EXHIBIT 10.9
REPURCHASE AGREEMENT
(Including amendments through April 15, 1999)
THIS REPURCHASE AGREEMENT (the "Agreement") is made as of November 20, 1996
by and between LiveWorld Productions, Inc., a California corporation (the
"Company") and Xxxxx Xxxxxx ("Employee").
1. Release of Shares From Repurchase Option.
----------------------------------------
(a) Employee currently holds 1,500,000 shares of the Company's Common
Stock (the "Shares"). The Shares shall be subject to a Repurchase Option (as
defined in Section 2) by the Company pursuant to Section 2 below, provided,
--------
however, that one-third (1/3) of the Shares shall be released from the Company's
-------
Repurchase Option on the date of this Agreement and one thirty-sixth (1/36th) of
the remaining two-thirds (2/3) of the Shares shall be released from the
Company's Repurchase Option each month thereafter until all such shares are
released from the Company's Repurchase Option, provided in each case that the
Employee's employment has not been terminated prior to the date of any such
release. Any of the Shares which have not yet been released from the Company's
Repurchase Option are referred to as "Unreleased Shares."
(b) Notwithstanding the above, upon (i) the closing of a Qualified
IPO (as defined in the Company's Articles of Incorporation or Certificate of
Incorporation, as the case may be) or (ii) a Sale of the Company (as defined
below), all of the Unreleased Shares will be immediately released from the
Repurchase Option. For purposes of this Section 1, a "Sale of the Company" shall
be defined as the sale of all or substantially all of the assets of the Company,
a merger or consolidation of the Company with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
Company, or any other corporate reorganization, in which sale of assets,
consolidation, reorganization or merger the shareholders of the Company receive
distributions in cash or securities of another corporation or corporations as a
result of such sale of assets, consolidation, reorganization or merger, unless
the shareholders of the Company hold more than fifty percent (50%) of the voting
equity securities of the successor or surviving corporation immediately
following such merger, sale of assets, reorganization or consolidation, in which
case such merger, sale of assets, reorganization or consolidation shall not be
treated as a Sale of the Company.
2. Repurchase Option.
-----------------
(a) In the event that Employee's status as an employee of the Company
terminates for any reason (a "Termination"), the Company shall upon the date of
such Termination (as reasonably fixed and determined by the Company) (the
"Termination Date") have an irrevocable right for a period of thirty (30) days
from such Termination Date to repurchase any or all of the Unreleased Shares
(the "Repurchase Option"), at the Repurchase Price (as defined below) (subject
to adjustment as set forth in Section 6). For purposes of this Agreement, the
"Repurchase Price" shall mean the price equal to the average of (i) the last per
share price of preferred stock issued by the Company plus (ii) the last per
share price of Common Stock issued by the Company, or, if options to purchase
shares of the Company's Common Stock have been granted after the most recent
issuance of the Company's Common Stock, then the last per share option price as
granted by the Board of Directors of the Company (the "Board").
(b) The Repurchase Option shall be exercised by the Company within
thirty (30) days following the Termination Date by delivering or mailing to the
Employee written notice in the manner provided for in Section 8(d) and a check
in the amount of the aggregate Repurchase Price. Upon delivery of such notice
and the payment of the aggregate Repurchase Price, 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.
(c) The Company may assign its rights and delegate its duties under
this Agreement, including the Repurchase Option. Accordingly, whenever the
Company shall have the right to repurchase Shares hereunder, the Company may
designate and assign one or more employees, officers, directors or shareholders
of the Company or other persons or organizations to exercise all or a part of
the Company's Repurchase Option under this Agreement.
(d) The Repurchase Option shall terminate and be null and void upon
the earlier of (i) such time as all of the Unreleased Shares have been released
from the Repurchase Option pursuant to Sections 1(a) and (b) above, or (ii) in
the event that the Repurchase Option shall expire unexercised.
3. Escrow of Shares.
----------------
(a) To insure the availability for delivery of the Employee's
Unreleased Shares upon repurchase by the Company pursuant to the Company's
Repurchase Option, the Employee shall upon execution of this Agreement, deliver
and deposit with an escrow holder designated by the Company (the "Escrow
Holder") the share certificates representing the Unreleased Shares, together
with the stock assignment duly endorsed in blank, attached as Exhibit A-1. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder
pursuant to the Joint Escrow Instructions of the Company and Employee attached
as Exhibit A-2, until such time as the Company's rights of repurchase pursuant
to the Company's Repurchase Option no longer are in effect. As a further
condition to the Company's obligations under this Agreement, the spouse of
Employee, if any, shall execute and deliver to the Company the Consent of Spouse
attached as Exhibit A-3.
(b) The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow and while
acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises its Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such option
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
-2-
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of Shares has been released from such Repurchase
Option, upon the Employee's request the Escrow Holder shall promptly cause a new
certificate to be issued for such released shares and shall deliver such
certificate to the Employee without the legend referred to in Section 5 below.
(e) Subject to the terms hereof, the Employee shall have all the
rights of a shareholder with respect to such Shares while they are held in
escrow, including without limitation, the right to vote the Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
the Company's Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Employee is entitled by reason
by the Employee's ownership of the Shares shall be immediately subject to this
escrow (subject to Section 2(c) above), deposited with the Escrow Holder and
included thereafter as "Shares" for purposes of this Agreement and the Company's
Repurchase Option.
4. Rights as Shareholder. Subject to the terms and conditions of this
---------------------
Agreement, Employee shall have all of the rights of a shareholder of the Company
with respect to the Shares until such time as Employee disposes of the Shares or
the Company and/or its assignee(s) exercises the Repurchase Option hereunder.
Upon such exercise, Employee shall have no further rights as a holder of the
Shares so purchased except the right to receive payment for the Shares so
purchased in accordance with the provisions of this Agreement, and Employee
shall forthwith cause the certificate(s) evidencing the Shares so purchased to
be surrendered to the Company for transfer or cancellation.
5. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. The Company shall cause the legend set forth below or
-------
any legend substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Unreleased Shares together with any
other legends that may be required by state or federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
REPURCHASE AS SET FORTH IN A REPURCHASE AGREEMENT BETWEEN THE ISSUER
AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. THESE RIGHTS ARE
BINDING ON TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. In order to ensure compliance with the
---------------------
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
-3-
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
6. Adjustment for Stock Split. All references to the number of Shares and
--------------------------
the Repurchase Price of the Shares in the 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.
7. Severance Compensation
----------------------
(a) In the event of a Termination, Employee shall be entitled to
receive all compensation earned and all benefits and reimbursements due through
the Termination Date. In addition, in the event that Employee's status as an
employee of the Company terminates for any reason, other than a Voluntary
Resignation, termination for Cause or death or Disability, Employee shall
receive ninety (90) days (or such longer period as the Board shall determine) of
Employee's then current salary and benefits (the "Severance Compensation"). Such
salary shall be payable in one lump sum upon the Termination Date.
(b) For the purposes of this Agreement, (i) termination for "Cause"
shall be: (A) the conviction of Employee of any crime involving the property or
business of the Company or any felonious crime detrimental to the Company; or
(B) the Employee's repeated, reckless misconduct and failure to cure such action
within twenty (20) days after written demand for substantial improvement in
performance with reasonable detail is delivered to the Employee by the Board;
(ii) "Disability" means Employee's permanent disability which, in the opinion of
the Board, materially impairs Employee's ability to perform her duties under
this Agreement; (iii) "Voluntary Resignation" means the Employee's voluntary
resignation from employment, excluding a voluntary resignation as a result of
Constructive Termination; and (iv) "Constructive Termination" means (A) a
material reduction in salary and benefits other than a reduction applied to all
employees, (B) a requirement to relocate without the Employee's consent beyond
25 miles from the principal offices of the Company in Saratoga, California, (C)
a change in Employee's title from Vice President of Community or (D) a material
reduction in responsibilities reasonably accorded to and expected of the Vice
President of Community of a company.
(d) Notwithstanding any provision of this Section 7 to the contrary,
the provisions of Sections 1 through 6, 7(a) and 8 shall survive the termination
of this Agreement.
8. Miscellaneous.
-------------
(a) Any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrator shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A
-4-
decision by the arbitrator shall be final and binding. Judgment may be entered
on the arbitrator's award in any court having jurisdiction. The direct expense
of any arbitration proceeding shall be borne by the Company. Each party shall
bear its own counsel fees. The arbitration proceeding shall be held in the city
where the Company is located.
(b) If any portion of this Agreement is held by a court of competent
jurisdiction to conflict with any federal, state or local law, such portion of
this Agreement shall be of no force or effect and this Agreement shall otherwise
remain in full force and effect and be construed as is such portion had not been
included in this Agreement.
(c) Employee shall not assign this Agreement or any rights or
obligations under this Agreement without the prior written consent of the
Company. This Agreement shall inure to the benefit of the Successors and Assigns
of the Company.
(d) Any notice or communication required or permitted under this
Agreement shall be made in writing and delivered personally to the other party
or sent by certified or registered mail, return receipt requested and postage
paid.
(e) This Agreement contains the entire agreement and understanding of
the parties and supersedes all prior discussions, agreements and understandings
related to the subject matter of this Agreement. This Agreement may not be
changed or modified, except by an agreement in writing executed by the Company
and by Employee.
(f) The waiver of a breach of any term or provision of this Agreement
shall not operate as or be construed to be a waiver of any other previous or
subsequent breach of this Agreement.
(g) This Agreement shall be governed by the internal laws of the
State of California as applied to agreements made and performed in California by
residents of California.
(h) All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.
(i) This Agreement may be executed in counterparts, each of which
shall constitute one and the same Agreement.
-5-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
year first above written.
LIVEWORLD PRODUCTIONS, INC. EMPLOYEE
By: /s/ Xxxxx X. Xxxxxxxx /s/ Xxxxx Xxxxxx
Xxxxx X. Xxxxxxxx Xxxxx Xxxxxx
President, Chief Executive Officer
and Chairman of the Board
-6-
EXHIBIT A-1
-----------
STOCK POWER AND ASSIGNMENT
--------------------------
SEPARATE FROM CERTIFICATE
-------------------------
FOR VALUE RECEIVED and pursuant to that certain Repurchase Agreement dated
as of November 20, 1996 (the "Agreement"), the undersigned hereby sells, assigns
and transfers unto ____________________________________________________________,
_______________ shares of the Common Stock of LIVEWORLD PRODUCTIONS, INC., a
California corporation, standing in the undersigned's name on the books of said
corporation represented by Certificate No. ___________ delivered herewith, and
does hereby irrevocably constitute and appoint ________________________________
________________________________________________ attorney to transfer the said
stock on the books of said corporation with full power of substitution in the
premises.
Dated: _________________, 19__
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
INSTRUCTIONS: Please do not fill in the blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"Repurchase Option," as set forth in the Agreement, without requiring additional
signatures on the part of the Employee.
EXHIBIT A-2
-----------
JOINT ESCROW INSTRUCTIONS
-------------------------
November 20, 1996
Page Xxxxxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Dear Xx. Xxxxxxxxx:
As Escrow Agent for both LIVEWORLD PRODUCTIONS, INC., a California
corporation (the "Company"), and the undersigned employee of the Company
("Employee"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Repurchase Agreement (the
"Agreement"), dated as of November 20, 1996, to which a copy of these Joint
Escrow Instructions is attached, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Employee 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. Employee 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 the 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 Company or its assignee
against the simultaneous delivery to you of the purchase price (by cash, a
check, cancellation of indebtedness or some combination thereof) for the number
of shares of stock being purchased pursuant to the exercise of the Company's
Repurchase Option.
3. Employee 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 defined in the Agreement. Employee
does hereby irrevocably constitute and appoint you as Employee's attorney-in-
fact and agent for the term of this escrow to execute with respect to such
securities all documents necessary or appropriate to make such securities
negotiable and to complete any transaction herein contemplated, including but
not limited to the filing with any applicable state blue sky authority of any
required applications for consent, or notice of transfer of, the securities.
Subject to the provisions of this paragraph 3, Employee shall exercise all
rights and privileges of a shareholder of the Company while the stock is held by
you.
4. Upon written request of the Employee, unless the Company's Repurchase
Option has been exercised, you will deliver to Employee a certificate or
certificates representing the shares of stock as are not then subject to the
Repurchase Option. Within thirty (30) days after cessation of Employee's
continuous employment by the Company you will deliver to Employee a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Company pursuant to exercise
of the Company's Repurchase Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Employee,
you shall deliver all of same to Employee and shall be discharged of all further
obligations hereunder.
6. 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. 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 Employee 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, 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,
authorities 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 the
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 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 cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
-2-
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 held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes 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
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: LIVEWORLD PRODUCTIONS, INC.
00000 Xxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxx 00000
EMPLOYEE: Xxxxx Xxxxxx
00000 Xxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
ESCROW AGENT: Page Xxxxxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
16. By signing these Joint Escrow Instructions, you become a party only
for the purpose of the Joint Escrow Instructions; you do not become a party to
the Agreement.
-3-
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns. This
instrument may be executed in counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.
Very truly yours,
LIVEWORLD PRODUCTIONS, INC.
a California corporation
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, President, Chief Executive
Officer and Chairman of the Board
EMPLOYEE:
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
ESCROW AGENT:
/s/ Page Xxxxxxxxx
-4-
EXHIBIT A-3
-----------
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Employee has read and hereby approves the terms
and conditions of the foregoing Agreement. The undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Agreement and further
agrees that any community property interest shall be similarly bound. The
undersigned hereby appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the
Agreement.
/s/ Signature Illegible
Spouse of Employee
