Exhibit 10.46
RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement is made as of September 29, 2000 by and between FIRETAP
COMMUNICATIONS INCORPORATED, a Delaware corporation (the "Company") and
Xxxxxxxxx Xxxxx, the Chief Executive Officer of RHYTHMS NETCONNECTIONS, INC., a
Delaware corporation (Xxxxxxxxx Xxxxx, the "Purchaser").
In consideration of the covenants, representations and considerations
set forth in this Agreement, the parties to this Agreement hereby agree as
follows:
1. PURCHASE OF SHARES
1.1 Purchase. The Purchaser hereby agrees to purchase from the Company, and
the Company hereby agrees to sell and issue to the Purchaser, a number of
Shares (the "Purchased Shares") equal to one and one-half percent (1 1/2%)
of the total outstanding shares of Company on a fully-diluted basis as of
the conclusion of the first round of financing for Company which ended in
approximately April, 2000 (the "First Round"), which one and one half
percent (1 1/2 %) shall be calculated on a post-money basis in respect of
the First Round without regard to subsequent issuances of shares. The total
number of shares issued under this Agreement, the Restricted Stock Purchase
Agreement dated as of the date hereof between Rhythms Netconnections, Inc.
("Rhythms") and Company and the Service Agreement dated as of the date
hereof between Rhythms and Company shall be up to 5% of the total
outstanding shares of Company on a fully-diluted basis as of the conclusion
of the First Round, which 5% shall be calculated on a post-money basis in
respect of the First Round without regard to subsequent issuances of
shares. The Purchased Shares shall be issued pursuant to Company's employee
and director stock option plan (the "Plan") once it is adopted by Company.
Company agrees to use commercially reasonable efforts to adopt the Plan
within a commercially reasonable time period.
1.2 Payment. The Purchaser shall purchase the Purchased Shares by (i) payment
of $0.001 for each Purchased Share on the date hereof, and (ii) providing
the continuing services of the Director, subject to the terms and
conditions contained herein ("Purchase Price").
1.3 Issuance of Shares. The Purchased Shares shall be issued within 30 days'
of the adoption of the Plan.
1.4 Stockholder Rights. Until such time as the Company actually exercises its
Repurchase Rights (as defined herein) under this Agreement, if ever, the
Purchaser (or any successor in interest) is entitled to all the rights of a
stockholder with respect to the Purchased Shares, subject, however, to the
restrictions of this Agreement and the Company's Stockholders Agreement,
dated as of May 15, 2000, as may be amended from time to time (the
"Stockholders Agreement").
2. SECURITIES LAW
2.1 Investment Intent. The Purchaser hereby warrants and represents that the
Purchaser will acquire the Purchased Shares for the Purchaser's own account
and not with a view to their resale or distribution.
2.2 Exemption from Registration. The Purchaser acknowledges that the Purchased
Shares will not be registered under the Securities Act of 1933, as amended
(the "1933 Act"), and will be issued in reliance upon an exemption from
such registration.
2.3 Restricted Securities. The Purchaser hereby confirms that the Purchaser
has been informed that the Purchased Shares will be restricted securities
under the 1933 Act and may not be resold or transferred unless the
Purchased Shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly, the
Purchaser hereby acknowledges that the Purchaser is prepared to hold the
Purchased Shares for an indefinite period and that the Purchaser is aware
that Rule 144 of the Securities and Exchange Commission issued under the
1933 Act is not presently available to exempt the sale of the Purchased
Shares from the registration requirements of the 1933 Act.
2.4 Disposition of Shares. The Purchaser hereby agrees that the Purchaser may
not make any disposition of the Purchased Shares other than in accordance
with the Plan, the Stockholders Agreement and all applicable securities
laws. The Company will not be required:
(A) to transfer on its books any Purchased Shares which have been sold or
transferred in violation of the provisions of this Section 2; nor
(B) to treat as the owner of the Purchased Shares, or otherwise to accord
voting or dividend rights to, any transferee to whom the Purchased
Shares have been transferred in contravention of this Agreement.
2.5 Restrictive Legends. In order to reflect the restrictions on disposition
of the Purchased Shares, the stock certificates for the Purchased Shares
will be endorsed with the following restrictive legend:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT, PURSUANT TO A CERTAIN STOCKHOLDERS AGREEMENT AMONG FIRETAP
COMMUNICATIONS INCORPORATED (THE "COMPANY"), XXXXXXXXX.XXX, INC. AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS, TO CERTAIN RIGHTS AND
RESTRICTIONS ON TRANSFER SET FORTH IN THE STOCKHOLDERS AGREEMENT. A
COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.
(ii) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAN RESTRICTED STOCK PURCHASE
AGREEMENT BETWEEN THE
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COMPNY AND THE REGISTERED HOLDER HEREOF WHICH INCLUDES A RIGHT OF
REPURCHASE. A COPY OF SUCH RESTRICTED STOCK PURCHASE AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
(iii) THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED
OR SOLD UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE,
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SHALL
HAVE BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT SUCH OFFER OR
SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT)."
2.6 Nature of Purchaser. The Purchaser hereby warrants and represents that the
Purchaser is and will be at the time of purchase an "Accredited Investor"
as that term is defined in Rule 501(a) of Regulation D adopted by the
Securities and Exchange Commission under the Securities Act of 1933 (17 CFR
Sec. 230.501(a)).
3. TRANSFER RESTRICTIONS
3.1 Restriction on Transfer. The Purchaser may not transfer, assign, encumber,
or otherwise dispose of any of the Purchased Shares that are subject to the
Company's Repurchase Right under Section 4 and pursuant to such Repurchase
Right.
4. VESTING SCHEDULE AND REPURCHASE RIGHT
4.1 Vesting Schedule. On the date of the first anniversary of the issuance of
the Purchased Shares, 33% of the Purchased Shares shall be considered
"Vested Shares" and the remainder shall be considered "Unvested Shares."
On the date of the second anniversary hereof, an additional 33% of the
Purchased Shares shall become Vested Shares. Finally, on the date of the
third anniversary hereof, the remaining 34% of the Purchased Shares shall
become Vested Shares.
4.2 Repurchase Rights Based on Services of Xxxxxxxxx Xxxxx.
(A) If Xxxxxxxxx Xxxxx is not a member of the Company's Board of
Directors, whether voluntarily or involuntarily (A) due to a permanent
disability of Xxxxxxxxx Xxxxx rendering her unable to continue working
for the Company's Board of Directors, (B) due to the Board of
Directors or the stockholders of the Company removing her from the
Board of Directors with Cause (as defined below), or (C) due to the
Board of Directors or the stockholders of the Company voting not to
elect or re-elect Xxxxxxxxx Xxxxx to the Board of Directors because
she has engaged in any conduct which constitutes Cause for removal,
then the Company will have the option (the "Repurchase Right"),
exercisable within 30 days of such event by notice to the Purchaser or
the Purchaser's legal
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representatives, heirs, legatees, distributees, assigns or
transferees, to repurchase from the Purchaser (unless prohibited by
any applicable law) all of the Unvested Shares of Purchased Shares
owned by the Purchaser at the purchase price of $0.10 per share (the
"Repurchase Price").
(B) Notwithstanding anything to the contrary in this Agreement, any
Unvested Shares of Purchased Shares shall immediately vest if the
Board of Directors or the Company's shareholders remove or do not re-
elect Xxxxxxxxx Xxxxx without having Cause.
For the purposes of this Agreement, "Cause" shall mean that the
Company, acting in good faith based upon the information then known to
the Company, determines that Xxxxxxxxx Xxxxx has engaged in or
committed: willful misconduct; gross negligence; theft, fraud or other
illegal conduct; refusal or unwillingness to perform her duties;
sexual harassment; conduct which reflects adversely upon, or making
any remarks disparaging of, the Company, its Board, officers,
directors, advisors or employees or its affiliates or subsidiaries;
insubordination; any willful act that is likely to and which does in
fact have the effect of injuring the reputation, business or a
business relationship of the Company; violation of any fiduciary duty
to Company; violation of any duty of loyalty to Company; and breach of
any term of this Agreement.
5. GENERAL PROVISIONS
5.1 Assignment. The Company may, at its option, assign its Repurchase Right
under Section 4 to any person or entity selected by the Company's Board of
Directors, including, but not limited to, one or more stockholders of the
Company.
5.2 Notices. Any notice required hereunder will be deemed effective upon
personal delivery or five (5) days following deposit in the United States
mail, registered or certified, postage prepaid and addressed to the party
entitled to such notice at the address indicated on the shareholder records
of the Company or at such other address as such party may designate by ten
(10) days advance written notice under this Section 5.2 to the other party
to this Agreement.
5.3 No Waiver. The failure of the Company (or its assignees) in any instance
to exercise the Repurchase Right granted under Section 4 will not
constitute a waiver of any other repurchase rights and/or rights of first
refusal that may subsequently arise under the provisions of this Agreement,
the Plan or any other agreement between the Company and the Purchaser. No
waiver of any breach or condition of this Agreement will be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
5.4 Cancellation of Shares. If the Company (or its assignees) makes available,
at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such
time, the Purchaser will no longer have any rights as
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a holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such shares will be
deemed purchased in accordance with the applicable provisions hereof and
the Company (or its assignees) will be deemed the owner and holder of such
shares.
6. MISCELLANEOUS
6.1 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter
hereof.
6.2 Governing Law; Venue. This Agreement will be governed by, and construed in
accordance with, the laws of the State of California as such laws are
applied to agreements among California residents entered into and performed
entirely within California. Any dispute or controversy out of this
Agreement shall have its venue in the state or federal courts located in
Los Angeles, California and each party hereby consents to that venue and
jurisdiction of any such court.
6.3 Enforcement. If any action at law or in equity is necessary to enforce or
interpret the term of this Agreement or to protect the rights obtained
hereunder the prevailing party will be entitled to its reasonable
attorneys' fees, costs, and disbursements in addition to any other relief
to which it may be entitled.
6.4 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original, but all of which together will
constitute one and the same instrument.
6.5 Successors and Assigns. The provisions of this Agreement will inure to the
benefit of, and be binding upon, the Company and its successors and assigns
and the Purchaser and the Purchaser's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law,
whether or not any such person will have become a party to this Agreement
and have agreed in writing to join herein and be bound by the terms and
conditions hereof.
6.6 Director Status. Nothing contained in this Agreement or in any other
related document will confer upon Xxxxxxxxx Xxxxx any right to continue to
serve on the Company's Board of Directors or constitute any contract of
employment, or interfere in any way with the right of the Company and its
stockholders to remove Xxxxxxxxx Xxxxx from the Company's Board of
Directors.
6.7 Construction of Agreement. This Agreement has been drafted by counsel for
the Company. The Purchaser has had the opportunity to seek separate
representation with respect to this Agreement. This Agreement is to be
construed fairly and not strictly for or against either of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
FIRETAP COMMUNICATIONS INCORPORATED
By:_____________________________________
Name:
Title:
RHYTHMS NETCONNECTIONS, INC.
________________________________________
Name:
Title:
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