Exhibit 10.5
SATELLITE ONLINE SOLUTIONS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
the 1st day of September, 1997, between Satellite Online Solutions
Corporation, a California corporation (the "Company"), and Xxxx Xxxxxx
("Purchaser").
RECITALS
WHEREAS, Purchaser is an employee of the Company and previously
agreed to defer certain wages owed to him by the Company in the amount of
$3,717.46 (the "Wage Obligation");
WHEREAS, the Company desires to offer Purchaser the opportunity to
purchase shares of its Common Stock, and Purchaser desires to purchase such
shares;
NOW, THEREFORE, the parties agree as follows:
1. ISSUANCE OF COMMON STOCK
(a) SALE OF SHARES. The Company hereby agrees to sell to
Purchaser, and Purchaser agrees to buy from the Company, 185,873 shares of
the Common Stock of the Company (the "Shares"), at a per share purchase price
of $0.02 per share. The term "Shares" refers to the purchased Shares, all
securities or property received in replacement of Shares and all securities
or property distributed with respect to Shares, in any case by way of stock
split, stock dividend, recapitalization, consolidation, merger,
reorganization or similar event.
(b) PAYMENT FOR SHARES. As full payment for the Shares,
Purchaser agrees to the cancellation of all indebtedness owed to him by the
Company pursuant to the Wage Obligation and hereby releases the Company from
any liability therefor.
(c) DELIVERY. Concurrently with the execution hereof, the
Company will deliver to Purchaser a certificate representing the Shares
(which shall be issued in Purchaser's name).
2. TRANSFER RESTRICTIONS. In addition to any other limitations
on transfer created by applicable securities laws, Purchaser agrees not to
sell, assign, encumber or otherwise dispose of any interest in the Shares
except as provided in this Section 2.
(a) RIGHT OF FIRST REFUSAL.
(i) In the event Purchaser or his transferee
desires (or is required) to sell or transfer in any manner any of the Shares,
Purchaser shall first offer such Shares for sale to the Company upon the
terms and conditions specified herein (the "Right of First Refusal") by
delivering a notice (the "Notice") to the Company stating (A) his bona fide
intention to sell or otherwise transfer such Shares, (B) the number of such
Shares to be sold or otherwise transferred, (C) the price
for which Purchaser proposes to sell such Shares, (D) the name of the
proposed buyer or transferee and (E) all additional terms and conditions, if
any, of the proposed sale or transfer. Purchaser shall attach to the Notice a
copy of the written offer, if any, reflecting the terms and conditions of the
proposed sale or transfer of the Shares to the third party. In the event of a
transfer not involving a sale of the Shares for a specific sum of money, or
if, in the sole judgment of the Company's Board of Directors, the proposed
transfer does not involve a price for the Shares negotiated by Purchaser and
its proposed buyer or transferee in a bona fide "arms' length transaction,"
the price of the Shares shall be determined by the Company's Board of
Directors in the manner specified in Section 2(c) below.
(ii) Within thirty (30) days following receipt
by the Company of the Notice (the "Acceptance Period"), the Company (or its
assignee) may elect to purchase all or a portion of the Shares to which the
Notice refers, at the price per Share and on the same terms and conditions
(or terms and conditions as reasonably similar as possible) as set forth in
the Notice or, if required by this Agreement, at the price per Share
determined pursuant to Section 2(c).
(iii) If the Company (or its assignee) elects
to purchase such Shares hereunder, it shall notify Purchaser in writing of
its intention to purchase such Shares hereunder and either (A) set a date for
the closing of the transaction at a place specified by the Company not later
than ten (10) days from the date of such notice at which time the Company (or
its assignee) shall tender payment for the Shares so purchased or
cancellation of Purchaser's indebtedness to the Company or a combination
thereof, or (B) include payment for the Shares with the Company's notice to
Purchaser. At such closing, the certificate(s) representing the Shares so
purchased shall be delivered to the Company and canceled (and the Shares
transferred to the Company's assignee, if applicable) or, in the case of
payment by the Company (or its assignee) by mail, such certificate(s) shall
be deemed canceled (and the Shares transferred to the Company's assignee, if
applicable) as of the date of the mailing of the Company's notice and,
thereafter, shall be promptly returned by Purchaser to the Company by
certified or registered mail.
(iv) If the Company (or its assignee) does not
elect to purchase any of the Shares to which the Notice refers, Purchaser may
sell or otherwise transfer the Shares not purchased to the third party named
in the Notice at the price and on the terms and conditions specified in the
Notice or at a higher price; provided, however, that such sale or transfer
must be consummated within thirty (30) days from the earlier of (A) the lapse
of the Acceptance Period or (B) the date of the Company's notice, whether
written or oral, advising Purchaser that the Company does not intend to
purchase the Shares hereunder; and provided, further, that any such sale or
transfer must be made in accordance with applicable securities laws and the
terms and conditions set forth in this Agreement. In the event the Shares are
not disposed of by Purchaser within such thirty (30) day period, such Shares
shall once again be subject to the Right of First Refusal herein provided.
(b) INVOLUNTARY TRANSFER.
(i) In the event of any transfer by operation
of law or other involuntary transfer, of all, or a portion, of the Shares,
the Company shall have an option to purchase all of the
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Shares transferred (the "Involuntary Transfer Option") at a price set
pursuant to Section 2(c). Upon such a transfer, the person acquiring the
Shares shall promptly notify the Secretary of the Company of such transfer.
(ii) The Company (or its assignee) shall
notify Purchaser and the person acquiring the Shares as to whether the
Company (or its assignee) wishes to purchase the Shares pursuant to the
Involuntary Transfer Option within thirty (30) days following the date on
which the Company was notified of the transfer. If the Company (or its
assignee) elects to purchase such Shares hereunder, it shall set a date for
the closing of the transaction at a place specified by the Company not later
than ten (10) days from the date of the Company's notice to Purchaser and the
person acquiring the Shares. At such closing, the Company (or its assignee)
shall tender payment for the Shares in the form of a check, cancellation of
Purchaser's indebtedness to the Company or some combination thereof and the
certificate(s) representing the Shares so purchased shall be canceled.
(c) DETERMINATION OF PRICE BY BOARD. With respect to
the Shares to be transferred pursuant to the Right of First Refusal or the
Involuntary Transfer Option where the price per Share is to be determined
pursuant to this Section 2(c), the price per Share shall be a price set by
the Board of Directors of the Company that will reflect, in the Board's sole
discretion, the then current fair market value of such Shares. The Company
shall notify Purchaser, his representative or the person acquiring the Shares
under Section 2(b) of the price so determined within thirty (30) days after
receipt by the Company of written notice of the transfer or proposed transfer
of the Shares.
(d) RESTRICTION ON ALIENATION. Purchaser agrees that
Purchaser will not sell, transfer, pledge, encumber, assign or otherwise
dispose of any of the Shares subject to the Company's Right of First Refusal
or Involuntary Transfer Option, or any right or interest therein, whether
voluntarily, by operation of law or otherwise, without the prior written
consent of the Company. Any sale, transfer or disposition or purported sale,
transfer or disposition of any of the Shares by Purchaser shall be null and
void unless the terms, conditions and provisions of this Agreement are
strictly complied with. Purchaser hereby authorizes and directs the Transfer
Agent of the Company to transfer the Shares as to which the Right of First
Refusal or Involuntary Transfer Option has been exercised from Purchaser to
the Company (or its assignee). Purchaser further authorizes the Company to
refuse, or to cause its Transfer Agent to refuse, to transfer or record any
Shares to be transferred in violation of this Agreement.
(e) ASSIGNMENT BY COMPANY. The Company's Right of
First Refusal and Involuntary Transfer Option may be assigned in whole or in
part to any employee(s), shareholder(s) or successors of the Company.
(f) OBLIGATIONS BINDING UPON TRANSFEREES. All
transferees of Shares or any interest therein will receive and hold such
Shares or interests subject to the provisions of this Agreement, including,
insofar as applicable, the Company's Right of First Refusal and Involuntary
Transfer Option under this Section 2. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are complied with.
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(g) MERGER, SALE OF ASSETS OR PUBLIC OFFERING. In the
event of (A) a merger, consolidation or reorganization of the Company with or
into another corporation as a result of which the Company is not the
surviving corporation or as a result of which the outstanding Common Stock of
the Company are exchanged for or converted into cash or property or
securities not of the Company, or (B) the sale of all or substantially all of
the Company's assets to another corporation, if the acquiring, surviving or
successor corporation (or its parent or subsidiary) assumes this Agreement
then the rights and obligations contained herein, including the Right of
First Refusal and Involuntary Transfer Option, shall continue to be
applicable to Purchaser and the surviving, acquiring or successor corporation
(or its parent or subsidiary). The Right of First Refusal and Involuntary
Transfer Option granted by this Section 2 shall terminate at such time as a
public market exists for the Company's Common Stock (or any other stock
issued to purchasers in exchange for the Shares purchased under this
Agreement). For the purpose of this Agreement, a "public market" shall be
deemed to exist if the Common Stock is listed on a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), or the Common Stock is traded on the
over-the-counter market and prices are published daily on business days in a
recognized financial journal.
(h) REPLACEMENT CERTIFICATE. In the event the
restrictions imposed by this Agreement shall be terminated as provided in
this Section 2, a new certificate or certificates representing the Shares
shall be issued, on request, without the legend referred to in Section 4.
(i) EXCLUDED TRANSFERS. The restrictions on transfer
set forth in this Section 2 shall not apply to an inter-vivos transfer to
Purchaser's ancestors or descendants or spouse or to a Trustee for their
benefit, provided that such transferee(s) shall agree in writing to take such
Shares subject to all the terms of this Agreement, including restrictions on
further transfer.
(j) INDEBTEDNESS. Notwithstanding any provision to the
contrary in this Agreement, any payment by the Company for purchase of Shares
from Purchaser may be made by cancellation of any indebtedness of Purchaser
owed to the Company.
(k) MARKET STANDOFF AGREEMENT. Purchaser hereby agrees
that if so requested by the Company or any representative of the underwriters
in connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended (the "Securities Act"),
Purchaser shall not sell or otherwise transfer any Shares or other securities
of the Company during the 180-day period (the "Market Standoff Period")
following the effective date of a registration statement of the Company filed
under the Securities Act; provided, however, that such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
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3. PURCHASER INVESTMENT REPRESENTATIONS. In connection with
the acquisition of the Shares, Purchaser represents and warrants to the
Company as follows:
(a) INVESTMENT. Purchaser is acquiring the Shares for
investment for Purchaser's own account and not with the view to, or for
resale in connection with, any distribution, assignment or resale to others
within the meaning of the Securities Act or the California Corporate
Securities Law of 1968, as amended ("California Securities Law"), and no
other person has a direct or indirect beneficial interest, in whole or in
part, in such Shares. Purchaser understands that the Shares have not been and
will not be registered under the Securities Act or qualified under the
California Securities Law or under the laws of any other state of the United
States in reliance upon specific exemptions therefrom which depend upon,
among other things, the bona fide nature of the investment intent as
expressed herein and in any other representations, warranties or information
provided by Purchaser to the Company under this Agreement.
(b) RESTRICTIONS ON TRANSFER. Purchaser acknowledges
that the Shares to be issued to Purchaser must be held indefinitely unless
subsequently registered and qualified under the Securities Act or unless an
exemption from registration and qualification is otherwise available.
Purchaser further understands that the Company is under no obligation to
register or qualify the Shares. In addition, Purchaser understands that the
certificate representing the Shares will be imprinted with a legend which
prohibits the transfer of such Shares unless they are sold in a transaction
in compliance with the Securities Act or are registered and qualified or such
registration and qualification are not required in the opinion of counsel
acceptable to the Company.
(c) RULE 144. Purchaser is aware of the provisions of
Rule 144, promulgated under the Securities Act, which 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, including, among
other things, the existence of a public market for the Shares, the
availability of certain current public information about the Company, the
resale occurring not less than one year after the latter of the date full
payment has been made for the securities purchased from the Company or an
affiliate of the Company, the sale being made through a "broker's
transaction" or in transactions directly with a "market maker" (as such term
is defined in the Exchange Act) and the number of securities being sold
during any three (3) month period not exceeding specified limitations stated
therein; provided, however, that if Purchaser is not an affiliate of the
Company and the Shares were held more than two (2) years after full payment
and acquisition from the Company or an affiliate, which ever is later, then
certain of the foregoing conditions under Rule 144 will not be applicable.
(d) EXEMPTION FROM REGISTRATION. Purchaser further
acknowledges that, in the event all of the applicable requirements of Rule
144 are not satisfied, registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be required; and
that, although Rule 144 is not exclusive, the Staff of the SEC has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and other than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption
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from registration is available for such offers or sales and that such persons
and the brokers who participate in the transactions do so at their own risk
and that therefore there is no assurance that any exemption from registration
under the Securities Act will be available, or, if available, will allow him
to dispose of, or otherwise transfer, all or any portion of the Shares.
(e) RELATIONSHIP TO COMPANY; EXPERIENCE. Purchaser
either has a preexisting business or personal relationship with the Company
or any of its officers, directors or controlling persons or, by reason of
Purchaser's business or financial experience or the business or financial
experience of Purchaser's personal representative(s), if any, who are
unaffiliated with and who are not compensated by the Company or any affiliate
or selling agent, directly or indirectly, has the capacity to protect
Purchaser's own interests in connection with Purchaser's acquisition of the
Shares to be issued to Purchaser hereunder. Purchaser and/or Purchaser's
personal representative(s) have such knowledge and experience in financial,
tax and business matters to enable Purchaser and/or them to utilize the
information made available to Purchaser and/or them in connection with the
acquisition of the Shares to evaluate the merits and risks of the prospective
investment and to make an informed investment decision with respect thereto.
Purchaser is experienced in evaluating and investing in high risk, high
technology companies such as the Company.
(f) PURCHASER'S LIQUIDITY. In reaching the decision to
invest in the Shares, Purchaser has carefully evaluated Purchaser's financial
resources and investment position and the risks associated with this
investment, and Purchaser acknowledges that Purchaser is able to bear the
economic risks of the investment. Purchaser (i) has adequate means of
providing for Purchaser's current needs and possible personal contingencies,
(ii) has no need for liquidity in Purchaser's investment, (iii) is able to
bear the substantial economic risks of an investment in the Shares for an
indefinite period and (iv) at the present time, can afford a complete loss of
such investment. Purchaser's commitment to investments which are not readily
marketable is not disproportionate to Purchaser's net worth and Purchaser's
investment in the Shares will not cause Purchaser's overall commitment to
become excessive.
(g) OFFER AND SALE. Purchaser understands that the
offer and sale of the Shares have not been registered under the Securities
Act in reliance upon exemption therefrom. Purchaser was not offered or sold
the Shares, directly or indirectly, by means of any form of general
solicitation or general advertisement, including the following: (i) any
advertisement article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio;
or (ii) any seminar or meeting whose attendees had been invited by general
solicitation or general advertising.
(h) ACCESS TO DATA. Purchaser acknowledges that during
the course of this transaction and before deciding to acquire the Shares,
Purchaser has been provided with financial and other written information
about the Company. Purchaser has been given the opportunity by the Company to
obtain any information and ask questions concerning the Company, the Shares,
and Purchaser's investment that Purchaser felt necessary; and to the extent
Purchaser availed himself of that opportunity, Purchaser has received
satisfactory information and answers.
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(i) RISKS. Purchaser acknowledges and understands that
(i) an investment in the Company constitutes a high risk, (ii) the Shares are
highly speculative, and (iii) there can be no assurance as to what return, if
any, there may be. Purchaser is aware that the Company may issue additional
securities in the future which could result in the dilution of Purchaser's
ownership interest in the Company.
(j) VALID AGREEMENT. This Agreement when executed and
delivered by Purchaser shall constitute a valid and legally binding
obligation of Purchaser which is enforceable in accordance with its terms.
(k) RESIDENCE. The address set forth on the signature
page of this Agreement is Purchaser's current address and accurately sets
forth Purchaser's place of residence.
4. SECURITIES COMPLIANCE.
(a) LEGENDS. The certificate or certificates
representing the Shares shall bear legends in substantially the following
form (in addition to any other legend imposed by applicable blue sky laws):
(i) 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 FOR THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
(ii) THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS 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.
(b) NO QUALIFICATION. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA
CORPORATIONS COMMISSIONER, IS SUBJECT TO SUCH QUALIFICATION OR AN EXEMPTION
BEING AVAILABLE, AND THE ISSUANCE OF SUCH SECURITIES, OR THE RECEIPT OF ANY
PART OF THE CONSIDERATION PRIOR TO SUCH QUALIFICATION IS UNLAWFUL. THE RIGHTS
OF THE PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
(c) TRANSFERS. In addition to the restrictions imposed
under Section 2, all transfers of Shares or any interest in any such Shares
shall be made in strict compliance with applicable state and federal
securities laws.
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5. TAX CONSIDERATIONS. Purchaser understands that the tax
consequences to Purchaser as a result of this transaction depend on
Purchaser's individual circumstances and the characterization of this
transaction. Further, Purchaser will be responsible for any personal tax
liability, whether federal, state or local, as a result of this transaction
and Purchaser's ownership of the Shares. Purchaser acknowledges that the
Company will report cancellation of the Wage Obligation to the appropriate
federal and state tax authorities in accordance with applicable law.
Purchaser has consulted with Purchaser's own advisor(s) with respect to this
transaction and has not relied on any advice from the Company or any of its
officers, directors, agents or representatives.
6. MISCELLANEOUS.
(a) AMENDMENT. This Agreement may only be amended by
written agreement between Company and Purchaser.
(b) NOTICES. Any notice, demand, request or other
communications hereunder shall be in writing and shall be deemed sufficient
when delivered personally or sent by telegram or upon deposit in the U.S.
mail, as certified, registered or first class mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention:
the President, or if to Purchaser, at his address as shown on the signature
page hereof. The address to which notice is to be given hereunder may be
changed from time to time by the parties entitled to notice by notice given
to all other parties as provided herein.
(c) SUCCESSORS AND ASSIGNS. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by, the
Company's successors and assigns. The rights and obligations of Purchaser
under this Agreement may only be assigned with the prior written consent of
the Company.
(d) FURTHER ACTIONS. Both parties agree to execute any
additional documents and take such further action as may be reasonably
necessary to carry out the purposes of this Agreement.
(e) SHAREHOLDER RIGHTS. Subject to the provisions of
this Agreement, Purchaser shall during the term of this Agreement exercise
all rights and privileges of a shareholder of the Company with respect to the
Shares.
(f) INJUNCTIVE RELIEF. Purchaser agrees that the
Company and/or other shareholders shall be entitled to a decree of specific
performance of the terms hereof or an injunction restraining violations of
this Agreement, such right to be in addition to any of the remedies of the
Company. No remedy provided herein is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity.
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(g) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
regard to principles governing conflicts of laws.
(h) SEVERABILITY. If any provision of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full
force and effect without being impaired or invalidated in any way and shall
be construed in accordance with the purposes, tenor and effect of this
Agreement.
(i) ENTIRE AGREEMENT. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and supersedes all prior and contemporaneous written or
oral communications or agreements between the Company and Purchaser regarding
the subject matter hereof and no amendment or addition hereto shall be deemed
effective unless agreed to in writing by the parties hereto.
(j) WAIVERS. No waiver of any provision of this
Agreement or any rights or obligations of any party hereunder shall be
effective, except pursuant to a written instrument signed by the party or
parties waiving compliance, and any such waiver shall be effective only in
the specific instance and for the specific purpose stated in such writing.
(k) COUNTERPARTS. This Agreement may be executed in
one or more counterparts each of which shall be an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first set forth above.
SATELLITE ONLINE SOLUTIONS
CORPORATION
/s/ Xxxxx Xxxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
PURCHASER
/s/ Xxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxx
Address: 0000 Xxx Xxxx Xxx
Xxxxxxx Xxx, XX 00000
