Exhibit 10.3
ZAPME! CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
DATED SEPTEMBER 13, 1999
AMENDED AS OF JUNE 21, 2000
THIS AGREEMENT is made by and between ZapMe! Corporation, a Delaware
corporation (the "Company"), and Xxxx Xxxxxxx (the "Purchaser") and
supercedes the Restricted Stock Purchase Agreement originally dated September
13, 1999, except for Exhibits B, C and D.
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to
participate in the affairs of the Company, the Company is willing to sell to
the Purchaser and the Purchaser desires to purchase shares of Common Stock
according to the terms and conditions contained herein.
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES. The Company hereby agrees to sell to
the Purchaser and the Purchaser hereby agrees to purchase an aggregate of
1,000,000 shares of the Company's Common Stock (the "Shares"), at the price
of $5.00 per share for an aggregate purchase price of $5,000,000.00, such
offer to sell the Shares subject to expiration on September 30, 1999.
2. PAYMENT OF PURCHASE PRICE.
(a) The purchase price for the Shares may be paid by delivery to
the Company at the time of execution of this Agreement of cash, check, duly
executed limited recourse promissory note in the form attached hereto as
EXHIBIT A (the "Note"), or any combination thereof.
(b) With respect to the Note, the parties agree to the following:
(1) The Note shall become payable in full upon the earlier of
four (4) years from September 13, 1999, thirty (30) days following
termination of Purchaser's employment with or services to the Company except
for death or disability, or one (1) year following termination as a result of
death or disability.
(2) The Purchaser shall deliver to an escrow holder
designated by the Company (the "Escrow Holder") all certificates representing
the Shares and two executed blank stock assignments, in the form attached
hereto as EXHIBIT B, for use in transferring all or a portion of said Shares
to the Company, as required under this Section 2(b) or under any other
provision of this Agreement including Section 4, and shall enter into a set
of Joint Escrow Instructions in the form attached hereto as EXHIBIT C.
(3) As security for the payment of the Note and any renewal,
extension or modification thereof, the Purchaser hereby grants to the
Company, pursuant to the Security Agreement attached hereto as EXHIBIT D, a
security interest in and pledges with and delivers to the Company the
certificate or certificates representing the Shares.
(4) In the event of any foreclosure of the security interest,
the Company may sell the Shares at a private sale or may itself repurchase
any or all of the Shares. The parties acknowledge that, prior to the
establishment of a public market for the Shares of the Company, the
securities laws applicable to the sale of the Shares make a public sale of
the Shares commercially unreasonable. The parties agree that the
repurchasing of said Shares by the Company, or by any person to whom the
Company may have assigned its rights hereunder, is commercially reasonable if
made at any of the following prices: (i) a price determined by the Board of
Directors in its discretion, fairly exercised, representing what would be the
fair market value of the Shares diminished by any limitation on
transferability, whether due to the size of the block of Shares or the
restrictions of applicable securities laws, or (ii) the book value per Share
as recorded on the Company's books at the end of the last fiscal quarter
prior to the date of sale of the Shares upon foreclosure (whether or not such
book value per share is unaudited and subject to adjustment), or (iii) the
price at which the Shares were originally purchased by the Purchaser.
(5) In the event of default in payment when due of any
indebtedness under the Note, the Company's sole recourse shall be the right
to sell the Shares at a private or public sale or repurchase the Shares as
provided above. The proceeds of any sale shall be applied in the following
order:
(i) To pay all reasonable expenses of the Company in
enforcing this Agreement, including without limitation reasonable attorneys'
fees and legal expenses incurred by the Company.
(ii) In satisfaction of the remaining indebtedness under
the Note.
(iii) To the Purchaser, any remaining proceeds.
(6) Upon full payment by the Purchaser of all amounts due on
Purchaser's Note, the Escrow Holder shall deliver to the Purchaser the
certificate or certificates representing the Shares in the Escrow Holder's
possession belonging to the Purchaser, the blank stock assignment and the
executed original of the Note marked "canceled" by the Company, and the
Escrow Holder shall be discharged of all further obligations hereunder;
provided, however, that the Escrow Holder shall nevertheless retain said
certificate or certificates and stock assignment as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.
3. VESTING. The Shares shall vest and be released from the Company's
Repurchase Option (as hereinafter defined) in accordance with the following
provisions:
Subject to your continued full time employment by the Company,
twenty-five percent (25%) of the Shares purchased pursuant to this
Restricted Stock Purchase Agreement shall vest on September 7, 2000, and
one forty-eighth (approximately 2.08%) of the Shares shall vest at the
end of each month thereafter, so that all of the Shares shall become
fully vested on September 7, 2003, provided you shall continue to be a
full time Employee of the Company. In addition, the Shares will become
vested in the event of a Change of Control, as more fully described in
your employment offer letter dated September 7, 1999.
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4. REPURCHASE OPTION. In the event of any voluntary or involuntary
termination of the Purchaser's employment by or services to the Company for
any or no reason (including death or disability) before all of the Shares are
released from the Company's repurchase option (see Section 5), the Company
shall, upon the date of such termination (as reasonably fixed and determined
by the Company) have an irrevocable, exclusive option for a period of 90 days
from such date to repurchase all (but not less than all) of the Shares that
shall constitute the Unreleased Shares (as defined in Section 4) at such
time, at the original purchase price of $5.00 per share (the "Repurchase
Price"). Such option shall be exercised by the Company by written notice to
the Purchaser or the Purchaser's executor (with a copy to the Escrow Holder)
and, at the Company's option, (i) by delivery to the Purchaser or the
Purchaser's executor with such notice of a check in the amount of the
purchase price for the Shares being repurchased, or (ii) by cancellation by
the Company of an amount of the Purchaser's indebtedness to the Company
equal to the purchase price for the Shares being repurchased, or (iii) by a
combination of (i) and (ii) so that the combined payment and cancellation
of indebtedness equals the aggregate Repurchase Price. Upon delivery of such
notice and the payment of the purchase price in any of the ways described
above, the Company shall become the legal and beneficial owner of the Shares
being repurchased and all rights and interests therein or relating thereto,
and the Company shall have the right to retain and transfer to its own name
the number of Shares being repurchased by the Company.
5. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) Shares shall be released from the Company's repurchase option as
set forth in Section 4, above.
(b) Any of the Shares which have not yet been released from the
Company's repurchase option are referred to herein as "Unreleased Shares".
(c) The Shares which (i) have been released from the Company's
repurchase option, (ii) have been paid for in full, and (iii) no longer
secure Shares not yet paid for in full, shall be delivered to the Purchaser
at the Purchaser's request (see Section 7).
6. RESTRICTION ON TRANSFER. None of the Shares or any beneficial interest
therein shall be transferred, encumbered or otherwise disposed of in any
manner, except for the deposit of the Shares into escrow pursuant to Section
2 and 7 hereof or the release of the Shares to the Company pursuant to such
provisions, until the release of such Shares from the Company's repurchase
option in accordance with the provisions of this Agreement.
7. ESCROW OF SHARES. The Shares issued under this Agreement shall be held
by the Escrow Holder, along with a stock assignment executed by the Purchaser
in blank in the form attached hereto as Exhibit B, pursuant to the terms of
the Joint Escrow Instructions attached hereto as Exhibit C and the Security
Agreement attached hereto as Exhibit D.
8. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee or
any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation
of law), the Company or its assignee(s) shall have a right of
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first refusal to purchase the Shares on the terms and conditions set forth in
this Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii)
the name of each proposed purchaser or other transferee ("Proposed
Transferee"); (iii) the number of Shares to be transferred to each Proposed
Transferee; and (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Shares (the "Offered Price"), and
the Holder shall offer the Shares at the Offered Price to the Company or its
assignee(s).
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within 30 days
after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) PURCHASE PRICE. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall
be (i) the Offered Price in the case of Shares that are Vested Shares, or
(ii) in the case of Shares that are not Vested Shares, the lower of the
Offered Price or the Repurchase Price as defined in subsection (c) hereof.
If the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith.
(d) PAYMENT. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation
of all or a portion of any outstanding indebtedness of the Holder to the
Company (or, in the case of repurchase by an assignee, to the assignee), or
by any combination thereof within thirty (30) days after receipt of the
Notice or in the manner and at the times set forth in the Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee
at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice and
provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares
described in the Notice are not transferred to the Proposed Transferee
within such period, a new Notice shall be given to the Company, and the
Company and/or its assignees shall again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or
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sister. In such case, the transferee or other recipient shall receive and
hold the Shares so transferred subject to the provisions of this Section, and
there shall be no further transfer of such Shares except in accordance with
the terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First Refusal
shall terminate as to any Shares 90 days after the first sale of Common Stock
of the Company to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the 1933 Act.
9. INVESTMENT REPRESENTATIONS. In connection with the purchase of the
Shares, the Purchaser represents to the Company the following:
(a) The 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
securities. The Purchaser is purchasing these securities for investment for
the 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
Securities Act of 1933, as amended (the "Securities Act").
(b) The Purchaser understands that the securities have 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 Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in view of the Securities and
Exchange Commission (the "Commission"), the statutory basis for such
exemption may not be present if the Purchaser's representations meant that
the Purchaser's present intention was to hold these securities for a minimum
capital gains period under the 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 Purchaser further acknowledges and understands that the
securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available. The Purchaser further acknowledges and understands that the
Company is under no obligation to register the securities. The Purchaser
understands that the certificate evidencing the securities will be imprinted
with a legend which prohibits the transfer of the securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company.
10. STOCK CERTIFICATE LEGENDS. The share certificate evidencing the Shares
issued hereunder shall be endorsed with the following legends:
(a) THE SHARES 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.
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(b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(c) Any legend required by any applicable state securities laws.
11. MARKET STAND-OFF AGREEMENT. The Purchaser hereby agrees, if so
requested by the managing underwriters in such offering, that, without the
prior written consent of such managing underwriters, the Purchaser will not
offer, sell, contract to sell, grant any option to purchase, make any short
sale or otherwise dispose of or make a distribution of any capital stock of
the Company held by or on behalf of the Purchaser or beneficially owned by
the Purchaser in accordance with the rules and regulations of the
Securities and Exchange Commission for a period of up to 180 days after the
date of the final prospectus relating to the Company's initial public
offering.
12. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
13. TAX CONSEQUENCES. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The
Purchaser is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Purchaser
understands that the Purchaser (and not the Company) shall be responsible for
the Purchaser's own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement. The Purchaser
understands that Section 83 of the Code taxes as ordinary income both (i) the
difference between the fair market value of the Shares when the Company
granted the Purchaser the right to purchase the Shares and the fair market
value of the Shares on the date of this Agreement, and (ii) the difference
between the amount paid for the Shares and the fair market value of the
Shares as of the date any restrictions on the Shares lapse. In this context,
"restriction" includes the right of the Company to buy back the Shares
pursuant to its repurchase option. In the event the Company has registered
under the Exchange Act, "restriction" with respect to officers, directors and
10% shareholders also means the period after the purchase of the Shares
during which such officers, directors and 10% shareholders could be subject
to suit under Section 16(b) of the Exchange Act. The Purchaser understands
that the Purchaser may elect to be taxed at the time the Shares are purchased
rather than when and as the Company's repurchase option or the Section 16(b)
period expires by filing an election under Section 83(b) of the Code with
the I.R.S. within 30 days from the date of purchase.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER
SECTION 83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF.
14. ADMINISTRATION. The Board of Directors of the Company shall have all
authority to make determinations deemed necessary or advisable for
administering this Agreement. Subject to any
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required action by the shareholders of the Company, the number of shares of
Common Stock covered by this Agreement shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion
of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding and
conclusive.
15. GENERAL PROVISIONS.
(a) This Agreement shall be governed by the laws of the State of
California as they apply to contracts entered into and wholly to be performed
in such state. This Agreement represents the entire agreement between the
parties with respect to the purchase of Common Stock by the Purchaser and may
only be modified or amended in writing signed by both parties.
(b) Any dispute, claim or controversy of any kind (including but not
limited to tort, contract and statute) arising under, in connection with, or
relating to this Agreement shall at the request of either party be resolved
exclusively by binding arbitration in San Ramon, California in accordance
with the Commercial rules of the American Arbitration Association then in
effect. The Purchaser and the Company agree to waive any objection to
personal jurisdiction or venue in any forum located in San Ramon, California.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(c) Any notice, demand or request required or permitted to be given by
either the Company or the Purchaser 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 end of this
Agreement or such other address as a party may request by notifying the other
in writing.
(d) The rights and benefits of the Company under 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
Purchaser under this Agreement may only be assigned with the prior written
consent of the Company.
(e) 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.
(f) The Purchaser agrees upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.
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(g) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A FULL
TIME EMPLOYEE AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED
AT THIS DATE, AND NOT THROUGH PURCHASING SHARES HEREUNDER). PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH
OR WITHOUT CAUSE.
(h) Purchaser 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.
IN WITNESS WHEREOF, the parties have duly executed this amended Agreement as
of the day and year first set forth above.
ZAPME! CORPORATION PURCHASER:
a Delaware corporation
By: ______________________________ ___________________________________
(Signature)
Title: ___________________________ ___________________________________
(Type or Print Name)
___________________________________
(Address)
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CONSENT OF SPOUSE
I, ____________________, spouse of Xxxx Xxxxxxx, have read and approve the
foregoing Stock Purchase Agreement, as amended (the "Agreement"). In
consideration of grant of the right to my spouse to purchase shares of ZapMe!
Corporation, a Delaware Corporation (the "Company") as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to
the exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said
Agreement or any shares issued pursuant thereto under the community property
laws of the State of California or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: June __, 2000
Signed: _________________________________
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EXHIBIT A
PROMISSORY NOTE
Dated: September 13, 1999
(Amended: June 21, 2000)
$5,000,000.00
For value received, the undersigned promises to pay to ZapMe! Corporation a
Delaware corporation (the "Company"), or order, at its principal office the
principal sum of $5,000,000.00 with interest thereof at the rate of 5.98% per
annum, compounded annually, on the unpaid balance of the principal sum. Said
principal shall be due on the earlier to occur of the fourth anniversary of
the date of this Note (September 13, 1999), thirty (30) days after
termination other than for death or disability, or one year after termination
for death or disability. Said interest shall be accrued and is payable on
the due date of the Note.
Should the undersigned fail to make full payment of principal or interest for
a period of 10 days or more after the due date thereof, the whole unpaid
balance on this Note of principal and interest shall become immediately due
at the option of the holder of this Note.
This Note is subject to the terms of a Stock Purchase Agreement, dated as of
September 13, 1999, as subsequently amended on June 21, 2000, ("Stock
Purchase Agreement"). This Note is secured by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith
and is subject to all the provisions thereof.
The sole recourse for the holder of this Note against the undersigned
(including, but not limited to the payment of principal and interest) shall
be the right to sell the Shares at a private or public sale or repurchase the
Shares as provided in the Stock Purchase Agreement.
The principal is payable in lawful money of the United States of America.
The privilege is reserved to prepay any portion of the Note at any time.
If the undersigned shall default in the payment of amounts hereunder when
due, the sole recourse against the holder of this Note shall be the right to
sell the Shares at a private or public sale or repurchase the Shares as
provided in the Stock Purchase Agreement. The maker waives presentment for
payment, protest, notice of protest and notice of non-payment of this Note.
This Note shall be governed by the laws of the State of California as they
apply to contracts entered into and wholly to be performed within such state.
_______________________
Xxxx Xxxxxxx
