number of Vested Shares, if any, registered in the name of the Stockholder, and
thereupon all of the Stockholder's rights in and to such Contingent Shares shall
terminate.
Section 6. SPECIFIC ENFORCEMENT. The Stockholder expressly agrees
that the Investors and the Company will be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by the Stockholder, the Investors
and the Company shall, in addition to all other remedies, each
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be entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions hereof.
Section 7. ISSUANCE OF SHARE CERTIFICATES AT CLOSING; LEGEND
REQUIREMENTS; REISSUANCE OF SHARES.
a At the closing contemplated by the Purchase Agreement, the
Stockholder shall deliver to the Company for cancellation the
certificate evidencing the Base Shares, and in consideration
therefor, the Company shall issue to the Stockholder (i) a
certificate or certificates evidencing the Other Shares, and (ii)
a certificate or certificates evidencing the Contingent Shares, in
each case duly registered in the name of the Stockholder and duly
executed by the Company.
b Each certificate representing the Contingent Shares owned by the
Stockholder shall be endorsed with the following legend:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
STOCK RESTRICTION AGREEMENT BY AND AMONG THE REGISTERED HOLDER (OR
HIS PREDECESSOR IN INTEREST) AND BLUESTONE SOFTWARE, INC. A COPY
OF SUCH AGREEMENT IS ON THE FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY."
c The Section 7(b) legend shall be removed by the Company: (i) with
respect to Vested Shares, at the request of the Stockholder from
time to time; and (ii) with respect to Contingent Shares, upon
termination of this Agreement in accordance with the provisions of
Section 4.
d From time to time as the Contingent Shares become Vested Shares,
the Stockholder may deliver to the Company any certificates
evidencing such Vested Shares, and the Company shall accept such
certificates for cancellation, and reissue certificates evidencing
such Vested Shares, in an amount adjusted to reflect the number of
such Vested Shares, and certificates representing the number of
Contingent Shares as of such date of issuance, in each case duly
registered in the name of the Stockholder and duly executed by the
Company.
Section 8. MISCELLANEOUS PROVISIONS.
a Unless otherwise provided, all notices, consents or other
communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been
duly given (i) when delivered personally, (ii) three (3) business
days after being mailed by first class mail, postage prepaid, or
(iii) one (1) business day after being sent by a reputable
overnight delivery service, postage
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or delivery charges prepaid, to the parties at their respective
addresses stated on the signature page of this Agreement. Notices
may also be given by prepaid telegram or facsimile and shall be
effective on the date transmitted if confirmed within 24 hours
thereafter by a signed original sent in the manner provided in the
preceding sentence. Any party may change its address for notice
and the address to which copies must be sent by giving notice of
the new addresses to the other parties in accordance with this
Section 8(a), except that any such change of address notice shall
not be effective unless and until received.
b SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed and interpreted
in such manner as to be effective and valid under applicable law.
c WAIVER OR MODIFICATION. Any amendment or modification of this
Agreement shall be effective only if evidenced by a written
instrument executed by the Company and the Stockholder or their
assignees.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of law of any jurisdiction.
Section 10. ATTORNEYS' FEES. In the event of any dispute involving
the terms hereof, the prevailing parties shall be entitled to collect legal fees
and expenses from the other party to the dispute.
Section 11. FURTHER ASSURANCES. Each party agrees to act in
accordance herewith and not to take any action which is designed to avoid the
intention hereof.
Section 12. OWNERSHIP. The Stockholder represents and warrants that
he is the sole legal and beneficial owner of the shares of stock subject to this
Agreement and that no other person has any interest (other than a community
property interest) in such shares.
Section 13. ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement shall
not be assigned by either party hereto without the prior written consent of the
other party. This Agreement and the rights and obligations of the parties
hereunder shall inure to the benefit of, and be binding upon, their respective
successors, permitted assigns and legal representatives.
Section 14. ENTIRE AGREEMENT. This Agreement and the other
Transaction Agreements (as defined in the Purchase Agreement) constitute the
entire agreement with respect to the subject matter hereof among the parties,
and no party shall be liable or bound to any other party in any
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manner by any warranties, representations, or covenants except as specifically
set forth herein or therein.
Section 15. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXX XXXXXX
/s/ Xxx Xxxxxx
---------------------------------------------
(Signature)
BLUESTONE SOFTWARE, INC.
By: /s/ Xxx Xxxxxx
----------------------------------------
Name: Xxx Xxxxxx
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Title: President
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EXHIBIT A
QUARTER CALENDAR CONTINGENT VESTED
NUMBER QUARTER SHARES SHARES
--------- ---------- ------------ --------
1 2nd Quarter 1997 1,350,000 0
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2 3rd Quarter 1997 1,265,625 84,375
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3 4th Quarter 1997 1,181,250 168,750
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4 1st Quarter 1998 1,096,875 253,125
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5 2nd Quarter 1998 1,012,500 337,500
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6 3rd Quarter 1998 928,125 421,875
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7 4th Quarter 1998 843,750 506,250
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8 1st Quarter 1999 759,375 590,625
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9 2nd Quarter 1999 675,000 675,000
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10 3rd Quarter 1999 590,625 759,375
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11 4th Quarter 1999 506,250 843,750
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12 1st Quarter 2000 421,875 928,125
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13 2nd Quarter 2000 337,500 1,012,500
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14 3rd Quarter 2000 253,125 1,096,875
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15 4th Quarter 2000 168,750 1,181,250
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16 1st Quarter 2001 84,375 1,265,625
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17 2nd Quarter 2001 0 1,350,000
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