SMARTSERV ONLINE, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 29, 1998 between SmartServ
Online, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇
("Purchaser").
WHEREAS Purchaser is an employee of the Company whose continued
affiliation with the Company is considered to be important for the Company's
continued growth; and
WHEREAS in order to provide Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for Purchaser to continue to
participate in the affairs of the Company, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of Common Stock according to
the terms and conditions hereof;
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to sell to Purchaser and
Purchaser agrees to purchase from the Company 206,080 shares of the Company's
Common Stock (the "Stock") at a price of $2.19885 per share (the "Per Share
Purchase Price"), for an aggregate purchase price of $453,139.01. (The Per Share
Purchase Price being equal to 110% of the fair market value of the Stock as
determined by the average of the high and low sales price for the Stock for the
30 trading days immediately preceding the date of this Agreement.) The purchase
price for the Stock shall be paid by a non-recourse promissory note (the "Note")
in the form attached hereto as Exhibit A, in the amount of $453,139.01. The Note
shall be secured by pledge of the Stock and Purchaser shall be required to
execute and deliver a Security Agreement in the form attached hereto as Exhibit
B (the "Security Agreement"). If during the time that the Note remains
outstanding, the Company sells shares of the Company's Common Stock or other
securities convertible into the Company's Common Stock, pursuant to a Change of
Control Transaction (as defined below) at a price per share less than the Per
Share Purchase Price the aggregate principal amount of the Note shall be
automatically reduced to an amount equal the number of shares of Stock
multiplied by the per share price at which such securities are to be sold in the
Change of Control Transaction (the "Adjusted Principal Amount"). Furthermore, if
the Company shall sell shares of the Company's Common Stock or other securities
convertible into the Company's Common Stock in a private placement, or one or
more related private placements (a "Private Placement"), within six (6) months
of this Agreement for an aggregate purchase price in excess of $1,000,000, then
the number of shares issued pursuant to this Agreement shall automatically be
adjusted (the "Adjustment") in order to ensure that
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immediately following such Private Placement the Purchaser shall retain three
percent (3%) of the outstanding shares of the Company's Common Stock and other
securities convertible into the Company's Common Stock on a fully diluted basis.
The number of shares of the Company's Common Stock issued pursuant to the
Adjustment (the "Additional Shares") shall be set forth on Schedule 1 attached
hereto and shall be subject to the same terms and conditions as the Stock and
each reference herein to the Stock shall include the Additional Shares, to the
extent appropriate.
2. REPURCHASE OPTION, PUT OPTION AND RELEASE OF SHARES.
(a) REPURCHASE OPTION AND PUT OPTION.
(i) In the event of any voluntary or involuntary
termination of Purchaser's employment with the
Company (including as a result of death but excluding
Purchaser's termination of employment without Cause
(as defined below) or for Good Reason (as defined
below)) before all shares of the Stock are released
from the Company's repurchase option under Section
2(b) below, the Company shall, upon the date of such
termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option
for a period of twelve (12) months from such date to
repurchase all or any portion of the Stock which has
not been released from the repurchase option
described in this Section 2 (the "Repurchase Option")
at the time of such termination at the original
purchase price per share. The Repurchase Option shall
be exercised by the Company by written notice to
Purchaser or his/her executor and, at the Company's
option, (A) by delivery to Purchaser or his/her
executor with such notice of a check in the amount of
the aggregate repurchase price for the Stock being
repurchased, (B) by cancellation by the Company of an
amount of Purchaser's indebtedness to the Company
equal to the aggregate repurchase price for the Stock
being repurchased, or (C) by a combination of (A) and
(B) so that the combined payment and cancellation of
indebtedness equals such aggregate repurchase price.
Upon delivery of such notice and the payment of the
aggregate repurchase price in any of the ways
described above, the Company shall become the legal
and beneficial owner of the Stock being repurchased
and all rights and interests therein or relating
thereto, and the Company shall have the right to
retain and transfer to its own name the number of
shares of the Stock being repurchased by the Company.
(ii) If Purchaser's employment with the Company is
terminated (A) by the Company other than for Cause,
(B) as a result of Purchaser's death or Disability
(as defined below) or (C) by Purchaser for Good
Reason, Purchaser or his/her executor shall have the
right to cause the Company to
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repurchase all Stock at the original purchase price
per share (the "Put Option"). The Put Option shall be
exercised by Purchaser by written notice to the
Company delivered within sixty (60) days of such
termination. The repurchase price shall be paid at
the Company's option, (A) by delivery to Purchaser
or his/her executor within ninety (90) days a check
in the amount of the aggregate repurchase price for
the Stock being repurchased, (B) by cancellation by
the Company of an amount of Purchaser's indebtedness
to the Company equal to the aggregate repurchase
price for the Stock being repurchased, or (C) by a
combination of (A) and (B) so that the combined
payment and cancellation of indebtedness equals such
aggregate repurchase price. Upon payment of the
aggregate repurchase price in any of the ways
described above, the Company shall become the legal
and beneficial owner of the Stock being repurchased
and all rights and interests therein or relating
thereto, and the Company shall have the right to
retain and transfer to its own name the number of
shares of the Stock being repurchased by the Company.
(b) RELEASE OF SHARES FROM REPURCHASE OPTION.
(i) Subject to Section 2(b)(ii), 1/36th of the Stock
shall be released from the Company's Repurchase
Option on the one-month anniversary of this
Agreement, and an additional 1/36th of the Stock
shall be released on each monthly anniversary of such
date thereafter until all shares of the Stock have
been released; provided in each case that there has
not been any voluntary or involuntary termination
prior to each such date of release.
(ii) Notwithstanding Section 2(b)(i), all of the
stock shall be released from the Company's Repurchase
Option in the event that (A) Purchaser terminates his
employment for Good Reason (as defined below), (B)
the Company terminates the Purchaser's employment
with the Company without cause or (C) there is a
Change of Control (as defined below)..
(c) CERTAIN DEFINITIONS
(i) For purposes of this Agreement, "Cause" shall
mean termination of the Purchaser by the Company
upon:
(A) the willful and continued failure by the
Executive to substantially perform his
duties with the Company (other than any such
failure resulting from his incapacity due to
physical or mental illness), after a written
demand for substantial performance is
delivered to the Executive by the Board of
Directors which specifically identifies the
manner in which the Board of Directors
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believes that the Executive has not
substantially performed his duties, and
which failure has not been cured within
thirty days after such written demand; or
(B) the willful and continued engaging by
the Executive in conduct which is
demonstrably and materially injurious to the
Company, monetarily or otherwise.
For purposes of this Subsection (c)(i), no act, or
failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without
reasonable belief that such action or omission was in
the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until there
shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of
not less than 51% of the entire membership of the
Board of Directors at a meeting of the Board of
Directors called and held for that purpose (after
reasonable notice to the Executive and an opportunity
for the Executive, together with his counsel, to be
heard before the Board of Directors), finding that in
the good faith opinion of the Board of Directors the
Executive was guilty of conduct set forth above in
clauses (A) or (B) of the first sentence of this
Subsection (c)(i) and specifying the particulars
thereof in detail.
(ii) For purposes of this Agreement "Change of
Control" shall mean Change of Control shall occur if:
(i) at any time less than 60% of the members of the
Board of Directors shall be individuals who were
either (x) Directors on the effective date of this
Agreement or (y) individuals whose election, or
nomination for election, was approved by a vote
(including a vote approving a merger or other
agreement providing for the membership of such
individuals on the Board of Directors) of at least
two-thirds of the Directors then still in office who
were Directors on the effective date of this
Agreement or who were so approved (the "Continuing
Directors"); or (ii) the shareholders of the
Corporation shall approve an agreement or plan
providing for the Corporation to be merged,
consolidated or otherwise combined with, or for all
or substantially all its assets or stock to be
acquired by, another corporation, as a consequence of
which the former shareholders of the Corporation will
own, immediately after such merger, consolidation,
combination or acquisition, less than a majority of
the Voting Power of such surviving or acquiring
corporation or the parent thereof (a "Change of
Control Transaction"). (iii) For purposes of this
Agreement, "Disability" shall mean that Purchaser, at
the time notice of termination is given, has been
unable to
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substantially perform his/her duties under this
Agreement for a period of not less than four (4)
consecutive months as the result of his/her
incapacity due to physical or mental illness.
(iv) For purposes of this Agreement, "Good Reason"
shall mean the termination of employment by the
Executive upon the occurrence of any one of the
following events: (i) a material breach by the
Company of the Employment Agreement (defined below),
(ii) the Company's assignment to Executive of duties
inconsistent in any material respect with his
position (including status and reporting) or any
other diminution of authority, duties or
responsibilities, excluding an isolated action by the
Company not taken in bad faith and which is remedied
by the Company within 15 days after receipt of notice
from the Executive, (iii) a Change of Control, other
than a Change of Control Transaction that was
approved by a majority of the Continuing Directors,
or (iv) the relocation of the Executive's principal
place of employment to a location more than 50 miles
from his principal place of employment on the date of
the Employment Agreement (defined below)(unless such
relocation is closer to the Executive's Principal
residence).
(v) For the purposes of this Agreement, "Employment
Agreement" shall mean that certain employment
agreement by and between the Purchaser and the
Company dated as of January 1, 1999.
(vi) This Agreement shall not confer upon Purchaser
any right with respect to employment by the Company,
nor shall it interfere with or affect in any manner
the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's
employment or consulting relationship with the
Company, which right is hereby reserved, subject to
the provisions of the Employment Agreement.
3. STOCK SPLITS, ETC. If, from time to time during the term of
this Agreement: (i) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or (ii) there is any
consolidation, merger or sale of all, or substantially all, of the assets of the
Company; then, in such event, any and all new, substituted or additional
securities or other property to which Purchaser is entitled by reason of
Purchaser's ownership of the Stock shall be immediately subject to this
Agreement and be included in the word "Stock" for all purposes with the same
force and effect as the shares of Stock currently subject to the Repurchase
Option and other terms of this Agreement. While the aggregate repurchase price
payable upon execution of the Repurchase Option shall remain the same after each
such event, the repurchase price per share of Stock shall be appropriately
adjusted.
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4. RESTRICTION ON TRANSFER. Purchaser shall not, except as
contemplated by the Security Agreement, sell, transfer, pledge, hypothecate or
otherwise dispose of any shares of the Stock which remain subject to the
Repurchase Option. The Company shall not be required (i) to transfer on its
books any shares of Stock which shall have purportedly 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 purported transferee to whom such shares shall have been
purportedly transferred.
5. REGISTRATION RIGHTS
(a) Piggy Back Registration Rights. If at any time
the Company shall determine to register for its own
account or the account of others under the Securities
Act of 1933, as amended (the "Securities Act") any of
its equity securities, other than on Form S-8 or Form
S-4 or their then equivalents relating to shares of
Common Stock to be issued solely in connection with
any acquisition of any entity or business or shares
of Common Stock issuable in connection with stock
option or other employee benefit plans, it shall send
to the Purchaser written notice of such determination
and, if within 15 days after receipt of such notice,
the Purchaser shall so request in writing, the
Company shall use its best efforts to include in such
registration statement all or any part of the Stock
not then subject to the Repurchase Option the
Purchaser requests to be registered, except that if,
in connection with any offering involving an
underwriting of the Company's Common Stock to be
issued by the Company, the managing underwriter shall
impose a limitation on the number of shares of such
Common Stock which may be included in the
registration statement because, in its judgment, such
limitation is necessary to effect an orderly public
distribution, then the Company shall be obligated to
include in such registration statement only such
limited portion of the Stock with respect to which
the Purchaser has requested inclusion hereunder. Any
exclusion of the Stock shall be made PRO RATA among
the all holders of the Company's Common Stock with
similar registration rights seeking to include such
shares, in proportion to the number of such shares
sought to be included by such holders. No incidental
right under this Section 5(a) shall be construed to
limit any registration required under Section 5(b).
The obligations of the Company under this Section
5(a) may be waived at any time upon the written
consent of the Purchaser and shall expire on the 6th
anniversary of this Agreement.
(b) S-3 Registration Rights. In addition to the
rights provided the Purchaser and other holders of
the Company's Common Stock with registration rights
in Section 5(a) above, if the registration of the
Company's Common Stock under the Securities Act can
be effected on
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Form S-3 (or any similar form promulgated by the
Commission that permits secondary offerings of
securities), then upon the written request of
the Purchaser, the Company will, as expeditiously
as possible, use its best efforts to effect
qualification and registration under the Securities
Act on Form S-3 of all or such portion of the
Stock as the Purchaser shall specify; provided,
however, that the Company shall not be required to
effect more than one registration during any 12-month
period pursuant to this Section 5(b).
(d) The Company will use its best efforts to maintain
the effectiveness for up to 90 days (or such shorter
period of time as the underwriters need to complete
the distribution of the registered offering, or one
year in the case of a "shelf" registration statement
on Form S-3) of any registration statement pursuant
to which any of the Stock is being offered, and from
time to time will amend or supplement such
registration statement and the prospectus contained
therein to the extent necessary to comply with the
Securities Act and any applicable state securities
statute or regulation. The Company will also provide
the Purchaser with as many copies of the prospectus
contained in any such registration statement as he
may reasonably request.
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The share certificate evidencing the
Stock issued hereunder shall be endorsed with the
following legends (in addition to any legends
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A
COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
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(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in
order to ensure compliance with the restrictions
referred to herein, the Company may issue appropriate
"stop transfer" instructions to its transfer agent,
if any, and that, if the Company transfers its own
securities, it may make appropriate notations to the
same effect in its own records.
7. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection
with the purchase of the Stock, Purchaser hereby represents and warrants to the
Company as follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS.
Purchaser is purchasing the Stock solely for
Purchaser's own account for investment and not with a
view to or for sale in connection with any
distribution of the Stock or any portion thereof and
not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the
Stock or any portion thereof. Purchaser also
represents that the entire legal and beneficial
interest of the Stock is being purchased, and will be
held, for Purchaser's account only, and neither in
whole or in part for any other person. Purchaser
either (i) has a pre-existing business or personal
relationship with the Company or at least one of its
officers, directors or controlling persons, or (ii)
by reason of Purchaser's business or financial
experience (or the business or financial experience
of Purchaser's professional advisors who are
unaffiliated with and who are not compensated by the
Company or any affiliate or selling agent of the
Company, directly or indirectly), can be reasonably
assumed to have the capacity to evaluate the merits
and risks of an investment in the Company and to
protect Purchaser's own interests in connection with
this transaction.
(b) RESIDENCE. Purchaser's principal residence is
within the State of Connecticut and is located at the
address indicated beneath Purchaser's signature
below.
(c) INFORMATION CONCERNING COMPANY. Purchaser has
discussed the Company and its plans, operations and
financial condition with the Company's officers and
has received all such information as Purchaser has
deemed necessary and appropriate to enable Purchaser
to evaluate the financial risk inherent in making an
investment in the Stock. Purchaser has received
satisfactory and complete information concerning the
business and financial condition of the Company in
response to all inquiries in respect thereof.
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(d) ECONOMIC RISK. Purchaser realizes that the
purchase of the Stock will be a highly speculative
investment and involves a high degree of risk.
Purchaser is able, without impairing Purchaser's
financial condition, to hold the Stock for an
indefinite period of time and to suffer a complete
loss on Purchaser's investment.
(e) RESTRICTED SECURITIES. Purchaser understands and
acknowledges that:
(i) The Stock has not been registered under the
Securities Act of 1933, as amended, in reliance upon
a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed
herein.
(ii) The Stock must be held indefinitely unless it is
subsequently registered under the Securities Act or
unless an exemption from such registration is
otherwise available. In addition, Purchaser
understands that the certificate evidencing the Stock
will be imprinted with a legend which prohibits the
transfer of the Stock unless it is registered or such
registration is not required in the opinion of
counsel satisfactory to the Company.
(f) DISPOSITION UNDER RULE 144. Purchaser understands
that:
(i) The shares of Stock are restricted securities
within the meaning of Rule 144 promulgated under the
Securities Act; that the exemption from registration
under Rule 144 will not be available in any event for
at least one (1)) year from the date of payment of
the Note (or the applicable portion thereof relating
to such shares of Stock), and even then will not be
available unless (i) a public trading market then
exists for the Common Stock of the Company, (ii)
adequate information concerning the Company is then
available to the public, and (iii) other terms and
conditions of Rule 144 are complied with; and that
any sale of the Stock may be made only in limited
amounts in accordance with such terms and conditions
of Rule 144;
(ii) That at the time Purchaser wishes to sell the
Stock there may be no public market upon which to
make such a sale; 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, Purchaser would be precluded
from selling the Stock under Rule 144 even if the one
(1) year minimum holding period had been satisfied;
and
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(iii) In the event all of the requirements of Rule
144 are not satisfied, registration under the
Securities Act or compliance with Regulation A or
another registration exemption will be required;
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 or 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.
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in
any way limiting Purchaser's representations set
forth above, Purchaser further agrees that Purchaser
shall in no event make any disposition of all or any
portion of the Stock unless and until:
(i) Either:
(A) There is then in effect a Registration
Statement under the Securities Act covering
such proposed disposition, and such
disposition is made in accordance with said
Registration Statement; or
(B) (1) Purchaser shall have notified the
Company of the proposed disposition and
shall have furnished the Company with a
detailed statement of the circumstances
surrounding the proposed disposition; (2)
Purchaser shall have furnished the Company
with an opinion of Purchaser's counsel to
the effect that such disposition will not
require registration of such shares under
the Securities Act; and (3) such opinion of
Purchaser's counsel shall have been
concurred in by counsel for the Company, and
the Company shall have advised Purchaser of
such concurrence; and,
(ii) The shares of Stock proposed to be transferred
are no longer subject to the Repurchase Option set
forth in Section 2 hereof.
8. ARBITRATION.
(a) ELECTION OF ARBITRATION. At the option of either
party, any and all disputes or controversies whether
of law or fact and of any nature whatsoever arising
from or respecting this Agreement shall be decided by
arbitration by the American Arbitration Association
in accordance with the rules and regulations of that
Association.
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(b) SELECTION OF ARBITRATORS. The arbitrators shall
be selected as follows: In the event the Company and
Purchaser agree on one arbitrator, the arbitration
shall be conducted by such arbitrator. In the event
the Company and Purchaser do not so agree, the
Company and Purchaser shall each select one
independent, qualified arbitrator, and the two
arbitrators so selected shall select the third
arbitrator. The Company reserves the right to object
to any individual arbitrator who shall be employed by
or affiliated with a competing organization.
(c) CONDUCT OF ARBITRATION. Arbitration shall take
place in Stamford, Connecticut or any other location
mutually agreeable to the parties. Reasonable notice
of the time and place of arbitration shall be given
to all persons other than the parties as shall be
required by law, and such persons or their authorized
representatives shall have the right to attend and/or
participate in all the arbitration hearings in such
manner as the law shall require.
(d) SECRECY OF PROCEEDINGS. At the request of either
party, arbitration proceedings will be conducted in
the utmost secrecy; in such case all documents,
testimony and records shall be received, heard and
maintained by the arbitrators in secrecy under seal,
available for the inspection only of the Company or
Purchaser and their respective attorneys and their
respective experts, who shall agree in advance and in
writing to receive all such information
confidentially and to maintain such information in
secrecy until such information shall become generally
known.
(e) RELIEF. The arbitrators, who shall act by
majority vote, shall be able to decree any and all
relief of an equitable nature (including without
limitation such relief as temporary restraining
orders or temporary and/or permanent injunctions),
and shall also be able to award damages, with or
without an accounting and costs. The decree or
judgment of an award rendered by the arbitrators may
be entered in any court having jurisdiction thereof.
9. GOVERNING LAW. This Agreement shall be governed and
construed by the laws of the State of Connecticut without regard to its choice
of laws provisions.
10. MISCELLANEOUS.
(a) RIGHTS AS SHAREHOLDER. Subject to the provisions
and limitations hereof, Purchaser may, during the
term of this Agreement,
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exercise all rights and privileges of a shareholder
of the Company with respect to the Stock purchased
hereby.
(b) FURTHER ASSURANCES. The parties agree to execute
such further instruments and to take such further
action as may reasonably be necessary to carry out
the intent of this Agreement.
(c) NOTICES. Any notice required or permitted
hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery
(including by express courier) or upon deposit in the
United States Post Office, by First Class mail with
postage and fees prepaid, addressed to Purchaser at
his/her address shown on the Company's employment
records and to the Company at the address of its
principal corporate offices (attention: President) or
at such other address as such party may designate by
ten (10) days' advance written notice to the other
party.
(d) ASSIGNMENT. This Agreement shall inure to the
benefit of the successors and assigns of the Company
and, subject to the restrictions on transfer herein
set forth, be binding upon Purchaser, his/her heirs,
executors, administrators, successors and assigns. No
party to this Agreement may assign its rights and
obligations under this Agreement without the prior
written consent of the other party.
(e) AUTHORIZATION OF TRANSFER. Purchaser hereby
authorizes and directs the Secretary or transfer
agent of the Company to transfer the Stock as to
which the Repurchase Option has been exercised from
Purchaser to the Company or the Company's assignees.
(f) WAIVER. Either party's failure to enforce any
provision or provisions of this Agreement shall not
in any way be construed as a waiver of any such
provision or provisions, nor prevent that party
thereafter from enforcing each and every other
provision of this Agreement. The rights granted both
parties herein are cumulative and shall not
constitute a waiver of either party's right to assert
all other legal remedies available to it under the
circumstances.
(g) ADVICE OF COUNSEL. Purchaser has reviewed this
Agreement in its entirety, has had an opportunity to
obtain the advice of counsel prior to executing this
Agreement and fully understands all provisions
hereof.
(h) COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an
original and all of which together shall constitute
one instrument.
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(i) ENTIRE AGREEMENT. This Agreement, the Employment
Agreement, the Note and the Security Agreement
represent the entire agreement between the parties
with respect to the purchase of Common Stock by
Purchaser and the vesting thereof, supersedes all
prior understandings and agreements, written and
oral, with regard thereto, and satisfies all of the
Company's obligations to Purchaser with regard to the
issuance or sale of securities. This Agreement may be
modified or amended only in writing signed by both
parties.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
SMARTSERV ONLINE, INC., ▇▇▇▇▇ ▇. ▇▇▇▇▇
a Delaware corporation
By:___________________________ __________________________________
Title:________________________
(Address)
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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SCHEDULE 1
Pursuant to Section 1 of the Agreement, the Purchaser received _______
Additional Shares as a result of a Private Placement of _______ shares of
__________ by the Company on _______, 1999.
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exhibit A
PROMISSORY NOTE
$453,139.01 Stamford, Connecticut
December 29, 1998
FOR VALUE RECEIVED, ▇▇▇▇▇ ▇. ▇▇▇▇▇ promises to pay to SmartServ
Online, Inc., a Delaware corporation (the "Company"), or order, the principal
sum of Four Hundred Fifty Three Thousand One Hundred Thirty Nine Dollars and One
Cent ($453,139.01), together with interest on the unpaid principal hereof from
the date hereof at the rate of 6.75% [such interest equal to one point below the
prime rate as of the date of this Note] per annum, compounded annually.
Notwithstanding the foregoing, the principal amount of the Note shall be subject
to an automatic reduction to the Adjustment Principal Amount pursuant to the
terms of the Purchase Agreement (as defined below).
This Note shall be due and payable in full on December 29, 2003 (the
"Due Date"), unless accelerated as provided herein. Upon the termination of the
Executive from the Company for Cause, the whole unpaid balance on this Note of
principal and interest shall become immediately due at the option of the holder
of this Note. In the event that the Executive terminates his employment with the
Company for Good Reason, the whole unpaid balance on this Note of principal and
interest shall be due and payable upon the earlier of the Due Date or six (6)
months from the Date of Termination. Payments of principal and interest shall be
made in lawful money of the United States of America.
The undersigned may at any time prepay without penalty all or any
portion of the principal or interest owing hereunder.
This Note is subject to the terms of that certain Restricted Stock
Purchase Agreement by and between the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇, dated as of
December 29, 1998 (the "Purchase Agreement") and capitalized terms used herein
which are not otherwise defined shall have the meanings ascribed to them in the
Purchase Agreement. This Note is secured by a pledge of the Company's Common
Stock under the terms of a Security Agreement of even date herewith (the
"Security Agreement") and is subject to all the provisions thereof.
This Note is intended to evidence a non-recourse obligation to secure
the purchase of the Company's Common Stock pursuant to the Purchase Agreement.
Accordingly, this Note shall be without recourse against ▇▇▇▇▇ ▇. ▇▇▇▇▇ and no
person entitled to payment under this Note shall have any right to his assets
other than the collateral given for this Note and earnings attributable to such
collateral or the investment of such collateral, if any.
This Note shall be governed and construed in accordance with the laws
of the State of Connecticut.
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
exhibit B
SECURITY AGREEMENT
This Security Agreement is made as of December 29, 1998 between
SmartServ Online, Inc., a Delaware corporation ("Pledgee"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇
("Pledgor").
Recitals
Pursuant to Pledgor's purchase of Stock under the Restricted Stock
Purchase Agreement dated December 29, 1998, between Pledgor and Pledgee (the
"Purchase Agreement"), and Pledgor's election to pay for such Stock with his
promissory note (the "Note"), Pledgor has purchased 206,080 shares of Pledgee's
Common Stock (the "Shares") at a price of $2.19885 per share, for a total
purchase price of $453,139.01. The Note and the obligations thereunder are as
set forth in Exhibit A to the Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Purchase Agreement, Pledgor,
pursuant to the Connecticut Uniform Commercial Code, hereby pledges all of such
Shares (herein sometimes referred to as the "Collateral") represented by
certificate number ______, duly endorsed in blank or with executed stock powers,
and herewith delivers said certificate to the Pledgee, who shall hold said
certificate subject to the terms and conditions of this Security Agreement.
The pledged stock shall be held by the Pledgee as security for the
repayment of the Note, and the Pledgee shall not encumber or dispose of such
Shares except in accordance with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
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delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities the Pledgor and the Pledgee shall cooperate and
execute such documents as are reasonable so as to provide for the substitution
of such Collateral and, upon such substitution, references to "Shares" in this
Security Agreement shall include the substituted shares of capital stock of
Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the pledged Shares, such rights and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgee shall be immediately delivered to Pledgee, to be held under the terms
of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth in the
Restricted Stock Purchase Agreement or contained in this
Security Agreement for a period of 10 days after written
notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall have the
right to accelerate payment of the Note upon notice to Pledgor, and Pledgee
shall thereafter be entitled to pursue its remedies under the Connecticut
Uniform Commercial Code.
7. Release of Collateral. There shall be released from this pledge a
portion of the pledged Shares held by Pledgee here under upon payments of the
principal of the Note. The number of the pledged Shares which shall be released
shall be that number of full Shares which bears the same proportion to the
initial number of Shares pledged hereunder as the payment of principal bears to
the initial full principal amount (or in the event that the initial principal
amount on the Note has been adjusted pursuant to Section 1 of the Purchase
Agreement, the Adjusted Principal Amount) of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining pledged stock
shall be promptly delivered to Pledgor, subject to the provisions for prior
release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
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11. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
12. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
13. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of Connecticut without regard to its
conflict of laws provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" ▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________________
(signature)
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
"PLEDGEE" SMARTSERV ONLINE, INC.
a Delaware corporation
By:________________________________________
Title:_____________________________________
