Exhibit 10.11(a)
AVESTA TECHNOLOGIES, INC.
STOCK RESTRICTION AGREEMENT
AGREEMENT, made as of the 19th day of December, 1996, by and among Avesta
Technologies, Inc., a Delaware corporation (the "Company"), and Kam Saifi (the
"Stockholder").
WHEREAS, the Stockholder is the holder of an aggregate of 2,191,948 shares
of common stock, $.01 par value, of the Company (the "Common Stock");
WHEREAS, the Company desires to place certain restrictions on the
disposition of shares of Common Stock held by the Stockholder and the parties
are willing to execute this Agreement and to be bound by the provisions hereof;
AREAS, the Company has entered into a certain Series A Preferred Stock and
Warrant Purchase Agreement (the "Purchase Agreement") dated December 10, 1996
between the Company and the entities listed on the Schedule of Purchasers
attached as Exhibit A to the Purchase Agreement (the "Purchasers"); and
WHEREAS, it is a condition to the obligations of the Purchasers under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
stockholders, the parties hereby agree with each other as follows:
1. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Stock" shall mean and include all shares of Common Stock, and
all other securities of the Company which may be issued in exchange for or in
respect of shares of Common Stock (whether by way of stock split, stock
dividend, combination, reclassification, reorganization or any other means).
(b) "Shares" shall mean and include all shares of Stock owned by the
Stockholder.
(c) As used in the context of the Stockholder's employment with the
Company, "For Cause" shall mean and include (i) a material breach of the
Noncompetition and Nonsolicitation Agreement or the Nondisclosure and
Developments Agreement between the Company and the Stockholder, (ii) conviction
of a felony, a crime of moral turpitude or any crime against the Company, (iii)
repeated substance abuse, (iv) habitual failure to report to work or (v) failure
to follow the directions of the Board of Directors after thirty (30) days'
written notice by the Board of Directors of such initial failure.
2. Prohibited Transfers.
(a) The Stockholder shall not sell, assign, transfer, pledge,
hypothecate, mortgage, encumber or dispose of all or any of his Shares except
(i) Vested Shares, as defined in Section 3(b), (ii) to the Company or (iii) as
expressly provided in this Agreement. Notwithstanding the foregoing, the
Stockholder may transfer all or any of his Shares (i) by way of gift to any
member of his family or to any trust for the benefit of any such family member
or the Stockholder, provided that any such transferee shall agree in writing
with the Company, as a condition to such transfer, to be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Stockholder, or (ii) by will or the laws of descent and distribution, in which
event each such transferee shall be bound by all of the provisions of this
Agreement to the same extent as if such transferee were the Stockholder. As used
herein, the word "family" shall include any spouse, lineal ancestor or
descendant, brother or sister.
(b) The Stockholder agrees that in connection with any underwritten
public offering of Common Stock, upon the request of the Company or the
principal underwriter managing such public offering, the Shares may not be sold,
offered for sale or otherwise disposed of without the prior written consent of
the Company or such underwriter, as the case may be, for at least 180 days after
the effectiveness of the registration statement filed in connection with such
offering, or such longer period of time as the Board of Directors of the Company
may determine if all of the Company's directors, officers and affiliates agree
to be similarly bound. This Section 2(b) shall expressly survive a termination
of this Agreement pursuant to Section 4 hereof.
3. Option of Company Conditioned Upon Termination of Employment or Sale of
Series A Preferred Stock.
(a) If the Stockholder shall for any reason, including, without
limitation, death, disability or involuntary removal with or without cause,
cease to be employed in any capacity by the Company or any of its subsidiaries,
the Company may within 120 days from the date upon which the Stockholder shall
so cease to be employed, exercise its option under this Section 3 to purchase
from the Stockholder all of his Shares (all Shares being subject to equitable
adjustment for any stock split, stock dividend, combination of shares or the
like and based upon Common Stock or Common Stock equivalents) other than any of
such Shares which now are or hereafter become Vested Shares, as defined in
Section 3(b).
(b) "Vested Shares" shall mean the following amounts of the Shares
on the following dates: twenty-five percent (25%) of the Shares shall vest on
the first anniversary of the date of the date of the Purchase Agreement, and
1/48th of the Shares shall vest on the first day of each month following the
anniversary of the date of the Purchase Agreement, provided that, if the
Stockholder's termination is For Cause, no such additional Shares shall become
Vested Shares after the date upon which the Stockholder shall cease to be
employed in any capacity by the Company or any of its subsidiaries. If the
Stockholder's employment by the Company is terminated other than For Cause, the
Stockholder's Vested Shares shall include Shares that would have vested had the
Stockholder remained employed for an additional twelve (12) months from the
employment termination date. In addition, upon an Acquisition (as defined in the
Company's 1996 Stock Plan) of the Company then immediately prior to the
consummation of
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such Acquisition, such portion of the Shares as would have vested pursuant to
this Section 3(b) if the Stockholder had continued to be employed with the
Company during the twelve (12) month period immediately following any of the
foregoing events shall become Vested Shares.
(c) In addition to the other option provided in this Section 3, the
Stockholder agrees that if the Second Closing of the sale of Series A Preferred
Stock pursuant to the Purchase Agreement, or any amendment thereto, does not
occur, the Company shall within 60 days from the last date on which such Second
Closing could have occurred exercise its option under this Section 3 to purchase
from the Stockholder 52,360 of his Shares (all Shares being subject to equitable
adjustment for any stock split, stock dividend, combination of shares or the
like and based upon Common Stock or Common Stock equivalents); provided,
however, that if the Second Closing occurs but the Company sells less than all
shares of the Series A Preferred Stock authorized to be sold at such Second
Closing, this repurchase option shall be adjusted so that it shall apply to
52,360 shares multiplied by a fraction (a) the numerator of which shall be the
number of shares sold in the Second Closing and (b) the denominator of which is
the total number of shares authorized for sale in the Second Closing.
(d) The purchase price of any Shares for which the Company exercises
its option under this Section 3 (the "Option Price") shall be $.0000037 per
Share (such price being subject to equitable adjustment for any stock split,
stock dividend, combination of shares or the like and based upon Common Stock or
Common Stock equivalents).
(e) If the Company desires to exercise its option to purchase, it
shall do so by communicating in writing its election to purchase to the
Stockholder, which communication shall state the number of Shares the Company is
electing to purchase and the Option Price and shall be delivered in person or
mailed to the Stockholder at the address set forth in accordance with Section 8
below within the 120-day period provided for in Section 3(a). The sale of the
Shares to be sold to the Company pursuant to this Section 3 shall be made at the
offices of the Company on the 20th day following the date of the Company's
written election to purchase (or if such 20th day is not a business day, then on
the next succeeding business day). Such sale shall be effected by the
Stockholder's delivery to the Company of a certificate or certificates
evidencing the Shares to be purchased by it, duly endorsed for transfer to the
Company, against payment to the Stockholder by the Company of the Option Price
for each Share to be purchased by the Company.
4. Term. This Agreement shall terminate on the fourth anniversary of the
date of this Agreement.
5. Failure to Deliver Shares. If the Stockholder becomes obligated to sell
any Shares to the Company under this Agreement and fails to deliver such Shares
in accordance with the terms of this Agreement, the Company, may, at its option,
in addition to all other remedies it may have, send to the Stockholder the
purchase price for such Shares as is herein specified. Thereupon, the Company
upon written notice to the Stockholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of the Company a new certificate or
certificates representing such Shares, and thereupon all of the Stockholder's
rights in and to such Shares shall terminate.
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6. Specific Enforcement. The Stockholder expressly agrees that the Company
will be irreparably damaged if this Agreement is not specifically enforced. Upon
a breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by the Stockholder, the Company shall, in addition to all other
remedies, be entitled to a temporary or permanent injunction, without showing
any actual damage, and/or a decree for specific performance, in accordance with
the provisions hereof.
7. Legend. Each certificate evidencing any of the Shares shall bear a
legend substantially as follows:
"The shares represented by this certificate are subject to
restrictions on transfer and may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of except
in accordance with and subject to all the terms and conditions of a
certain Stock Restriction Agreement dated as of December 19, 1996, a
copy of which the Company will furnish to the holder of this
certificate upon request and without charge."
8. Notices. Notices given hereunder shall be deemed to have been duly
given on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on the applicable signature page hereto
or such other address as the addressee may subsequently notify the other parties
of in writing.
9. Entire Agreement and Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and neither
this Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the parties hereto. To the
extent any term or other provision of any other indenture, agreement or
instrument by which any party hereto is bound conflicts with this Agreement,
this Agreement shall have precedence over such conflicting term or provision.
10. Governing Law; Successors and Assigns. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
and shall in all respects be interpreted, enforced and governed under the
internal and domestic laws of such state, without giving effect to the
principles of conflicts of laws of such state. Any claims or legal actions by
one party against the other arising out of the relationship between the parties
contemplated herein (whether or not arising under this Agreement) shall be
governed by the laws of the State of New York and shall be commenced and
maintained in any state or federal court located in such state, and the parties
hereby submit to the jurisdiction and venue of any such court. This Agreement
shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns of the parties.
11. Waivers. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
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12. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
13. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
14. Continuation of Employment. Nothing in this Agreement shall create an
obligation on the Company to continue the Stockholder's employment with the
Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
COMPANY:
AVESTA TECHNOLOGIES, INC.
By: /s/ David Arbeitel
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Title: Vice President
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Address: 2041 Winding Brook Way
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Scotch Plains, NJ 07076
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STOCKHOLDER:
/s/ Kam Saifi
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Address: 2041 Winding Brook Way
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Scotch Plains, NJ 07076
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