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ACCELGRAPHICS, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement ("Agreement") is made as of
November 13, 1994 by and between ACCELGRAPHICS, INC., a California corporation
(the "Company"), and Xxxxxxx X. Xxxx ("Purchaser").
1. Sale of Stock.
Subject to the terms and conditions hereof, on the Closing
Date the Company will issue and sell to Purchaser, and Purchaser agrees to
purchase from the Company, Six Hundred and Fifteen Thousand (615,000) shares of
the Company's Common Stock (the "Shares") at a purchase price of $0.05 per Share
for a total purchase price of $30,750.00. The term "Shares" refers to the
purchased Shares and all securities received in replacement of Shares or as
stock dividends or splits, all securities received in replacement of the Shares
in a recapitalization, merger, reorganization, exchange or the like, and all
new, substituted or additional securities or other properties to which Purchaser
is entitled by reason of Purchaser's ownership of the Shares.
2. Closing; Security Interest.
(a) The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the principal office of the Company
simultaneously with the execution of this Agreement by the parties or on such
other date as they agree (the "Closing Date" ).
(b) At the Closing, the Company will deliver to Purchaser a
certificate representing the Shares to be purchased by Purchaser (which shall be
issued in Purchaser's name) against payment of the purchase price therefore. Ten
percent (10%) of the purchase price for the Shares shall be paid to the Company
by cash in the amount of $3,075.00 and ninety percent (90%) by full recourse
promissory note (the "Note") in the form attached hereto as EXHIBIT A for the
balance of the purchase price.
(c) With respect to the Note, the parties agree to the
following:
(1) The Note shall become payable in full upon the
voluntary or involuntary termination or cessation of employment or association
of Purchaser with the Company, for any reason, with or without cause (including
death or disability).
(2) Purchaser shall deliver to the Secretary of the
Company, or his designee (hereinafter referred to as the "Pledge Holder"), all
certificates representing the Shares, together with (i) an Assignment Separate
from Certificate in the form attached hereto EXHIBIT B executed by Purchaser and
by Purchaser's spouse (if required for transfer), in blank, for use in
transferring all or a portion of said Shares to the Company if, as and when
required under this Section 2(c) or under any other provision of this Agreement
including, without limitation, Section 3.
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In addition, Purchaser's spouse, if any, shall execute and deliver to the
Company the Consent of Spouse attached hereto as EXHIBIT C.
(3) As security for the payment of the Note and any
renewal, extension or modification thereof, Purchaser hereby grants to the
Company a security interest in and pledges with and delivers to the Company
Purchaser's Shares (sometimes referred to herein as the "Collateral").
In the event that Purchaser prepays all or a
portion of the Note, in accordance with the provisions thereof, Purchaser
intends, unless written notice to the contrary is delivered to the Pledge
Holder, that the Shares represented by the portion of the Note so repaid,
including annual interest thereon, shall continue to be so held by the Pledge
Holder, to serve as independent collateral for the outstanding portion of the
Note for the purpose of commencing the holding period set forth in Rule 144(d)
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
(4) In the event of any foreclosure of the security
interest, the Company may sell the Shares at a private sale or may repurchase
the Shares itself. The parties agree that, prior to the establishment of a
public market for the Shares of the Company, the securities laws affecting sale
of the Shares make a public sale of the Shares commercially unreasonable. The
parties further agree that the repurchasing of such Shares by the Company, or by
any person to whom the Company may have assigned its rights hereunder, is
commercially reasonable if made at a price determined by the Board of Directors
in its discretion, fairly exercised, representing what would be the fair market
value of the Shares reduced by any limitation on transferability, whether due to
the size of the block of Shares or the restrictions of applicable securities
laws.
(5) In the event of default in payment when due of
any indebtedness under Purchaser's Note, the Company may elect then, or at any
time thereafter, to exercise all rights available to a Secured Party under the
California Commercial Code including the right to sell the Collateral at a
private or public sale or repurchase the Shares as provided above. The proceeds
of any sale shall be applied in the following order:
(i) To the extent necessary, proceeds shall be
used to pay all reasonable expenses of the
Company in enforcing this Agreement,
including, without limitation, reasonable
attorney's fees and legal expenses incurred
by the Company.
(ii) To the extent necessary, proceeds shall be
used to satisfy any remaining indebtedness
under Purchaser's Note.
(iii) Any remaining proceeds shall be delivered
to Purchaser.
(6) Upon full payment by Purchaser of all amounts due
on the Note, Pledge Holder shall deliver to Purchaser all Shares in Pledge
Holder's possession belonging to Purchaser, and Pledge Holder shall thereupon be
discharged of all further obligations hereunder;
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provided, however, that Pledge Holder shall nevertheless retain said Shares as
escrow agent if at the time of full payment by Purchaser said Shares are still
subject to restrictions under Section 3 hereof.
3. Limitations on Transfer.
In addition to any other limitation on transfer created by
applicable securities laws, Purchaser shall not assign, encumber or dispose of
any interest in the Shares while the Shares are subject to the Company's
repurchase option, except as provided in Section 3(h) below. After any Shares
have been released from such repurchase option, Purchaser shall not assign,
encumber or dispose of any interest in such Shares except in compliance with
Sections 3(b) and 3(c) below and applicable securities laws:
(a) Repurchase Option. In the event of the voluntary or
involuntary termination of employment or association with the Company of
Purchaser with the Company for any reason, with or without cause (including
death or disability), the Company shall, upon the date of such termination, have
an irrevocable, exclusive option for a period of 60 days from such date to
repurchase all or any portion of the Shares held by Purchaser as of such date
which have not yet been released from the Company's repurchase option at the
original purchase price per Share specified in Section 1. The option shall be
exercised by the Company by written notice to Purchaser or his executor and, at
the Company's option, (i) by delivery to the Purchaser or his executor with such
notice of a check in the amount of the purchase price for the Shares being
purchased, or (ii) in the event the Purchaser is indebted to the Company, by
cancellation by the Company of an amount of such indebtedness equal to the
purchase price for the Shares being repurchased, or (iii) by a combination of
(i) and (ii) so that the combined payment and cancellation of indebtedness
equals such purchase price. Upon delivery of such notice and payment of the
purchase price in any of the ways described above, the Company shall become the
legal and beneficial owner of the Shares being repurchased and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer to its own name the number of Shares being repurchased by the Company,
without further action by Purchaser.
Ten percent (10%), or 61,500, of the Shares will be immediately
released from the Company's repurchase option set forth above. Thereafter, the
remaining Shares (the "Remaining Shares") held by Purchaser shall be released
from the Company's repurchase option under this Section 3(a) as follows
(provided in each case that Purchaser's employment or by association with the
Company has not been terminated prior to the date of any such release): 1/48th
of the total number of Remaining Shares shall be released from the repurchase
option on each monthly anniversary of the Vesting Commencement Date (as set
forth on the signature page of this Agreement) thereafter until all Shares are
released from the repurchase option. Fractional shares shall be rounded to the
nearest whole share.
Notwithstanding the foregoing, in the event that and at such time as
the Company has recorded gross product sales revenues of One Hundred Fifty
Thousand Dollars ($150,000.00), an additional fifteen percent (15%), or 92,250,
of the Shares will be immediately released from the Company's repurchase option.
In such case, the number of unvested Remaining Shares will be reduced by such
additional amount and such reduced number of Remaining Shares will continue to
vest according to the vesting schedule set forth above.
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(b) Right of First Refusal. In the event, at any time after
the date of this Agreement, the Purchaser or Purchaser's transferee desires to
sell or transfer in any manner the Shares, Purchaser shall first offer such
Shares for sale to the Company at the same price, and upon the same terms (or
terms as similar as reasonably possible) upon which Purchaser is proposing or is
to dispose of said Shares. Said right of first refusal shall be provided to the
Company for a period of thirty (30) days following receipt by the Company of
written notice by the Purchaser of the terms and conditions of said proposed
sale or transfer and the name, address and phone number of each proposed buyer
or transferee. If the Company desires to exercise such right of first refusal,
it shall notify Purchaser in writing within such thirty (30) day period. In the
event the Shares are not disposed of on such terms within thirty (30) days
following lapse of the period of the right of first refusal provided to the
Company or if the Purchaser proposes to change the price or other terms to make
them more favorable to the buyer, they shall once again be subject to the right
of first refusal herein provided.
(c) Involuntary Transfer. In the event, at any time after the
date of this Agreement, of any transfer by operation of law or other involuntary
transfer (including death or divorce) of all or a portion of the Shares by the
record holder thereof, the Company shall have an option to purchase all of the
Shares transferred. Upon such a transfer, the person acquiring the Shares shall
promptly notify the Secretary of the Company of such transfer. The right to
purchase such Shares shall be provided to the Company for a period of thirty
(30) days following receipt by the Company of written notice by the person
acquiring the Shares.
(d) Price for Involuntary Transfer. With respect to any stock
to be transferred pursuant to paragraph 3(b), the price per Share shall be a
price set by the Board of Directors of the Company that will reflect the current
value of the stock in terms of present earnings and future prospects of the
Company. The Company shall notify Purchaser or Purchaser's executor of the price
so determined within thirty (30) days after receipt by it of written notice of
the transfer or proposed transfer of Shares. The decision of the Board of
Directors as to the purchase price shall be final.
(e) Assignment. The right of the Company to purchase any part
of the Shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations.
(f) Restrictions Binding on Transferees. All transferees of
Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement, including, insofar as applicable,
the Company's option to repurchase under paragraph 3. Any sale or transfer of
the Company's Shares shall be void unless the provisions of this Agreement are
met.
(g) Termination of Refusal Right; Public Offering Lockup. The
right of first refusal granted the Company by paragraphs 3(a) and 3(b) above
shall terminate at such time as a Public Market exists for the Company's capital
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 (i) such stock is listed on a national
securities exchange (as that term is used in the Securities Exchange Act of
1934) or (ii) such stock is traded on the over-
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the-counter market and prices are published daily on business days in a
recognized financial journal. Notwithstanding the foregoing, Purchaser and
Purchaser's transferees will not, without the prior written consent of the
Company, offer, sell, contract to sell or grant any option to purchase or
otherwise dispose of any of the Shares for a period of one hundred eighty (180)
days following the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
the Company's initial public offering of securities.
Upon termination of the right of first refusal imposed by
this Agreement, a new certificate or certificates representing the Shares not
repurchased shall be issued, on request, without the legend referred to in
paragraph 5(b) herein and delivered to Purchaser.
(h) Exempt Transfers. The restrictions on transfer of this
paragraph 3 shall not apply to a transfer to Purchaser's ancestors or
descendants or spouse or to a trustee for their benefit, provided that such
transferee shall agree in writing to take such Shares subject to all the terms
of this Agreement, including restrictions on further transfer
4. Escrow. For purposes of facilitating the enforcement of the
provisions of Section 3 above, Purchaser agrees, immediately upon receipt of the
certificate(s) for his Shares, to deliver such certificate(s), together with an
Assignment Separate from Certificate in the form attached hereto as EXHIBIT B
executed by Purchaser and by Purchaser's spouse (if required for transfer), in
blank, to the Secretary of the Company, or his 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 in
accordance with the terms hereof. Purchaser hereby acknowledges that the
Secretary of the Company, or his 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. Purchaser agrees that said escrow holder shall not be liable to any
party hereof (or to any other party) for any actions or omissions unless such
escrow holder is grossly negligent relative thereto. 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. Purchaser agrees that if the Secretary of
the Company, or his 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.
5. Investment Representations.
In connection with the purchase of the Shares, Purchaser
represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities. Purchase
is purchasing these securities for investment for Purchaser's own account only
and not with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act.
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(b) Purchaser understands that the securities have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the
securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser further acknowledges and understands that the Company is under no
obligation to register the securities. Purchaser understands that the
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and
701, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the securities exempt under Rule
701 may be resold by the Purchaser ninety (90) days thereafter, subject to the
satisfaction of certain of the conditions specified by Rule 144, including,
among other things: (1) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and (2) in the case
of an affiliate, the availability of certain public information about the
Company, and the amount of securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), if applicable.
If the Company does not qualify under Rule 701 at the time of
purchase, then the securities may be resold by the Purchaser in certain limited
circumstances subject to the provisions of Rule 144, which requires, among other
things: (1) the availability of certain public information about the Company;
(2) the resale occurring not less than two years after the party has purchased,
and made full payment of (within the meaning of Rule 144), the securities to be
sold; and (3) in the case of an affiliate, or of a non-affiliate who has held
the securities less than three years, the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934) and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein, if applicable. PURCHASER UNDERSTANDS
THAT PAYMENT BY NOTE IS NOT DEEMED TO BE FULL PAYMENT UNDER RULE 144 UNLESS IT
IS SECURED BY ASSETS OTHER THAN THE SHARES.
(e) Purchaser further understands that at the time he or she
wishes to sell the securities there may be no public market upon which to make
such a sale, and that, even if such a public market then exists, the Company may
not be satisfying the current public information requirements of Rule 144 or
701, and that, in such event, Purchaser would be precluded from selling the
securities under Rule 144 or 701 even if the two-year minimum holding period had
been satisfied.
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(f) Purchaser further understands that in the event all of the
applicable requirements of Rule 144 or 701 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are 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 otherwise than pursuant to Rule 144 or 701 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
6. Legends.
The certificate or certificates representing the Shares shall
bear the following legends (as well as any legends required by applicable state
and federal corporate and securities laws):
(a) "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."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY 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."
7. Section 83(b) Election.
Purchaser understands that Section 83(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income the
difference between the amount paid for the Shares and the fair market value of
the Shares as of the date any restrictions on the Shares lapse. In this context,
"restriction" means the right of the Company to buy back the Shares pursuant to
the repurchase option set forth in Section 3(a) of this Agreement. Purchaser
understands that Purchaser may elect to be taxed at the time the Shares are
purchased, rather than when and as the repurchase option expires, by filing an
election under Section 83(b) of the Code with the Internal Revenue Service
within 30 days from the date of purchase. Even if the fair market value of the
Shares at the time of the execution of this Agreement equals the amount paid for
the Shares, the election must be made to avoid tax treatment under Section 83(a)
in the future. The form for making Purchaser's election is attached hereto.
Purchaser understands that his failure to file such an election in a timely
manner may result in adverse tax consequences for Purchaser. Purchaser further
understands that an additional copy of such election form should be filed with
his federal income tax return for the calendar year in which the date of this
Agreement falls.
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8. Miscellaneous.
(a) Governing Law. This Agreement and all acts and
transactions 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.
(b) Entire Agreement; Enforcement of Rights. This Agreement
sets 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
hereto. The failure by either party to enforce any rights hereunder shall not be
construed as a waiver of any rights of such party.
(c) Severability. If one or more provisions of this Agreement
are 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
(x) such provision shall be excluded from this Agreement, (y) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (z) the
balance of the Agreement shall be enforceable in accordance with its terms.
(d) Construction. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel; 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, demand or request required or
permitted to be given under this Agreement shall be in writing and shall be
deemed sufficient when delivered personally or sent by telegram or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, and addressed, if to the Company, at its principal
place of business, attention the President, and if to Purchaser, at Purchaser's
address as shown on the stock records of the Company.
(f) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(h) California Corporate Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS AN EXEMPTION FROM SUCH
QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH EXEMPTION
BEING AVAILABLE.
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(i) 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
ACCELGRAPHICS, INC. Xxxxxxx X. Xxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
By: /s/Xxxxxxx X. Xxxx /s/Xxxxxxx X. Xxxx
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Title: President and C.E.O. Address:
-----------------------
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Vesting Commencement Date: November 9, 1994
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EXHIBIT A
PROMISSORY NOTE
$____________ _______________, California
_______________, 199__
At the times hereinafter stated, for value received, the undersigned promises
to pay AccelGraphics, Inc., a California corporation (the "Company"), or order,
at its principal office the principal sum of $____________ with interest from
the date hereof at a rate of __% per annum, compounded semi-annually, on the
unpaid balance of said principal sum. Said principal and interest shall be due
and payable on ______________, 19__.
If the undersigned's employment by or association with the Company is
terminated prior to payment in full of this Note, this Note shall be immediately
due and payable.
Principal and interest are payable in lawful money of the United States of
America. AT ANY TIME, THE PRIVILEGE IS RESERVED TO PAY MORE THAN THE SUM DUE.
Should suit be commenced to collect this Note or any portion thereof, such sum
as the Court may deem reasonable shall be added hereto as attorneys' fees. The
makers and endorsers have severally waived presentment for payment, protest,
notice of protest, and notice of non-payment of this Note.
This Note, which is full recourse, is secured by a pledge of certain shares of
Common Stock of the Company and is subject to the terms of a Restricted Stock
Purchase Agreement between the undersigned and the Company of even date
herewith.
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EXHIBIT B
CONSENT OF SPOUSE
I, ____________________, spouse of Name, have read and hereby approve
the foregoing Agreement. In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Agreement, I hereby agree
to be irrevocably bound by the Agreement and further agree that any community
property or other such interest shall be similarly bound by the Agreement. I
hereby appoint my spouse as my attorney-in-fact with respect to any amendment or
exercise of any rights under the Agreement.
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Spouse of Purchaser
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EXHIBIT C
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement between the undersigned ("Purchaser") and ACCELGRAPHICS, INC.
dated ______ (the "Agreement"), Purchaser hereby sells, assigns and transfers
unto ________________________________________ (________) shares of the Common
Stock of ACCELGRAPHICS, INC. standing in Purchaser'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
within-named corporation with full power of substitution in the premises. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS
THERETO.
Dated:__________, 199_.
Signature:
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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 its repurchase
option set forth in the Agreement without requiring additional signatures on the
part of Purchaser.
