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EXHIBIT 10.8
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT(this "Agreement") is made as
of March 6, 1996 (the "Effective Date") by and between JT STORAGE, INC., a
Delaware corporation ("JT Storage"), and DAVID T. MITCHELL ("Purchaser"), with
reference to the following:
RECITALS
A. JT Storage desires to advance its growth, development and
financial success by providing additional incentives to its key executive
personnel by assisting them to acquire shares of JT Storage's common stock (the
"Common Stock"), and to benefit directly from JT Storage's growth, development
and financial success.
B. JT Storage desires to sell to Purchaser on the Effective Date,
and Purchaser desires to subscribe for and purchase from JT Storage at such
time, certain shares of Common Stock as set forth in this Agreement.
C. In order to induce JT Storage to sell such shares, Purchaser
desires to have such shares subject to the restrictions and interests created
by this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
covenants and conditions contained herein, the parties agree as follows:
1. SALE AND PURCHASE OF STOCK. JT Storage hereby agrees to sell
to Purchaser, subject to the conditions and restrictions contained in this
Agreement, and Purchaser hereby agrees to purchase from JT Storage, 1,000,000
shares (the "Shares") of Common Stock at a price of $1.00 per Share for an
aggregate purchase price of $1,000,000 (the "Purchase Price"). Purchaser shall
pay the Purchase Price by issuing a secured promissory note attached hereto as
Exhibit A (the "Note") to JT Storage for $1,000,000. The Note shall be secured
by a pledge of the Shares, in conjunction with which Purchaser shall execute a
Stock Pledge Agreement (the "Pledge Agreement") attached hereto as Exhibit B.
The Note and Pledge Agreement, Joint Escrow Instructions attached hereto as
Exhibit C (the "Escrow Instructions"), and two copies of a Stock Assignment
Separate from Certificate (the "Stock Assignment") attached hereto as Exhibit D
shall be delivered to JT Storage on the Effective Date.
2. VESTING. The Shares purchased pursuant to Section 1 hereof
will vest over a five-year period from February 21, 1996 (the "Vesting
Commencement Date"), with 1,000,000 Shares vesting in one lump sum on February
21, 2001. Notwithstanding the foregoing, in the event that the merger of Atari
Corporation with and into JT Storage (the "Merger") closes, the
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Shares purchased pursuant to Section 1 hereof will vest over a four-year period
from the Vesting Commencement Date, with 125,000 Shares vesting in one lump sum
on August 21, 1996 and with the balance vesting in 42 successive monthly
installments of 20,833-1/3 Shares each commencing September 21, 1996 and
thereafter on the twenty-first day of each successive month through and until
February 21, 2000. JT Storage's repurchase option as described in Section 4
hereof shall be limited to those Shares which have not so vested (herein
referred to as "Unvested Shares") in accordance with this Section 2 at the time
of termination of the Purchaser's employment with JT Storage. Accordingly,
such repurchase right shall not apply to any Shares which have vested (herein
referred to as "Vested Shares") as of the time of termination of Purchaser's
employment with JT Storage.
3. RESTRICTION ON TRANSFER OF THE UNVESTED SHARES. Except as
otherwise specifically provided herein, Purchaser may not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of any of the Unvested Shares,
or any right or interest therein. Any purported sale, transfer (including
involuntary transfers initiated by operation of legal process), hypothecation
or disposition of any of the Unvested Shares or any right or interest therein,
except in strict compliance with the terms and conditions of this Agreement,
shall be null and void. Vested Shares not required to remain pledged with JT
Storage pursuant to the Pledge Agreement shall not be subject to the
restrictions on transfer set forth in this Section 3.
4. REPURCHASE OPTION UPON TERMINATION.
(a) JT STORAGE'S REPURCHASE OPTION. In the event that
Purchaser's employment by JT Storage terminates for any reason (including,
without limitation, death, disability, retirement, voluntary or involuntary
resignation or dismissal, with or without cause) prior to the fifth anniversary
of the Vesting Commencement Date, JT Storage or its nominee(s) shall have the
right and option (the "Repurchase Option") to purchase from Purchaser all or
any portion of the Unvested Shares for a period of 60 days after the date of
such termination (the "Termination Date"). The amount of Unvested Shares shall
be determined as of the Termination Date.
(b) REPURCHASE PRICE UNDER REPURCHASE OPTION. The
purchase price for each Share to be purchased pursuant to the Repurchase Option
(the "Repurchase Price") shall be $1.00 per Share. The Company may apply
unpaid amounts owing under the Note against the Repurchase Price.
(c) EXERCISE OF REPURCHASE OPTION. The Repurchase Option
shall be exercised by JT Storage or its nominee(s) by delivery, within the
60-day period specified in Section 4(a) above, to Purchaser of (i) a written
notice specifying the number of Shares to be purchased and (ii) a check in the
amount of the Repurchase Price, calculated as provided in this Section 4, for
all Shares to be purchased.
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5. DIVIDENDS, SPLITS AND CERTAIN REORGANIZATIONS. If, from time
to time during the term of this Agreement:
(a) 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 JT Storage; or
(b) There is any consolidation, merger or sale of all, or
substantially all, of the assets of JT Storage;
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 Shares shall be immediately subject to this Agreement and be
included in the word "Shares" (as either Vested Shares or Unvested Shares, as
appropriate) for all purposes with the same force and effect as the Shares
presently subject to this Agreement. All such securities or other property so
included in the word "Shares" shall be delivered to the Escrow Agent (as
hereinafter defined) and held pursuant to the Escrow Instructions in accordance
with Section 7 hereof. While the total Repurchase Price pursuant to the
Repurchase Option shall remain the same after each such event, the Repurchase
Price per Share upon exercise of the Repurchase Option shall be appropriately
adjusted, as necessary.
6. CHANGE OF CONTROL. Notwithstanding the foregoing provisions
of Section 2 of this Agreement, in the event there occurs a Change of Control
(as defined below) and within three (3) years thereafter any one or more of the
following events occurs:
(a) JT Storage terminates Purchaser's employment with JT
Storage, other than by reason of Purchaser's willful failure to discharge his
duties of employment to JT Storage; or
(b) Purchaser is assigned a different employment position
with JT Storage involving a significant reduction in responsibility, stature or
compensation compared to Purchaser's position immediately preceding such Change
of Control; or
(c) Purchaser's continuation of employment with JT
Storage is conditioned on Purchaser's place of principal employment being
relocated by more than fifty (50) miles from such place of principal employment
immediately preceding such Change of Control;
then, in any such event, any Unvested Shares shall automatically become Vested
Shares and JT Storage's repurchase right with respect thereto shall accordingly
terminate. For purposes of this paragraph, "Change of Control" shall mean
either of the following events:
(i) Any "person" (as that term is defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under such Act),
directly or indirectly, of securities of JT Storage
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representing more than 50% of the total voting power represented by the then
outstanding voting securities of JT Storage; provided, however, that the
foregoing shall not apply with respect to any such "person" (excluding Atari
Corporation) who, at the date of this Agreement, is such "beneficial owner" of
securities of JT Storage representing at least 20% of the total voting power
represented by the presently outstanding voting securities of JT Storage; or
(ii) The stockholders of JT Storage shall approve
a merger or consolidation of JT Storage with any other corporation other than a
merger or consolidation which would result in the voting securities of JT
Storage outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the
voting securities of JT Storage or such surviving entity outstanding
immediately after such merger or consolidation, as applicable, or the
stockholders of JT Storage approve a plan of complete liquidation of JT Storage
or an agreement for the sale or disposition by JT Storage of all or
substantially all of the assets of JT Storage.
Notwithstanding the foregoing, the Merger shall not constitute a
Change of Control for purposes of this Section 6.
7. LIMITATION ON PAYMENTS. In the event that the automatic
vesting of all Unvested Shares provided for under Section 6 of this Agreement
(i) constitutes a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section 7 would be subject to the excise tax imposed by Section 4999 of the
Code, then the Unvested Shares shall become automatically vested either:
(a) as to all of the Unvested Shares, or
(b) such lesser number of Unvested Shares which would
result in no portion of value of such acceleration being subject to excise tax
under Section 4999 of the Code,
whichever of the foregoing, taking into account the applicable federal, state,
and local employment taxes, income taxes, and the excise tax imposed by Section
4999 of the Code, results in the receipt by the Purchaser, on an after-tax
basis, of the greatest benefit of such acceleration, notwithstanding that the
value of all or some portion of such benefit may be taxable under Section 4999
of the Code.
All determinations required to be made under this Section 7
shall be made in writing by JT Storage's independent public accountants (the
"Accounting Firm"). JT Storage shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Purchaser.
Notice must be given to the Accounting Firm within fifteen (15) business days
after an event causing automatic vesting of Unvested Shares under Section 6 of
this Agreement. All fees and expenses of the Accounting Firm shall be borne
solely by JT Storage. The Accounting Firm's determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code).
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8. ESCROW. In the event the Note is repaid prior to the
termination of the Repurchase Option and the certificates representing Unvested
Shares are released pursuant to the Pledge Agreement, as security for the
faithful performance of the terms of this Agreement and to insure the
availability for delivery of the Unvested Shares upon exercise of the
Repurchase Option herein provided for, Purchaser agrees to deliver to, and
deposit with, the Secretary of JT Storage, or such other person designated by
JT Storage (the "Escrow Agent"), as the Escrow Agent in this transaction, two
copies of the Stock Assignment duly endorsed (with date and number of shares
blank), together with the certificate or certificates evidencing the Unvested
Shares. Said documents are to held by the Escrow Agent and delivered by the
Escrow Agent pursuant to the Escrow Instructions.
9. PERMITTED TRANSFERS. Purchaser may, at any time or times,
transfer any or all of the Unvested Shares only: (a) inter vivos to Purchaser's
spouse or issue, or to a trust for their benefit, (b) upon Purchaser's death,
to any person in accordance with the laws of descent and/or testamentary
distribution (such persons described in clauses (a) and (b) hereof are
collectively referred to herein as "Permitted Transferee"), provided, however,
that such Unvested Shares shall not be transferred until the Permitted
Transferee executes a valid undertaking to JT Storage to the effect that the
Unvested Shares so transferred shall thereafter remain subject to all of the
provisions of this Agreement (including the Repurchase Option in the event
Purchaser's employment with JT Storage is terminated for any reason prior to
the fifth anniversary of the Vesting Commencement Date) as though the Permitted
Transferee were a party to this Agreement, bound in every respect in the same
way as Purchaser. Vested Shares not required to remain pledged with JT Storage
pursuant to the Pledge Agreement shall not be subject to the restrictions on
transfer set forth in this Section 9.
10. RIGHTS AS SHAREHOLDER. Subject to compliance with the
provisions of this Agreement and of the Pledge Agreement, Purchaser shall
exercise all rights and privileges of the registered holder of the Shares while
they are held by JT Storage pursuant to the Pledge Agreement or the Escrow
Instructions, and shall be entitled to receive any dividend or other
distribution thereof; provided, however, that any dividends or distributions
with respect to the Shares in the form of shares of capital stock of JT Storage
(whether by way of stock dividend, stock split or recapitalization) shall be
subject to this Agreement, the Pledge Agreement and the Escrow Instructions.
11. INVESTMENT REPRESENTATIONS. Purchaser represents and warrants
to JT Storage as follows:
(a) PURCHASER'S OWN ACCOUNT. Purchaser is acquiring the
Shares for Purchaser's own account and not with a view to or for sale in
connection with any distribution of the Shares.
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(b) ACCESS TO INFORMATION. Purchaser (i) is familiar
with the business of JT Storage, (ii) has had an opportunity to discuss with
representatives of JT Storage the condition of any prospects for the continued
operation and financing of JT Storage and such other matters as Purchaser has
deemed appropriate in considering whether to invest in the Shares and (iii) has
been provided access to all available information about JT Storage requested by
Purchaser.
(c) SHARES NOT REGISTERED. Purchaser understands that
the Shares have not been registered under the Act or registered or qualified
under the securities laws of any state and that Purchaser may not sell or
otherwise transfer the Shares unless they are subsequently registered under the
Act and registered or qualified under applicable state securities laws, or
unless an exemption is available which permits sale or other transfer without
such registration and qualification.
12. UNDERWRITERS' LOCK-UP. The Purchaser agrees that, in
connection with any underwritten offering of Common Stock of JT Storage
pursuant to a registration statement under the Securities Act of 1933, the
Purchaser shall withhold from the market any or all of the Shares for a period,
not to exceed one hundred and eighty (180) days, which the managing underwriter
reasonably determines is necessary in order to effect the underwritten public
offering.
13. NO CONTRACT OF EMPLOYMENT. Purchaser acknowledges and agrees
that this Agreement shall not be construed to give Purchaser any right to be
retained in the employ of JT Storage, and that the right and power of JT
Storage to dismiss or discharge Purchaser (with or without cause) is strictly
reserved.
14. MISCELLANEOUS.
(a) LEGENDS ON CERTIFICATES. Any and all certificates
now or hereafter issued evidencing the Shares shall have endorsed upon them a
legend substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS UPON TRANSFER AND A PURCHASE OPTION IN FAVOR OF THE
ISSUER AND May NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THAT CERTAIN RESTRICTED STOCK PURCHASE
AGREEMENT DATED AS OF MARCH 6, 1996 BY AND BETWEEN JT STORAGE, INC., A
DELAWARE CORPORATION, AND DAVID T. MITCHELL, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF JT STORAGE."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
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(b) FURTHER ASSURANCES. Each party hereto agrees to
perform any further acts and execute and deliver any document which may be
reasonably necessary to carry out the intent of this Agreement.
(c) BINDING AGREEMENT. This Agreement shall bind and
inure to the benefit of the successors and assigns of JT Storage and the
personal representatives, heirs and legatees of Purchaser.
(d) OTHER RESTRICTIONS ON TRANSFERS. The restrictions on
transfer set forth in this Agreement are in addition to any and all
restrictions imposed pursuant to any applicable state or federal law or
regulation.
(e) NOTICES. Any notice required or permitted to be
given pursuant to this Agreement shall be in writing and shall be deemed given
upon personal delivery or, if mailed, upon the expiration of 48 hours after
mailing by any form of United States mail requiring a return receipt, addressed
(i) to Purchaser at the address set forth on the signature page hereof and (ii)
to JT Storage, Inc. at 166 Baypointe Parkway, San Jose, California 95134. A
party may change address by giving written notice to the other parties setting
forth the new address for the giving of notices pursuant to this Agreement.
(f) AMENDMENTS. This Agreement may be amended only by
the written agreement and consent of the parties hereof.
(g) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California without
regard to the conflicts of laws rules thereof.
(h) DISPUTES. In the event of any dispute among the
parties arising out of this Agreement, the prevailing party shall be entitled
to recover from the nonprevailing party the reasonable expenses of the
prevailing party, including, without limitation, reasonable attorneys' fees.
(i) ENTIRE AGREEMENT. This Agreement, including the
agreements referred to herein, constitutes the entire agreement and
understanding among the parties pertaining to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, relating
thereto.
(j) HEADINGS. Introductory headings at the beginning of
each section of this Agreement are solely for the convenience of the parties
and shall not be deemed to be a limitation upon, or description of, the
contents of any such section.
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(k) COUNTERPARTS. This Agreement may be executed in
counterparts, both of which, when taken together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF,the parties hereto have duly executed this
Agreement as of the day and year first above written.
JT STORAGE:
JT STORAGE, INC.,
a Delaware corporation
By: /s/ W. Virginia Walker
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W. Virginia Walker
Executive Vice President,
Finance and Administration,
Chief Financial Officer
PURCHASER:
/s/ D. T. Mitchell
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David T. Mitchell
Address: c/o JT Storage, Inc.
166 Baypointe Parkway
San Jose, CA 95134
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EXHIBIT A
SECURED PROMISSORY NOTE
$1,000,000 March 6, 1996
FOR VALUE RECEIVED,the undersigned ("Borrower") hereby promises to pay
to JT Storage, Inc., a Delaware corporation ("Payee"), the principal sum of One
Million Dollars ($1,000,000), together with interest at 5.45% per annum,
compounded annually, on the unpaid balance of such principal amount from the
date hereof. Principal payments of $250,000 plus all accrued interest hereon
shall be paid in four installments on each of the first four anniversary dates
hereof.
Payments of principal and interest on this Secured Promissory Note
(this "Promissory Note") shall be made in legal tender of the United States of
America and shall be made at the office of Payee at 166 Baypointe Parkway, San
Jose, California 95134 or at such other place as Payee shall have designated in
writing to Borrower. If the date set for any payment on this Promissory Note
is a Saturday, Sunday or legal holiday, then such payment shall be due on the
next succeeding business day.
As of the date hereof, Borrower has purchased 1,000,000 shares (the
"Shares") of the common stock of Payee, pursuant to the terms of that certain
Restricted Stock Purchase Agreement dated as of March 6, 1996 by and between
Borrower and Payee. This Promissory Note shall be secured by the Shares as
provided in that certain Stock Pledge Agreement (the "Pledge Agreement") of
even date herewith by and between Payee and Borrower.
The principal of, and accrued interest on, this Promissory Note may be
prepaid at any time, in whole or in part, without premium or penalty.
In the event Borrower shall (i) fail to make complete payment of any
installment of principal or accrued interest when due under this Promissory
Note or (ii) commit a breach of, or default under, the Pledge Agreement, Payee
may accelerate this Promissory Note and declare the entire unpaid principal
amount of this Promissory Note and all accrued and unpaid interest thereon to
be immediately due and payable and, thereupon, the unpaid principal amount and
all such accrued and unpaid interest shall become and be immediately due and
payable, without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor or other notices or demands of any kind
(all of which are hereby expressly waived by Borrower). The failure of Payee
to accelerate this Promissory Note shall not constitute a waiver of any of
Payee's rights under this Promissory Note as long as Borrower's default under
this Promissory Note or breach of or default under the Pledge Agreement
continues.
The provisions of this Promissory Note shall be governed by, and
construed in accordance with, the laws of the State of California without
regard to the conflicts of law rules thereof. In the event that Payee is
required to take any action to collect or otherwise enforce
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payment of this Promissory Note, Borrower agrees to pay such attorneys' fees
and court costs as Payee may incur as a result thereof, whether or not suit is
commenced.
IN WITNESS WHEREOF,this Promissory Note has been duly executed and
delivered by Borrower on the date first above written.
BORROWER
/s/ D. T. Mitchell
----------------------------------------
David T. Mitchell
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EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made as of
March 6, 1996 by and between DAVID T. MITCHELL, as pledgor ("Pledgor"), and JT
STORAGE, INC., a Delaware corporation, as pledgee ("Pledgee"), with reference
to the following:
RECITALS
A. Pursuant to that certain Restricted Stock Purchase Agreement
(the "Purchase Agreement") of even date herewith, by and between Pledgor and
Pledge, Pledgor has agreed to purchase 1,000,000 shares (the "Shares") of the
common stock of Pledgee.
B. Pursuant to the terms of that certain Secured Promissory Note
in the original principal amount of $1,000,000 (the "Note") of even date
herewith delivered by Pledgor to Pledgee, Pledgor has agreed to make payments
of principal and interest to Pledgee as provided in the Note.
C. Pursuant to the terms of the Note, Pledgor shall execute this
Pledge Agreement to assure compliance with the terms and conditions of the
Note.
D. In order to induce Pledgee to make the loan evidenced by the
Note, Pledgor desires to have the Shares held subject to this Pledge Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties hereto agree as
follows:
1. GRANT OF SECURITY INTEREST. Pledgor hereby grants to Pledgee
a security interest in the Shares, pledges and hypothecates the Shares to
Pledgee, and deposits the certificates evidencing the Shares (the
"Certificates") with Pledgee as collateral security for the payment by Pledgor
of the Note and the full, faithful and timely performance by Pledgor of all of
its other obligations under the Note and this Pledge Agreement. The
Certificates, together with a stock assignment duly executed in blank with
signatures appropriately guaranteed or witnessed, are being retained by
Pledgee, as the pledgeholder for the Shares. Notwithstanding the foregoing,
the Pledgee shall, from time to time at the request of the Pledgor, cause to be
delivered to the Pledgor one or more certificates which, together with all
other such certificates theretofore delivered pursuant to this sentence,
evidences that portion of the Shares which is equal to the portion of the full
purchase price for all of the Shares then actually paid to the
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Pledgee by the Pledgor (i.e., the portion determined by adding the cash payment
amount set forth in Section 1 of the Purchase Agreement to all principal
payments on the Note which have theretofore been made by the Pledgor at the
time of such request), subject in all cases to the provisions of Section 7 of
the Purchase Agreement requiring the continued escrow of Unvested Shares.
2. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor represents
and warrants to Pledgee that the Shares are free and clear of all claims,
mortgages, pledges, liens and other encumbrances of any nature whatsoever,
except any restriction upon sale and distribution imposed by the Securities Act
of 1933, as amended (the "Act"), or applicable state securities laws, and by
the Subscription Agreement.
3. VOTING OF SHARES IN THE ABSENCE OF DEFAULT. So long as there
shall exist no Event of Default as provided in Section 9 hereof, Pledgor shall
be entitled to exercise, as Pledgor deems proper but in a manner not
inconsistent with the terms hereof, Pledgor's rights to voting power with
respect to the Shares. Pledgor shall not be entitled to vote the Shares at any
time that there exists an Event of Default as provided in Section 9 hereof.
4. DIVIDENDS AND OTHER DISTRIBUTIONS. So long as there shall
exist no Event of Default as provided in Section 9 hereof, Pledgor shall be
entitled to receive any dividend or other distribution with respect to the
Shares except as provided in Section 5 of this Pledge Agreement. If there
exists an Event of Default, such dividend or distribution shall be delivered to
Pledgee to be held as additional collateral security under this Pledge
Agreement.
5. STOCK DIVIDENDS. In the event of any distribution in shares
of capital stock of Pledgee (whether by way of stock dividend, stock split,
recapitalization or otherwise) with respect to the Shares, the shares to be
distributed to Pledgor shall be delivered to Pledgee, together with an
appropriately executed stock certificate and an appropriately executed stock
power, to be held as additional collateral security under this Pledge
Agreement.
6. PLEDGEE'S DUTIES. So long as Pledgee exercises reasonable
care with respect to the Shares in its possession, Pledgee shall have no
liability for any loss or damage to such Shares, and in no event shall Pledgee
have liability for any diminution in value of the Shares occasioned by economic
or market conditions or events. Pledgee shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Shares in
its possession are accorded treatment substantially equal to that which Pledgee
accords its own property, it being understood that Pledgee shall not have any
responsibility under this Pledge Agreement for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to the Shares, whether or not Pledgee has or is deemed
to have knowledge of such matters, or (b) taking any necessary steps to
preserve rights against any person or entity with respect to the Shares.
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7. SALE OF COLLATERAL. Upon the occurrence of any Event of
Default as provided in Section 9 hereof, Pledgee shall have all the rights and
remedies of a secured party on default under the Uniform Commercial Code in
effect in the State of California at that time and also may, without notice,
except as specified below, at its option sell, resell, assign, transfer and
deliver all or any part of the Shares, for cash or on credit for future
delivery. Upon such sale, Pledgee, unless prohibited by a provision of any
applicable statute, may purchase all or any part of the Shares being sold, free
from, and discharged of, all trusts, claims, rights of redemption and equities
of Pledgor. If the proceeds of any sale of the Shares shall be insufficient to
pay all amounts due under the Note, including collection costs and expenses of
sale, Pledgor shall remain obligated and liable for any deficiency with respect
thereto. If, at any time when Pledgee shall determine to exercise its rights
to sell all or any part of the Shares pursuant to this Section 7, such Shares,
or the part thereof to be sold, shall not be effectively registered under the
Act as then in effect or any similar statute then in force, subject to the
provisions of Section 8 hereof, Pledgee, in its sole and absolute discretion,
is hereby expressly authorized to sell such Shares, or any part thereof, by
private sale in such manner and under such circumstances as Pledgee may deem
necessary or advisable in order that such sale may be effected legally without
such registration. Without limiting the generality of the foregoing, Pledgee,
in its sole and absolute discretion, may approach and negotiate with a
restricted number of potential purchasers to effect such sale or restrict such
sale to a purchaser or purchasers who will represent and agree that such
purchaser or purchasers are purchasing for its or their own account, for
investment only, and not with a view to the distribution or sale of such Shares
or any part thereof. Any such sale shall be deemed to be a sale made in a
commercially reasonable manner within the meaning of the California Uniform
commercial Code, and Pledgor hereby consents and agrees that Pledgee shall
incur no responsibility or liability for selling all or any part of the Shares
at a price which is not unreasonably low, notwithstanding the possibility that
a substantially higher price might be realized if the sale were public.
Pledgee shall not be obligated to make any sale of the Shares regardless of
notice of sale having been given. Pledgee may adjourn any-public or private
sale from time to time by announcement at the time and place fixed therefor,
and any such sale may, without further notice, be made at the time and place to
which it was so adjourned.
8. REDEMPTION OF COLLATERAL. Notwithstanding any other provision
of this Pledge Agreement, upon the occurrence of an Event of Default as
provided in Section 9 hereof, Pledgee shall give Pledgor written notice of the
time and place of any public sale or of the time on or after which any private
sale or other disposition is to be made at least ten days before the date fixed
for any public sale or the day on or after which any private sale or other
disposition is to be made. Pledgor agrees that, to the extent notice of sale
shall be required by law, such ten days' notice shall constitute reasonable
notification. This notice shall also specify the aggregate outstanding
monetary obligations of Pledgor to Pledgee at the date of such notice (the
"Total Obligation"). At any time during such ten-day period, Pledgor shall
have the right to redeem the Shares by the payment by certified or bank
cashier's check of an amount equal to the Total Obligation.
3.
14
9. EVENTS OF DEFAULT. At the option of Pledgee, the principal
balance of the Note and all accrued and unpaid interest thereon, and all other
obligations of Pledgor to Pledgee thereunder and hereunder, shall become and be
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor or other notices or
demands of any kind (all of which are hereby expressly waived by Pledgor), upon
the occurrence of any of the events set out below ("Events of Default"):
(a) Pledgor shall fail to make complete payment or
prepayment of principal or interest when due in accordance with the terms of
the Note; or
(b) Pledgor shall commit a breach or default of any of
his obligations under this Pledge Agreement.
10. TERMINATION. This Pledge Agreement shall terminate upon the
payment in full of the principal amount and all accrued interest thereon under
the Note. Upon termination of this Pledge Agreement, Pledgor shall be entitled
to the return of the Certificates and any other collateral security then held
by Pledgee pursuant to Section 4 or Section 5 of this Pledge Agreement.
11. CUMULATION OF REMEDIES; WAIVER OF RIGHTS. The remedies
provided herein in favor of Pledgee shall not be deemed exclusive but shall be
cumulative and shall be in addition to all of the remedies in favor of Pledgee
existing at law or in equity. Nothing in this Pledge Agreement shall require
Pledgee to proceed against or exhaust its remedies against the Shares before
proceeding against Pledgor or executing against any other security or
collateral securing performance of Pledgor's obligations to Pledgee under the
Note or this Pledge Agreement. No delay on the part of Pledgee in exercising
any of its options, powers or rights, or the partial or single exercise
thereof, shall constitute a waiver thereof.
12. EXECUTION OF ENDORSEMENTS, ASSIGNMENTS, ETC. Upon the
occurrence of an Event of Default as provided in Section 9 hereof, Pledgee
shall have the right for and in the name, place and stead of Pledgor to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Shares and any other shares of the capital stock
of Pledgee or other property which is held by Pledgee as collateral security
pursuant to Section 4 or Section 5 of this Pledge Agreement.
13. MISCELLANEOUS.
(a) FURTHER DOCUMENTS. Pledgor agrees to execute,
acknowledge and deliver any documents or instruments which Pledgee may request
in order to better evidence or effectuate this Pledge Agreement and the
transactions contemplated hereby.
4.
15
(b) BINDING AGREEMENT. This Pledge Agreement shall bind
and inure to the benefit of the parties hereto and their respective successors,
assigns, personal representatives, heirs and legatees. Notwithstanding the
foregoing, Pledgor may not assign any of his rights or delegate any of his
duties hereunder without the prior written consent of Pledgee. The parties
hereto acknowledge that Pledgee shall have the right to assign, with absolute
discretion, any or all of its rights and obligations under this Pledge
Agreement to any bank(s) or lending institution(s) as collateral security.
(c) NOTICE. Any notice required or permitted to be given
pursuant to this Pledge Agreement shall be in writing and shall be deemed given
upon personal delivery, or if mailed, upon the expiration of 48 hours after
mailing by any form of United States mail requiring a return receipt, addressed
(i) to Pledgor, at the address set forth on the signature page hereof and (ii)
to Pledgee at 166 Baypointe Parkway, San Jose, California 95134. A party may
change its address by giving written notice to the other party setting forth
the new address for the giving of notices pursuant to this Pledge Agreement.
(d) AMENDMENTS. This Pledge Agreement may be amended
only by-the written agreement and consent of the parties hereto.
(e) GOVERNING LAW. This Pledge Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California, without regard to the conflicts of laws rules thereof.
(f) DISPUTES. In the event of any dispute between the
parties arising out of this Pledge Agreement, the prevailing party shall be
entitled to receive from the nonprevailing party the reasonable expenses of the
prevailing party including, without limitation, reasonable attorneys' fees.
(g) ENTIRE AGREEMENT. This Pledge Agreement, including
the agreements referred to herein, constitutes the entire agreement and
understanding among the parties pertaining to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, relating
thereto.
5.
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(h) HEADINGS. Introductory headings at the beginning of
each section of this Pledge Agreement are solely for the convenience of the
parties and shall not be deemed to be a limitation upon, or description of, the
contents of any such section and shall not affect the meanings or construction
of the terms and provisions of this Pledge Agreement.
IN WITNESS WHEREOF,the parties hereto have duly executed this Pledge
Agreement as of the day and year first above written.
PLEDGOR:
/s/ D. T. Mitchell
---------------------------------------------
David T. Mitchell
Address: c/o JT Storage, Inc.
166 Baypointe Parkway
San Jose, CA 95134
PLEDGEE:
JT Storage, Inc.
a Delaware corporation
By: /s/ W. Virginia Walker
----------------------------------------
W. Virginia Walker
Executive Vice President,
Finance and Administration
and Chief Financial Officer
166 Baypointe Parkway
San Jose, California 95134
6.
17
EXHIBIT C
JOINT ESCROW INSTRUCTIONS
Secretary March 6, 1996
JT Storage, Inc.
166 Baypointe Parkway
San Jose, California 95134
Dear Sir or Madame:
As Escrow Agent for both JT Storage, Inc., a Delaware corporation
("Corporation"), and the undersigned purchaser of stock of the Corporation
("Purchaser"), you are hereby authorized and directed to hold the documents,
including stock certificates and stock assignments, delivered to you pursuant
to the terms of that certain Restricted Stock Purchase Agreement (the
"Agreement"), dated as of even date, to which a copy of these Joint Escrow
Instructions is attached as Exhibit C, in accordance with the following
instructions:
1. In the event the Corporation and/or any nominee or assignee of
the Corporation (referred to collectively for convenience herein as the
"Corporation") exercises the Repurchase Option set forth in the Agreement, the
Corporation shall give to Purchaser and you a written notice specifying the
number of shares of stock to be purchased, the purchase price, and the time for
a closing hereunder at the principal office of the Corporation. Purchaser and
the Corporation hereby irrevocably authorize and direct you to close the
transaction contemplated by such notice in accordance with the terms of said
notice.
2. At the closing, you are directed to (a) date the stock
assignments necessary for the transfer in question, (b) fill in the number of
shares being transferred and (c) deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against
the simultaneous delivery to you of the purchase price (by check) for the
number of shares of stock being purchased pursuant to the exercise of the
Repurchase Option.
3. Purchaser irrevocably authorizes the Corporation to deposit
with you any certificates evidencing shares of stock to be held by you
hereunder and any additions and substitutions to said shares as defined in the
Agreement. Purchaser does hereby irrevocably constitute and appoint you as his
or her attorney-in-fact and agent for the term of this escrow to execute with
respect to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this paragraph 3, Purchaser shall exercise all
rights and privileges of a shareholder of the Corporation while the shares of
stock are held by you.
1.
18
4. From time to time upon written request of the Purchaser you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Corporation's Repurchase Option
and are not required to remain pledged with JT Storage pursuant to the Pledge
Agreement. Within 30 days after the expiration of the 60-day period referred
to in paragraph 3 of the Agreement, you will deliver to Purchaser a certificate
or certificates representing the aggregate number of shares sold and issued
pursuant to the Agreement and not purchased by the Corporation or its assignees
pursuant to exercise of the Repurchase Option.
5. Notwithstanding the foregoing paragraphs 1, 2, 3 and 4, your
duties and obligations as Escrow Agent shall not commence until such time as
the certificates representing the shares of stock of the Corporation subject to
these instructions pursuant to the Agreement together with two duly executed
stock assignments separate from certificate are delivered to you. It is also
understood and agreed that you may, on behalf of the Corporation, concurrent
with your duties hereunder, hold such certificates and stock assignments as
collateral for Purchaser's obligations pursuant to a Secured Promissory Note of
even date herewith in the aggregate principal amount of $1,000,000.
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying on any instrument reasonably believed by you to be genuine and to have
been signed or presented by the proper party or parties. You shall not be
personally liable for any act you may do or omit to do hereunder as Escrow
Agent or as attorney-in-fact for Purchaser while acting in good faith and in
the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or decree,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding-any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under
the statute of limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
2.
19
11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary to advise you properly in connection with
your obligations hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor. The Corporation shall be
obligated to reimburse you for your expenses in this connection.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be Secretary of the Corporation or if you shall
resign by written notice to each party. In the event of any such termination,
the Corporation shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the shares
of stock held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said shares
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of arbitrators
or of a court of competent jurisdiction after the time for appeal has expired
and no appeal has been perfected, but you shall be under no duty whatsoever to
institute or defend any such proceedings.
15. Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed given upon personal delivery, if mailed, or
upon the expiration of 48 hours after mailing by any form of United States mail
requiring a return receipt, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
CORPORATION: JT Storage, Inc.
166 Baypointe Parkway
San Jose, California 95134
PURCHASER: David T. Mitchell
Address: c/o JT Storage, Inc.
166 Baypointe Parkway
San Jose, CA 95134
ESCROW AGENT: Secretary of JT Storage
166 Baypointe Parkway
San Jose, California 95134
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
3.
20
17. This instrument shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns.
Very truly yours,
JT STORAGE, INC.,
a Delaware corporation
By: /s/ W. Virginia Walker
------------------------------------
W. Virginia Walker
Executive Vice President,
Finance and Administration and
Chief Executive Officer
PURCHASER:
/s/ D. T. Mitchell
----------------------------------------
David T. Mitchell
ESCROW AGENT:
/s/ W. Virginia Walker
- -------------------------------
W. Virginia Walker, Secretary
4.
21
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Restricted Stock
Purchase Agreement and Stock Pledge Agreement, each dated as of March 6, 1996
by and between JT STORAGE, INC., a Delaware corporation (the "Corporation"),
and the undersigned, DAVID T. MITCHELL hereby sells, assigns and transfers unto
(_________________________) Shares of the common stock of the Corporation
standing in the undersigned's name on the books of the Corporation represented
by Certificate No. ______ herewith, and does 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: ___________________ [do not date]
/s/ D.T. Mitchell
____________________________________
David T. Mitchell