Accrued Salary Stock Purchase Agreement (the "Agreement") effective as
of December 1, 1998 ("Effective Date") by and between eB2B Commerce Inc., a
Delaware corporation (the "Company") and Xxxxx Xxxxx ("Xxxxx").
WHEREAS, the Company and Xxxxx have executed and entered into an
Employment Agreement simultaneously with the execution of this Agreement;
WHEREAS, pursuant to the Employment Agreement, the Company has the
right to accrue Xxxxx'x Base Salary (the "Accrued Salary");
WHEREAS, the purpose of this Agreement is to set forth the terms of the
agreement between the Company and Xxxxx regarding Xxxxx'x right to apply the
Accrued Salary to the purchase of shares of the Company's Common Stock; and
WHEREAS, the capitalized terms used but not defined herein shall have
the meaning set forth in the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the Parties do hereby agree as follows:
1 Accrued Salary. In accordance with the Employment Agreement, the Parties
acknowledge that the Company has the right to accrue Xxxxx'x Base Salary for the
1999 calender year. The Parties agree that interest shall not accrue on the
Accrued Salary.
2 Right to Purchase Subject Shares. The Company hereby grants to Xxxxx the right
to apply the Accrued Salary to purchase from the Company shares of the Company's
Common Stock ("Subject Shares"). The number of Subject Shares available for
purchase shall be determined by multiplying a fraction the numerator of which is
the Accrued Salary (less applicable withholding a payroll deductions) and the
denominator of which is the Purchase Price of the Company's Common Stock ( as
defined in Section 3.3 below).
3 Common Stock Purchase. Xxxxx shall be entitled to purchase the Subject Shares
at any time during the period January 1, 1999 through December 31, 2001 (the
"Exercise Period").
3.1 Number of Shares Purchased. Xxxxx may exercise the rights set forth
in this Agreement at any time, and from time to time, during the Exercise
Period, and he may apply all or a part of the Accrued Salary to such purchase.
3.2 Notice of Purchase. Xxxxx shall exercise his right to purchase the
Subject Shares by completing, signing and delivering to the Company a notice of
purchase ("Notice of Purchase"), attached hereto as Exhibit A.
3.3 Purchase Price. The purchase price (the "Purchase Price") per share
of the Subject Shares purchased with the Accrued Salary shall be the Fair Market
Value (as defined below) of the Subject Shares on the earlier of the date on
which the Company receives a Notice of Purchase or December 31, 1999.
3.4 Payment of Accrued Salary. At any time during the Exercise Period
and provided the Company has received third party investment (in the form of
debt or equity) totaling a minimum of $1.5 million, Xxxxx shall have the right
to terminate this Agreement by providing notice thereof to the Company, and the
Company shall thereafter immediately pay Xxxxx the balance of the Accrued
Salary.
3.5 Record Owner; Delivery. The Company agrees that Xxxxx shall be
deemed the record owner of the Subject Shares as of the date on which the Notice
Of Purchase is presented to the Company. Certificates for the Subject Shares so
purchased shall be delivered to Xxxxx within a reasonable time after the
presentation of the Notice of Purchase to the Company.
3.6 Withholding Taxes. Any application of the Accrued Salary pursuant
to this
Agreement shall be subject to the applicable withholding taxes and other
standard payroll deductions.
4 Adjustments. Subject and pursuant to the provisions of this Section 4, the
Purchase Price and number of Common Shares shall be subject to adjustment from
time to time as set forth hereinafter. If the Company shall, at any time,
subdivide its outstanding Common Shares by recapitalization, reclassification,
split up thereof, the Purchase Price shall be proportionately decreased, and if
the Company shall at any time combine the outstanding Common Shares by
recapitalization, reclassification or combination thereof, the Purchase Price
shall be proportionately increased. Any such adjustment to the Purchase Price
shall become effective at the close of business on the record date for such
subdivision or combination.
5 Representations and Warranties of the Company. The Company represents and
warrants to Xxxxx as follows, in each case as of the date this Agreement is
executed by the Company.
5.1 The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware.
5.2 The Company has full power and authority to execute and deliver
this Agreement and upon the exercise of Xxxxx'x right, issue the Subject Shares.
Without limiting the generality of the foregoing, the Board of Directors has
duly authorized the execution, delivery, and performance of this Agreement by
the Company. This Agreement constitutes the valid and legally binding obligation
of the Company, enforceable in accordance with its terms and conditions.
5.3 The authorized capital stock of the Company consists of 19,800,000
shares of common stock, par value $0.001, and 200,000 shares of preferred stock,
par value $0.001. Each outstanding share of common stock and preferred stock is
duly authorized, validly issued, fully paid and non-assessable.
5.4 Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company is subject or any provision of the charter or bylaws
of the Company. The Company need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement (except such filings and consents as may be
required and have been or will timely be made or obtained under federal and
state securities laws).
5.5 There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending or, to the best
knowledge of the Company, threatened (or any basis therefor) with respect to the
Company or the Company's operations, businesses, properties or assets. The
Company is not in violation of, nor in default with respect to, any law, rule,
regulation, order, judgment or decree, nor is the Company required to take any
action in order to avoid any such violation or default.
5.6 The shares of Common Stock issuable upon the exercise of Xxxxx'x
right under this Agreement have been duly reserved for such issuance. Such
shares of Common Stock are duly authorized and, if and when issued, will be
validly issued, fully paid and nonassessable, and will not be issued in
violation of any preemptive or other rights of stockholders.
6 Representations and Warranties of Xxxxx.
6.1 Xxxxx is a bona fide resident of the state indicated in the address
set forth above, is at least 21 years of age, and is legally competent to
execute this Agreement. This Agreement constitutes the legal, valid and binding
obligation of Xxxxx enforceable against Xxxxx in accordance with its terms.
6.2 Xxxxx has such knowledge and experience in finance, securities,
investments and other business matters so as to be able to evaluate the merits
and risks of his investment in the Company.
6.3 Xxxxx has adequate means of providing for his current and
foreseeable future needs and has no need for liquidity of his investment in the
Company. Xxxxx recognizes and is fully cognizant of the fact that his investment
in the Company involves a high degree of risk, and Xxxxx represents that he can
afford to bear such risk, including, without limitation, the risk of losing the
entire investment.
6.4 Xxxxx has been advised by the Company that (i) none of the Subject
Shares have been registered under the Securities Act, and that the Subject
Shares will be issued on the basis of the statutory exemption provided by
Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or
both, relating to transactions by an issuer not involving any public offering,
and under similar exemptions under applicable state securities laws; (ii) none
of the Subject Shares have been registered or qualified with any federal or
state agency or self-regulatory organization, and (iii) the Company's reliance
on exemptions from federal and state registration or qualification requirements
is based in part upon the representations made by Xxxxx contained in this
Agreement.
6.5 Xxxxx has been advised by the Company of, and/or he is otherwise
familiar with, the nature of the limitations on the transfer of the Subject
Shares imposed by the Securities Act and the Rules and Regulations promulgated
thereunder. In particular, Xxxxx agrees that no sale, assignment or transfer of
any of the Subject Shares shall be valid or effective (and agrees to not so
sell, assign or transfer any of the Subject Shares), and the Company shall not
be required to give any effect to such a sale, assignment or transfer, unless
the sale, assignment or transfer is (i) registered under the Securities Act, it
being understood that none of the Subject Shares are currently registered for
sale; or (ii) made in accordance with all the requirements and limitations of
Rule 144 under the Securities Act. Xxxxx acknowledges that the Subject Shares
shall be subject to a stop transfer order and that the certificate or
certificates evidencing the Securities shall bear the following legend, or a
legend substantially similar (and such other legends as may be required by state
blue sky laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH
SECURITIES MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED UNLESS (1) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT WITH RESPECT TO THE SECURITIES OR
(2) THERE IS AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED OR THAT SUCH TRANSFER
MAY BE MADE PURSUANT TO RULE 144 OR RULE 144A OF THE ACT.
THE SECURITIES REPRESENTED HEREBY WERE ISSUED IN ACCORDANCE
WITH A CERTAIN ACCRUED SALARY STOCK CONVERSION AGREEMENT
BETWEEN THE HOLDER AND THE ISSUER
HEREOF, AND MAY NOT BE TRANSFERRED, SOLD, ENCUMBERED OR
OTHERWISE DISPOSED EXCEPT PURSUANT TO THE TERMS OF SUCH
AGREEMENT.
6.6 Xxxxx is acquiring the Subject Shares for his own account for
investment and not with a view to the sale or distribution thereof or the
granting of any participation therein. Xxxxx has no present intention of
distributing or selling to others any of such interest or granting any
participation therein.
6.7 It never has been represented, guaranteed or warranted by the
Company, the Company's officers, directors, stockholders, employees or agents,
or any other person, whether expressly or by implication, that (i) the Company
or Xxxxx will realize any given percentage of profits and/or amount or type of
consideration, profit or loss as a result of the Company's activities or Xxxxx'x
investment; or (ii) the past performance or experience of the management of the
Company, or of any other person, will in any way indicate the predictable
results of the Company's activities or the ownership of the Subject Shares.
6.8 Xxxxx is not acquiring the Subject Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a share exchange by a person other than a representative of the Company with
whom Xxxxx had a pre-existing relationship.
6.9 Xxxxx covenants that in no event will he dispose of any Subject
Shares except in compliance with the Securities Act and any applicable state
securities laws.
6.10 Xxxxx is not relying on the Company with respect to the tax or
other economic considerations of an investment.
6.11 Xxxxx acknowledges that the representations and agreements made by
Xxxxx herein shall survive the execution and delivery of this Agreement and the
receipt of the Subject Shares.
6.12 Xxxxx agrees to notify the Company promptly of any changes in the
information provided herein by Xxxxx which may occur subsequent to the execution
and delivery of this Agreement by Xxxxx.
7 Indemnification. Xxxxx acknowledges that Xxxxx understands the meaning and
legal consequences of the representations contained in Section 5 hereof, and
agrees to indemnify and hold harmless the Company and its incorporators,
officers, directors, employees, agents, including their respective attorneys and
controlling persons, past, present or future, from and against any and all loss,
damage or liability due to or arising out of a breach of any such
representation.
8 Nonassignability. The right to purchase the Subject Shares under this
Agreement may not be assigned, transferred, pledged or otherwise disposed of in
any way (other than by will, the laws of descent and distribution) by Xxxxx. Any
such attempt at assignment, transfer, pledge or other disposition shall be void
and without effect.
9 Restrictions on Transfer; Company's Right of First Refusal.
9.1 If Xxxxx receives from an unaffiliated person or entity a bona fide
offer (for the purpose of this Section 9, an "Offer") to purchase all or any
portion of the Subject Shares which Offer Xxxxx desires to accept, Xxxxx shall
deliver written notice (for the purpose of this Section 9,
the "Offer Notice") to the Company setting forth all the terms and conditions of
the Offer, including the aggregate purchase price, proposed closing date,
payment terms and the name and address of the proposed purchaser. No Offer
Notice will be effective under this Section 9 if it is received by the Company
on a date fewer than thirty (30) days prior to the proposed closing date of the
proposed sale. For the purpose of verifying the contents of an Offer Notice,
Xxxxx hereby authorizes the Company's representatives to directly contact any
person identified in any Offer Notice.
9.2 Within twenty-five (25) days after receiving the Offer Notice, the
Company may, by written notice to Xxxxx, elect to purchase, at the price and
time and on terms and conditions not less favorable to Xxxxx than those
contained in the Offer, not less than all of the Subject Shares proposed in the
Offer to be purchased.
9.3 If the Company fails to elect to exercise its rights under Section
9.2, Xxxxx may, at any time within (but not after) forty (40) days after the
expiration of the twenty-five (25) day exercise period referred to in Section
9.2, sell not less than all the Shares proposed in the Offer to be purchased to
the proposed purchaser at the price, and on the terms and conditions, contained
in the Offer.
9.4 The Company shall not be obligated to recognize or give effect to
any sale of any of the Subject Shares under this Section 9 unless and until a
proposed transferee has delivered to the Company a written instrument, in a form
reasonably acceptable to the Company, evidencing the proposed transferee's
consent and agreement to perform and be bound by all of the obligations
originally binding on Xxxxx under this Agreement.
10 Fair Market Value Defined. The "Fair Market Value" of corporate stock will
mean the price at which one could reasonably expect such stock to be sold in an
arm's length transaction, for cash, other than on an installment basis, to a
person not employed by, controlled by, in control of or under common control
with the issuer of such stock. Such Fair Market Value will be that which has
currently or most recently been determined for this purpose by the Board, or at
the sole discretion of the Board by an independent appraiser or appraisers
selected by the Board, in either case giving due consideration to recent
transactions involving shares of such stock, if any, the issuer's net worth,
prospective earning power and dividend-paying capacity, the goodwill of the
issuer's business, the issuer's industry position and its management, that
industry's economic outlook, the values of securities of issuers whose stock is
Publicly Traded and which are engaged in similar businesses, the effect of
transfer restrictions to which such stock may be subject under law and under the
applicable terms of any contract governing such stock, the absence of a public
market for such stock and such other matters as the Board or its appraiser or
appraisers deem pertinent. The determination by the Board or its appraiser or
appraisers of the Fair Market Value will, if not unreasonable, be conclusive and
binding notwithstanding the possibility that other persons might make a
different, and also reasonable, determination. If the Fair Market Value to be
used was thus fixed more than sixteen (16) months prior to the day as of which
Fair Market Value is being determined, it will in any event be no less than the
book value of the stock being valued at the end of the most recent period for
which financial statements of the issuer are available.
If the Common Stock is listed on an established stock exchange or
exchanges, such Fair Market Value shall be deemed to be the highest closing
price of the Common Stock on such stock exchange or exchanges on the day the
Option is awarded or if no sale of the Company's Common Stock occurs that day or
the Common Stock is not listed on an established stock exchange, the Fair Market
Value per share shall be the mean between dealer "bid" and "ask" prices of the
Common Stock in the New York over-the-counter market on the day the Option is
awarded, as reported by the National Association Securities Dealers, Inc., or if
not reported by said association,
by the National Quotation Service, Inc. Subject to the foregoing, the Board of
Directors and the Committee in fixing the Option price shall have full authority
and discretion and be fully protected in doing so.
11 Miscellaneous.
11.1 Notices. Any and all notices, demands, requests or other
communication required or permitted by this Agreement or by law to be served on,
given to, or delivered to any Party hereto by any other Party to this Agreement
shall be in writing and shall be deemed duly served, given, or delivered when
personally delivered to the Party to be notified, or in lieu of such personal
delivery, when deposited in the United States mail, registered or certified
mail, return receipt requested, or when confirmed as received if delivered by
overnight courier, addressed to the to the Party to be notified, at the address
of the Company at its principal office, as first set forth above, or to Xxxxx at
the address as first set forth above. The Company or Xxxxx may change the
address in the manner required by law for purposes of this paragraph by giving
notice of the change, in the manner required by this paragraph, to the
respective Parties.
11.2 Amendment. This Agreement may not be modified, changed, amended,
or altered except in writing signed by Xxxxx or his duly authorized
representative, and by a member of the Board.
11.3 Governing Law. This Agreement shall be interpreted in accordance
with the laws of the State of New York. It shall inure to the benefit of and be
binding upon the Company, and its successors and assigns.
11.4 Attorney's Fees. Should any litigation or arbitration be commenced
between the Parties to this Agreement concerning any provision of this
Agreement, the expense of all attorneys' fees and other costs incurred in
connection therewith shall be paid by the losing Party.
11.5 Severability. Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
11.6 Entire Agreement. This Agreement, together with the Employment
Agreement constitutes the sole and understandings of the Parties hereto
respecting the subject matter hereof. Any conflict between this Agreement and
the Employment Agreement shall be resolved in favor of the Employment Agreement.
11.7 Counterparts. This Agreement and any certificates made pursuant
hereto, may be executed in any number of counterparts and when so executed all
of such counterparts shall constitute a single instrument binding upon all
Parties hereto notwithstanding the fact that all Parties are not signatory to
the original or to the same counterpart.
11.8 Section Headings. The Article and Section headings used in this
Agreement are for reference purposes only, and should not be used in construing
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Accrued Salary Stock Purchase Agreement as of the date set forth below.
eB2B Commerce, Inc.
By:___________________________ ______________________________
Xxxxx Xxxxx
Date: __________________ , 1999 Date:____________________, 1999
PURCHASE FORM
To Be Executed
Upon Exercise of Right to Purchase Common Stock
The undersigned hereby exercises the right to purchase ____ Common Shares (a
minimum of one Common Share) evidenced by the attached Agreement, according to
the terms and conditions thereof, and herewith desires to apply his Accrued
Salary to the purchase price. The undersigned requests that certificates for
such shares shall be issued in the name set forth below.
Dated: ,
--------------------------
Signature
--------------------------
Print Name of Signatory
--------------------------
Name to whom certificates are to be issued if
different from above
Address: ____________________
--------------------
Social Security No. _________________
or other identifying number
