EXHIBIT 10.13
[PlaceWare Letterhead]
July 7, 2000
Mr. James Hogan
PlaceWare, Inc.
295 North Bernardo Ave.
Mountain View, CA 94043
Re: Loan and Loan Forgiveness Agreement
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Dear Jim:
The following Letter Agreement (the "Agreement") sets forth the terms of an
agreement between James A. Hogan ("you") and PlaceWare, Inc., a Delaware
corporation (the "Company"). Under the terms of this Agreement, the Company
agrees to make a loan to you in the amount of $295,000 (the "Loan"), and in
connection with the repayment of the Loan, the Company shall forgive the final
$50,000 principal payment, shall forgive the payment of any interest accrued
under the Loan and shall provide a bonus payment to you to compensate you for
any tax liability and for any accountant's fees that are incurred in connection
with the Loan and interest forgiveness provisions (the "Forgiveness
Provisions"). In consideration of the Loan and the Forgiveness Provisions, you
hereby agree to release the Company from any present or future claims related to
the Company's failure to timely file an 83(b) election with the Internal Revenue
Service on your behalf ("the 83(b) Event"), which contributed to your increased
tax liability, as calculated on the attached Schedule C.
1. Loan amount
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The Company hereby agrees to make a secured loan to you in the principal
amount of $295,000, to be paid out in a series of payments as provided on the
Loan Payment Schedule attached hereto as Exhibit A to this Agreement (the "Loan
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Payment Schedule"), and shall be repaid quarterly over a three year period, also
as provided on the Loan Payment Schedule. The Loan shall be made pursuant to
the terms of a Secured Promissory Note, attached hereto as Exhibit B (the
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"Note"), and shall be secured by 125,000 shares of Common Stock of the Company
owned by you. The interest rate on the Loan shall be the lowest applicable
federate rate in effect for April 2001.
On the date on which a payment is to be made pursuant to the Loan Payment
Schedule, or on the date five (5) business days prior to the date on which any
payment attributed to your increased tax liability becomes due as set forth on
Schedule C, the Company shall release from the Company's security interest such
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minimum whole number of shares as is necessary to make such payment based on the
fair market value of such shares. The fair market value of the shares shall
equal the closing price of the shares of stock as provided three (3) business
days prior to the date on which the payment is to be made, or in the event that
the shares are not publicly traded, as determined by the Board of Directors of
the Company.
Upon your written request, not to be made more than once every three (3)
months, commencing on the date three (3) months from the Company's first Loan
payment, the Company shall adjust the number of your shares subject to the
Company's security interest. The written request shall specify a date upon
which the adjustment is to be made, no sooner than five (5) business days from
which the request is made. The number of shares subject to the Company's
security interest shall be adjusted such that the
Mr. James Hogan
July 7, 2000
aggregate fair market value of the shares shall be equal to two times the value
of the outstanding principal and interest. The fair market value of the shares
shall equal the closing price of the shares of stock as provided three (3) days
prior to the date on which the adjustment is to be made.
2. Forgiveness of debt
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As described on the Loan Payment Schedule, you shall begin payment of the
Loan in April 2002 and shall make a final payment in January 2004, leaving an
outstanding principal balance of $50,000 to be due under the Loan. In
connection with this Agreement, the Company shall forgive this final outstanding
principal balance.
3. Forgiveness of interest payment
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Under the terms of the Note, each quarterly repayment shall consist of
principal and accrued interest. In connection with each repayment, the Company
agrees to forgive any portion of the repayment that is attributed to accrued
interest.
4. Bonus payment
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The Company also agrees to pay a one-time bonus to you to reimburse you for
any increased tax liabilities that you may incur in connection with the
Forgiveness Provisions in Sections 2 and 3 of this Agreement. The bonus payment
shall be made in such amount that the net payment to you, after standard payroll
deductions and required withholdings, shall reimburse you for your increased tax
liability incurred in connection these forgiveness provisions, as communicated
to the Company in a detailed statement from your accountant.
5. Reimbursement of accountant fees
--------------------------------
The Company hereby agrees pay any fees charged by your accountant for
services rendered in connection with the 83(b) Event and the review and
negotiation of this Agreement.
6. Satisfaction and release of claims
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In consideration of the above Loan and Forgiveness Provisions, you hereby
agree to release the Company, its directors, officers, employees or agents, and
any person acting on behalf of or at the request of the Company, from any
liability in connection with the 83(b) Event, and agree to refrain from bringing
any claims, actions and suits, for any and all losses, damages, costs, expenses
and liabilities whatsoever, which you may sustain or incur in connection with
said 83(b) Event. You acknowledge that you have had the opportunity to consult
with both tax and legal advisors regarding this Agreement and the tax
liabilities described in Exhibit C, that such exhibit was prepared by such
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advisors, and that you are releasing the Company from any and all liability
associated with the 83(b) Event after consultation with such advisors and not in
reliance on any representations made by the Company, its directors, officers,
employees or agents.
2
Mr. James Hogan
July 7, 2000
7. Survival
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In the event of a "change in control" event, as defined below, or in the
event that your employment with the Company is terminated, the Loan shall
continue to be repaid to the surviving company pursuant to the schedule
disclosed in the Note. A "change in control" event shall mean (a) a
consolidation or merger of the Company or any affiliated corporation with or
into any other corporation or corporations, (b) the sale of all or substantially
all of the assets or business of the Company in one or more related
transactions, (c) a transaction or series of related transactions (other than a
public offering of the Company's securities) in which the stockholders of the
Company immediately prior to such transaction(s) own, as a result of such
transaction(s), less than a majority of the voting securities of the successor
or surviving corporation, which shall not be the Company in the event of a
consolidation or merger, immediately thereafter, or (d) a transaction or series
of related transactions (other than a public offering of the Company's
securities) in which the Company issued shares representing more than 50% of the
voting power of the Company immediately after giving effect to such transaction.
8. Attorney's Fees
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In the event a suit, action , or other proceeding of any nature whatsoever
is instituted to enforce or interpret any provision of this Agreement or in
connection with any dispute hereunder, the prevailing party shall be entitled to
recover its attorneys', paralegals' accountants', and other experts' fees and
all other fees, costs, and expenses actually incurred and reasonably necessary
in connection therewith, as determined by the court at trial or on any appeal or
review, in addition to all other amounts provided by law.
If the foregoing terms meet with your approval, please countersign this
letter and return it to the Company at your earliest convenience, such that we
may make the appropriate arrangements in connection with the bonus payment and
Loan to be made on your behalf. Again, we apologize for any inconvenience that
you may have been caused, and look forward to maintaining our strong
relationship in the future.
Sincerely,
PlaceWare, Inc.
By: /s/ Barry James Folsom
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Barry James Folsom
President and Chief Executive Officer
Accepted and agreed:
/s/ James A. Hogan
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James A. Hogan
Date: July 7, 2000
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3
Exhibit A
LOAN PAYMENT SCHEDULE
Exhibit A
LOAN PAYMENT SCHEDULE
Date Principal Due Loan Balance
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$295,000
Apr-02 $(180,000) 115,000
Jun-02 (10,000) 105,000
Sep-02 (10,000) 95,000
Jan-02 (10,000) 85,000
Apr-03 (10,000) 75,000
Jun-03 (10,000) 65,000
Sep-03 (10,000) 55,000
Jan-04 (5,000) 50,000
Remaining balance $ 50,000
Exhibit B
SECURED PROMISSORY NOTE
$295,000 Date: April 1, 2001
For value received, the undersigned ("Borrower") hereby unconditionally
promises to pay to PlaceWare, Inc. (the "Company"), at 295 North Bernardo Ave.,
Mountain View, CA 94043, the sum of Two Hundred Ninety-Five Thousand dollars
($295,000), together with interest thereon. This Note shall be subject to the
following terms and conditions.
1. Interest. The unpaid principal sum of this Note shall bear interest,
calculated annually, at the rate of ________% per annum.
2. Repayment. Except as provided in paragraphs 3 and 4 below, the unpaid
principal balance of this Note shall be due in twelve (12) quarterly
installments beginning July 1, 2001 and ending January 1, 2004, as described on
the Loan Payment Schedule, attached hereto as Exhibit A. All money paid toward
the satisfaction of this Note shall be applied first to the payment of any
accrued interest on the principal as required hereunder and then to the
retirement of the principal. All payments of interest and principal shall be in
lawful money of the United States of America in immediately available funds or
the equivalent at such address as the Company may designate.
3. Default; Acceleration. If the undersigned fails to pay any portion of
principal or interest on any of the amounts owing hereunder when and as the same
become due and payable, and such failure is not cured to the Company's
satisfaction within thirty (30) days, the undersigned shall be in default under
this Note. Upon the occurrence of a default hereunder, all unpaid principal,
accrued interest and other amounts owing hereunder shall, at the option of the
Company, be immediately collectible by or on behalf of the Company pursuant to
this Note and applicable law.
4. Security Interest. As partial collateral security for prompt and complete
payment and performance of all obligations of Borrower under this Note and to
induce the Company to extend credit, Borrower hereby assigns, conveys, grants,
pledges and transfers to and creates in favor of the Company a security interest
in (125,000) shares of Common Stock of the Company owned by Borrower represented
by Certificate numbered CS-137 (the "Collateral"). Capitalized terms used in
the previous sentence but not defined have the meanings set forth in the Uniform
Commercial Code, as in effect in the State of California. Borrower shall, upon
demand, do all such acts as the Company may reasonably request to establish and
maintain a perfected security interest in the Collateral.
Upon the written request of the Borrower, not to be made more than once
every three (3) months, commencing on the date three (3) months from the date
hereof, the Company shall adjust the number of your shares subject to the
Company's security interest. The written request shall specify a date upon
which the adjustment is to be made, no sooner than five (5) business days from
which the request is made. The number of shares subject to the Company's
security interest shall be adjusted such that the aggregate fair market value of
the shares shall be equal to two times the value of the outstanding principal
and interest. The fair market value of the shares
shall equal the closing price of the shares of stock as provided three (3) days
prior to the date on which the adjustment is to be made.
5. Prepayment. This Note may be prepaid without penalty, in full or in part,
at any time.
6. Expenses. In the event of any default hereunder, the undersigned shall pay
all reasonable attorney's fees and court costs incurred by the Company in
enforcing and collecting this Note.
7. Waivers. The undersigned hereby waives presentment, protest, notice of
protest, notice of non payment, notice of dishonor and any and all other notices
of demands relative to this Note and the benefit of any statute of limitations
with respect to any action to enforce this Note.
8. Binding Agreement. This Note shall be binding upon the undersigned and the
Company and their representatives, successors and assigns.
9. Governing Law. This Note shall be governed by and construed under the laws
of the State of California.
/s/ James A. Hogan
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James A. Hogan
Exhibit C
TAX LIABILITY TABLES
PlaceWare, Inc.
Exhibit C
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Taxes Due Time Line
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Taxes Due
As Taxes Due Loan &
Quarter Quarterly Loan To Company Hogan
Beginning Planned Cumulative Amount Oversign Cumulative Original Tax
- --------- ----------- ---------- ----------- ---------- ---------- ------------
Apr-99 $ 19,599 $ 19,599 $ 19,599 $ 19,599
Jun-99 $ 19,599 $ 39,198 $ 19,599 $ 39,198
Sep-99 $ 19,599 $ 58,797 $ 19,599 $ 58,797
Jan-00 $ 19,599 $ 78,396 $ 19,599 $ 78,396
Apr-00 $ 51,572 $ 129,968 $ 19,599 $ 97,995
Jun-00 $ 17,892 $ 147,860 $ 19,599 $117,594
Sep-00 $ 17,892 $ 165,752 $ 19,599 $137,193
Jan-01 $ 17,892 $ 183,644 $ 19,599 $156,792
Apr-01 $ 18,786 $ 202,430 $ 215,000 $ 257,233 $414,025 $ 417,430
Jun-01 $ 18,786 $ 221,216 $ 25,000 $ 46,504 $460,529 $ 461,216
Sep-01 $ 18,786 $ 240,002 $ 30,000 $ 46,504 $507,032 $ 510,002
Jan-02 $ 18,786 $ 258,788 $ 25,000 $ 46,504 $553,536 $ 553,788
Apr-02 $ 218,678 $ 477,466 $(180,000) $ 33,332 $586,868 $ 592,466
Jun-02 $ 41,808 $ 519,275 $ (10,000) $ 33,332 $620,200 $ 624,275
Sep 02 $ 41,808 $ 561,083 $ (10,000) $ 33,332 $653,532 $ 656,083
Jan 03 $ 41,808 $ 602,891 $ (10,000) $ 33,332 $686,864 $ 687,891
Apr-03 $ 41,808 $ 644,699 $ (10,000) $ 33,332 $720,196 $ 719,699
Jun-03 $ 41,808 $ 686,508 $ (10,000) $ 33,332 $753,528 $ 751,508
Sep-03 $ 41,808 $ 728,316 $ (10,000) $ 33,332 $786,860 $ 783,316
Jan-04 $ 41,808 $ 770,124 $ (5,000) $ 33,332 $820,192 $ 820,124
$ 770,124 $ 820,192