EXHIBIT 10.16
XXXXXXXXXX.XXX CORPORATION
STOCK PURCHASE AGREEMENT
AGREEMENT made this ____ day of _______ 1999, by and between XxxxxxxXxx.xxx
Corporation, a Delaware corporation, and ____________ (the "Optionee") under the
Corporation's 1998 Stock Option/Stock Issuance Plan.
All capitalized terms in this Agreement shall have the meaning assigned to
them in this Agreement or in the attached Appendix.
A. EXERCISE OF OPTION
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1. Exercise. Optionee hereby purchases ________ shares of Common Stock
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(the "Purchased Shares") pursuant to that certain option (the "Option")
granted Optionee on _______ (the "Grant Date") to purchase up to _____ shares of
Common Stock (the "Option Shares") under the Plan at the exercise price of $
_____________ per share (the "Exercise Price").
2. Payment. Concurrently with the delivery of this Agreement to the
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Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise , together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.
3. Stockholder Rights. Until such time as the Corporation exercises the
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Repurchase Right or the First Refusal Right, Optionee (or any successor in
interest) shall have all the rights of a stockholder (including voting, dividend
and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
B. SECURITIES LAW COMPLIANCE
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1. Restricted Securities. The Purchased Shares have not been registered
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under the 1933 Act and are being issued to Optionee in reliance upon the
exemption from such registration provided by SEC Rule 701 for stock issuances
under compensatory benefit plans such as the Plan. Optionee hereby confirms that
Optionee has been informed that the Purchased Shares are 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, Optionee hereby
acknowledges that Optionee is prepared to hold the Purchased Shares for an
indefinite period and that Optionee is aware that SEC Rule 144 issued under the
1933 Act which exempts certain resales of unrestricted securities is not
presently available to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act.
2. Restrictions on Disposition of Purchased Shares. Optionee shall make no
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disposition of the Purchased Shares (other than a Permitted Transfer) unless and
until there is compliance with all of the following requirements:
(i) Optionee shall have provided the Corporation with a written
summary of the terms and conditions of the proposed disposition.
(ii) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.
(iii) Optionee shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation, that (a)
the proposed disposition does not require registration of the Purchased
Shares under the 1933 Act or (b) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or any
exemption from registration available under the 1933 Act (including Rule
144) has been taken.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.
3. Restrictive Legends. The stock certificates for the Purchased Shares
shall be endorsed with one or more of the following restrictive legends:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares may not be sold or offered for
sale in the absence of (a) an effective registration statement for the
shares under such Act, (b) a "no action" letter of the Securities and
Exchange Commission with respect to such sale or offer or (c) satisfactory
assurances to the Corporation that registration under such Act is not
required with respect to such sale or offer."
"The shares represented by this certificate are subject to certain
repurchase rights and rights of first refusal granted to the Corporation
and accordingly may not be sold, assigned, transferred, encumbered, or in
any manner disposed of except in conformity with the terms of a written
agreement dated ______ between the Corporation and the registered holder of
the shares (or the predecessor in interest to the shares). A copy of such
agreement is maintained at the Corporation's principal corporate offices."
C. TRANSFER RESTRICTIONS
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1. Restriction on Transfer. Except for any Permitted Transfer, Optionee
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shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are
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subject to the Repurchase Right. In addition, Purchased Shares which are
released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise disposed of in contravention of the First Refusal Right
or the Market Stand-Off.
2. Transferee Obligations. Each person (other than the Corporation) to whom
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the Purchased Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Corporation that such person is bound by the provisions of this Agreement
and that the transferred shares are subject to (i) the Repurchase Right, (ii)
the First Refusal Right and (iii) the Market Stand-Off, to the same extent such
shares would be so subject if retained by Optionee.
3. Market Stand-Off.
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(a) In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions
with respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such restriction (the "Market Stand-Off")
shall be in effect for such period of time from and after the effective date of
the final prospectus for the offering as may be requested by the Corporation or
such underwriters. In no event, however, shall such period exceed one hundred
eighty (180) days and the Market Stand-Off shall in all events terminate two (2)
years after the effective date of the Corporation's initial public offering.
(b) Ownershall be subject to the Market Stand-Off provided and
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only if the officers and directors of the Corporation are also subject to
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similar restrictions.
(c) Any new, substituted or additional securities which are by
reason of any Recapitalization or Reorganization distributed with respect to
the Purchased Shares shall be immediately subject to the Market Stand-Off, to
the same extent the Purchased Shares are at such time covered by such
provisions.
(d) In order to enforce the Market Stand-Off, the Corporation may
impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period.
D. REPURCHASE RIGHT
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1. Grant. The Corporation is hereby granted the right (the "Repurchase
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Right"), exercisable at any time during the sixty (60)-day period following the
date Optionee ceases for any reason to remain in Service or (if later) during
the sixty (60)-day period following the execution date of this Agreement, to
repurchase at the Exercise Price any or all of the Purchased Shares in which
Optionee is not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those shares or the special
vesting
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acceleration provisions of Paragraph D.6 of this Agreement (such shares to be
hereinafter referred to as the "Unvested Shares").
2. Exercise of the Repurchase Right. The Repurchase Right shall be
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exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on or before the close
of business on the date specified for the repurchase. Concurrently with the
receipt of such stock certificates, the Corporation shall pay to Owner, in cash
or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Exercise Price previously paid for the
Unvested Shares which are to be repurchased from Owner.
3. Termination of the Repurchase Right. The Repurchase Right shall
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terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall, however, remain subject to
(i) the First Refusal Right and (ii) the Market Stand-Off.
4. Aggregate Vesting Limitation. If the Option is exercised in more than
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one increment so that Optionee is a party to one or more other Stock Purchase
Agreements (the "Prior Purchase Agreements") which are executed prior to the
date of this Agreement, then the total number of Purchased Shares as to which
Optionee shall be deemed to have a fully-vested interest under this Agreement
and all Prior Purchase Agreements shall not exceed in the aggregate the number
of Purchased Shares in which Optionee would otherwise at the time be vested, in
accordance with the Vesting Schedule, had all the Purchased Shares (including
those acquired under the Prior Purchase Agreements) been acquired exclusively
under this Agreement.
5. Recapitalization. Any new, substituted or additional securities or other
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property (including cash paid other than as a regular cash dividend) which is by
reason of any Recapitalization distributed with respect to the Purchased Shares
shall be immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to reflect such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the price per share to be paid upon the
exercise of the Repurchase Right in order to reflect the effect of any such
Recapitalization upon the Corporation's capital structure; provided, however,
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that the aggregate purchase price shall remain the same.
6. Corporate Transaction.
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(a) The Repurchase Right shall automatically terminate in its
entirety, and all the Purchased Shares shall vest in full, immediately prior to
the consummation of any
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Corporate Transaction, except to the extent the Repurchase Right is to be
assigned to the successor entity in such Corporate Transaction.
(b) To the extent the Repurchase Right remains in effect following a
Corporate Transaction, such right shall apply to any new securities or other
property (including any cash payments) received in exchange for the Purchased
Shares in consummation of the Corporate Transaction, but only to the extent the
Purchased Shares are at the time covered by such right. Appropriate adjustments
shall be made to the price per share payable upon exercise of the Repurchase
Right to reflect the effect of the Corporate Transaction upon the Corporation's
capital structure; provided, however, that the aggregate purchase price shall
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remain the same. The new securities or other property (including any cash
payments) issued or distributed with respect to the Purchased Shares in
consummation of the Corporate Transaction shall be immediately deposited in
escrow with the Corporation (or the successor entity) and shall not be released
from escrow until Optionee vests in such securities or other property in
accordance with the same Vesting Schedule in effect for the Purchased Shares.
(c) The Repurchase Right may also terminate on an accelerated basis, and
the Purchased Shares shall immediately vest in full, in accordance with the
terms and conditions of any special addendum attached to this Agreement.
E. RIGHT OF FIRST REFUSAL
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1. Grant. The Corporation is hereby granted the right of first refusal (the
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"First Refusal Right"), exercisable in connection with any proposed transfer of
the Purchased Shares in which Optionee has vested in accordance with the
provisions of Article D. For purposes of this Article E, the term "transfer"
shall include any sale, assignment, pledge, encumbrance or other disposition of
the Purchased Shares intended to be made by Owner, but shall not include any
Permitted Transfer.
2. Notice of Intended Disposition. In the event any Owner of Purchased
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Shares in which Optionee has vested desires to accept a bona fide third-party
offer for the transfer of any or all of such shares (the Purchased Shares
subject to such offer to be hereinafter referred to as the "Target Shares"),
Owner shall promptly (i) deliver to the Corporation written notice (the
"Disposition Notice") of the terms of the offer, including the purchase price
and the identity of the third-party offeror, and (ii) provide satisfactory proof
that the disposition of the Target Shares to such third-party offeror would not
be in contravention of the provisions set forth in Articles B and C.
3. Exercise of the First Refusal Right. The Corporation shall, for a period
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of twenty-five (25) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares subject to the Disposition
Notice upon the same terms as those specified therein or upon such other terms
(not materially different from those specified in the Disposition Notice) to
which Owner consents. Such right shall be exercisable by delivery of written
notice (the "Exercise Notice") to Owner prior to the expiration of the twenty-
five (25)-day exercise period. If such right is exercised with respect to all
the Target
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Shares, then the Corporation shall effect the repurchase of such shares,
including payment of the purchase price, not more than five (5) business days
after delivery of the Exercise Notice; and at such time the certificates
representing the Target Shares shall be delivered to the Corporation.
Should the purchase price specified in the Disposition Notice be payable in
property other than cash or evidences of indebtedness, the Corporation shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If Owner and the Corporation cannot agree on such
cash value within ten (10) days after the Corporation's receipt of the
Disposition Notice, the valuation shall be made by an appraiser of recognized
standing selected by Owner and the Corporation or, if they cannot agree on an
appraiser within twenty (20) days after the Corporation's receipt of the
Disposition Notice, each shall select an appraiser of recognized standing and
the two (2) appraisers shall designate a third appraiser of recognized standing,
whose appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by Owner and the Corporation. The closing shall then be
held on the later of (i) the fifth (5th) business day following delivery of the
Exercise Notice or (ii) the fifth (5th) business day after such valuation shall
have been made.
4. Non-Exercise of the First Refusal Right. In the event the Exercise
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Notice is not given to Owner prior to the expiration of the twenty-five (25)-day
exercise period, Owner shall have a period of thirty (30) days thereafter in
which to sell or otherwise dispose of the Target Shares to the third-party
offeror identified in the Disposition Notice upon terms (including the purchase
price) no more favorable to such third-party offeror than those specified in the
Disposition Notice; provided, however, that any such sale or disposition must
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not be effected in contravention of the provisions of Articles B and C. The
third-party offeror shall acquire the Target Shares subject to the First Refusal
Right, the provisions of Article B and the provisions of Paragraph C.3. In the
event Owner does not effect such sale or disposition of the Target Shares within
the specified thirty (30)-day period, the First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses.
5. Partial Exercise of the First Refusal Right. In the event the
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Corporation makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within five (5) business days after Owner's receipt of the Exercise
Notice, to effect the sale of the Target Shares pursuant to either of the
following alternatives:
(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in full
compliance with the requirements of Paragraph E.4, as if the Corporation
did not exercise the First Refusal Right; or
(ii) sale to the Corporation of the portion of the Target Shares
which the Corporation has elected to purchase, such sale to be effected in
substantial conformity with the provisions of Paragraph E.3. The First
Refusal
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Right shall continue to be applicable to any subsequent disposition of the
remaining Target Shares until such right lapses.
Owner's failure to deliver timely notification to the Corporation
deemed to be an election by Owner to sell the Target Shares pursuant to
alternative (i) above.
6. Recapitalization/Reorganization.
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(a) Any new, substituted or additional securities or other property
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the First Refusal Right, but
only to the extent the Purchased Shares are at the time covered by such right.
(b) In the event of a Reorganization, the First Refusal Right shall
remain in full force and effect and shall apply to the new capital stock or
other property received in exchange for the Purchased Shares in consummation of
the Reorganization, but only to the extent the Purchased Shares are at the time
covered by such right.
7. Lapse. The First Refusal Right shall lapse upon the earliest to occur of
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(i) the first date on which shares of the Common Stock are held of record by
more than five hundred (500) persons, (ii) a determination made by the Board
that a public market exists for the outstanding shares of Common Stock or (iii)
a firm commitment underwritten public offering, pursuant to an effective
registration statement under the 1933 Act, covering the offer and sale of the
Common Stock in the aggregate amount of at least ten million dollars
($10,000,000). However, the Market Stand-Off shall continue to remain in full
force and effect following the lapse of the First Refusal Right.
F. SPECIAL TAX ELECTION
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The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax consequences applicable to the
acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b)
ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.
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G. GENERAL PROVISIONS
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1. Assignment. The Corporation may assign the Repurchase Right and/or the
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First Refusal Right to any person or entity selected by the Board, including
(without limitation) one or more stockholders of the Corporation.
2. No Employment or Service Contract. Nothing in this Agreement or in the
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Plan shall confer upon Optionee any right to continue in Service for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby expressly reserved by each, to
terminate Optionee's Service at any time for any reason, with or without cause.
3. Notices. Any notice required to be given under this Agreement shall be
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in writing and shall be deemed effective upon personal delivery or upon deposit
in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
4. No Waiver. The failure of the Corporation in any instance to exercise
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the Repurchase Right or the First Refusal Right shall 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 or any other agreement between the
Corporation and Optionee. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
5. Cancellation of Shares. If the Corporation shall make available, at the
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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 person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.
H. MISCELLANEOUS PROVISIONS
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1. Optionee Undertaking. Optionee hereby agrees to take whatever additional
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action and execute whatever additional documents the Corporation may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.
2. Agreement is Entire Contract. This Agreement constitutes the entire
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contract between the parties hereto with regard to the subject matter hereof.
This Agreement is
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made pursuant to the provisions of the Plan and shall in all respects be
construed in conformity with the terms of the Plan.
3. Governing Law. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
4. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5. Successors and Assigns. The provisions of this Agreement shall inure to
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the benefit of, and be binding upon, the Corporation and its successors and
assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
XXXXXXXXXX.XXX CORPORATION
By: __________________________
Title: __________________________
Address: __________________________
__________________________
__________, OPTIONEE
Address: __________________________
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SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right to purchase any Purchased Shares in which Optionee is not vested at the
time of his or her cessation of Service and the first refusal rights granted to
the Corporation (or its assigns) with respect to the Purchased Shares.
____________________________________
OPTIONEE'S SPOUSE
Address: ________________________________
________________________________
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED ____________ hereby sell(s), assign(s) and transfer(s)
unto XxxxxxxXxx.xxx Corporation (the "Corporation"), _________________ (____)
shares of the Common Stock of the Corporation standing in his or her name on the
books of the Corporation represented by Certificate No. ___________ herewith and
do(es) hereby irrevocably constitute and appoint ________________ Attorney to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises.
Dated:____________
Signature___________________________
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.
EXHIBIT II
FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(b) TAX ELECTION
II. Federal Income Tax Consequences and Section 83(b) Election For Exercise
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of Non-Statutory Option. If the Purchased Shares are acquired pursuant to the
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exercise of a Non-Statutory Option, as specified in the Grant Notice, then under
Code Section 83, the excess of the Fair Market Value of the Purchased Shares on
the date any forfeiture restrictions applicable to such shares lapse over the
Exercise Price paid for such shares will be reportable as ordinary income on the
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. However, Optionee may elect under Code Section 83(b) to be
taxed at the time the Purchased Shares are acquired, rather than when and as
such Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30) days
after the date of the Agreement. Even if the Fair Market Value of the Purchased
Shares on the date of the Agreement equals the Exercise Price paid (and thus no
tax is payable), the election must be made to avoid adverse tax consequences in
the future. The form for making this election is attached as part of this
exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY
PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE
FORFEITURE RESTRICTIONS LAPSE.
III. Federal Income Tax Consequences and Conditional Section 83(b) Election
For Exercise of Incentive Option. If the Purchased Shares are acquired pursuant
to the exercise of an Incentive Option, as specified in the Grant Notice, then
the following tax principles shall be applicable to the Purchased Shares:
(i) For regular tax purposes, no taxable income will be recognized at
the time the Option is exercised.
(ii) The excess of (a) the Fair Market Value of the Purchased Shares
on the date the Option is exercised or (if later) on the date any
forfeiture restrictions applicable to the Purchased Shares lapse over (b)
the Exercise Price paid for the Purchased Shares will be includible in
Optionee's taxable income for alternative minimum tax purposes.
(iii) If Optionee makes a disqualifying disposition of the Purchased
Shares, then Optionee will recognize ordinary income in the year of such
disposition equal in amount to the excess of (a) the Fair Market Value of
the Purchased Shares on the date the Option is exercised or (if later) on
the date any forfeiture restrictions applicable to the Purchased Shares
lapse over (b) the Exercise Price paid for the Purchased Shares. Any
additional gain recognized upon the disqualifying disposition will be
either short-term or long-term capital
gain depending upon the period for which the Purchased Shares are held
prior to the disposition.
(iv) For purposes of the foregoing, the term "forfeiture restrictions"
will include the right of the Corporation to repurchase the Purchased
Shares pursuant to the Repurchase Right. The term "disqualifying
disposition" means any sale or other disposition /1/ of the Purchased
Shares within two (2) years after the Grant Date or within one (1) year
after the exercise date of the Option.
(v) In the absence of final Treasury Regulations relating to Incentive
Options, it is not certain whether Optionee may, in connection with the
exercise of the Option for any Purchased Shares at the time subject to
forfeiture restrictions, file a protective election under Code Section
83(b) which would limit (a) Optionee's alternative minimum taxable income
upon exercise and (b) Optionee's ordinary income upon a disqualifying
disposition to the excess of the Fair Market Value of the Purchased Shares
on the date the Option is exercised over the Exercise Price paid for the
Purchased Shares. Accordingly, such election if properly filed will only be
allowed to the extent the final Treasury Regulations permit such a
protective election. Page 2 of the attached form for making the election
should be filed with any election made in connection with the exercise of
an Incentive Option.
___________________
/1/ Generally, a disposition of shares purchased under an Incentive Option
includes any transfer of legal title, including a transfer by sale, exchange or
gift, but does not include a transfer to the Optionee's spouse, a transfer into
joint ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax free
exchanges permitted under the Code.
SECTION 83(b) ELECTION
This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: Optionee
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
__________________ shares of the common stock of XxxxxxxXxx.Xxx Corporation.
(3) The property was issued on _____________.
(4) The taxable year in which the election is being made is the calendar year
199_.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's service with the issuer terminates.
The issuer's repurchase right lapses in a series of installments over a
four (4)-year period ending on , 200.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $________ per share.
(7) The amount paid for such property is $________ per share.
(8) A copy of this statement was furnished to XxxxxxxXxx.xxx Corporation for
whom taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed on _______________, 199__.
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
The property described in the above Section 83(b) election is
comprised of shares of common stock acquired pursuant to the exercise of an
incentive stock option under Section 422 of the Internal Revenue Code (the
"Code"). Accordingly, it is the intent of the Taxpayer to utilize this election
to achieve the following tax results:
1. The purpose of this election is to have the alternative
minimum taxable income attributable to the purchased shares measured by the
amount by which the fair market value of such shares at the time of their
transfer to the Taxpayer exceeds the purchase price paid for the shares. In the
absence of this election, such alternative minimum taxable income would be
measured by the spread between the fair market value of the purchased shares and
the purchase price which exists on the various lapse dates in effect for the
forfeiture restrictions applicable to such shares. The election is to be
effective to the full extent permitted under the Code.
2. Section 421(a)(1) of the Code expressly excludes from income
any excess of the fair market value of the purchased shares over the amount paid
for such shares. Accordingly, this election is also intended to be effective in
the event there is a "disqualifying disposition" of the shares, within the
meaning of Section 421(b) of the Code, which would otherwise render the
provisions of Section 83(a) of the Code applicable at that time. Consequently,
the Taxpayer hereby elects to have the amount of disqualifying disposition
income measured by the excess of the fair market value of the purchased shares
on the date of transfer to the Taxpayer over the amount paid for such shares.
Since Section 421(a) presently applies to the shares which are the subject of
this Section 83(b) election, no taxable income is actually recognized for
regular tax purposes at this time, and no income taxes are payable, by the
Taxpayer as a result of this election. The election shall be effective to the
full extent permitted under the Code.
THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Purchase Agreement.
---------
B. Board shall mean the Corporation's Board of Directors.
-----
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following
---------------------
stockholder-approved transactions:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
F. Corporation shall mean XxxxxxxXxx.xxx Corporation, a Delaware
-----------
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of XxxxxxxXxx.xxx Corporation which shall by appropriate
action adopt the Plan.
G. Disposition Notice shall have the meaning assigned to such term in
------------------
Paragraph E.2.
H. Exercise Notice shall have the meaning assigned to such term in
---------------
Paragraph E.3.
I. Exercise Price shall have the meaning assigned to such term in
--------------
Paragraph A.1.
J. Fair Market Value of a share of Common Stock on any relevant date,
-----------------
prior to the initial public offering of the Common Stock, shall be determined by
the Plan Administrator after taking into account such factors as it shall deem
appropriate.
K. First Refusal Right shall mean the right granted to the Corporation in
-------------------
accordance with Article E.
L. Grant Date shall have the meaning assigned to such term in Paragraph
----------
A.1.
X. Xxxxx Notice shall mean the Notice of Grant of Stock Option pursuant
------------
to which Optionee has been informed of the basic terms of the Option.
A-1
N. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
O. Market Stand-Off shall mean the market stand-off restriction specified
----------------
in Paragraph C.3.
P. 1933 Act shall mean the Securities Act of 1933, as amended.
--------
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Option shall have the meaning assigned to such term in Paragraph A.1.
------
T. Option Agreement shall mean all agreements and other documents
----------------
evidencing the Option.
U. Optionee shall mean the person to whom the Option is granted under the
--------
Plan.
V. Owner shall mean Optionee and all subsequent holders of the Purchased
-----
Shares who derive their chain of ownership through a Permitted Transfer from
Optionee.
W. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
X. Permitted Transfer shall mean (i) a gratuitous transfer of the
------------------
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death or (iii) a transfer to the Corporation in pledge as
security for any purchase-money indebtedness incurred by Optionee in connection
with the acquisition of the Purchased Shares.
Y. Plan shall mean the Corporation's 1998 Stock Option/Stock Issuance
----
Plan.
Z. Plan Administrator shall mean either the Board or a committee of the
------------------
Board acting in its capacity as administrator of the Plan.
AA. Prior Purchase Agreement shall have the meaning assigned to such term
------------------------
in Paragraph D.4.
AB. Purchased Shares shall have the meaning assigned to such term in
----------------
Paragraph A.1.
A-2
AC. Recapitalization shall mean any stock split, stock dividend,
----------------
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
AD. Reorganization shall mean any of the following transactions:
--------------
(i) a merger or consolidation in which the Corporation is not
the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities
are transferred in whole or in part to a person or persons different
from the persons holding those securities immediately prior to the
merger, or
(iv) any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.
AE. SEC shall mean the Securities and Exchange Commission.
---
AF. Service shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.
AG. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AH. Target Shares shall have the meaning assigned to such term in
-------------
Paragraph E.2.
A-3
XXXXXXXXXX.XXX CORPORATION
ADDENDUM
TO
STOCK PURCHASE AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Purchase Agreement (the "Purchase Agreement")
by and between XxxxxxxXxx.xxx Corporation (the "Corporation") and _________
("Optionee") evidencing the shares of Common Stock purchased on this date by
Optionee pursuant to the option granted to him or her under the Corporation's
1998 Stock Option/Stock Issuance Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum, to the extent not otherwise
defined herein, shall have the meanings assigned to such terms in the Purchase
Agreement.
ACCELERATION IN CONNECTION WITH
A CORPORATE TRANSACTION
1. The Repurchase Right shall automatically lapse with respect to
fifty percent (50%) of the unvested Purchased Shares at the time of a Corporate
Transaction, and such Purchased Shares shall vest on an accelerated basis and
shall, immediately prior to the consummation of a Corporate Transaction, become
fully-vested shares of Common Stock.
2. For purposes of determining which unvested Purchased Shares shall
become vested on an accelerated basis, the Purchased Shares that are next to
become vested pursuant to the Vesting Schedule shall become vested on an
accelerated basis in accordance with Paragraph 1 of this Addendum and the
remaining unvested shares shall continue to vest in accordance with the Vesting
Schedule specified in the Grant Notice.
IN WITNESS WHEREOF, XxxxxxxXxx.xxx Corporation has caused this Addendum
to be executed by its duly-authorized officer as of the Effective Date specified
below.
RELEASE SOFTWARE CORPORATION
By: ___________________________________
Title: _______________________________
EFFECTIVE DATE: ____________, 1999
XXXXXXXXXX.XXX CORPORATION
--------------------------
STOCK PLEDGE AGREEMENT
----------------------
AGREEMENT made as of this _____ day of July _____, 1999 by and between
XxxxxxxXxx.xxx Corporation, a Delaware corporation (the "Corporation") and
__________ ("Pledgor").
RECITALS
--------
A. In connection with the purchase of ___________ (_______) shares of
the Corporation's Common Stock (the "Purchased Shares") on the date of this
Agreement from the Corporation, Pledgor has issued that certain promissory note
(the "Note") dated July _____, 1999 payable to the order of the Corporation in
the principal amount of __________________________ Dollars ($________).
B. Such Note is secured by the Purchased Shares and other collateral
upon the terms set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Security Interest. Pledgor hereby grants the
--------------------------
Corporation a security interest in, and assigns, transfers to and pledges with
the Corporation, the following securities and other property (collectively, the
"Collateral"):
(i) the Purchased Shares delivered to and deposited with the
Corporation as collateral for the Note;
(ii) any and all new, additional or different securities or
other property subsequently distributed with respect to the
Purchased Shares which are to be delivered to and deposited with
the Corporation pursuant to the requirements of Paragraph 3 of
this Agreement;
(iii) any and all other property and money which is
delivered to or comes into the possession of the Corporation
pursuant to the terms of this Agreement; and
(iv) the proceeds of any sale, exchange or disposition of
the property and securities described in subparagraphs (i), (ii)
or (iii) above.
2. Warranties. Pledgor hereby warrants that Pledgor is the
----------
owner of the Collateral and has the right to pledge the Collateral and that the
Collateral is free from all liens, adverse claims and other security interests
(other than those created hereby).
1
3. Duty to Deliver. Any new, additional or different securities
---------------
or other property (other than regular cash dividends) which may now or
distributable with respect to the Collateral by reason of (i) any stock split,
hereafter become stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Common Stock as a class without
the Corporation's receipt of consideration or (ii) any merger, consolidation or
other reorganization affecting the capital structure of the Corporation shall,
upon receipt by Pledgor be promptly delivered to and deposited with the
Corporation as part of the Collateral hereunder. Any such securities shall be
accompanied by one or more properly-endorsed stock power assignments.
4. Payment of Taxes and Other Charges. Pledgor shall pay,
----------------------------------
prior to the delinquency date, all taxes, liens, assessments and other charges
against the Collateral, and in the event of Pledgor's failure to do so, the
Corporation may at its election pay any or all of such taxes and other charges
without contesting the validity or legality thereof. The payments so made shall
become part of the indebtedness secured hereunder and until paid shall bear
interest at the minimum per annum rate, compounded semi-annually, required to
avoid the imputation of interest income to the Corporation and compensation
income to Pledgor under the Federal tax laws.
5. Stockholder Rights. So long as there exists no event of
------------------
default under Paragraph 10 of this Agreement, Pledgor may exercise all
stockholder voting rights and be entitled to receive any and all regular cash
dividends paid on the Collateral and all proxy statements and other stockholder
materials pertaining to the Collateral.
6. Rights and Powers of Corporation. The Corporation may,
--------------------------------
without obligation to do so, exercise at any time and from time to time one or
more of the following rights and powers with respect to any or all of the
Collateral:
(i) subject to the applicable limitations of Paragraph
9, accept in its discretion other property of Pledgor in exchange for
all or part of the Collateral and release Collateral to Pledgor to the
extent necessary to effect such exchange, and in such event the other
property received in the exchange shall become part of the Collateral
hereunder;
(ii) perform such acts as are necessary to preserve and
protect the Collateral and the rights, powers and remedies granted
with respect to such Collateral by this Agreement; and
(iii) transfer record ownership of the Collateral to
the Corporation or its nominee and receive, endorse and give receipt
for, or collect by legal proceedings or otherwise, dividends or other
distributions made or paid with respect to the Collateral, provided
--------
and only if there exists at the time an outstanding event of default
-----------
under Paragraph 10 of this Agreement. Any cash sums which the
Corporation may so receive shall be applied to the payment of the Note
and any other indebtedness secured hereunder, in such order of
application
2
as the Corporation deems appropriate. Any remaining cash shall be paid
over to Pledgor.
Any action by the Corporation pursuant to the provisions of this
Paragraph 6 may be taken without notice to Pledgor. Expenses reasonably
incurred in connection with such action shall be payable by Pledgor and form
part of the indebtedness secured hereunder as provided in Paragraph 12.
7. Care of Collateral. The Corporation shall exercise
------------------
reasonable care in the custody and preservation of the Collateral. However, the
Corporation shall have no obligation to (i) initiate any action with respect to,
or otherwise inform Pledgor of, any conversion, call, exchange right, preemptive
right, subscription right, purchase offer or other right or privilege relating
to or affecting the Collateral, (ii) preserve the rights of Pledgor against
adverse claims or protect the Collateral against the possibility of a decline in
market value or (iii) take any action with respect to the Collateral requested
by Pledgor unless the request is made in writing and the Corporation determines
that the requested action will not unreasonably jeopardize the value of the
Collateral as security for the Note and other indebtedness secured hereunder.
Subject to the limitations of Paragraph 9, the Corporation may at
any time release and deliver all or part of the Collateral to Pledgor, and the
receipt thereof by Pledgor shall constitute a complete and full acquittance for
the Collateral so released and delivered. The Corporation shall accordingly be
discharged from any further liability or responsibility for the Collateral, and
the released Collateral shall no longer be subject to the provisions of this
Agreement.
8. Transfer of Collateral. In connection with the
----------------------
transfer or assignment of the Note (whether by negotiation, discount or
otherwise), the Corporation may transfer all or any part of the Collateral, and
the transferee shall thereupon succeed to all the rights, powers and remedies
granted the Corporation hereunder with respect to the Collateral so transferred.
Upon such transfer, the Corporation shall be fully discharged from all liability
and responsibility for the transferred Collateral.
9. Release of Collateral. Provided all indebtedness
---------------------
secured hereunder shall at the time have been paid in full and there does not
otherwise exist any event of default under Paragraph 10, the Purchased Shares,
together with any additional Collateral which may hereafter be pledged and
deposited hereunder, shall be released from pledge and returned to Pledgor in
accordance with the following provisions:
(i) Upon payment or prepayment of principal under the
Note, together with payment of all accrued interest to date, one or
more of the Purchased Shares held as Collateral hereunder shall below) be
(subject to the applicable limitations of Paragraphs 9(iii) and 9(v)
released to Pledgor within thirty (30) days after such payment or
prepayment. The number of the shares to be so released shall be equal to
the number obtained by multiplying (i)
3
the total number of Purchased Shares held under this Agreement at the time
of the payment or prepayment, by (ii) a fraction, the numerator of which
shall be the amount of the principal paid or prepaid and the denominator of
which shall be the unpaid principal balance of the Note immediately prior
to such payment or prepayment. In no event, however, shall any fractional
shares be released.
(ii) Any additional Collateral which may hereafter be pledged and
deposited with the Corporation (pursuant to the requirements of Paragraph
3) with respect to the Purchased Shares shall be released at the same time
the particular shares of Common Stock to which the additional Collateral
relates are to be released in accordance with the applicable provisions of
Paragraph 9(i).
(iii) Under no circumstances, however, shall any Purchased Shares
or any other Collateral be released if previously applied to the payment of
any indebtedness secured hereunder. In addition, in no event shall any
Purchased Shares or other Collateral be released pursuant to the provisions
of Paragraph 9(i) or 9(ii) if, and to the extent, the fair market value of
the Common Stock and all other Collateral which would otherwise remain in
pledge hereunder after such release were effected would be less than the
unpaid principal and accrued interest under the Note.
(iv) For all valuation purposes under this Agreement, the fair
market value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(A) If the Common Stock is at the time traded on the Nasdaq
National Market, the fair market value shall be the closing selling price
per share of Common Stock on the date in question, as such prices are
reported by the National Association of Securities Dealers on its Nasdaq
system or any successor system. If there is no reported closing selling
price for the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such quotation exists
shall be determinative of fair market value.
(B) If the Common Stock is at the time listed on the
American Stock Exchange or the New York Stock Exchange, then the fair
market value shall be the closing selling price per share of Common Stock
on the date in question on the securities exchange serving as the primary
Common Stock, as such price is officially quoted in the composite tape of
market for the transactions on such exchange. If there is no reported sale
on such exchange on the date in question, then the fair market value shall
of Common Stockbe the closing selling price on the exchange on the last
preceding date for which such quotation exists.
4
(C) If the Common Stock is at the time neither listed on any
securities exchange nor traded on the Nasdaq National Market, the fair
market value shall be determined by the Corporation's Board of Directors
after taking into account such factors as the Board shall deem appropriate.
(v) In the event the Collateral becomes in whole or in
part comprised of "margin securities" within the meaning of Section
207.2(i) of Regulation G of the Federal Reserve Board, then no Collateral
shall thereafter be substituted for any Collateral under the provisions of
Paragraph 6(i) or be released under Paragraph 9(i) or (ii), unless there is
compliance with each of the following additional requirements:
(A) The substitution or release must not increase
the amount by which the indebtedness secured hereunder at the time of such
substitution or release exceeds the maximum loan value (as defined below)
of the Collateral immediately prior to such substitution or release.
(B) The substitution or release must not cause
the amount of indebtedness secured hereunder at the time of such
substitution or release to exceed the maximum loan value of the Collateral
remaining after such substitution or release is effected.
(C) For purposes of this Paragraph 9(v), the
maximum loan value of each item of Collateral shall be determined on the
day the substitution or release is to be effected and shall, in the case of
the shares of Common Stock and any additional Collateral (other than margin
securities), equal the good faith loan value thereof (as defined in Section
207.2(e)(1) of Regulation G) and shall, in the case of all margin
securities (other than the Common Stock), equal fifty percent (50%) of the
current market value of such securities.
10. Events of Default. The occurrence of one or more of the
-----------------
following events shall constitute an event of default under this Agreement:
(i) the failure of Pledgor to pay, when due under the
Note, any installment of principal or accrued interest after any grace
period set forth in the Note has expired, if any; or
(ii) the occurrence of any other acceleration event
specified in the Note; or
(iii) the failure of Pledgor to perform any obligation
imposed upon Pledgor by reason of this Agreement; or
(iv) the breach of any warranty of Pledgor contained in
this Agreement.
5
Upon the occurrence of any such event of default, the Corporation may,
at its election, declare the Note and all other indebtedness secured hereunder
to become immediately due and payable and may exercise any or all of the rights
and remedies granted to a secured party under the provisions of the California
Commercial Code (as now or hereafter in effect), including (without limitation)
the power to dispose of the Collateral by public or private sale or to accept
the Collateral in full payment of the Note and all other indebtedness secured
hereunder.
Any proceeds realized from the disposition of the Collateral pursuant
to the foregoing power of sale shall be applied first to the payment of expenses
incurred by the Corporation in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness secured hereunder. Any
surplus proceeds shall be paid over to Pledgor. However, in the event such
proceeds prove insufficient to satisfy all obligations of Pledgor under the
Note, then Pledgor shall remain personally liable for the resulting deficiency.
11. Other Remedies. The rights, powers and remedies granted to
--------------
the Corporation pursuant to the provisions of this Agreement shall be in
addition to all rights, powers and remedies granted to the Corporation under any
statute or rule of law. Any forbearance, failure or delay by the Corporation in
exercising any right, power or remedy under this Agreement shall not be deemed
to be a waiver of such right, power or remedy. Any single or partial exercise of
any right, power or remedy under this Agreement shall not preclude the further
exercise thereof, and every right, power and remedy of the Corporation under
this Agreement shall continue in full force and effect unless such right, power
or remedy is specifically waived by an instrument executed by the Corporation.
12. Costs and Expenses. All costs and expenses (including
------------------
reasonable attorneys fees) incurred by the Corporation in the exercise or
enforcement of any right, power or remedy granted it under this Agreement shall
become part of the indebtedness secured hereunder and shall constitute a
personal liability of Pledgor payable immediately upon demand and bearing
interest until paid at the minimum per annum rate, compounded semi-annually,
required to avoid the imputation of interest income to the Corporation and
compensation income to Pledgor under the Federal tax laws.
13. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California without resort
to that State's conflict-of-laws rules.
14. Successors. This Agreement shall be binding upon the
----------
Corporation and its successors and assigns and upon Pledgor and the executors,
heirs and legatees of Pledgor's estate.
15. Severability. If any provision of this Agreement is held to
------------
be invalid under applicable law, then such provision shall be ineffective only
to the extent of such invalidity, and neither the remainder of such provision
nor any other provisions of this Agreement shall be affected thereby.
6
IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and
the Corporation on this ____day of July _____, 1999.
XXXXXXXXXX.XXX CORPORATION PLEDGOR
By:_______________________________
___________________________________
Title:____________________________
Address:___________________________
Dated:____________________________
___________________________________
___________________________________
Dated:_____________________________
7
RELEASE SOFTWARE CORPORATION
----------------------------
NOTE SECURED BY STOCK PLEDGE AGREEMENT
--------------------------------------
AND AMENDMENT TO STOCK PLEDGE AGREEMENT
---------------------------------------
$_________________ __________________, 1999
FOR VALUE RECEIVED, ________________ ("Maker") promises to pay to the
order of Release Software Corporation (the "Corporation"), at its corporate
offices at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxx, 00000 the principal
sum of ________________________________ ($_____________________), together with
all accrued interest thereon, upon the terms and conditions specified below.
1. Interest. Interest shall accrue on the unpaid balance outstanding
--------
from time to time under this Note at the rate of ____% per annum, compounded
annually.
2. Principal. The entire principal balance of this Note, together
---------
with all accrued and unpaid interest, shall become due and payable in one lump
sum on ____________.
3. Payment. Payment shall be made in lawful tender of the United
-------
States and shall be applied first to the payment of all accrued and unpaid
interest and then to the payment of principal. Prepayment of the principal
balance of this Note, together with all accrued and unpaid interest, may be made
in whole or in part at any time without penalty.
4. Events of Acceleration. The entire unpaid principal balance of
----------------------
this Note, together with all accrued and unpaid interest, shall become
immediately due and payable prior to the specified due date of this Note upon
the occurrence of one or more of the following events:
A. the failure of the Maker to pay when due the principal or the
accrued interest on this Note and the continuation of either such default
for more than thirty (30) days; or
B. the expiration of the one (1) year period following the date
the Maker ceases for any reason to remain in the Corporation's employ; or
C. the date one (1) year following an acquisition of the
Corporation (whether by merger or acquisition of all or substantially all
of the Corporation's assets or outstanding voting stock) for consideration
payable in cash or freely-tradable securities; provided, however, that if
the Pooling of Interest Method, as described in Accounting Principles Board
Opinion No. 16, is used to account for the acquisition for financial
reporting purposes, acceleration shall not occur prior to the end of the
sixty (60)-day period immediately following the end of the applicable
restriction period required under Accounting Series Release Numbers 130 and
135;
1.
D. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment
for the benefit of creditors, the filing by or against the Maker of any
petition in bankruptcy or any petition for relief under the provisions of
the Federal Bankruptcy Act or any other state or Federal law for the relief
of debtors and the continuation of such petition without dismissal for a
period of thirty (30) days or more, the appointment of a receiver or
trustee to take possession of any property or assets of the Maker or the
attachment of or execution against any property or assets of the Maker; or
E. the occurrence of any event of default under the Stock Pledge
Agreement securing this Note or any obligation secured thereby.
5. Special Acceleration Event. In the event the Maker sells or
--------------------------
otherwise transfers for value one or more shares of the Corporation's common
stock purchased with the proceeds of this Note, then any unpaid portion of the
principal balance of this Note attributable to the purchase price of those
shares shall become immediately due and payable, together with all accrued and
unpaid interest on that principal portion.
6. Employment. For purposes of applying the provisions of this Note,
----------
the Maker shall be considered to remain in the Corporation's employ for so long
as the Maker renders services as a full-time employee of the Corporation, any
successor entity or one or more of the Corporation's fifty percent (50%)-or-more
owned (directly or indirectly) subsidiaries.
7. Security. The proceeds of the loan evidenced by this Note shall
--------
be applied solely to the payment of the purchase price of ______________ shares
of the Corporation's common stock and payment of this Note shall be secured by a
pledge of those shares with the Corporation pursuant to the Stock Pledge
Agreement to be executed this date by the Maker. The Maker, however, shall
remain personally liable for payment of this Note, and assets of the Maker, in
addition to the collateral under the Stock Pledge Agreement, may be applied to
the satisfaction of the Maker's obligations hereunder.
8. Collection. If action is instituted to collect this Note, the
----------
Maker promises to pay all costs and expenses (including reasonable attorneys'
fees) incurred in connection with such action.
9. Waiver. A waiver of any term of this Note, the Stock Pledge
------
Agreement or of any of the obligations secured thereby must be made in writing
and signed by a duly-authorized officer of the Corporation and any such waiver
shall be limited to its express terms. No delay by the Corporation in acting
with respect to the terms of this Note or the Stock Pledge Agreement shall
constitute a waiver of any breach, default or failure of a condition under this
Note, the Stock Pledge Agreement or the obligations secured thereby.
The Maker waives presentment, demand, notice of dishonor, notice of
default or delinquency, notice of acceleration, notice of protest and
nonpayment, notice of costs, expenses or losses and interest thereon, notice of
interest on interest and diligence in taking any action to
2.
collect any sums owing under this Note or in proceeding against any of the
rights or interests in or to properties securing payment of this Note.
10. Conflicting Agreements. In the event of any inconsistencies
----------------------
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
11. Governing Law. This Note shall be construed in accordance with
-------------
the laws of the State of California, without regard to the conflict of laws
principles thereof.
12. Note Supercedes Prior Agreement. This Note shall supercede in
-------------------------------
its entirety that certain promissory note by Maker in favor of the Company dated
_____________, 1999 (the "Prior Note"), which Prior Note shall be of no further
force or effect.
13. Amendment to Stock Pledge Agreement. References to the "Note" in
-----------------------------------
that certain Stock Pledge Agreement by and between the Company and Maker shall
hereby refer to this Note rather than the Prior Note.
---------------------------------
"Maker"
XXXXXXXXXX.XXX CORPORATION
By:
--------------------------------
Its:
--------------------------------
3.
