Exhibit 10.33
STOCK RESTRICTION AGREEMENT
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This Stock Restriction Agreement (the "Agreement") is made as of December
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10, 1999 by and between Chemdex Corporation, a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxx (the "Stockholder").
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RECITALS
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The Company is a party to an Agreement and Plan of Merger (the "Merger
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Agreement") with XxxxxxxxxXX.xxx Corporation ("Target") and Spinach Acquisitions
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Corp. dated December 10, 1999.
Stockholder owns 2,080,000 of the Common Stock of Target (the "Target
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Shares") originally purchased at an average purchase price of $0.01227 per
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Target Share (the "Target Purchase Price") pursuant to a Stock Purchase
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Agreement dated May 29, 1998 and the exercise of an option on November 9, 1999.
Stockholder will receive a number of shares of the Common Stock of the Company
upon completion of the merger in accordance with the Merger Agreement. The
Company and the Stockholder recognize that, in order to provide the proper
incentives for working with the Company, it is necessary and appropriate for the
Stockholder to agree to subject approximately 84,800 shares of the Common Stock
of the Company (the number of shares for which 833,000 shares of the Common
Stock of Target will be exchanged, the "Shares") to a repurchase option in favor
of the Company in the event of the voluntary or involuntary termination of the
employment or consulting relationship of the Stockholder with the Company and to
certain other restrictions on the transfer of the Shares.
AGREEMENT
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In consideration of the foregoing, the parties hereto agree as follows:
1. Limitations of Transfer. The Stockholder shall not assign, encumber or
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dispose of any interest in the Shares while the Shares are subject to the
Repurchase Option (as defined below). After any Shares have been released from
the Repurchase Option, the Stockholder shall not assign, encumber or dispose of
any interest in such Shares except in compliance with the provisions below and
applicable securities laws.
(a) Repurchase Option.
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(i) In the event of the voluntary or involuntary termination of
Stockholder's employment or consulting relationship with the Company for any
reason (including death or disability), with or without cause, subject to the
severance provisions of that certain letter agreement between the Company and
Stockholder dated December 10, 1999] and the Change of Control Agreement between
the Company and Stockholder dated December 10, 1999, the Company shall upon the
date of such termination (the "Termination Date") have an irrevocable, exclusive
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option (the "Repurchase Option") for a period of 90 days from such date to
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repurchase all or any portion of the Shares held by Stockholder as of the
Termination Date
which have not yet been released from the Company's Repurchase Option at the
"Repurchase Price" (as defined below).
(ii) Unless the Company notifies Stockholder within 90 days
from the date of termination of Stockholder's employment or consulting
relationship that it does not intend to exercise its Repurchase Option with
respect to some or all of the Shares, the Repurchase Option shall be deemed
automatically exercised by the Company as of the 90th day following such
termination, provided that the Company may notify Stockholder that it is
exercising its Repurchase Option as of a date prior to such 90th day. Unless
Stockholder is otherwise notified by the Company pursuant to the preceding
sentence that the Company does not intend to exercise its Repurchase Option as
to some or all of the Shares to which it applies at the time of termination,
execution of this Agreement by Stockholder constitutes written notice to
Stockholder of the Company's intention to exercise its Repurchase Option with
respect to all Shares to which such Repurchase Option applies. The Company, at
its choice, may satisfy its payment obligation to Stockholder with respect to
exercise of the Repurchase Option by either (A) delivering a check to
Stockholder in the amount of the purchase price for the Shares being
repurchased, or (B) in the event Stockholder is indebted to the Company,
canceling an amount of such indebtedness equal to the purchase price for the
Shares being repurchased, or (C) by a combination of (A) and (B) so that the
combined payment and cancellation of indebtedness equals such purchase price,
provided that the Company shall use good faith efforts to satisfy its payment
obligation to Stockholder within such 90 days, and that if such check is not
delivered or such cancellation is not effective within 90 days from the date of
termination, the amount of the Company's unsatisfied payment obligation shall
bear interest at a rate of nine percent (9%) per annum until the Company has
satisfied its payment obligation under this paragraph (ii). In the event of any
deemed automatic exercise of the Repurchase Option pursuant to this Section
3(a)(ii) in which Stockholder is indebted to the Company, such indebtedness
equal to the purchase price of the Shares being repurchased shall be deemed
automatically canceled as of the 90th day following termination of Stockholder's
employment or consulting relationship unless the Company otherwise satisfies its
payment obligations. As a result of any repurchase of Shares pursuant to this
Section 3(a), the Company shall become the legal and beneficial owner of the
Shares being repurchased and shall have all rights and interest therein or
related thereto, and the Company shall have the right to transfer to its own
name the number of Shares being repurchased by the Company, without further
action by Stockholder.
(iii) The Shares shall be subject to the Repurchase Option as of
the closing of the transaction contemplated by the Merger Agreement. 1/15th of
the Shares shall be released from the Repurchase Option at the end of each month
following the Vesting Commencement Date (as set forth on the signature page to
this Agreement), until all Shares are released from the Repurchase Option at the
end of such 15 month period (provided in each case that the Stockholder's
employment or consulting relationship with the Company has not been terminated
prior to the date of any such release). Fractional shares shall be rounded to
the nearest whole share.
(iv) The Repurchase Price shall be $0.001 per share (adjusted
for any stock splits, stock dividends and the like), unless Stockholder's
employment or consulting
relationship with the Company is terminated as a result of death or disability,
in which case the Repurchase Price shall be the fair market value of the
Company's Common Stock as of the date of termination.
(v) For purposes of this Section 1, the fair market value of
one share of Common Stock on the date of termination shall mean:
(A) If the Common Stock is traded on a securities exchange
or The Nasdaq National Market, the fair market value shall be deemed to be
the average of the closing prices of the securities on such exchange over
the five-day trading period ending one day prior to termination;
(B) If the Common Stock is actively traded over-the-
counter, the value shall be deemed to be average of the closing bid or sale
prices (whichever is applicable) over the five-day period ending one day
prior to termination.
(C) If the Common Stock is not traded on a securities
exchange, the Nasdaq National Market or over-the-counter, the fair market
value shall be at the highest price per share which the Company could
obtain on the date of calculation from a willing buyer (not a current
employee or director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by the Board of
Directors.
(b) Assignment. The right of the Company to purchase any part of the
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Shares may be assigned in whole or in part to any stockholder or stockholders of
the Company or other persons or organizations; provided, however, that an
assignee, other than a corporation that is the parent or a 100% owned subsidiary
of the Company, must pay the Company, upon assignment of such right, cash equal
to the difference between the repurchase price and fair market value, if the
repurchase price is less than the fair market value of the Shares subject to the
assignment.
(c) Restrictions Binding on Transferees. All transferees of Shares
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or any interest therein will receive and hold such Shares or interest subject to
the provisions of this Agreement. Any sale or transfer of the Company's Shares
shall be void unless the provisions of this Agreement are satisfied.
(d) Tax Indemnification.
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(i) The imposition of vesting on the Options and the Repurchase
Option are intended to protect the value of the assets of the Company and
Target, including their workforce and intangible property. The Options and the
Shares are intended to constitute a part of the consideration for the
transactions contemplated by the Merger Agreement, and not to constitute
compensation for services rendered. The Company and Stockholder each agrees to
treat the Options and the Shares consistent with the preceding sentence for all
federal, state and local tax purposes, and to take no position on any tax return
inconsistent therewith, except to the extent required by law.
(ii) The Company will indemnify and hold harmless Stockholder,
on an after-tax basis, from and against any federal, state or local tax
liability (including, without limitation, franchise, income, or employment
taxes) that arises from treatment by any taxing authority of (A) the receipt of
the Shares by Stockholder upon the Merger or upon the exercise of the Options or
(B) the vesting of such Shares, as compensation for services rendered by
Stockholder. For purposes of the preceding sentence, it shall be assumed that
such compensation was taxed at the highest combined effective marginal federal,
state and local income tax rates applicable to compensation of individuals
residing in California at the times the income was recognized.
(iii) The Company's indemnification obligation with respect to
the compensation income recognized with respect to receipt of the Options and
the Shares pursuant to subsection 1(d)(ii) shall be reduced by the federal,
state or local income or franchise taxes paid by the Stockholder with respect to
sales of the Shares prior to the date that such obligation is payable, provided
that the number of shares of the Company taken into account pursuant to this
sentence shall not exceed the number of Shares received by Stockholder and the
per-share amount realized upon each such sale shall not exceed the per-share
value of the Shares at the Effective Time of the Merger. For purposes of the
preceding sentence, it shall be assumed that all sales of Shares taken into
account were taxed at the highest combined effective marginal federal, state and
local income tax rates applicable to sales of capital assets by individuals
residing in California at the times the sales occur and Stockholder's tax basis
in the Shares sold equaled the basis of the Target Shares exchanged for the
Shares in the Merger (or the Option Price, if the shares were received upon
exercise of an Option) rather than the fair market value of the Shares on the
date(s) such compensation income was recognized. Sales of Shares by Stockholder
subsequent to the Effective Time shall be taken into account pursuant to the
foregoing provisions in the order in which such sales occur.
2. Escrow. For purposes of facilitating the enforcement of the provisions
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of Section 1(a) above, the Stockholder agrees to deliver the certificate(s) for
the Shares, together with an Assignment Separate from Certificate in the form
attached to this Agreement as Attachment A executed by the Stockholder and by
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the Stockholder's spouse (if required for transfer), in blank, to the Secretary
of the Company, or the Secretary's designee, to hold such certificate(s) and
Assignment Separate from Certificate in escrow and to take all such actions and
to effectuate all such transfers and/or releases as are required in accordance
with the terms of this Agreement. The Stockholder hereby acknowledges that the
Secretary of the Company, or the Secretary's designee, is so appointed as the
escrow holder with the foregoing authorities as a material inducement to make
this Agreement and that said appointment is coupled with an interest and is
accordingly irrevocable. The Stockholder agrees that said escrow holder shall
not be liable to any party hereof (or to any other party). The escrow holder may
rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time. The Stockholder agrees that
if the Secretary of the Company, or the Secretary's designee, resigns as escrow
holder for any or no reason, the Board of Directors of the Company shall have
the power to appoint a successor to serve as escrow holder pursuant to the terms
of this Agreement. Upon release of any Shares from the repurchase option
pursuant to this agreement, the escrow holder shall deliver (a) ninety percent
(90%) of such released shares (i) if
such release occurs prior to July 1, 2000, to the Escrow Agent holding shares
pursuant to the Lock-Up Escrow Agreement to be executed among Company, Target,
Escrow Agent, and Stockholders' Agents to be held or distributed in accordance
with the terms thereof, and (ii) if such release occurs after June 30, 2000, to
the Stockholder; and (b) ten percent (10%) of such released shares (i) if such
release occurs prior to the release of escrowed shares under section 2(d) of the
Indemnity Escrow Agreement to be executed among Company, Target, Escrow Agent,
and Stockholders' Agents to be held or distributed in accordance with the terms
thereof, and (ii) if such release occurs after such date, to the Stockholder.
3. Legends. The certificate or certificates representing the Shares
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shall be endorsed with the following legend (as well as any legends required by
applicable state and federal corporate and securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
When the Option has fully vested and the Repurchase Potion has expired or
exercised in full, the Shares then held by the Stockholder will no longer be
subject to the foregoing legend. After such time, and upon the Stockholder's
request, a new certificate or certificates representing the outstanding Shares
not repurchased shall be issued without the legend set forth above and
delivered to the Stockholder.
4. No Employment Rights. Nothing in this Agreement shall affect in any
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manner whatsoever the right or power of the Company, or a parent or subsidiary
of the Company, to terminate the Stockholder's employment, for any reason, with
or without cause.
5. Miscellaneous.
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(a) Governing Law. This Agreement and all acts and transactions
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pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets
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forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement. The failure by either party to enforce any rights
under this Agreement shall not be construed as a waiver of any rights of such
party.
(c) Severability. If one or more provisions of this Agreement are
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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.
(d) Construction. This Agreement is the result of negotiations
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between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.
(e) Notices. Any notice required or permitted by this Agreement
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shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or 48 hours after
being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.
(f) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) Successors and Assigns. The rights and benefits of this
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Agreement shall inure to the benefit of, and be enforceable by the Company's
successors and assigns. The rights and obligations of the Stockholder under this
Agreement may only be assigned with the prior written consent of the Company.
[Signature Page Follows]
The parties hereto have executed this Agreement as of the day and year
first set forth above.
CHEMDEX CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
President
Address:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
THE STOCKHOLDER ACKNOWLEDGES AND AGREES THAT THE VESTING OF OPTIONS OR
SHARES PURSUANT TO SECTION 1 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN
EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY. THE STOCKHOLDER FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON THE
STOCKHOLDER ANY RIGHT WITH RESPECT TO CONTINUATION OF SUCH EMPLOYMENT OR
CONSULTING RELATIONSHIP WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH
THE STOCKHOLDER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE THE STOCKHOLDER'S
EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
THE STOCKHOLDER:
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
c/o XxxxxxxxxXX.xxx Corporation
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Vesting Commencement Date: the "Closing" as defined in the Agreement and Plan of
Merger.
ATTACHMENT A
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ASSIGNMENT SEPARATE FROM CERTIFICATE
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FOR VALUE RECEIVED and pursuant to that certain Stock Restriction Agreement
between the undersigned (the "Stockholder") and Chemdex Corporation (the
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"Company") dated December 10, 1999 (the "Agreement"), the Stockholder hereby
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sells, assigns and transfers unto the Company ________________ shares of the
Company's Common Stock standing in the Stockholder's name on the books of said
corporation represented by Certificate No. ______________ herewith and does
hereby irrevocably constitute and appoint ____________________ to transfer said
stock on the books of the Company with full power of substitution in the
premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND
THE ATTACHMENTS THERETO.
Dated: ________________, __________.
Signature:
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx P.O.A.
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Spouse of Xxxxxx Xxxxxx
Instruction: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option set forth in the Agreement without requiring additional
signatures on the part of the Stockholder.
ATTACHMENT B
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CONSENT OF SPOUSE
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I, Xxxx Xxxxxx, spouse of Xxxxxx Xxxxxx, have read and hereby approve
the foregoing Stock Restriction Agreement (the "Agreement"). In consideration of
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the Company's enhanced potential to raise additional capital for the benefit of
all stockholders, including my spouse, provided by the Agreement, I hereby agree
to be irrevocably bound by the Agreement and further agree that any community
property or other interest I may have in the Shares shall be subject to the
Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment to or exercise of any rights I may have under the Agreement.
/s/ Xxxxxx Xxxxxx P.O.A.
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Spouse of Xxxxxx Xxxxxx
