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EXHIBIT 99.24
CODEMASTER CORPORATION
STOCK BUY-BACK AGREEMENT
This CodeMaster Corporation Stock Buy-Back Agreement (the "Agreement")
is entered into this _____ day of _____________, _____ by and between CodeMaster
Corporation, a California corporation (the "Corporation"), and
_______________________ (the "Optionee") with reference to the following:
A. Effective this date, the Optionee exercised an option ("Option")
granted to ___________________ ("Employee") pursuant to the CodeMaster
Corporation 1998 Executive Stock Option Plan ("Plan") and the CodeMaster
Corporation __________________ Stock Option Agreement by and between the
Employee and the Corporation and dated ________________ ("Option Agreement") to
purchase ________ shares of the Common Stock of the Corporation ("Shares"), said
Shares being hereinafter referred to as "Option Shares" or "Option Share" as the
context requires.
B. In accordance with the provisions of the Plan and the Option
Agreement, the above-referenced Option Shares shall be held by the Optionee
subject to the restrictions and pursuant to all of the terms and conditions of
this Agreement.
In consideration of the foregoing and the mutual covenants of the
parties herein, the Corporation and the Optionee hereby agree as follows:
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1. SALE AND PURCHASE OF STOCK. In accordance with the terms of the
Plan and Option Agreement, the Corporation hereby sells to the Optionee, and the
Optionee hereby purchases from the Corporation, __________ (____) Option Shares
at a price of __________ ($________) per Share, for an aggregate purchase price
of __________________________ Dollars ($________). Payment of the purchase price
for the Option Shares shall be made in accordance with the terms of the Plan and
the Option Agreement.
2. VALUE OF THE OPTION SHARES. The Board of Directors of the
Corporation has determined (and the Corporation and the Optionee agree) that on
the date of execution of this Agreement the fair market value of the Option
Shares is _________________________ Dollars ($__________) (or $________ per
Share), and each of the Corporation and the Optionee agrees to adopt this value
in any tax return or other document or report reflecting the fair market value
of the Option Shares.
3. RESTRICTIONS ON TRANSFER OF THE SHARES. Other than as
contemplated in Section 4 hereof, the Option Shares are not transferable by the
Optionee, voluntarily or by operation of law, except with the express written
consent of the Corporation and, then, only under circumstances that the
transferee executes an agreement in the same form as this Agreement. Any
purported transfer of the Shares or any interest therein by the Optionee, other
than as aforesaid, shall be null and void and shall not be recognized for any
purpose whatsoever by the Corporation.
4. REPURCHASE OF SHARES BY THE CORPORATION UPON THE EMPLOYEE'S
TERMINATION OF CONTINUOUS EMPLOYMENT.
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a. If the Employee's "Continuous Employment," as defined in
Subsection 4.e below, terminates or has terminated for any reason, with or
without cause, including the death or disability of the Employee, and whether
before or after execution of this Agreement, (such termination of the Employee's
Continuous Employment being hereinafter referred to as a "Termination Event"),
then all of the Optionee's Option Shares shall be subject to the following
purchase option and (if applicable) put option provisions:
(1) Upon the occurrence of a Termination Event with
respect to the Employee, the Corporation shall have the option (but not the
obligation) to purchase all of the Optionee's Option Shares. This purchase
option shall be exercisable by the Corporation by delivering a written notice to
the Optionee within sixty (60) days after the Termination Event (or, in the case
Optionee acquires Option Shares upon exercise of the Option after the
Termination Event, within sixty (60) days after such exercise of the Option). If
this purchase option is so exercised by the Corporation, the Optionee (or, in
the event of the Employee's death, the Employee's executor, personal
representative, trustee, or other legal representative, as the case may be),
hereinafter the "Seller," shall be obligated to sell to the Corporation all of
the Optionee's Option Shares at the purchase price determined in Subsection 4.b
and pursuant to the terms and provisions of Subsections 4.c and 4.d.
(2) If the Termination Event occurs by reason of the
Employee's death, and the Corporation does not exercise the purchase option
granted pursuant to Subsection 4.a, then the Seller shall have the right (but
shall not be obligated) to put (sell) all of the Optionee's Option Shares to the
Corporation. This put option shall be exercisable by the Seller by delivering a
written notice to the Corporation within one fifteen (15) days after the
expiration of the sixty (60)-day period described in Section 4.a(1). If this put
option is exercised by the Seller, the Corporation
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shall be obligated to purchase all of the Optionee's Option Shares from the
Seller, at the purchase price determined in Subsection 4.b, and pursuant to the
terms and conditions of Subsections 4.c and 4.d.
b. The price per Share to be paid by the Corporation for
the Optionee's Option Shares pursuant to this Section 4 shall be equal to the
"Fair Market Value Per Share" of the issued and outstanding Shares as of the
date of the Termination Event. The Fair Market Value Per Share of the issued and
outstanding Shares shall be equal to the greater of the per-Share price
determined in the following paragraph (1) or the per-Share price determined in
the following paragraph (2):
(1) The per-Share price paid by the Optionee upon
purchase of the Optionee's Option Shares as provided in Section 1; or
(2) Ten and thirty-seven hundredths (10.37) times
the annual earnings of the Corporation, divided by the number of outstanding
Shares of the Common Stock of the Corporation. For this purpose, the annual
earnings of the Corporation shall be equal to the average annual earnings of the
Corporation, determined on an accrual basis by the Corporation's accountants,
over the three-calendar-year period ending on the last day of the calendar year
immediately
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preceding the year in which the Corporation's purchase option (or, if
applicable, the Seller's put option) is exercised by delivery of written notice
as provided in Subsection 4.a; provided, however, that if such written notice is
dated after July 1 of the year such option is exercised, then the average annual
earnings of the Corporation shall be determined over the period which includes
the two calendar years ending with the last day of the calendar year immediately
preceding the calendar year in which such option is exercised, and the calendar
year in which the option is exercised with the Corporation's earnings for such
year annualized based on the Corporation's earnings for the calendar months of
such year preceding the month in which such option is exercised. The annual
earnings of the Corporation shall be determined based upon the customary
principles and practices followed by the Corporation in the preparation of its
financial statements; provided, however, that if the Corporation is not a C
corporation there shall be subtracted from the Corporation's annual earnings
hypothetical corporate taxes at the assumed rate of forty percent (40%) of the
Corporation's pre-tax income.
The purchase price for the Optionee's Option Shares shall be the price
per-Share, as determined above in this Subsection 4.b, multiplied by the number
of such Optionee's Option Shares being purchased.
c. Payment by the Corporation for the Optionee's Option
Shares hereunder (where applicable) shall be made in cash or cancellation of
purchase money indebtedness within thirty (30) days after the expiration of the
sixty (60)-day period described in Section 4.a(1).
d. As a condition to the Corporation's obligation to make
the payment of the purchase price called for hereunder for the Optionee's Option
Shares, the Seller shall execute and deliver to the Corporation all necessary
assignments and documents of transfer necessary to reassign and transfer the
Optionee's Option Shares to the Corporation or to its designee.
e. "Continuous Employment" shall mean the employment of the
Employee with the Corporation, any parent or subsidiary of the Corporation, any
successor of the Corporation, or any corporation or parent or subsidiary of any
corporation which assumes the Option in a
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transaction to which Section 424(a) of the Internal Revenue Code of 1986, as
amended ("Code") applies (such entities being individually and collectively
referred to herein as "Employer"), which employment is not interrupted or
terminated. The Employee's employment shall not be considered interrupted or
terminated in the case of (1) any leave of absence approved by the Employer or
(2) transfers between locations of the Employer. A leave of absence approved by
the Employer shall include sick leave, military leave, or any other personal
leave approved by an authorized representative of the Employer. No such leave of
absence may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract, including the Employer's policies.
5. SECURITIES ACT REPRESENTATION OF THE OPTIONEE; CERTIFICATE
LEGEND. The Optionee hereby represents to the Corporation that the Optionee is
purchasing the Option Shares for investment, and not with a view to the
distribution or resale thereof. The Optionee agrees that the certificate
representing the Optionee's Option Shares shall contain one or more legends
restricting transfer thereof under applicable securities laws, and shall contain
a legend referring to this Agreement and to the fact that the Shares are subject
to this Agreement and are not, subject to the provisions of this Agreement,
transferable by the Optionee.
6. DESIGNATION OF BENEFICIARY. The Employee may at any time
designate a beneficiary to receive payment for the Optionee's Option Shares in
the event of the Employee's death. Such designation shall be in writing, signed
by the Employee, and delivered to the Corporation. Such designation may be
revoked at any time in writing by the Employee, in which case a new designation
may be made.
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7. RIGHT OF CORPORATION TO TERMINATE EMPLOYMENT. Nothing contained
in this Agreement shall interfere in any way with the right of the Corporation
to terminate the employment of the Employee at any time, with or without cause,
for any reason.
8. CHANGES IN STOCK. In the event that the Corporation declares a
stock dividend, or if by reason of a stock split, reverse stock split, stock
dividend, recapitalization, reclassification, or otherwise, the Option Shares of
the Optionee are exchanged for or supplemented by other or additional shares of
capital stock of the Corporation, then and in such event, the Optionee agrees
that such additional or other shares of capital stock of the Corporation shall
be subject to all of the terms and provisions of this Agreement.
9. TAX WITHHOLDING. If, in the opinion of counsel or accountants to
the Corporation, any amounts are required to be withheld by the Corporation
under applicable Federal, state or local withholding tax requirements in
connection with the Optionee's purchase or the disposition of such Option
Shares, then and in such event the Optionee agrees to promptly pay to or
reimburse the Corporation for any such taxes payable or paid by it in connection
with such purchase or disposition of such Shares, and the Optionee agrees that
the Corporation shall have the right to withhold such taxes from payments made
or to be made by it to the Employee, including but not limited to other
compensation paid or payable to the Employee by the Corporation and any such
payments made or to be made by the Corporation pursuant to this Agreement, all
as the Corporation deems appropriate, and the Optionee agrees to make any such
payments and hereby authorizes the Corporation to withhold such taxes as deemed
appropriate by the Corporation. The
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Optionee shall be personally liable for any and all taxes of any kind which may
be imposed on or result from the purchase or sale of Shares pursuant to this
Agreement, or the ownership of Shares at death.
10. ARBITRATION. Any dispute arising between the parties under this
Agreement or with respect to the terms and conditions of this Agreement, to the
parties' rights under this Agreement, or to the interpretation, application,
enforceability, or validity thereof, shall be resolved by arbitration at San
Jose, California in accordance with the provisions of Section 1280 et seq. of
the California Code of Civil Procedure. The arbitrator or arbitrators shall be
selected by mutual agreement of the parties, and if no agreement can be reached,
by a court of law having competent jurisdiction over the dispute.
The arbitrator shall have no authority to award or assess punitive or
exemplary damages against either party.
The Optionee shall pay the portion of the costs of such arbitration
equal to the filing fee the Optionee would have paid to file a civil court case,
and the Corporation shall pay the balance of such costs; provided, however, that
the Optionee may unilaterally elect to pay one-half of such costs, and to have
the Corporation pay the other one-half of such costs. Each party shall pay for
its own attorneys' fees.
The prevailing party in any such arbitration may file the award as a
judgment in the Superior Court of the State of California in and for the County
of Santa Xxxxx or other city wherein the principal offices of the Corporation
are then located or where one or more of the parties to the arbitration resides,
as the case may be.
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11. LIMITATION ON PURCHASE BY CORPORATION. Notwithstanding anything
to the contrary in this Agreement, the Corporation shall not make any purchase
of Option Shares pursuant to this Agreement if it is prohibited from doing so
under the General Corporation Law of California.
12. EFFECT OF S CORPORATION STATUS. The Optionee acknowledges that
the Corporation is an S corporation under the Internal Revenue Code, and
Optionee may have taxable income allocated to him, her or it as an S corporation
shareholder, with respect to which no cash distribution is made with which to
pay such taxes. Optionee further acknowledges that the Corporation is under no
obligation to make distributions to pay such taxes, unless otherwise agreed in
writing. Optionee agrees to execute any and all consents and forms required by
the Corporation, as may be necessary to maintain the status of the Corporation
as an S corporation.
13. TERMINATION. This Agreement may only be amended, altered or
terminated with the written approval of Optionee and CodeMaster Corporation;
provided, however, that this Agreement and the repurchase portion of the
Corporation shall automatically terminate on the date the stock of the
Corporation is publicly traded or in the event of the dissolution of the
Corporation.
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IN WITNESS WHEREOF, the Corporation and the Optionee have entered into
this Agreement effective as of the day and year first above written.
THE "CORPORATION" THE "OPTIONEE"
CODEMASTER CORPORATION
By: ____________________________ __________________________________
Xxxxxxxxxxx X. Xxxxxxxxx,
President
__________________________________
[Name of the Optionee]
By: ___________________________
Xxxxx X. Xxxxx,
Secretary
