EXHIBIT 10.2
COMMON STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made as of the 30th day of March, 1998 by and between
Good Noise Corporation, a Delaware corporation (the "Company"), and Xxxx
Xxxxxxxxx (the "Purchaser").
WITNESSETH:
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WHEREAS, the Purchaser has devoted time and resources to the development of
certain technology. The Company desires to obtain all rights to such technology
and related assets as more fully described in Attachment I to Exhibit A hereto
(the "Assets") in consideration of which, the Company will issue shares of its
Common Stock on the terms and conditions hereinafter set forth.
WHEREAS, the Purchaser is an employee, officer and/or director of the
Company.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Number of Shares and Price Per Share. The Purchaser hereby agrees to
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purchase from the Company and the Company agrees to sell to Purchaser 900,000
shares of the Company's Common Stock (the "Stock") in consideration of the
transfer of all of the Purchaser's rights in the Assets. Purchaser agrees to
execute the form of Xxxx of Sale attached hereto as Exhibit A and such other
documents as the Company may from time to time to request to confirm such
transfer. The closing of such purchase shall occur immediately upon execution of
this Agreement.
2. Unvested Share Repurchase Option. In the event the Purchaser's
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employment with the Company is terminated for any reason or no reason, with or
without cause, or if the Purchaser or the Purchaser's legal representative
attempts to sell, exchange, transfer, pledge or otherwise dispose of any shares
purchased pursuant to this Purchase Agreement which have not vested in the
Purchaser pursuant to Section 2(a) below (the "Unvested Shares"), the Company
shall have the right to reacquire the Unvested Shares under the terms and
subject to the conditions set forth in this Section 2 (the "Unvested Share
Repurchase Option").
(a) Vesting of Shares. The term "Initial Vesting Date" shall mean the
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Effective Date of this Agreement. The Stock purchased hereby will vest in the
Purchaser and become "Vested Shares" on and after the Initial Vesting Date in
accordance with the following schedule:
Date Portion Vested
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As of the Initial Vesting Date 300,000 shares of Stock will vest.
For each full month of continuous An additional 16,667 of the Stock
service to the Company following will vest for each such full month
the Initial Vesting Date. of employment.
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Provided that the aggregate percentage of Stock constituting Vested Shares may
not exceed 100%, and that such numbers shall be adjusted appropriately to
reflect any stock splits or recombinations, recapitalizations or the like by the
Company.
(b) Exercise of Unvested Share Repurchase Option. Except as provided
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in Section 2(e) below, if the Purchaser's employment or consultancy with the
Company is terminated for any reason or for no reason, with or without cause, or
if the Purchaser or the Purchaser's legal representative attempts to dispose of
any Unvested Shares other than as allowed in this Agreement, the Company may
exercise the Unvested Share Repurchase Option by written notice to the Escrow
Agent (as defined in Section 9 below) and to the Purchaser or the Purchaser's
legal representative within sixty (60) days after such termination or after the
Company has received notice of the attempted disposition. For the purposes
hereof, to be continuous, employment or consultancy must be for a minimum of 20
hours per week unless otherwise approved in writing by the Company.
(c) Payment for Shares and Return of Shares. Payment by the Company
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to the Escrow Agent on behalf of the Purchaser or the Purchaser's legal
representative shall be made in cash within sixty (60) days after the date of
the mailing of the written notice of exercise of the Unvested Share Repurchase
Option. For purposes of the foregoing, cancellation of any promissory note of
the Purchaser to the Company shall be treated as payment to the Purchaser in
cash to the extent of the unpaid principal and any accrued interest canceled.
The purchase price per share being purchased by the Company shall be an amount
equal to the $0.01 per share. Within thirty (30) days after payment by the
Company, the Escrow Agent shall give the shares which the Company has purchased
to the Company and shall give the payment received from the Company to the
Purchaser.
(d) Early Termination of Unvested Share Repurchase Option. The other
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provisions of Section 2 notwithstanding, the Unvested Share Repurchase Option
shall be terminated upon the closing of any of the following transactions: (1) a
merger or the sale or exchange by the shareholders of the Company of all or
substantially all of the stock of the Company where the shareholders of the
Company before such merger or sale or exchange do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the surviving Company; (2) the sale or exchange of all or substantially all
of the Company's assets (other than a sale or transfer to a subsidiary of the
Company as defined in section 425(f) of the Internal Revenue Code of 1986, as
amended (the "Code")); or (3) in such other event as the Company's Board of
Directors may determine to be appropriate; provided however, that the Unvested
Share Repurchase Option shall be terminated with no action required by the Board
of Directors if following any of the transactions described in (1)-(2) above,
the employment of the Purchaser is terminated by the Company or its successor
without cause.
(e) Transfers Not Subject to the Unvested Share Repurchase Option.
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The Unvested Share Repurchase Option shall not apply to a transfer to the
Purchaser's ancestors, descendants or spouse or to a trustee for their benefit
or the benefit of the Purchaser, provided that such transferee shall agree in
writing (in a form satisfactory to the Company) to take the Stock subject to all
the terms and conditions of this Agreement, including this Section 2 providing
for an Unvested Share Repurchase Option.
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(f) Legends. The Company may at any time place a legend or legends
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referencing the Unvested Share Repurchase Option on any shares subject to the
Unvested Share Repurchase Option.
(g) Assignment of Unvested Share Repurchase Option. In the event the
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Company is unable to exercise the Unvested Share Repurchase Option or the Right
of First Refusal (as defined in Section 4 below) pursuant to the provisions of
Section 500 et seq. of the California Corporations Code, or the corresponding
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provisions of other applicable law, the Company shall have the right to assign
the Unvested Share Repurchase Option or the Right of First Refusal to one or
more persons as may be selected by the Company.
3. Stock Dividends, etc. If, from time to time, there is any stock
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dividend, stock split or other change in the character or amount of any of the
outstanding stock of the Company, then in such event any and all new substituted
or additional securities to which Purchaser is entitled by reason of Purchaser's
ownership of the shares acquired pursuant to this Agreement shall be considered
Stock and shall be immediately subject to the Unvested Share Repurchase Option
and the Right of First Refusal and all other terms of this Agreement with the
same force and effect as the shares subject to the Unvested Share Repurchase
Option, the Right of First Refusal and all other terms of this Agreement
immediately before such event in accordance with the formula set forth in
Section 2(a) above.
4. Agreements Between the Company and Founders.
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(a) Right of First Refusal.
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(i) The Right. In the event the Purchaser proposes to sell any
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of the Stock to one or more third parties pursuant to an understanding with such
third parties in a transaction not registered under the Securities Act of 1933
(the "Securities Act") in reliance upon a claimed exemption thereunder, then the
Purchaser shall first grant the Company the right to purchase all of any part of
such securities (the "Offered Securities") on the same terms as the Purchaser is
willing to sell such Stock to such third parties. Further, each such agreement
provides that (i) the Purchaser shall deliver written notice (the "Purchaser's
Notice") to the Company at least thirty (30) days prior to the closing of the
proposed sale describing all material terms of the proposed sale of the Stock,
which notice shall either be signed by the proposed transferee(s) or include a
copy of the offer letter or letter of agreement signed by such proposed
transferee(s), (ii) the Company shall be entitled to a period in which to
exercise its right of first refusal of a least thirty (30) days in length from
the date of the delivery of the Purchaser's Notice to the Company (the "Exercise
Period"), and (iii) as required pursuant to Section 4(a)(ii) below, the Company
shall assign such right of first refusal to all other shareholders of the
Company (the "Eligible Purchasers" to the extent such right is not exercised
with respect to all of the Offered Securities and, in the event of such an
assignment, the Exercise Period shall be extended for an additional fifteen (15)
days from the date of such assignment.
(ii) Reapportionment. If the Eligible Purchasers as a group do
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not purchase the maximum portion of the Remaining Securities to which they are
entitled pursuant to this Section 4(a) (the "Maximum Portion"), each such
Eligible Purchaser shall be entitled to purchase an additional share of the
Maximum Portion in the proportion, as nearly as practicable,
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the pro rata share of the Remaining Securities which such Eligible Purchaser
indicated that he desired to purchase bore to the Maximum Portion. The Eligible
Purchasers and the Purchaser shall use their best efforts to purchase and sell
the Remaining Securities within thirty (30) days of the date of the delivery of
the Assignment Notice. If an Eligible Purchaser gives the Purchaser notice that
it desires to purchase its share of the Remaining Securities, then payment for
the Remaining Securities shall be for the consideration and in accordance with
the other terms of the written agreement between the Company and the Purchaser.
(iii) Failure to Notify. If, within fifteen (15) days after the
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date of the delivery of the Assignment Notice, the Eligible Purchasers as a
group do not notify the Purchaser that they elect to purchase all of the
Remaining Securities described in such notice on the terms set forth therein,
then the Purchaser may during the ninety (90) days following the end of such
fifteen (15) day period, sell such Offered Securities as to which the Company
and the Eligible Purchasers do not indicate a desire to purchase to the third
parties (or to the representative of such third parties and other investors
designed by such representative) with whom the understanding had been reached at
a price and upon terms and conditions no more favorable in any material respect
to such third parties as those set forth in the Purchaser's Notice. In the event
the Purchaser has not sold such Offered Securities or entered into an agreement
to sell such Offered Securities within said ninety (90) day period, the
Purchaser shall not thereafter sell any Equity Securities without first offering
such securities to the Company in the manner provided above and pursuant to the
terms of the written agreement between the Company and the Purchaser.
(b) Condition to Transfer. All transferees of shares of Stock or any
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interest therein other than the Company shall be required as a condition of such
transfer to agree in writing (in a form satisfactory to the Company) that they
will receive and hold such shares of Stock or interests subject to the
provisions of this Agreement, including the Right of First Refusal and the
restrictions set forth in Section 4 of this Agreement.
(c) The Right of First Refusal shall terminate at such time as a
public market exists for the Company's Common Stock (or any other stock issued
by the Company, or any successor, in exchange for the Stock). 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-the-counter
market and prices therefore are published daily on business days in a recognized
financial journal.
(d) Limitation on Right. Notwithstanding the provisions of this
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Section 4, the Right of First Refusal set forth in this Section 4 shall not
apply to:
(i) any transfer to the Purchaser's (or Founder's) ancestors or
descendants or spouse or to a trustee for their benefit provided that in any
case any such transferee shall agree in writing (in a form satisfactory to the
Company) to take the Stock subject to all the terms of this Agreement, including
the Right of First Refusal.
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(ii) any sale or transfer of Vested Shares of the Stock in a
public offering of securities of the Company registered under the Securities Act
in which the Company receives net proceeds of at least $10,000,000.
5. Restrictions on Transfer of Unvested Shares. The Purchaser may not
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sell, transfer, pledge or otherwise dispose of any Unvested Shares of the Stock
still subject to the Unvested Share Repurchase Option except as provided in
Section 2(e) and 4(c).
6. "Market Stand-Off" Agreement. Purchaser hereby agrees that in
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connection with any underwritten public offering by the Company, during the
period of duration specified by the Company and an underwriter of the Common
Stock of the Company following the effective date of the registration statement
of the Company filed under the Securities Act with respect to the offering, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase, pledge or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
the Common Stock included in such registration.
7. Consent of Spouse. If the Purchaser is married on the date of this
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Agreement, the Purchaser's spouse shall execute a Consent of Spouse in the form
of Exhibit B hereto, effective on the date hereof. Such consent shall not be
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deemed to confer or convey to the spouse any rights in the Stock that do not
otherwise exist by operation of law or the agreement of the parties. If the
Purchaser should marry or remarry subsequent to the date of this Agreement, the
Purchaser shall within thirty (30) days thereafter obtain his or her new
spouse's acknowledgment of and consent to the existence and binding effect of
all restrictions contained in this Agreement by signing an additional Consent of
Spouse in the form of Exhibit B.
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8. Legends. All certificates representing any shares of Stock subject to
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the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
REPURCHASE OPTION, A RIGHT OF FIRST REFUSAL IN FAVOR OF THE CORPORATION OR ITS
ASSIGNEE, AND OTHER RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN
THE CORPORATION AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN
INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS
CORPORATION."
(b) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
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(c) Any legend required to be placed thereon by the California
Commissioner of Corporations.
9. Release.
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(a) In partial consideration for the issuance of the Stock, the
Purchaser hereby releases the Company and each of its officers, directors,
shareholders, affiliates and all agents, successors, or assigns of said persons
or entities (the "Released Parties") from any and all claims, demands,
liabilities, damages, causes of action, costs, expenses and compensation of any
kind or nature whatsoever, whether or not now known or unknown, suspected or
claimed, matured or unmatured, fixed or contingent, which the Purchaser ever
had, now has, or may claim to have from the beginning of time, against the
Released Parties (whether directly or indirectly), or any of them, by reason of
any act, event, or omission concerning any matter, cause or thing, including
those which arise out of, or result from, or occurred in connection with the
Purchaser's work with the Released Parties which preceded or related to the
incorporation of the Company and its business.
(b) The Purchaser acknowledges that there is a risk that, subsequent
to the execution of this Agreement, he may discover, incur or suffer from claims
which were unknown or unanticipated at the time this Agreement is executed,
including, without limitation, unknown or unanticipated claims which arose from,
are based upon, or are related to the matters released herein which, if known by
him on the date this Agreement is being executed, may have materially affected
his decision to execute this Agreement. The Purchaser acknowledges that he is
assuming the risk of such unknown and unanticipated claims and agree that this
Agreement applies thereto. The Purchaser expressly waive the benefits of Section
1542 of the Civil Code of the State of California, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
10. Warranties and Representations. In connection with the proposed
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purchase of the Stock, the Purchaser hereby agrees, represents and warrants as
follows:
(a) The Purchaser is purchasing the Stock solely for his or her own
account for investment and not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act of 1933 as
amended (the "Act"). The Purchaser further represents that he or she does not
have any present intention of selling, offering to sell or otherwise disposing
of or distributing the Stock or any portion thereof; and that the entire legal
and beneficial interest of the Stock he or she is purchasing is being purchased
for, and will be held for the account of, the Purchaser only and neither in
whole nor in part for any other person.
(b) The 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 Stock. The Purchaser
further represents and warrants that he or she has discussed the Company and its
plans, operations and financial condition with its
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officers, has received all such information as he or she deems necessary and
appropriate to enable him or her to evaluate the financial risk inherent in
making an investment in the Stock and has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Purchaser realizes that his or her purchase of the Stock will
be a highly speculative investment, and he or she is able, without impairing his
financial condition, to hold the Stock for an indefinite period of time and to
suffer a complete loss on his or her investment.
(d) The Company has disclosed to the Purchaser that:
(i) The sale of the Stock has not been registered under the Act,
and the Stock must be held indefinitely unless a transfer of it is subsequently
registered under the Act or an exemption from such registration is available,
and that the Company is under no obligation to register the Stock;
(ii) The Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) The Purchaser is aware of the provisions of Rule 144, promulgated
under the Act, which, in substance, permits limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or an
affiliate of such issuer), in a non-public offering subject to the satisfaction
of certain conditions, including among other things: the resale occurring not
less than one year from the date the Purchaser has purchased and paid for the
Stock; the availability of certain public information concerning the Company;
the sale being through a broker in an unsolicited "broker's transaction" or in a
transaction directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and that any sale of the Stock may be made by
him or her only in limited amounts during any three-month period not exceeding
specified limitations. The Purchaser further represents that he or she
understands that at the time he or she wishes to sell the Stock 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, and that, in such event, he or she would
be precluded from selling the Stock under Rule 144 even if the one-year minimum
holding period had been satisfied. The Purchaser represents that he or she
understands that in the event all of the requirements of Rule 144 are not
satisfied, registration under the Act or compliance with an exemption from
registration will be required; and that, notwithstanding the fact that 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 otherwise than pursuant to Rule 144 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.
(f) Without in any way limiting the Purchaser's representations and
warranties set forth above, the Purchaser further agrees that he or she shall in
no event make any disposition of all or any portion of the Stock which he or she
is purchasing unless and until:
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(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) The Purchaser shall have (1) notified the Company of the
proposed disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (2) furnished the
Company with an opinion of his or her own counsel to the effect that such
disposition will not require registration of such shares under the Act, and such
opinion of his or her counsel shall have been concurred in by counsel for the
Company, and the Company shall have advised the Purchaser of such concurrence.
11. Escrow. As security for his or her faithful performance of the terms
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of this Agreement and to insure the availability for delivery of the Stock upon
exercise of the Unvested Share Repurchase Unvested Shares and the Right of First
Refusal herein provided for, the Purchaser agrees to deliver to and deposit with
Xxxx Xxxx Xxxx & Freidenrich LLP, counsel to the Company (the "Escrow Agent"),
as Escrow Agent in this transaction, two Stock Assignments duly endorsed (with
date and number of shares blank) in the form attached hereto as Exhibit C,
together with the certificate or certificates evidencing the Stock; such
documents are to be held by the Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and the Purchaser set forth in Exhibit D attached
hereto and incorporated by this reference, which instructions shall also be
delivered to the Escrow Agent at the closing hereunder.
12. Transfers in Violation of Agreement. The Company shall not be
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required (i) to transfer on its books any shares of Stock of the Company which
shall have been sold or transferred in violation of any of the provisions set
forth in this Agreement or (ii) to treat as owner of such shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
such shares shall have been so transferred.
13. Rights as Shareholder. Subject to the provisions of this Agreement,
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the Purchaser shall, during the term of this Agreement, exercise all rights and
privileges of a shareholder of the Company with respect to the Stock deposited
in escrow.
14. Further Instruments. The parties agree to execute such further
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instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
15. Notice. Any notice required or permitted hereunder shall be given in
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writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at the address
hereinafter shown below his or her signature or at such other address as such
party may designate by ten (10) days' advance written notice to the other party
hereto.
16. Successors and Assigns. This Agreement shall inure to the benefit of
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the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon the Purchaser, his or her heirs,
executors, administrators, successors and assigns.
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17. Entire Agreement; Amendments. This Agreement, together with the
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Exhibits hereto, shall be construed under the laws of the State of California
(as it applies to agreements between California residents, entered into and to
be performed entirely within California), and constitutes the entire agreement
of the parties with respect to the subject matter hereof superseding all prior
written or oral agreements, and no amendment or addition hereto shall be deemed
effective unless agreed to in writing by the parties hereto.
18. Right to Specific Performance. The Purchaser agrees that the Company
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shall be entitled to a decree of specific performance of the terms hereof or an
injunction restraining violation of this Agreement, said right to be in addition
to any other remedies available to the Company.
19. Separability. If any provision of this Agreement is held by a court of
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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 and tenor and effect of this Agreement.
20. Tax Election Notification. The Purchaser shall notify the Company in
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writing if Purchaser files an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, to be filed with the Internal Revenue Service
within thirty (30) days of the date of the sale herein contemplated. The
Company intends, in the event it does not receive from Purchaser evidence of
such filing, to claim a tax deduction for any amount which would otherwise be
taxable to Purchaser in the absence of such an election.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PURCHASER" "COMPANY"
XXXX XXXXXXXXX GOOD NOISE CORPORATION
____________________________ By:___________________________________
Xxxx Xxxxxxxxx Xxxxxx Xxxxxxx, Xx., President
Address:
0000 Xxxxxxx Xx.
Xxx Xxxxxxx, XX 00000
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