EXHIBIT 10.14
SITESMITH, INC.
2000 EXECUTIVE STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION GRANT
David Winn
10 Blvd. Flandrin
Paris 75116 France
You have been granted an option to purchase Common Stock of SiteSmith,
Inc. (the "COMPANY") as follows:
Board Approval Date: July 11, 2000
Date of Grant (Later of Board
Approval Date or Commencement
of Employment/Consulting): July 11, 2000
Exercise Price per Share: $1.75
Total Number of Shares Granted: 1,000,000
Total Exercise Price: $1,750,000.00
Type of Option: 0
---------------Shares Incentive
Stock Option
1,000,000
---------------Shares Nonstatutory
Stock Option
Expiration Date: July 10, 2010
Transferability: This Option may not be transferred.
Vesting Commencement Date: September 1, 2000
Vesting/Exercise Schedule: This Option may be exercised, in whole
or in part, at any time after the Date
of Grant. So long as your employment or
consulting relationship with the Company
continues, the Shares underlying this
Option shall vest in accordance with the
following schedule: 250,000 of the
Shares subject to the Option shall vest
on the 12-month anniversary of the
Vesting Commencement Date and 20,833.33
of the Shares subject to the Option
shall vest on the first day of each
month thereafter.
Special Acceleration: In the event Optionee provides
documented evidence that he has paid his
prior employer, IBM, or has been
prohibited by IBM from obtaining the
benefits of, gains on his actual or
desired exercises of incentive awards
under any IBM incentive program, and
subject to Optionee's commencement of
full-time employment with the Company on
or before September 1, 2000, Optionee
shall be deemed to have vested as to the
100,000 Shares subject to the Option
which would have vested last under the
vesting schedule described above, and,
if applicable, any repurchase right held
by the Company with respect to such
100,000 Shares issued upon exercise of
the Option shall lapse in full, in
either case effective as of September 1,
2000.
Termination Acceleration: BEFORE FIRST ANNIVERSARY: In the event
the Company terminates Optionee's
employment before September 1, 2001
"Without Cause" as that term is defined
in the Employment Agreement between
Optionee and the Company dated July 11,
2000 (the "EMPLOYMENT AGREEMENT"), then
provided Optionee executes a general
release of claims with respect to the
Company and certain related parties
within 45 days of such termination in
the form attached to the Employment
Agreement, as of the effective date of
such general release, vesting with
respect to 50% of the Shares subject to
the Option that are unvested at the time
of such termination shall accelerate and
be deemed to have vested or, if
applicable, the Company repurchase right
shall lapse with respect to 50% of the
Shares issued upon exercise of the
Option that are unvested at the time of
termination, in either case effective as
of the termination date.
ON OR AFTER FIRST ANNIVERSARY: In the
event the Company terminates Optionee's
employment on or after September 1, 2001
"Without Cause" as that term is defined
in the Employment Agreement, then
provided Optionee executes a general
release of claims with respect to the
Company and certain related parties
within 45 days of such termination in
the form attached to the Employment
Agreement, as of the effective date of
such general release, that number of
Shares which would have vested in the 12
months immediately following the date of
such
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termination had Optionee continued in
the employment relationship for such
12-month period shall be deemed to have
vested or, if applicable, any repurchase
right held by the Company with respect
to Shares issued upon exercise of the
Option which would have lapsed in the 12
months immediately following the date of
such termination had Optionee continued
in the employment relationship for such
12-month period shall lapse in full, in
either case effective as of the
termination date.
TERMINATION IN CONNECTION WITH CHANGE OF
CONTROL: In the event that, in
connection with or within 12 months
following a Change of Control (as
defined in the Plan) consummated during
Optionee's employment with the Company,
the Company or its successor terminates
Optionee's employment (or consulting
relationship) "Without Cause" as that
term is defined in the Employment
Agreement or Optionee resigns for "Good
Reason" as that term is defined in the
Employment Agreement, then provided
Optionee executes a general release of
claims with respect to the Company and
certain related parties within 45 days
of such termination in the form attached
to the Employment Agreement, as of the
effective date of such general release,
50% of the Shares subject to the Option
that are unvested at the time of such
termination and which would have vested
last under the vesting schedule
described above shall be deemed to have
vested and, if applicable, any
repurchase right held by the Company
with respect to such Shares issued upon
exercise of the Option shall lapse in
full, in either case effective as of the
termination date.
Termination Period: This Option may be exercised for 90 days
after termination of employment or
consulting relationship except as set
out in Section 5 of the Stock Option
Agreement (but in no event later than
the Expiration Date). Optionee is
responsible for keeping track of these
exercise periods following termination
for any reason of his or her service
relationship with the Company. The
Company will not provide further notice
of such periods.
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By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and governed
by the terms and conditions of the SiteSmith, Inc. 2000 Executive Stock
Incentive Plan and the Stock Option Agreement, both of which are attached and
made a part of this document.
In addition, you agree and acknowledge that your rights to any Shares
underlying the Option will be earned only as you provide services to the Company
over time, that the grant of the Option is not as consideration for services you
rendered to the Company prior to your Vesting Commencement Date, and that
nothing in this Notice or the attached documents confers upon you any right to
continue your employment or consulting relationship with the Company for any
period of time, nor does it interfere in any way with your right or the
Company's right to terminate that relationship at any time, for any reason, with
or without cause.
SITESMITH, INC.
/s/ David Winn /s/ Marv Tseu
- --------------------------------- By: -----------------------------------
David Winn Name: ---------------------------------
CEO
Title: --------------------------------
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SITESMITH, INC.
2000 EXECUTIVE STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. SiteSmith, Inc., a Delaware corporation (the
"COMPANy"), hereby grants to David Winn ("OPTIONEE"), an option (the "OPTION")
to purchase the total number of shares of Common Stock (the "SHARES") set forth
in the Notice of Stock Option Grant (the "NOTICE"), at the exercise price per
Share set forth in the Notice (the "EXERCISE PRICE") subject to the terms,
definitions and provisions of the SiteSmith, Inc. 2000 Executive Stock Incentive
Plan (the "PLAN") adopted by the Company, which is incorporated in this
Agreement by reference. Unless otherwise defined in this Agreement, the terms
used in this Agreement shall have the meanings defined in the Plan.
2. DESIGNATION OF OPTION. This Option is intended to be and is
designated as a Nonstatutory Stock Option.
3. EXERCISE OF OPTION. This Option shall be exercisable during its
term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 10 of the Plan as follows:
(a) RIGHT TO EXERCISE.
(i) This Option may not be exercised for a
fraction of a share.
(ii) In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Section 5 below, subject to the limitations contained in this Section 3.
(iii) In no event may this Option be exercised
after the Expiration Date of the Option as set forth in the Notice.
(b) METHOD OF EXERCISE.
(i) This Option shall be exercisable by
execution and delivery of the Early Exercise Notice and Restricted Stock
Purchase Agreement attached hereto as EXHIBIT A, the Exercise Notice and
Restricted Stock Purchase Agreement attached hereto as EXHIBIT B, or any other
form of written notice approved for such purpose by the Company which shall
state Optionee's election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by Optionee and shall be delivered to the Company
by such means as are determined by the Plan Administrator in its discretion to
constitute adequate delivery. The written notice shall be accompanied by payment
of the Exercise Price. This Option shall be deemed to be exercised upon receipt
by the Company of such written notice accompanied by the Exercise Price.
(ii) As a condition to the exercise of this
Option and as further set forth in Section 12 of the Plan, Optionee agrees to
make adequate provision for federal, state or other tax withholding obligations,
if any, which arise upon the vesting or exercise of the Option, or disposition
of Shares, whether by withholding, direct payment to the Company, or otherwise.
(iii) The Company is not obligated, and will have
no liability for failure, to issue or deliver any Shares upon exercise of the
Option unless such issuance or delivery would comply with the Applicable Laws,
with such compliance determined by the Company in consultation with its legal
counsel. This Option may not be exercised until such time as the Plan has been
approved by the stockholders of the Company, or if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any applicable federal or state securities or
other law or regulation, including any rule under Part 221 of Title 12 of the
Code of Federal Regulations as promulgated by the Federal Reserve Board. As a
condition to the exercise of this Option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by the
Applicable Laws. Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to Optionee on the date on which the Option is
exercised with respect to such Shares.
4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any
of the following, or a combination of the following, at the election of
Optionee:
(a) cash, check or, subject to Section 153 of the
Delaware General Corporation Law, promissory note (in the form attached as
Exhibit C to this agreement):
(b prior to the date, if any, upon which the Common
Stock becomes a Listed Security, by surrender of other shares of Common Stock of
the Company that have an aggregate Fair Market Value on the date of surrender
equal to the Exercise Price of the Shares as to which the Option is being
exercised. In the case of shares acquired directly or indirectly from the
Company, such shares must have been owned by Optionee for more than six (6)
months on the date of surrender (or such other period of time as is necessary to
avoid the Company's incurring adverse accounting charges); or
(c) following the date, if any, upon which the Common
Stock is a Listed Security, delivery of a properly executed exercise notice
together with irrevocable instructions to a broker approved by the Company to
deliver promptly to the Company the amount of sale or loan proceeds required to
pay the exercise price.
5. TERMINATION OF RELATIONSHIP. Following the date of termination of
Optionee's Continuous Service Status for any reason (the "TERMINATION DATE"),
Optionee may exercise the Option only as set forth in the Notice and this
Section 5. To the extent that Optionee is not entitled to exercise this Option
as of the Termination Date, or if Optionee does not exercise this
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Option within the Termination Period set forth in the Notice or the termination
periods set forth below, the Option shall terminate in its entirety. In no
event, may any Option be exercised after the Expiration Date of the Option as
set forth in the Notice.
(a) TERMINATION. In the event of termination of
Optionee's Continuous Service Status other than as a result of Optionee's
disability or death, Optionee may, to the extent otherwise so entitled at the
date of such termination (the "TERMINATION DATE"), exercise this Option during
the Termination Period set forth in the Notice.
(b) OTHER TERMINATIONS. In connection with any
termination other than a termination covered by Section 5(a), Optionee may
exercise the Option only as described below:
(i) TERMINATION UPON DISABILITY OF OPTIONEE. In
the event of termination of Optionee's Continuous Service Status as a result of
Optionee's disability, Optionee may, but only within twelve months from the
Termination Date, exercise this Option to the extent Optionee was entitled to
exercise it as of such Termination Date.
(ii) DEATH OF OPTIONEE. In the event of the
death of Optionee (a) during the term of this Option and while an Employee or
Consultant of the Company and having been in Continuous Service Status since the
date of grant of the Option, or (b) within thirty (30) days after Optionee's
Termination Date, the Option may be exercised at any time within twelve months
following the date of death by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
Optionee was entitled to exercise the Option as of the Termination Date.
6. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him or her. The
terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
7. TAX CONSEQUENCES. Below is a brief summary as of the date of this
Option of certain of the federal tax consequences of exercise of this Option and
disposition of the Shares under the laws in effect as of the Date of Grant. THIS
SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
As a Nonstatutory Stock Option, there may be a regular federal
(and state) income tax liability upon the exercise of the Option. Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the fair market value of the Shares
on the date of exercise over the Exercise Price. If Optionee is an Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise. If Shares issued
upon exercise of a Nonstatutory Stock Option are held for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes.
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If this Option is exercised with respect to unvested Shares,
certain other tax consequences may apply. Optionee is advised to consult his or
her own tax advisor with respect to these consequences.
8. LOCK-UP AGREEMENT. In connection with the initial public offering
of the Company's securities and upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, Optionee hereby
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company however and
whenever acquired (other than those included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time (not to exceed 180 days) from the effective date of such
registration as may be requested by the Company or such managing underwriters
and to execute an agreement reflecting the foregoing as may be requested by the
underwriters at the time of the public offering.
9. EFFECT OF AGREEMENT. Optionee acknowledges receipt of a copy of
the Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option
terms), and hereby accepts this Option and agrees to be bound by its contractual
terms as set forth herein and in the Plan. Optionee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the Plan
Administrator regarding any questions relating to the Option. In the event of a
conflict between the terms and provisions of the Plan and the terms and
provisions of the Notice and this Agreement, the Plan terms and provisions shall
prevail. The Option, including the Plan, constitutes the entire agreement
between Optionee and the Company on the subject matter hereof and supersedes all
proposals, written or oral, and all other communications between the parties
relating to such subject matter; provided however that the Employment Agreement
referenced in the Notice of Option Grant is specifically incorporated herein by
reference.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
document.
DAVID WINN SITESMITH, INC.
/s/ David Winn /s/ Marv Tseu
- --------------------------------- By: ----------------------------------
Name:---------------------------------
CEO
Dated: Title:--------------------------------
---------------------------
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EXHIBIT A
SITESMITH, INC.
2000 EXECUTIVE STOCK INCENTIVE PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement ("AGREEMENT") is made as of July 11, by and between
SiteSmith, Inc., a Delaware corporation (the "COMPANY"), and David Winn
("PURCHASER"). To the extent any capitalized terms used in this Agreement are
not defined, they shall have the meaning ascribed to them in the 2000 Executive
Stock Incentive Plan.
1. EXERCISE OF OPTION. Subject to the terms and conditions hereof,
Purchaser hereby elects to exercise his or her option to purchase 1,000,000
shares of the Common Stock (the "SHARES") of the Company under and pursuant to
the Company's 2000 Executive Stock Incentive Plan (the "PLAN") and the Stock
Option Agreement between the Purchaser and the Company (the "OPTION AGREEMENT").
Of these Shares, Purchaser has elected to purchase 0 of those Shares which have
become vested as of the date hereof under the Vesting Schedule set forth in the
Notice of Stock Option Grant (the "VESTED SHARES") and 1,000,000 Shares which
have not yet vested under such Vesting Schedule (the "UNVESTED SHARES"). The
purchase price for the Shares shall be $1.75 per Share for a total purchase
price of $1,750,000.00. The term "SHARES" refers to the purchased Shares and all
securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.
2. TIME AND PLACE OF EXERCISE. The purchase and sale of the Shares
under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement in accordance
with the provisions of Section 3(b) of the Option Agreement. On such date, the
Company will deliver to Purchaser a certificate representing the Shares to be
purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the exercise price therefor by Purchaser by (a) check made payable to
the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c)
delivery of shares of the Common Stock of the Company in accordance with Section
4 of the Option Agreement, (d) subject to the provisions of Section 153 of the
Delaware General Corporation Law, delivery of a promissory note in the form
attached as EXHIBIT C to the Option Agreement (or in any form acceptable to the
Company), or (e) a combination of the foregoing. If Purchaser delivers a
promissory note as partial payment of the purchase price, Purchaser will also
deliver a Pledge and Security Agreement in the form attached to EXHIBIT D to the
Option Agreement (or in any form acceptable to the Company).
3. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below). After any Shares have
been released from such Repurchase Option, Purchaser shall not assign, encumber
or dispose of any interest in such Shares except in compliance with the
provisions below and applicable securities laws.
(a) REPURCHASE OPTION.
(i) In the event of the voluntary or involuntary
termination of Purchaser's employment or consulting relationship with the
Company for any reason (including death or disability), with or without cause,
the Company shall upon the date of such termination (the "TERMINATION DATE")
have an irrevocable, exclusive option (the "REPURCHASE OPTION") for a period of
90 days from such date to repurchase all or any portion of the Shares held by
Purchaser as of the Termination Date which have not yet been released from the
Company's Repurchase Option at the original purchase price per Share specified
in Section 1 (adjusted for any stock splits, stock dividends and the like).
(ii) Unless the Company notifies Purchaser within
90 days from the date of termination of Purchaser's employment or consulting
relationship that it does not intend to exercise its Repurchase Option with
respect to some or all of the Shares, the Repurchase Option shall be deemed
automatically exercised by the Company as of the 90th day following such
termination, provided that the Company may notify Purchaser that it is
exercising its Repurchase Option as of a date prior to such 90th day. Unless
Purchaser is otherwise notified by the Company pursuant to the preceding
sentence that the Company does not intend to exercise its Repurchase Option as
to some or all of the Shares to which it applies at the time of termination,
execution of this Agreement by Purchaser constitutes written notice to Purchaser
of the Company's intention to exercise its Repurchase Option with respect to all
Shares to which such Repurchase Option applies. The Company, at its choice, may
satisfy its payment obligation to Purchaser with respect to exercise of the
Repurchase Option by either (A) delivering a check to Purchaser in the amount of
the purchase price for the Shares being repurchased, or (B) in the event
Purchaser is indebted to the Company, canceling an amount of such indebtedness
equal to the purchase price for the Shares being repurchased, or (C) by a
combination of (A) and (B) so that the combined payment and cancellation of
indebtedness equals such purchase price. In the event of any deemed automatic
exercise of the Repurchase Option pursuant to this Section 3(a)(ii) in which
Purchaser is indebted to the Company, such indebtedness equal to the purchase
price of the Shares being repurchased shall be deemed automatically canceled as
of the 90th day following termination of Purchaser's employment or consulting
relationship unless the Company otherwise satisfies its payment obligations. As
a result of any repurchase of Shares pursuant to this Section 3(a), the Company
shall become the legal and beneficial owner of the Shares being repurchased and
shall have all rights and interest therein or related thereto, and the Company
shall have the right to transfer to its own name the number of Shares being
repurchased by the Company, without further action by Purchaser.
(iii) One hundred percent (100%) of the Unvested
Shares purchased hereunder shall initially be subject to the Repurchase Option.
The Unvested Shares shall be
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released from the Repurchase Option in accordance with the Vesting Schedule set
forth in the Notice of Stock Option Grant, subject to the Special Acceleration
and the Termination Acceleration described in the Notice of Stock Option Grant,
until all Shares are released from the Repurchase Option. Fractional shares
shall be rounded to the nearest whole share.
(b) RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee of Purchaser (either being sometimes referred to
herein as the "HOLDER") may be sold or otherwise transferred (including transfer
by gift or operation of law), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth in
this Section 3(b) (the "RIGHT OF FIRST REFUSAL").
(i) NOTICE OF PROPOSED TRANSFER. The Holder of
the Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer such Shares;
(ii) the name of each proposed purchaser or other transferee ("PROPOSED
TRANSFEREE"); (iii) the number of Shares to be transferred to each Proposed
Transferee; and (iv) the terms and conditions of each proposed sale or transfer.
The Holder shall offer the Shares at the same price (the "OFFERED PRICE") and
upon the same terms (or terms as similar as reasonably possible) to the Company
or its assignee(s).
(ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any
time within 30 days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (iii) below.
(iii) PURCHASE PRICE. The purchase price
("PURCHASE PRICE") for the Shares purchased by the Company or its assignee(s)
under this Section 3(b) shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board of Directors of the
Company in good faith.
(iv) PAYMENT. Payment of the Purchase Price
shall be made, at the option of the Company or its assignee(s), in cash (by
check), by cancellation of all or a portion of any outstanding indebtedness, or
by any combination thereof within 30 days after receipt of the Notice or in the
manner and at the times set forth in the Notice.
(v) HOLDER'S RIGHT TO TRANSFER. If all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section 3(b), then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 60 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 3 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
or if the Holder proposes to change the price or other terms to make them more
favorable to the
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Proposed Transferee, a new Notice shall be given to the Company, and the Company
and/or its assignees shall again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
(vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS.
Anything to the contrary contained in this Section 3(b) notwithstanding, the
transfer of any or all of the Shares during Purchaser's lifetime or on
Purchaser's death by will or intestacy to Purchaser's Immediate Family or a
trust for the benefit of Purchaser's Immediate Family shall be exempt from the
provisions of this Section 3(b). "IMMEDIATE FAMILY" as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister. In
such case, the transferee or other recipient shall receive and hold the Shares
so transferred subject to the provisions of this Section, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section 3.
(c) INVOLUNTARY TRANSFER.
(i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY
TRANSFER. In the event, at any time after the date of this Agreement, of any
transfer by operation of law or other involuntary transfer (including death or
divorce, but excluding a transfer to Immediate Family as set forth in Section
3(b)(vi) above) of all or a portion of the Shares by the record holder thereof,
the Company shall have an option to purchase all of the Shares transferred at
the greater of the purchase price paid by Purchaser pursuant to this Agreement
or the Fair Market Value of the Shares on the date of transfer. Upon such a
transfer, the person acquiring the Shares shall promptly notify the Secretary of
the Company of such transfer. The right to purchase such Shares shall be
provided to the Company for a period of thirty (30) days following receipt by
the Company of written notice by the person acquiring the Shares.
(ii) PRICE FOR INVOLUNTARY TRANSFER. With
respect to any stock to be transferred pursuant to Section 3(c)(i), the price
per Share shall be a price set by the Board of Directors of the Company that
will reflect the current value of the stock in terms of present earnings and
future prospects of the Company. The Company shall notify Purchaser or his or
her executor of the price so determined within thirty (30) days after receipt by
it of written notice of the transfer or proposed transfer of Shares. However, if
the Purchaser does not agree with the valuation as determined by the Board of
Directors of the Company, the Purchaser shall be entitled to have the valuation
determined by an independent appraiser to be mutually agreed upon by the Company
and the Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.
(d) ASSIGNMENT. The right of the Company to purchase any
part of the Shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations.
(e) RESTRICTIONS BINDING ON TRANSFEREES. All transferees
of Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement, including, insofar as applicable,
the Repurchase Option. In the event of any purchase by the Company hereunder
where the Shares or interest are held by a transferee, the
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transferee shall be obligated, if requested by the Company, to transfer the
Shares or interest to the Purchaser for consideration equal to the amount to be
paid by the Company hereunder. In the event the Repurchase Option is deemed
exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may
deem any transferee to have transferred the Shares or interest to Purchaser
prior to their purchase by the Company, and payment of the purchase price by the
Company to such transferee shall be deemed to satisfy Purchaser's obligation to
pay such transferee for such Shares or interest, and also to satisfy the
Company's obligation to pay Purchaser for such Shares or interest. Any sale or
transfer of the Shares shall be void unless the provisions of this Agreement are
satisfied.
(f) TERMINATION OF RIGHTS. The right of first refusal
granted the Company by Section 3(b) above and the option to repurchase the
Shares in the event of an involuntary transfer granted the Company by Section
3(c) above shall terminate upon the first sale of Common Stock of the Company to
the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "SECURITIES ACT").
4. ESCROW OF UNVESTED SHARES. For purposes of facilitating the
enforcement of the provisions of Section 3 above, Purchaser agrees, immediately
upon receipt of the certificate(s) for the Shares subject to the Repurchase
Option, to deliver such certificate(s), together with an Assignment Separate
from Certificate in the form attached to this Agreement as ATTACHMENT A executed
by Purchaser and by Purchaser's spouse (if required for transfer), in blank, to
the Secretary of the Company, or the Secretary's designee, to hold such
certificate(s) and Assignment Separate from Certificate in escrow and to take
all such actions and to effectuate all such transfers and/or releases as are in
accordance with the terms of this Agreement. Purchaser hereby acknowledges that
the Secretary of the Company, or the Secretary's designee, is so appointed as
the escrow holder with the foregoing authorities as a material inducement to
make this Agreement and that said appointment is coupled with an interest and is
accordingly irrevocable. Purchaser agrees that said escrow holder shall not be
liable to any party hereof (or to any other party). The escrow holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may resign at any time. Purchaser agrees that if the Secretary of
the Company, or the Secretary's designee, resigns as escrow holder for any or no
reason, the Board of Directors of the Company shall have the power to appoint a
successor to serve as escrow holder pursuant to the terms of this Agreement.
5. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with
the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. Purchaser is purchasing these securities for investment for his or her
own account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act or under any
applicable provision of state law. Purchaser does not have any present intention
to transfer the Shares to any person or entity.
-5-
(b) Purchaser understands that the Shares have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that
the securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser further acknowledges and understands that the Company is under no
obligation to register the securities other than as specifically set forth in
Section 2(e)(iv) of the Employment Agreement between Purchaser and the Company
dated July 11, 2000. Purchaser understands that the certificate(s) evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the securities unless they are registered or such registration is not required
in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules
144 and 701, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer of the securities (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions. Purchaser understands that the Company provides no assurances as to
whether he or she will be able to resell any or all of the Shares pursuant to
Rule 144 or Rule 701, which rules require, among other things, that the Company
be subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended, that resales of securities take place only after the holder of the
Shares has held the Shares for certain specified time periods, and under certain
circumstances, that resales of securities be limited in volume and take place
only pursuant to brokered transactions. Notwithstanding this paragraph (d),
Purchaser acknowledges and agrees to the restrictions set forth in paragraph (e)
below.
(e) Purchaser further understands that in the event all
of the applicable requirements of Rule 144 or 701 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
(f) Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
-6-
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The certificate or certificates representing
the Shares shall bear the following legends (as well as any legends required by
applicable state and federal corporate and securities laws):
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE
COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH
THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(iii) IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.
(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a parent or
subsidiary of the Company, to
-7-
terminate Purchaser's employment or consulting relationship, for any reason,
with or without cause.
8. SECTION 83(B) ELECTION. Purchaser understands that Section
83(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), taxes as
ordinary income for a Nonstatutory Stock Option the difference between the
amount paid for the Shares and the Fair Market Value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "RESTRICTION" means
the right of the Company to buy back the Shares pursuant to the Repurchase
Option set forth in Section 3(a) of this Agreement. Purchaser understands that
Purchaser may elect to be taxed at the time the Shares are purchased, rather
than when and as the Repurchase Option expires, by filing an election under
Section 83(b) (an "83(B) ELECTION") of the Code with the Internal Revenue
Service within 30 days from the date of purchase. Even if the Fair Market Value
of the Shares at the time of the execution of this Agreement equals the amount
paid for the Shares, the election must be made to avoid income under Section
83(a) in the future. Purchaser understands that failure to file such an election
in a timely manner may result in adverse tax consequences for Purchaser.
Purchaser further understands that an additional copy of such election form
should be filed with his or her federal income tax return for the calendar year
in which the date of this Agreement falls. Purchaser acknowledges that the
foregoing is only a summary of the effect of United States federal income
taxation with respect to purchase of the Shares hereunder, and does not purport
to be complete. Purchaser further acknowledges that the Company has directed
Purchaser to seek independent advice regarding the applicable provisions of the
Code, the income tax laws of any municipality, state or foreign country in which
Purchaser may reside, and the tax consequences of Purchaser's death.
Purchaser agrees that he or she will execute and deliver to the Company
with this executed Agreement a copy of the Acknowledgment and Statement of
Decision Regarding Section 83(b) Election (the "ACKNOWLEDGMENT") attached hereto
as ATTACHMENT B. Purchaser further agrees that he or she will execute and submit
with the Acknowledgment a copy of the 83(b) Election attached hereto as
ATTACHMENT C (for tax purposes in connection with the early exercise of an
option) if Purchaser has indicated in the Acknowledgment his or her decision to
make such an election.
9. LOCK-UP AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Purchaser agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any securities of the Company however
or whenever acquired (other than those included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time (not to exceed 180 days) from the effective date of such
registration as may be requested by the Company or such managing underwriters
and to execute an agreement reflecting the foregoing as may be requested by the
underwriters at the time of the public offering.
10. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and
-8-
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.
(b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them; provided, however that the Employment Agreement referenced in the Notice
of Option Grant is specifically incorporated herein by reference. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.
(c) SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement, (ii)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
(d) CONSTRUCTION. This Agreement is the result of
negotiations between and has been reviewed by each of the parties hereto and
their respective counsel, if any; accordingly, this Agreement shall be deemed to
be the product of all of the parties hereto, and no ambiguity shall be construed
in favor of or against any one of the parties hereto.
(e) NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or 48 hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address as set forth below or as
subsequently modified by written notice.
(f) COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) SUCCESSORS AND ASSIGNS. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of Purchaser under
this Agreement may only be assigned with the prior written consent of the
Company.
[SIGNATURE PAGE FOLLOWS]
-9-
The parties have executed this Early Exercise Notice and Restricted
Stock Purchase Agreement as of the date first set forth above.
COMPANY:
SITESMITH, INC.
By: /s/ Marv Tseu
-------------------------------------
Name:
-----------------------------------
CEO
Title: ---------------------------------
PURCHASER:
David Winn
/s/ David Winn
----------------------------------------
(Signature)
Address: 10 Blvd. Flandrin
Paris 75116 France
I, ______________________, spouse of David Winn, have read and hereby approve
the foregoing Agreement. In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Agreement, I hereby agree
to be bound irrevocably by the Agreement and further agree that any community
property or other such interest that I may have in the Shares shall hereby be
similarly bound by the Agreement. I hereby appoint my spouse as my
attorney-in-fact with respect to any amendment or exercise of any rights under
the Agreement.
---------------------------
Spouse of David Winn
-10-
ATTACHMENT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Early Exercise
Notice and Restricted Stock Purchase Agreement between the undersigned
("PURCHASEr") and SiteSmith, Inc. (the "COMPANY") dated July 11, 2000 (the
"AGREEMENT"), Purchaser hereby sells, assigns and transfers unto the Company
_________________________________ (________) shares of the Common Stock of the
Company, standing in Purchaser's name on the books of the Company and
represented by Certificate No. ____, and does hereby irrevocably constitute and
appoint ________________________________________________ to transfer said stock
on the books of the Company with full power of substitution in the premises.
THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE
ATTACHMENTS THERETO.
Dated: ______________________
Signature:
/s/ DAVID WINN
___________________________
David Winn
________________________________________
Spouse of David Winn (if applicable)
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Company to exercise its Repurchase
Option set forth in the Agreement without requiring additional signatures on the
part of Purchaser.
ATTACHMENT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(B) ELECTION
The undersigned (which term includes the undersigned's spouse), a
purchaser of 1,000,000 shares of Common Stock of SiteSmith, Inc., a Delaware
corporation (the "COMPANY") by exercise of an option (the "OPTION") granted
pursuant to the Company's 2000 Executive Stock Incentive Plan (the "PLAN"),
hereby states as follows:
1. The undersigned acknowledges receipt of a copy of the Plan
relating to the offering of such shares. The undersigned has carefully reviewed
the Plan and the option agreement pursuant to which the Option was granted.
2. The undersigned either [check and complete as applicable]:
(a) ____ has consulted, and has been fully advised by, the
undersigned's own tax advisor,_______________________________,
whose business address is ______________________________,
regarding the federal, state and local tax consequences of
purchasing shares under the Plan, and particularly regarding
the advisability of making elections pursuant to Section 83(b)
of the Internal Revenue Code of 1986, as amended (the "CODE")
and pursuant to the corresponding provisions, if any, of
applicable state law; or
(b) ____ has knowingly chosen not to consult such a tax advisor.
3. The undersigned hereby states that the undersigned has decided
[check as applicable]:
(a) ____ to make an election pursuant to Section 83(b) of the Code, and
is submitting to the Company, together with the undersigned's
executed Early Exercise Notice and Restricted Stock Purchase
Agreement, an executed form entitled "Election Under Section
83(b) of the Internal Revenue Code of 1986;" or
(b) ____ not to make an election pursuant to Section 83(b) of the Code.
4. Neither the Company nor any subsidiary or representative of
the Company has made any warranty or representation to the undersigned with
respect to the tax consequences of the undersigned's purchase of shares under
the Plan or of the making or failure to make an election pursuant to Section
83(b) of the Code or the corresponding provisions, if any, of applicable state
law.
Date: /s/ DAVID WINN
---------------------- -----------------------------------
David Winn
Date:
---------------------- -----------------------------------
Spouse of David Winn
-2-
ATTACHMENT C
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code, to include in taxpayer's gross income or alternative
minimum taxable income, as applicable, for the current taxable year, the amount
of any income that may be taxable to taxpayer in connection with taxpayer's
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME OF TAXPAYER: David Winn
NAME OF SPOUSE: ________________
ADDRESS: 10 Blvd. Flandrin, Paris 75116 France
IDENTIFICATION NO. OF TAXPAYER: _______________
IDENTIFICATION NO. OF SPOUSE: _______________
TAXABLE YEAR: __________
2. The property with respect to which the election is made is described as
follows:
1,000,000 shares of the Common Stock of SiteSmith, Inc., a Delaware
corporation (the "COMPANY").
3. The date on which the property was transferred is: July 11, 2000.
4. The property is subject to the following restrictions:
Repurchase option at cost in favor of the Company upon termination of
taxpayer's employment or consulting relationship.
5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms
will never lapse, of such property is: $1,750,000.00.
6. The amount (if any) paid for such property: $1,750,000.00.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.
Dated: ____________ /s/ DAVID WINN
_________________________________
David Winn
Dated: ____________
_________________________________
Spouse of David Winn
RECEIPT AND CONSENT
The undersigned hereby acknowledges receipt of a photocopy of
Certificate No. ______ for 1,000,000 shares of Common Stock of SiteSmith, Inc.
(the "COMPANY").
The undersigned further acknowledges that the Secretary of the Company,
or his or her designee, is acting as escrow holder pursuant to the Early
Exercise Notice and Restricted Stock Purchase Agreement Purchaser has previously
entered into with the Company. As escrow holder, the Secretary of the Company,
or his or her designee, holds the original of the aforementioned certificate
issued in the undersigned's name.
Dated: _______________
___________________________________
David Winn
EXHIBIT B
SITESMITH, INC.
2000 EXECUTIVE STOCK INCENTIVE PLAN
EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement ("AGREEMENT") is made as of ______, by and between
SiteSmith, Inc., a Delaware corporation (the "COMPANY"), and David Winn
("PURCHASER"). To the extent any capitalized terms used in this Agreement are
not defined, they shall have the meaning ascribed to them in the 2000 Executive
Stock Incentive Plan.
1. EXERCISE OF OPTION. Subject to the terms and conditions
hereof, Purchaser hereby elects to exercise his or her option to purchase
__________________ shares of the Common Stock (the "SHARES") of the Company
under and pursuant to the Company's 2000 Executive Stock Incentive Plan (the
"PLAN") and the Stock Option Agreement dated _________, (the "OPTION
AGREEMENT"). The purchase price for the Shares shall be $1.75 per Share for a
total purchase price of $__________. The term "SHARES" refers to the purchased
Shares and all securities received in replacement of the Shares or as stock
dividends or splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.
2. TIME AND PLACE OF EXERCISE. The purchase and sale of the
Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement in accordance
with the provisions of Section 3(b) of the Option Agreement. On such date, the
Company will deliver to Purchaser a certificate representing the Shares to be
purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the exercise price therefor by Purchaser by (a) check made payable to
the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c)
delivery of shares of the Common Stock of the Company in accordance with Section
4 of the Option Agreement, (d) subject to Section 153 of the Delaware General
Corporation Law, delivery of a promissory note in the form attached as Exhibit C
to the Option Agreement (or in any form acceptable to the Company) or (e) by a
combination of the foregoing. If Purchaser delivers a promissory note as partial
or full payment of the purchase price, Purchaser will also deliver a Pledge and
Security Agreement in the form attached as Exhibit D to the Option Agreement (or
in any form acceptable to the Company).
3. LIMITATIONS ON TRANSFER. In addition to any other limitation
on transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares except in compliance with the
provisions below and applicable securities laws.
(a) RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee of Purchaser (either being sometimes referred to
herein as the "HOLDER") may be sold
or otherwise transferred (including transfer by gift or operation of law), the
Company or its assignee(s) shall have a right of first refusal to purchase the
Shares on the terms and conditions set forth in this Section 3(a) (the "RIGHT OF
FIRST REFUSAL").
(i) NOTICE OF PROPOSED TRANSFER. The Holder of
the Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer such Shares;
(ii) the name of each proposed purchaser or other transferee ("PROPOSED
TRANSFEREE"); (iii) the number of Shares to be transferred to each Proposed
Transferee; and (iv) the terms and conditions of each proposed sale or transfer.
The Holder shall offer the Shares at the same price (the "OFFERED PRICE") and
upon the same terms (or terms as similar as reasonably possible) to the Company
or its assignee(s).
(ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any
time within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (iii) below.
(iii) PURCHASE PRICE. The purchase price
("PURCHASE PRICE") for the Shares purchased by the Company or its assignee(s)
under this Section 3(a) shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board of Directors of the
Company in good faith.
(iv) PAYMENT. Payment of the Purchase Price
shall be made, at the option of the Company or its assignee(s), in cash (by
check), by cancellation of all or a portion of any outstanding indebtedness, or
by any combination thereof within 30 days after receipt of the Notice or in the
manner and at the times set forth in the Notice.
(v) HOLDER'S RIGHT TO TRANSFER. If all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section 3(a), then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 60 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 3 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
or if the Holder proposes to change the price or other terms to make them more
favorable to the Proposed Transferee, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS.
Anything to the contrary contained in this Section 3(a) notwithstanding, the
transfer of any or all of the Shares during Purchaser's lifetime or on
Purchaser's death by will or intestacy to Purchaser's Immediate
-2-
Family or a trust for the benefit of Purchaser's Immediate Family shall be
exempt from the provisions of this Section 3(a). "IMMEDIATE FAMILY" as used
herein shall mean spouse, lineal descendant or antecedent, father, mother,
brother or sister. In such case, the transferee or other recipient shall receive
and hold the Shares so transferred subject to the provisions of this Section,
and there shall be no further transfer of such Shares except in accordance with
the terms of this Section 3.
(b) INVOLUNTARY TRANSFER.
(i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY
TRANSFER. In the event, at any time after the date of this Agreement, of any
transfer by operation of law or other involuntary transfer (including death or
divorce, but excluding a transfer to Immediate Family as set forth in Section
3(a)(vi) above) of all or a portion of the Shares by the record holder thereof,
the Company shall have an option to purchase all of the Shares transferred at
the greater of the purchase price paid by Purchaser pursuant to this Agreement
or the fair market value of the Shares on the date of transfer. Upon such a
transfer, the person acquiring the Shares shall promptly notify the Secretary of
the Company of such transfer. The right to purchase such Shares shall be
provided to the Company for a period of thirty (30) days following receipt by
the Company of written notice by the person acquiring the Shares.
(ii) PRICE FOR INVOLUNTARY TRANSFER. With
respect to any stock to be transferred pursuant to Section 3(b)(i), the price
per Share shall be a price set by the Board of Directors of the Company that
will reflect the current value of the stock in terms of present earnings and
future prospects of the Company. The Company shall notify Purchaser or his or
her executor of the price so determined within thirty (30) days after receipt by
it of written notice of the transfer or proposed transfer of Shares. However, if
the Purchaser does not agree with the valuation as determined by the Board of
Directors of the Company, the Purchaser shall be entitled to have the valuation
determined by an independent appraiser to be mutually agreed upon by the Company
and the Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.
(c) ASSIGNMENT. The right of the Company to purchase any
part of the Shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations.
(e) RESTRICTIONS BINDING ON TRANSFEREES. All transferees
of Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement. Any sale or transfer of the
Company's Shares shall be void unless the provisions of this Agreement are
satisfied.
(f) TERMINATION OF RIGHTS. The right of first refusal
granted the Company by Section 3(a) above and the option to repurchase the
Shares in the event of an involuntary transfer granted the Company by Section
3(b) above shall terminate upon the first sale of Common Stock of the Company to
the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "SECURITIES ACT"). Upon termination of the right of first
refusal described in
-3-
Section 3(b) above, a new certificate or certificates representing the Shares
not repurchased shall be issued, on request, without the legend referred to in
Section 5(a)(ii) herein and delivered to Purchaser.
4. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with
the purchase of the Shares, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. Purchaser is purchasing these securities for investment for his or her
own account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act or under any
applicable provision of state law. Purchaser does not have any present intention
to transfer the Shares to any person or entity.
(b) Purchaser understands that the Shares have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that
the securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser further acknowledges and understands that the Company is under no
obligation to register the securities other than as specifically set forth in
Section 2(e)(iv) of the Employment Agreement between Purchaser and the Company
dated July 11, 2000. Purchaser understands that the certificate(s) evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the securities unless they are registered or such registration is not required
in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules
144 and 701, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer of the securities (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions. Purchaser understands that the Company provides no assurances as to
whether he or she will be able to resell any or all of the Shares pursuant to
Rule 144 or Rule 701, which rules require, among other things, that the Company
be subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended, that resales of securities take place only after the holder of the
Shares has held the Shares for certain specified time periods, and under certain
circumstances, that resales of securities be limited in volume and take place
only pursuant to brokered transactions. Notwithstanding this paragraph (d),
Purchaser acknowledges and agrees to the restrictions set forth in paragraph (e)
below.
(e) Purchaser further understands that in the event all
of the applicable requirements of Rule 144 or 701 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement
-4-
securities other than in a registered offering and otherwise than pursuant to
Rule 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
(f) Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The certificate or certificates
representing the Shares shall bear the following legends (as well as any legends
required by applicable state and federal corporate and securities laws):
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE
COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH
THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(iii) IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.
-5-
(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(c) REFUSAL TO TRANSFER. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
6. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment or consulting
relationship, for any reason, with or without cause.
7. LOCK-UP AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Purchaser agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any securities of the Company however
or whenever acquired (other than those included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time (not to exceed 180 days) from the effective date of such
registration as may be requested by the Company or such managing underwriters
and to execute an agreement reflecting the foregoing as may be requested by the
underwriters at the time of the public offering.
8. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
(b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them; provided, however that the Employment Agreement referenced in the Notice
of Option Grant is specifically incorporated herein by reference. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.
(c) SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement, (ii)
the balance of
-6-
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
(d) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.
(e) NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.
(f) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) SUCCESSORS AND ASSIGNS. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of Purchaser under
this Agreement may only be assigned with the prior written consent of the
Company.
[SIGNATURE PAGE FOLLOWS]
-7-
The parties have executed this Exercise Notice and Restricted Stock
Purchase Agreement as of the date first set forth above.
COMPANY:
SITESMITH, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PURCHASER:
David Winn
---------------------------------------
(Signature)
Address: 10 Blvd. Flandrin
Paris 75116 France
I, ______________________, spouse of David Winn, have read and hereby approve
the foregoing Agreement. In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Agreement, I hereby agree
to be irrevocably bound by the Agreement and further agree that any community
property or other such interest shall hereby by similarly bound by the
Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
---------------------------------------
Spouse of David Winn
-8-
EXHIBIT C
PROMISSORY NOTE
Amount: $1,749,900.00 Place of Execution: _______________________
Date: July 11, 2000
For value received, the undersigned promises to pay SiteSmith, Inc., a
Delaware corporation (the "COMPANY"), at its principal office the principal sum
of $1,749,900.00 with interest from the date hereof at a rate of 6.62 % per
annum, compounded semiannually, on the unpaid balance of such principal sum.
Such principal and interest shall be due and payable on the earlier of (a)
September 1, 2004 or (b) the 30th day following voluntary or involuntary
termination of the undersigned's employment with the Company for any reason
whatsoever, with or without cause (including death or disability).
Principal and interest are payable in lawful money of the United
States of America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME
WITHOUT INTEREST OR PENALTY.
Should suit be commenced to collect any sums due under this Note, such
sum as the Court may deem reasonable shall be added hereto as attorneys' fees.
The makers and endorsers have severally waived presentment for payment, protest
notice of protest and notice of nonpayment of this Note.
This Note, which is full recourse, is secured by a pledge of certain
shares of Common Stock of the Company and is subject to the terms of a Pledge
and Security Agreement between the undersigned and the Company of even date
herewith.
/s/ DAVID WINN
---------------------------------------
David Winn
EXHIBIT D
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (the "AGREEMENT") is entered into
this 11th day of July by and between SiteSmith, Inc., a Delaware corporation
(the "COMPANY") and David Winn ("PURCHASER").
RECITALS
In connection with Purchaser's exercise of an option to purchase
certain shares of the Company's Common Stock (the "SHARES") pursuant to an
Option Agreement dated July 11, 2000 between Purchaser and the Company,
Purchaser is delivering a promissory note of even date herewith (the "NOTE") in
partial payment of the exercise price for the Shares. The company requires that
the Note be secured by a pledge of the Shares or the terms set forth below.
AGREEMENT
In consideration of the Company's acceptance of the Note as full or
partial payment of the exercise price of the Shares, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. The Note shall become payable in full on the earlier of (a)
September 1, 2004 or (b) the 30th day following voluntary or involuntary
termination of the undersigned's employment with the Company for any reason
whatsoever, with or without cause (including death or disability).
2. Purchaser shall deliver to the Secretary of the Company, or his or
her designee (hereinafter referred to as the "PLEDGE HOLDER"), all certificates
representing the Shares, together with an Assignment Separate from Certificate
in the form attached to this Agreement as ATTACHMENT A executed by Purchaser and
by Purchaser's spouse (if required for transfer), in blank, for use in
transferring all or a portion of the Shares to the Company if, as and when
required pursuant to this Agreement. In addition, if Purchaser is married,
Purchaser's spouse shall execute the signature page attached to this Agreement.
3. As security for the payment of the Note and any renewal, extension
or modification of the Note, Purchaser hereby grants to the Company a security
interest in and pledges with and delivers to the Company Purchaser's Shares
(sometimes referred to herein as the "COLLATERAL").
4. In the event that Purchaser prepays all or a portion of the Note,
in accordance with the provisions thereof, Purchaser intends, unless written
notice to the contrary is delivered to the Pledge Holder, that the Shares
represented by the portion of the Note so repaid, including annual interest
thereon, shall continue to be so held by the Pledge Holder, to serve as
independent collateral for the outstanding portion of the Note for the purpose
of commencing the holding period set forth in Rule 144(d) promulgated under the
Securities
Act of 1933, as amended (the "SECURITIES ACT"). If written notice is
provided by Purchase to the Pledge Holder requesting a release of the Shares
upon prepayment of a portion of the Note, then the Pledge Holder will release to
Purchaser that number of Shares equal to the amount paid under the Note (less
the portion of the payment attributable to interest on the principal prepaid)
divided by $1.75; provided, however, that no Shares subject to the Repurchase
Option described in Section 3(a) of the Early Exercise Notice and Restricted
Stock Purchase Agreement shall be released until lapse of the Repurchase Option
with respect to such Shares.
5. In the event of any foreclosure of the security interest created by
this Agreement, the Company may sell the Shares at a private sale or may
repurchase the Shares itself. The parties agree that, prior to the establishment
of a public market for the Shares of the Company, the securities laws affecting
sale of the Shares make a public sale of the Shares commercially unreasonable.
The parties further agree that the repurchasing of such Shares by the Company,
or by any person to whom the Company may have assigned its rights under this
Agreement, is commercially reasonable if made at a price determined by the Board
of Directors in its discretion, fairly exercised, representing what would be the
fair market value of the Shares reduced by any limitation on transferability,
whether due to the size of the block of shares or the restrictions of applicable
securities laws.
6. In the event of default in payment when due of any indebtedness
under the Note, the Company may elect then, or at any time thereafter, to
exercise all rights available to a secured party under the California Commercial
Code including the right to sell the Collateral at a private or public sale or
repurchase the Shares as provided above. The proceeds of any sale shall be
applied in the following order:
(a) To the extent necessary, proceeds shall be used to pay all
reasonable expenses of the Company in enforcing this Agreement and the Note,
including, without limitation, reasonable attorney's fees and legal expenses
incurred by the Company.
(b) To the extent necessary, proceeds shall be used to satisfy any
remaining indebtedness under Purchaser's Note.
(c) Any remaining proceeds shall be delivered to Purchaser.
7. Upon full payment by Purchaser of all amounts due under the Note,
Pledge Holder shall deliver to Purchaser all Shares in Pledge Holder's
possession belonging to Purchaser, and Pledge Holder shall thereupon be
discharged of all further obligations under this Agreement; PROVIDED, HOWEVER,
that Pledge Holder shall nevertheless retain the Shares as escrow agent if at
the time of full payment by Purchaser said Shares are still subject to a
Repurchase Option in favor of the Company.
[SIGNATURE PAGE FOLLOWS]
-2-
The parties have executed this Pledge and Security Agreement as of the
date first set forth above.
COMPANY:
SITESMITH, INC.
By:
------------------------------------
Name:
----------------------------------
(print)
Title:
---------------------------------
Address:
3283 Scott Blvd.
Santa Clara, CA 95054
PURCHASER:
David Winn
---------------------------------------
(Signature)
------------------------------------
(Print Name)
Address:
10 Blvd. Flandrin
Paris 75116 France
-3-
ATTACHMENT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Pledge and Security
Agreement between the undersigned ("PURCHASEr") and SiteSmith, Inc. (the
"COMPANY") dated July 11, 2000 (the "AGREEMENT"), Purchaser hereby sells,
assigns and transfers unto the Company _________________________________
(________) shares of the Common Stock of the Company, standing in Purchaser's
name on the books of the Company and represented by Certificate No. ____, and
does hereby irrevocably constitute and appoint
________________________________________________ to transfer said stock on the
books of the Company with full power of substitution in the premises. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT.
Dated: ____________
Signature:
---------------------------------------
David Winn
---------------------------------------
Spouse of David Winn (if applicable)
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to perfect the security interest of the Company
pursuant to the Agreement.
RECEIPT
The undersigned hereby acknowledges receipt of Certificate No. _____
for __________ shares of Common Stock of SiteSmith, Inc.
Dated: _______________
---------------------------------------
David Winn
RECEIPT AND CONSENT
The undersigned hereby acknowledges receipt of a photocopy Certificate
No. _____ purchaser for __________ shares of Common Stock of SiteSmith, Inc.
(the "COMPANY").
The undersigned further acknowledges that the Secretary of the
Company, or his or her designee, is acting as Pledge Holder pursuant to the
Pledge and Security Agreement Purchaser has previously entered into with the
Company. As Pledge Holder, the Secretary of the Company, or his or her designee,
holds the original of the aforementioned certificate issued in the undersigned's
name.
Dated: _______________
---------------------------------------
David Winn
RECEIPT
SiteSmith, Inc.(the "COMPANY") hereby acknowledges receipt of (check
as applicable):
_____ A check in the amount of $100.00
_____ The cancellation of indebtedness in the amount of $__________
_____ Certificate No. ____ representing ______ shares of the Company's
Common Stock with a fair market value of $__________
_____ A promissory note in the amount of $1,749,900.00. given by David
Winn as consideration for Certificate No. ______ for ___________
shares of Common Stock of the Company.
Dated: ______________
SITESMITH, INC.
By:
-----------------------------------
Name:
----------------------------------
(print)
Title:
---------------------------------