RESTRICTED STOCK DONATIONAGREEMENT
This Restricted Stock DonationAgreement (the “Agreement”) is made as of May 7, 2024 with an effective date of August 22, 2023 (the “Effective Date”), between Antelope Valley Soccer Inc., a Delaware corporation, with principal address at 10756 Ashby Avenue, Los Angeles, CA 90064 (the “Company”), and the City of Lancaster, a city incorporated under the laws of the State of California, with an address at 44933 N. Fern Ave, Lancaster, CA 93534 (the “Acquiror”).
For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:
1.Donation of Shares.
The Company shall issue to the Acquiror, and the Acquiror shall acquire from the Company, subject to the terms and conditions set forth in this Agreement, six hundred fifty thousand (650,000) shares (the “Shares”) of common stock, $0.00001 par value per share, of the Company (“Common Stock”). The Shares are to be acquired by the Acquiror by its execution of that certain Operating Agreement by and between the Company and the Acquiror (the “Operating Agreement”). The parties covenant and agree that the Acquiror does not and will not pay any cash or other monetary consideration for the Shares. The Company shall record in the Company’s ledger in book form the number of Shares acquired by the Acquiror hereunder (the Company will not issue paper certificates). The Acquiror agrees that the Shares shall be subject to the Option (as defined below) and the restrictions on transfer set forth in this Agreement. For the purposes of clarification, even if this Agreement is executed earlier, the actual donation of the shares is contingent upon and effective upon the execution of the Operating Agreement.
2.Option.
(a) Subject to the terms and conditions of this Agreement, in the event (i) either Party terminates the Operating Agreement or (ii) the Operating Agreement does not come into effect for any and all reasons, including but not limited to the stadium plan not being agreed to prior to August 31, 2024, in each case prior to December 31, 2025 (the “Option Period”), the Company shall have the right and option (the “Option”) to re-acquire from the Acquiror, at $0.001 per share, some or all of the Shares.
3.Exercise of Option and Closing.
(a) The Company may exercise the Option by delivering or mailing to the Acquiror, during the Option Period, a written notice of exercise of the Option. If and to the extent the Option is not so exercised by the giving of such a notice within such ninety (90) day period, the Option shall automatically expire and terminate effective upon the expiration of such ninety (90) day period.
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(b) After the time at which the Company delivers its notice, the Company shall not pay any dividend to the Acquiror on account of such re-acquired Shares or permit the Acquiror to exercise any of the privileges or rights of a shareholder with respect to such re- acquired Shares, but shall, in so far as permitted by law, treat the Company as the legal and beneficial owner of such re-acquired Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name or cancel the number of Shares being re-acquired by the Company.
(c) The Company may assign its Option to one or more persons or entities.
The optionee will be under the same obligations as the Company as to Section 2 hereunder.
4.Restrictions on Transfer.
The Acquiror shall not sell, assign, transfer, pledge, encumber, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively, “transfer”) any Shares except in accordance with Section 5 below.
5.Right of First Refusal.
(a) If the Acquiror proposes to transfer any Shares that are no longer subject to the Option, then the Acquiror shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer Notice shall name the proposed transferee and state the number of such Shares Acquiror proposes to transfer (the “Offered Shares”), the price per share and all other material terms and conditions of the transfer. (b) For ten (10) days following delivery to the Company of such Transfer Notice, the Company shall have the option to purchase some or all of the Offered Shares at the price and upon the terms set forth in the Transfer Notice. In the event the Company elects to purchase the Offered Shares, it shall give written notice of such election to the Acquiror within such ten (10) day period. The Company shall then promptly deliver or mail to the Acquiror a check in payment of the purchase price for the Offered Shares; provided that if the terms of payment set forth in the Transfer Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and provided further that any minimal delay (but the Company does make the payment in due course) in making such payment shall not invalidate the Company’s exercise of its option to purchase the Offered Shares unless the Acquiror suffers material harm due to such delay. (c) If the Company does not elect to acquire all of the Offered Shares, the Acquiror may, within the sixty (60) day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares to the proposed transferee, provided that such transfer shall not be on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant to this section shall remain subject to this Agreement and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.
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(d) If the Company acquires all of the Offered Shares, following such purchase the Company shall not pay any dividend to the Acquiror on account of such Offered Shares or permit the Acquiror to exercise any of the privileges or rights of a shareholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Offered Shares.
(e) The following transactions shall be exempt from the provisions of this section:
(1) any transfer pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”); and (2) any transfer made in connection with a Sale (as such term is defined below).
(f) The Company may assign its rights to purchase Offered Shares in any particular transaction under this section to one or more persons or entities. (g) The provisions of this Section 5 shall terminate upon the earlier of the following events:
(1) the closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement filed by the Company under the Securities Act; or
(2) (i) a sale or exchange (or negotiations leading thereto) of the capital stock by the stockholders of the Company in one transaction or series of related transactions where more than 50% of the outstanding voting power of the Company is acquired by a person or entity or group of related persons or entities; or (ii) a reorganization, consolidation or merger (or negotiations leading thereto) of the Company with or into any other corporation or corporations (excluding an equity financing) where the outstanding voting securities of the Company immediately before the transaction represent or are converted into less than fifty percent 50% of the outstanding voting power of the surviving entity (or its parent corporation) immediately after the transaction; or (iii) a sale of all or substantially all of the assets of the Company and its subsidiaries, on a consolidated basis. A transaction of the type contemplated by this Section 5(g)(2) is herein referred to as a “Sale” of the Company. Notwithstanding the foregoing, a bona fide equity financing shall not be deemed to be a Sale. (h) The Acquiror shall not transfer any Shares, or any interest therein, to any person or entity that is a competitor of the Company, as determined by the Board of Directors of the Company in its sole discretion, unless such transfer is made in connection with a Sale. (i) The Company shall not be required (i) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (ii) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred. - 4 -
(j) If the Company and Acquiror are subject to an agreement containing right of first refusal provisions similar to the foregoing, such other agreement shall control.
6.Agreement in Connection with Public Offering.
The Acquiror agrees, in connection with the initial underwritten public offering of the Company’s securities pursuant to a registration statement under the Securities Act, (a) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock held by the Acquiror (other than those shares included in the offering) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of (i) 180 days from the effective date of such registration statement or (ii), if required by such underwriter, such longer period of time as is necessary to enable such underwriter to issue a research report or make a public appearance that relates to an earnings release or announcement by the Company within eighteen (18) days before or after the date that is one hundred eighty (180) days after the effective date of the registration statement relating to such offering, but in any event not to exceed two hundred ten (210) days following the effective date of the registration statement relating to such offering; and (b) to execute any agreement reflecting clause (a) above as may be requested by the Company or the managing underwriters at the time of such offering.
7.Restrictive Legends.
(a) All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:
“THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.”
“THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND AN OPTION TO PURCHASE SET FORTH
IN A CERTAIN RESTRICTED STOCK PURCHASE
AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED OWNER OF THESE SHARES (OR THE
PREDECESSOR IN INTEREST), AND SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION WITHOUT CHARGE AT
THE OFFICE OF THE SECRETARY OF THE COMPANY.”
(b) THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS
AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF - 5 -
CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT TO
SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
8.Adjustments for Stock Splits, Stock Dividends, etc.
(a) If from time to time there is any stock split, stock dividend, stock distribution or other reclassification of the Common Stock of the Company, any and all new, substituted or additional securities to which the Acquiror is entitled by reason of Acquiror’s ownership of the Shares shall be immediately subject to the Option, the restrictions on transfer and the other provisions of this Agreement in the same manner and to the same extent as the Shares.
(b) Other than in connection with a Sale, upon the occurrence of any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction, the repurchase and other rights of the Company hereunder shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Shares were converted into or exchanged for pursuant to such transaction in the same manner and to the same extent as they applied to the Shares under this Agreement.
If, in connection with such a transaction, a portion of the cash, securities and/or other property received upon the conversion or exchange of the Shares is to be placed into escrow to secure indemnification or similar obligations, the mix between the vested and unvested portion of such cash, securities and/or other property that is placed into escrow shall be the same as the mix between the vested and unvested portion of such cash, securities and/or other property that is not subject to escrow.
9.Investment Representations.
The Acquiror represents, warrants and covenants as follows:
(a) The Acquiror is acquiring the Shares for Acquiror’s own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act, or any rule or regulation under the Securities Act. (b) The Acquiror has had such opportunity as Acquiror has deemed adequate to obtain from representatives of the Company such information as is necessary to permit him to evaluate the merits and risks of Acquiror’s investment in the Company. - 6 -
(c) The Acquiror has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the acquisition of the Shares and to make an informed investment decision with respect to such acquisition. (d) The Acquiror can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period. (e) The Acquiror understands that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.
10.Withholding Taxes.
(a) The Acquiror acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Acquiror any federal, state or local taxes of any kind required by law to be withheld with respect to the acquisition of the Shares by the Acquiror or the lapse of the Option.
(b) The Acquiror has reviewed with the Acquiror’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Acquiror is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Acquiror understands that the Acquiror (and not the Company) shall be responsible for the Acquiror’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.
11.Severability.
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.
12.Waiver and Amendment.
Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Company. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Acquiror.
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13.Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the Company and the Acquiror and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth herein.
14.Notice.
All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, if to the Acquiror, to the address shown on the records of the Company, and if to the Company, to the Company’s principal executive offices, attention of the Corporate Secretary.
15.Entire Agreement.
This Agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.
16.Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of California without regard to any applicable conflicts of laws.
17.Acquiror’s Acknowledgements.
The Acquiror acknowledges that it: (a) has read this Agreement; (b) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Acquiror’s own choice or has voluntarily declined to seek such counsel; (c) understands the terms and consequences of this Agreement; and (d) is fully aware of the legal and binding effect of this Agreement.
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[SIGNATURE PAGE TO RESTRICTED STOCK AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COMPANY:
ANTELOPE VALLEY SOCCER INC.
By:
Name: John Smelzer
Title: CEO
ACQUIROR:
CITY OF LANCASTER
By:
Name: Jason Caudle
Title: City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney