JATO COMMUNICATIONS CORP.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 14th
day of October, 1998, by and between JATO Communications Corp., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxx ("Purchaser").
WHEREAS, the Company desires to issue, and Purchaser desires to
purchase, stock of the Company as herein described, on the terms and
conditions hereinafter set forth; and
WHEREAS, the issuance of common stock hereby is in connection with a
compensatory benefit plan for the employees, directors, officers, advisers or
consultants of the Company and is intended to comply with the provisions of
Rule 701 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act").
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 one hundred thirty thousand (130,000) shares of
the Common Stock of the Company (the "Stock") at a purchase price of $.25 per
share, for an aggregate purchase price of $32,500. The purchase price shall
be payable $20,000 in cash or by check , and $12,500 in services rendered to
the Company.
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. CO-FOUNDERS REPURCHASE RIGHT. In the event that Purchaser
voluntarily terminates his relationship with the Company (or a parent or
subsidiary of the Company), whether as an employee, director or consultant,
then Xxxxxxx Xxxxxx, Xxxxx X. Xxxx and Xxxxx X. Xxxxx (each a "Co-Founder")
shall each have the right, exercisable upon written notice to Purchaser
within thirty (30) days of the date of such termination, to purchase his pro
rata share of the Stock which has not vested pursuant to Section 4 below as
of such termination date, at a purchase price of $.25 per share (the
"Co-Founders' Option"). The Co-Founder's pro rata portion shall be that
number of shares equal to the product obtained by multiplying (x) the
aggregate number of shares of Stock which have not vested pursuant to Section
4 below by (y) a fraction the numerator of which is the number of shares of
Common Stock owned by such Co-Founder (on an as-if-converted basis) at the
time of Purchaser's termination and the denominator of which is the total
number of shares of Common Stock owned by each of the Co-Founders (on an
as-if-converted basis) at the time of Purchaser's termination.
1.
3. COMPANY'S REPURCHASE RIGHT.
(a) In the event that Purchaser voluntarily terminates his
relationship with the Company (or a parent or subsidiary of the Company),
whether as an employee, director or consultant, and the Co-Founders do not
purchase all of Purchaser's unvested Stock pursuant to the Co-Founders'
Option under Section 2 above within the period set forth therein, the Company
shall then have the right, exercisable upon written notice to Purchaser
within thirty (30) days after the expiration of the Co-Founders' Option, to
purchase all or a portion of the Stock which has not vested pursuant to
Section 4 below as of such termination date (less shares purchased by the
Co-Founders pursuant to Section 2 above), at a purchase price of $.25 per
share.
(b) In the event the Company terminates Purchaser's
relationship with the Company (or a parent or subsidiary of the Company),
whether as an employee, director or consultant, for Cause (as defined below),
then the Company shall have an option for a period of ninety (90) days after
said termination to repurchase from Purchaser, at a purchase price of $.25
per share, up to but not exceeding the number of shares of Stock which have
not vested under the provisions of Section 4 below as of such termination
date.
(c) "Cause" as used herein shall mean: (i) conviction of
any felony or of any crime involving moral turpitude or dishonesty; (ii)
participation in a fraud or act of dishonesty against the Company; (iii)
breach of Purchaser's duties to the Company, including persistent
unsatisfactory performance of job duties; (iv) intentional damage to any
property of the Company; or (v) conduct by Purchaser which in the good faith
and reasonable determination of the Board demonstrates gross unfitness to
serve; PROVIDED, HOWEVER, that Purchaser shall not be deemed to have been
terminated for Cause pursuant to clauses (iii) or (v) above unless the
Company shall have provided Purchaser written notice of such breach or
conduct and Purchaser shall have failed to cure the same to the reasonable
satisfaction of the Company within thirty (30) days after receipt of such
notice.
(d) In the event that Purchaser's relationship with the
Company (or a parent or subsidiary of the Company) is terminated by reason of
Purchaser's death or disability (as defined in Section 22(c)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")), then the Company
shall have an option for a period of ninety (90) days after said termination
to repurchase from Purchaser's personal representative at a purchase price of
$.25 per share, up to but not exceeding fifty percent (50%) of the number of
shares of Stock which have not vested under the provisions of Section 4 below
as of such termination date (together with the options set forth in Sections
3(a) and 3(b) above, the "Repurchase Option").
(e) In the event that the Company terminates Purchaser's
relationship with the Company (or a parent or subsidiary of the Company),
whether as an employee, director or consultant, other than for Cause, the
Company shall have no right to repurchase from Purchaser any shares of Stock,
whether vested or unvested.
(f) 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
2.
as provided in Section 17(a). Such notice shall identify the number of
shares of Stock to be repurchased and shall notify Purchaser of the time,
place and date for settlement of such repurchase, which shall be scheduled by
the Company within the term of the Repurchase Option set forth in this
Section 3. The Company shall be entitled to pay for any shares of Stock
repurchased pursuant to its Repurchase Option in cash or by offset against
any indebtedness owing to the Company by Purchaser, 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. VESTING. Subject to the acceleration of vesting set forth in
Section 7 below, 13,000 shares (representing ten percent (10%) of the Stock)
shall vest and be released from the Co-Founders' Option and the Repurchase
Option immediately on the date hereof. An additional 39,000 shares
(representing thirty percent (30%) of the Stock) shall vest and be released
from the Co-Founders' Option and the Repurchase Option on January 1, 2000.
The remaining 78,000 shares (representing sixty percent (60%) of the Stock)
shall vest in equal monthly installments thereafter, such that 3,250 shares
shall vest and be released from the Co-Founders' Option and the Repurchase
Option on the first day of each month beginning on February 1, 2000, with a
final installment of 3,250 shares vesting on January 1, 2002 (provided in
each case that Purchaser's relationship as an employee, director or
consultant of the Company (or a parent or subsidiary of the Company) has not
been terminated prior to the date of such release).
5. ADJUSTMENTS TO STOCK. If, from time to time, during the term of
the Co-Founders' Option or 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 corporate 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
Co-Founders' Option and the Repurchase Option and shall be deemed to be
"Stock" for all purposes hereunder with the same force and effect as the
shares of the Stock presently subject to the Co-Founders' Option and the
Repurchase Option, but only to the extent the Stock is, at the time, covered
by such Co-Founders' Option or Repurchase Option. While the aggregate
purchase price shall remain the same after each such event, the purchase
price per share of Stock upon exercise of the Co-Founders' Option or the
Repurchase Option shall be appropriately adjusted.
6. CORPORATE TRANSACTION. All previously unvested shares of Stock
shall vest immediately prior to the closing of (i) a sale of all or
substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation; (iii) a
reverse merger in which the company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise; or
3.
(iv) the acquisition by any person, entity or group within the meaning of
Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored
or maintained by the Company or any affiliate) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors ((i) through (iv) being collectively referred to herein
as a "Corporate Transaction").
7. TERMINATION OF CO-FOUNDERS' OPTION AND REPURCHASE OPTION. The
Co-Founders' Option and the Repurchase Option shall terminate (i) immediately
prior to the closing of a Corporate Transaction or (ii) upon exercise in full
or expiration of the Co-Founders' Option or the Repurchase Option, as
applicable, whichever first occurs.
8. 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 Co-Founders' Option or the
Repurchase Option, Purchaser agrees, at the closing hereunder, to deliver to
and deposit with the Secretary, as escrow agent in this transaction (the
"Escrow Agent"), three (3) stock assignments duly endorsed (with date and
number of shares blank) in the form attached hereto as EXHIBIT B, 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 said Escrow Agent pursuant to the Joint Escrow Instructions of
the Company and Purchaser set forth in EXHIBIT C attached hereto and
incorporated by this reference, which instructions shall also be delivered to
the Escrow Agent at the closing hereunder.
9. RIGHTS OF PURCHASER. Subject to the provisions of Sections 8,
10 and 13 herein, Purchaser shall at all times exercise all rights and
privileges of a stockholder of the Company with respect to the Stock, whether
vested or unvested, including all voting rights incident thereto.
10. 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 Co-Founders' Option or the
Repurchase Option. After any Stock has been released from the Co-Founders'
Option and the Repurchase Option, Purchaser shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock except in
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. Notwithstanding the foregoing, Purchaser may transfer all or any
portion of the Stock to his spouse, father, mother, brother, sister or lineal
descendants, PROVIDED; HOWEVER, that all shares of Stock so transferred by
Purchaser shall continue to be subject to the provisions of this Agreement
and shall remain "Stock" for all purposes hereunder.
4.
11. 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 THE 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) Any legend required by appropriate blue sky officials.
12. 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.
(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 701, 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.
Rule 701
5.
provides that if the issuer qualifies under Rule 701 at the time of issuance
of the securities, such issuance will be exempt from registration under the
Act. 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
exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter,
subject to the satisfaction of certain of the conditions specified by Rule
144 and the market stand-off provision described in Section 13 below.
In the event that the sale of the Stock does not qualify under Rule
701 at the time of purchase, then the Stock 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
or 701, and that, in such event, Purchaser would be precluded from selling
the Stock under Rule 144 or 701 even if the minimum holding period
requirement had been satisfied.
(f) Purchaser further represents and warrants 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 the business or financial expertise of himself or of
professional advisors to Purchaser who are unaffiliated with and who are not
compensated by the Company or any of its affiliates, directly or indirectly.
13. MARKET STAND-OFF. In connection with the first firmly
underwritten public offering of the Company's securities under the Act (the
"Initial Offering"), 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 with
respect to, any Common Stock 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 the registration statement filed under the Act in
connection with such Initial Offering. 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.
14. SECTION 83(b) ELECTION. Purchaser understands that Section
83(a) of the Code, taxes as ordinary income the difference between the amount
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 Co-Founders to buy the Stock from Purchaser pursuant to
6.
the Co-Founders' Option set forth in Section 2 above and the right of the
Company to repurchase the Stock pursuant to the Repurchase Option set forth
in Section 3 above. Purchaser understands that Purchaser may elect to be
taxed at the time the Stock is purchased, rather than when and as the
Co-Founders' Option and the Repurchase Option expire, 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 in the form
attached hereto as EXHIBIT D. 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.
15. REFUSAL TO TRANSFER. The Company shall not be required (i) 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 (ii) 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.
16. NO EMPLOYMENT RIGHTS. This Agreement is not an employment
contract and shall not be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company (or a parent
or subsidiary of the Company), or of the Company (or a parent or subsidiary
of the Company) to continue your employment.
17. 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 its 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.
7.
(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 purchase price thereunder, 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 stockholders. 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 Colorado. 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 Xxxxxx Godward LLP,
counsel to the Company and that Xxxxxx Godward 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 a provision of this Agreement is 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.
(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.
8.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
JATO COMMUNICATIONS CORP.
A DELAWARE CORPORATION
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
Address: 0000 Xxxxxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
PURCHASER:
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
XXXXXXX X. XXXXX
Address:
---------------------------------
--------------------------------------
--------------------------------------
CO-FOUNDERS:
/s/ Xxxxx X. Xxxx
-----------------------------------------
XXXXX X. XXXX
/s/ Xxxxx X. Xxxxx
-----------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
XXXXXXX XXXXXX
ATTACHMENTS:
Exhibit A -- Stock Assignment Separate from Certificate
Exhibit B -- Joint Escrow Instructions
Exhibit C -- Section 83(b) Election
9.
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Founder's Stock
Purchase Agreement (the "Agreement") dated as of October 14, 1998, Xxxxxxx X.
Xxxxx hereby sells, assigns and transfers unto ______________________,
____________________________ (_________) shares of Common Stock of JATO
Communications Corp., a Delaware corporation (the "Company"), standing in the
undersigned's name on the Company's books represented by Certificate No.
_____ herewith, and does hereby irrevocably constitute and appoint the
Secretary of the Company attorney to transfer the said stock on the books of
the said 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 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 Co-Founders' Option or the
Company's Repurchase Option under the Agreement.
Dated:
----------------------------- -------------------------------
[Signature]
EXHIBIT B
JOINT ESCROW INSTRUCTIONS
Xxxxx X. Xxxxx
JATO Communications Corp.
0000 Xxxxxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
Dear Sir:
As Escrow Agent for both JATO Communications Corp., a Delaware
corporation (the "Company"), and the undersigned purchaser of 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 Founder's
Stock Purchase Agreement (the "Agreement"), dated October 14, 1998 to which a
copy of these Joint Escrow Instructions is attached as Exhibit C, in
accordance with the following instructions:
1. In the event a Co-Founder or the Company or an assignee of the
Company shall elect to exercise the Co-Founders' Option or the Repurchase
Option, as the case may be, as set forth in the Agreement, the Co-Founder or
the Company or its assignee, as the case may be, will give to Purchaser and
you a written notice specifying the number of shares of stock to be
purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser, the Co-Founders 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.
2. 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 stock to be transferred, to the
Co-Founder or the Company, as applicable, 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 stock being
purchased pursuant to the exercise of the Co-Founders' Option or the
Repurchase Option, as applicable.
3. Purchaser irrevocably authorizes the Company to deposit with
you any certificates evidencing shares of stock to be held by you hereunder
and any additions and substitutions to said shares as specified in the
Agreement. Purchaser hereby irrevocably constitutes and appoints you as his
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.
4. This escrow shall terminate upon (i) the expiration of the
Co-Founders' Option and the Repurchase Option or (ii) the exercise in full of
the Co-Founders' Option or the Repurchase Option, whichever occurs first.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. You shall be entitled to employ such legal counsel (including
without limitation the firm of Xxxxxx Godward LLP) and other experts as you
may deem necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor.
12. 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 his attorney-in-fact and agent
to the full extent of your appointment.
13. 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.
14. 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 may (but are not obligated 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.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Office Box, by registered or certified mail
with postage and fees prepaid, addressed to each of the other parties
hereunto entitled at the following addresses specified below, or at such
other addresses as a party may designate by ten days' written notice to each
of the other parties hereto:
16. 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17. 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.
Very truly yours,
JATO COMMUNICATIONS CORP.
By:
--------------------------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
Address:
0000 Xxxxxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
PURCHASER:
-----------------------------------------
XXXXXXX X. XXXXX
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
ESCROW AGENT: CO-FOUNDERS:
--------------------------- ------------------------------
Xxxxx X. Xxxxx Xxxxx X. Xxxxx
------------------------------
Xxxxxxx Xxxxxx
------------------------------
Xxxxx X. Xxxx
PROMISSORY NOTE
$12,500 October 14, 0000
Xxxxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, Xxxxxxx X. Xxxxx (the "Debtor") hereby
unconditionally promises to pay to the order of JATO Communications Corp.
(the "Company"), 0000 Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000, 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, the principal sum of Twelve
Thousand Five Hundred Dollars ($12,500) together with interest accrued from
the date hereof on the unpaid principal at the rate of the lesser of 6% per
annum, or the maximum rate permissible by law, as follows:
PRINCIPAL REPAYMENT. The outstanding principal amount hereunder shall
be due and payable in full on March 1, 1999;
INTEREST PAYMENTS. Interest shall be payable at maturity and shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed.
This Note is delivered as partial payment of the one hundred thousand
(100,000) shares of Common Stock of the Company purchased by Debtor pursuant
to that certain Common Stock Purchase Agreement by and between Debtor and the
Company of even date herewith. This Note is full recourse.
Principal and interest shall be forgiven by the Company if Debtor
performs the services set forth on Exhibit A attached hereto.
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.
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.
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.
This Note shall be governed by, and construed, enforced and
interpreted in accordance with, the laws of the State of Colorado, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
DEBTOR:
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Address: 00000 X. 00xx Xx.
-----------------------------
Xxxxxx, XX 00000
------------------------------------
EXHIBIT A
DESCRIPTION OF SERVICES
Administration and negotiation of interconnection agreements, accounting and
administration projects and related activities as identified by JATO for a
period ending November 30, 1998.
EXHIBIT C
FORM OF SECTION 83(b) ELECTION
October 14, 1998
Director of Internal Revenue
Internal Revenue Service Center
Xxxxx, XX 00000
RE: ELECTION UNDER SECTION 83(b)
Gentlemen:
The undersigned hereby elects, pursuant to the provisions of Sections 55-56
and 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), to
include in alternative minimum taxable income for the undersigned's current
taxable year, as compensation for services, 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. The undersigned also elects pursuant to
Section 83(b) of the Code to include in gross income for the taxable year in
which the undersigned disposes of some or all of the property described below
in a transaction which fails to satisfy the requirements of Section 422(a)(1)
of the Code (a "disqualifying disposition"), as compensation for services,
the excess, if any, of the fair market value of the disposed property at the
time of transfer to the undersigned over the amount paid for such property.
Pursuant to Treasury Regulations Section 1.83-2, the following information is
submitted:
1. NAME: Xxxxxxx X. Xxxxx
("PURCHASER")
Address:
---------------------------------------
---------------------------------------
SOCIAL SECURITY NO.:
---------------------------------------
2. PROPERTY DESCRIPTION: 130,000 shares of Common Stock (the "Stock")
of JATO Communications Corp. (the "Company").
3. The date on which the Stock was purchased is October 14, 1998.
4. The taxable year for which the election is made is the calendar year
1998.
5. RESTRICTIONS:
"In the event that Purchaser voluntarily terminates his relationship
with the Company (or a parent or subsidiary of the Company), whether as an
employee, director or consultant, then Xxxxxxx Xxxxxx and Xxxxx X. Xxxxx
(each a "Co-Founder") shall each have the right, exercisable upon written
notice to Purchaser within thirty (30) days of the date of such termination,
to purchase his pro rata share of the Stock which has not vested pursuant to
Section 4 below as of such termination date, at a purchase price of $.25 per
share (the "Co-Founders' Option"). The Co-Founder's pro rata portion shall
be that number of shares equal to the product obtained by multiplying (x) the
aggregate number of shares of Stock which have not vested pursuant to Section
4 below by (y) a fraction the numerator of which is the number of shares of
Common Stock owned by such Co-Founder (on an as-if-converted basis) at the
time of Purchaser's termination and the denominator of which is the total
number of shares of Common Stock owned by each of the Co-Founders (on an
as-if-converted basis) at the time of Purchaser's termination.
In the event that Purchaser voluntarily terminates his relationship
with the Company (or a parent or subsidiary of the Company), whether as an
employee, director or consultant, and the Co-Founders do not purchase all of
Purchaser's unvested Stock pursuant to the Co-Founders' Option under Section
2 above within the period set forth therein, the Company shall then have the
right, exercisable upon written notice to Purchaser within thirty (30) days
after the expiration of the Co-Founders' Option, to purchase all or a portion
of the Stock which has not vested pursuant to Section 4 below as of such
termination date (less shares purchased by the Co-Founders pursuant to
Section 2 above), at a purchase price of $.25 per share.
In the event the Company terminates Purchaser's relationship with the
Company (or a parent or subsidiary of the Company), whether as an employee,
director or consultant, for Cause (as defined below), then the Company shall
have an option for a period of ninety (90) days after said termination to
repurchase from Purchaser, at a purchase price of $.25 per share, up to but
not exceeding the number of shares of Stock which have not vested under the
provisions of Section 4 below as of such termination date.
In the event that Purchaser's relationship with the Company (or a
parent or subsidiary of the Company) is terminated by reason of Purchaser's
death or disability (as defined in Section 22(c)(3) of the Internal Revenue
Code of 1986, as amended (the "Code")), then the Company shall have an option
for a period of ninety (90) days after said termination to repurchase from
Purchaser's personal representative at a purchase price of $.25 per share, up
to but not exceeding fifty percent (50%) of the number of shares of Stock
which have not vested under the provisions of Section 4 below as of such
termination date (together with the options set forth in Sections 3(a) and
3(b) above, the "Repurchase Option")."
6. The fair market value at the time of transfer of the Stock, determined
without regard to any restriction other than a restriction which by its terms
will never lapse, is $32,500 (130,000 shares having a fair market value of
$.25 per share).
7. PURCHASE PRICE: $32,500 (130,000 shares at $.25 per share).
A copy of this statement has been furnished to the Company and the transferee of
the Stock if different than Purchaser.
Dated: _______________, 1998.
Very truly yours,
----------------------------------
