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EXHIBIT 10.11
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of January 5, 1996 (the "Effective Date") by and between JT Storage, Inc., a
Delaware corporation ("JT Storage"), and W. Virginia Walker ("Purchaser"), with
reference to the following:
R E C I T A L S:
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.
A G R E E M E N T:
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, 250,000
shares (the "Shares") of Common Stock at a price of $.25 per Share for an
aggregate purchase price of $62,500 (the "Purchase Price"). Purchaser shall pay
$12,500 of the Purchase Price by personal check payable to JT Storage and shall
issue a secured promissory note attached hereto as Exhibit A (the "Note") to JT
Storage for $50,000, constituting the balance of the Purchase Price. 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 check, Note and Pledge Agreement, Joint Escrow Instructions
attached hereto as Exhibit C (the "Escrow Instructions"), and two copies of a
Stock
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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 four-year period from Purchaser's November 9, 1995 commencement of
employment (the "Vesting Commencement Date"), with 31,250 Shares vesting in one
lump sum on May 9, 1996 and with the balance vesting in 42 successive monthly
installments of 5,208-1/3 shares each commencing June 9, 1996 and thereafter on
the ninth day of each successive month through and until November 9, 1999. 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
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Repurchase Option (the "Repurchase Price") shall be $.25 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.
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
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(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 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" 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.
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
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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).
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)
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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.
(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,
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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 JANUARY 5, 1996 BY AND BETWEEN JT STORAGE, INC., A DELAWARE
CORPORATION, AND W. VIRGINIA WALKER, 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.
(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
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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 its 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.
(k) Counterparts. This Agreement may be executed in
counterparts, both of which, when taken together, shall constitute one and the
same instrument.
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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/ D. T. Mitchell
--------------------------------------
David T. Mitchell, President
and Chief Executive Officer
PURCHASER:
/s/ W. Virginia Walker
-----------------------------------------
W. Virginia Walker
Address: 3443 Clover Oak Dr.
--------------------------------
San Jose, CA 95148
--------------------------------
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EXHIBIT A
SECURED PROMISSORY NOTE
$50,000 January 5, 1996
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to pay
to JT Storage, Inc., a Delaware corporation ("Payee"), the principal sum of
Fifty Thousand Dollars ($50,000), together with interest at 5.91% per annum,
compounded annually, on the unpaid balance of such principal amount from the
date hereof. Principal payments of $12,500 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 250,000 shares (the
"Shares") of the common stock of Payee, pursuant to the terms of that certain
Restricted Stock Purchase Agreement dated as of January 5, 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
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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 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/ W. Virginia Walker
-----------------------------------------
W. Virginia Walker
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EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made as of
January 5, 1996 by and between W. Virginia Walker, as pledgor ("Pledgor"), and
JT Storage, Inc., a Delaware corporation, as pledgee ("Pledgee"), with reference
to the following:
R E C I T A L S:
A. Pursuant to that certain Restricted Stock Purchase Agreement (the
"Purchase Agreement") of even date herewith, by and between Pledgor and Pledgee,
Pledgor has agreed to purchase 250,000 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 $50,000 (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.
A G R E E M E N T:
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
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actually paid to the 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
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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.
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
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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.
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
4.
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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.
(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.
5.
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(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.
(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/ W. Virginia Walker
-----------------------------------------
W. Virginia Walker
Address: 3443 Clover Oak Dr.
---------------------------------
San Jose, CA 95148
---------------------------------
PLEDGEE:
JT STORAGE, INC.,
a Delaware corporation
By: /s/ D. T. Mitchell
--------------------------------------
David T. Mitchell, President
and Chief Executive Officer
166 Baypointe Parkway
San Jose, California 95134
6.
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EXHIBIT C
JOINT ESCROW INSTRUCTIONS
Secretary January 5, 1996
JT Storage, Inc.
166 Baypointe Parkway
San Jose, California 95134
Dear Sir:
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
19
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.
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 $50,000.
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
2.
20
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.
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
3.
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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: W. Virginia Walker
Address: 3443 Clover Oak Dr.
---------------------------------
San Jose, CA 95148
---------------------------------
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.
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/ D. T. Mitchell
--------------------------------------
David T. Mitchell, President
and Chief Executive Officer
PURCHASER:
/s/ W. Virginia Walker
-----------------------------------------
W. Virginia Walker
ESCROW AGENT:
/s/ W. Virginia Walker
- ----------------------------------
W. Virginia Walker, Secretary
4.
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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 January 5, 1996
by and between JT Storage, Inc., a Delaware corporation (the "Corporation"), and
the undersigned, W. Virginia Walker 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/ W. Virginia Walker
----------------------------------------
W. Virginia Walker