XXXXXXXX.XXX, INC.
STOCK ISSUANCE AGREEMENT
AGREEMENT made this 25th day of July, 2005, by and between Xxxxxxxx.xxx, Inc., a
Delaware corporation, and Xxxxx Xxxxx, a Participant in the Corporation's
Amended and Restated 2000 Stock Incentive Plan.
All capitalized terms in this Agreement shall have the meaning assigned to them
in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
1. PURCHASE. Participant hereby purchases 7,000 shares of Common Stock (the
"Purchased Shares") pursuant to the provisions of the Stock Issuance Program at
the purchase price of $0.0001 per share (the "Purchase Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the Corporation,
Participant shall pay the Purchase Price for the Purchased Shares in cash or
check payable to the Corporation and shall deliver 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, if any, as the Corporation exercises the
Repurchase Right, Participant (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 this Agreement.
4. ESCROW. The Corporation shall have the right to hold the Purchased Shares in
escrow until those shares have vested in accordance with the Vesting Schedule.
5. COMPLIANCE WITH LAW. Under no circumstances shall shares of Common Stock or
other assets be issued or delivered to Participant pursuant to the provisions of
this Agreement unless, in the opinion of counsel for the Corporation or its
successors, there shall have been compliance with all applicable requirements of
Federal and state securities laws, all applicable listing requirements of any
stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is at the time listed for trading and all other requirements of law
or of any regulatory bodies having jurisdiction over such issuance and delivery.
B. TRANSFER RESTRICTIONS
1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer, Participant shall
not transfer, assign, encumber or otherwise dispose of any of the Purchased
Shares while they are subject to the Repurchase Right.
2. RESTRICTIVE LEGEND. The stock certificate for the Purchased Shares shall be
endorsed with the following restrictive legend:
"The shares represented by this certificate are unvested and subject to certain
repurchase rights 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 as of July 25, 2005
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."
3. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation) to whom 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 the Repurchase Right to the same
extent such shares would be so subject if retained by Participant.
C. REPURCHASE RIGHT
1. GRANT. The Corporation is hereby granted the right (the "Repurchase Right"),
exercisable at any time during the ninety (90)-day period following the date
Participant ceases for any reason to remain in Service, provided, however, if,
prior to such cessation of Service the Corporation enters into an agreement to
effect a Change in Control (the "Change in Control Agreement"), then the
Repurchase Right shall not become exercisable unless the Change in Control
Agreement is terminated, and thereafter, the Corporation shall have a ninety
(90)-day period during which to exercise the Repurchase Right. During the
applicable 90-day period when the Repurchase Right is exercisable (the "Exercise
Period"), the Corporation may repurchase at the Purchase Price all or any
portion of the Purchased Shares in which Participant is not, at such time vested
in accordance with the Vesting Schedule (such shares to be hereinafter referred
to as the "Unvested Shares").
2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be exercisable
by written notice delivered to each Owner of the Unvested Shares prior to the
expiration of the 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 equivalent
(including the cancellation of any purchase-money indebtedness), an amount equal
to the Purchase Price previously paid for the Unvested Shares to be repurchased
from Owner. Notwithstanding the foregoing, in the event the Corporation fails to
provide written notice of exercise or waiver of the Repurchase Right, the
Repurchase Right shall be deemed exercised on the 90th day of the Exercise
Period, and Owner shall waive all rights to the Unvested Shares.
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3. VESTING SCHEDULE AND TERMINATION OF THE REPURCHASE RIGHT. The Purchased
Shares shall vest and the Repurchase Right shall terminate and cease to be
exercisable with respect to the Purchased Shares immediately prior to the
consummation of any Change in Control pursuant to a Change in Control Agreement.
4. RECAPITALIZATION. Any new, substituted or additional securities or other
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
or into which the Purchase Shares are converted 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 securities 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, that the aggregate Purchase Price shall remain the
same.
D. SPECIAL TAX ELECTION
1. SECTION 83(B) ELECTION. 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 Purchase 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. Participant 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 this Agreement. Even
if the fair market value of the Purchased Shares on the date of this Agreement
equals the Purchase Price paid (and thus no income is reportable), the election
must be made to avoid adverse tax consequences in the future. THE FORM FOR
MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS
THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD
WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS
LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE
SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
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E. GENERAL PROVISIONS
1. ASSIGNMENT. The Corporation may assign the Repurchase 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 Plan
shall confer upon Participant 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
Participant) or of Participant, which rights are hereby expressly reserved by
each, to terminate Participant's Service at any time for any reason, with or
without cause, subject to any other written agreements between the Company and
the Participant.
3. NOTICES. Any notice required to be given under this Agreement shall be 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 the
Repurchase Right shall not constitute a waiver of any other repurchase rights
that may subsequently arise under the provisions of this Agreement or any other
agreement between the Corporation and Participant. 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 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.
6. PARTICIPANT UNDERTAKING. Participant hereby agrees to take whatever
additional 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 Participant or the Purchased
Shares pursuant to the provisions of this Agreement.
7. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the entire contract
between the parties hereto with regard to the subject matter hereof. This
Agreement is made pursuant to the provisions of the Plan and shall, except as
otherwise provided in this Agreement, be construed in conformity with the terms
of the Plan.
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8. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without resort to that
State's conflict-of-laws rules.
9. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and upon Participant, Participant's assigns and the legal representatives, heirs
and legatees of Participant'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.
10. WITHHOLDING. No later than the date as of which an amount first becomes
includible in the gross income of Participant for federal income tax purposes
with respect to any Common Stock, Participant shall pay to the Corporation, or
make arrangements satisfactory to the Corporation regarding the payment of, all
federal, state, local and foreign taxes that are required by applicable laws and
regulations to be withheld with respect to such amount. The obligations of the
Corporation under this Agreement shall be conditioned on compliance by
Participant with this Paragraph E.10, and the Participant shall, to the extent
permitted by law, have the right to satisfy any withholding obligations
hereunder by having any such taxes deducted from any payment otherwise due to
Participant, including the delivery of the Common Stock that gives rise to the
withholding requirement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
XXXXXXXX.XXX, INC.
/s/ Xxxx Xxxxxxxx
---------------------------
Address: 000 Xxxxxx Xxxxxx, 0xx Xxxxx Xxx Xxxx, XX 00000
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
---------------------------
Address:
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EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _____________________ hereby sell(s), assign(s) and
transfer(s) unto Xxxxxxxx.xxx, Inc. (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 Participant.
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EXHIBIT II
SECTION 83(b) TAX 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:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is _________
shares of the common stock of Xxxxxxxx.xxx, Inc.
(3) The property was issued on _______________________.
(4) The taxable year in which the election is being made is the calendar year
________.
(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, subject
to a limited exception, for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses upon a Change in Control.
(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 Xxxxxxxx.xxx, Inc. for whom
taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed on ________.
------------------------
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 Issuance Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2)
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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.
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Issuance Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall mean, notwithstanding any definition of such term
contained in the Plan, the occurrence of any of the following events:
(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (x)
the then outstanding shares of Common Stock of the Corporation (the "Outstanding
Common Stock") or (y) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change in Control: (A) any acquisition directly from the Corporation, (B) any
acquisition by the Corporation, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Corporation or any corporation
controlled by the Corporation, or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
paragraph (ii) below; or
(ii) Consummation of a reorganization, merger, consolidation, sale or other
disposition of all or substantially all of the assets of the Corporation or an
acquisition of the assets of another entity (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Common Stock and Outstanding Voting Securities immediately prior
to consummation of such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors (or other
governing body, if applicable), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity which as a
result of such transaction owns the Corporation or all or substantially all of
the Corporation's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to the
consummation of such Business Combination of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust)) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then outstanding shares of common
stock of the entity resulting from such Business Combination or of the combined
voting power of the then outstanding voting securities of
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such entity, except to the extent that such ownership existed prior to the
consummation of the Business Combination, and (C) at least a majority of the
members of the board of directors (or other governing body, if applicable) of
the entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iii) Approval by the shareholders of the Corporation of a complete liquidation
or dissolution of the Corporation.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation's common stock.
F. Corporation shall mean Xxxxxxxx.xxx, Inc., a Delaware corporation.
G. Owner shall mean Participant and all subsequent holders of the Purchased
Shares who derive their chain of ownership through a Permitted Transfer from
Participant.
H. 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.
I. Participant shall mean the person to whom the Purchased Shares are issued
under the Stock Issuance Program.
J. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased
Shares, provided and only if Participant obtains the Corporation's prior written
consent to such transfer, or (ii) a transfer of title to the Purchased Shares
effected pursuant to Participant's will or the laws of intestate succession
following Participant's death.
K. Plan shall mean the Corporation's Amended and Restated 2000 Stock Incentive
Plan.
L. Plan Administrator shall mean either the Board or a committee of the Board
acting in its administrative capacity under the Plan.
M. Purchase Price shall have the meaning assigned to such term in Paragraph A.1.
N. Purchased Shares shall have the meaning assigned to such term in Paragraph
A.1.
O. Recapitalization shall mean any change in corporate capitalization
(including, but not limited to, a change in the number of shares of Common Stock
outstanding), such as a stock split or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Corporation
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(including any extraordinary cash or stock dividend), any reorganization
(whether or not such reorganization comes within the definition of such term in
Section 368 of the Code) or any partial or complete liquidation of the Company.
P. Repurchase Right shall mean the right granted to the Corporation in
accordance with Article C.
Q. Service shall mean the Participant'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 a consultant.
R. Stock Issuance Program shall mean the Stock Issuance Program under the Plan.
S. 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.
T. Vesting Schedule shall mean the vesting schedule specified in Paragraph C.3.
U. Unvested Shares shall have the meaning assigned to such term in Paragraph
C.1.
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