EXHIBIT 10.4
AVENUE A, INC.
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered into
as of this 2nd day of July, 1998, by and between Avenue A, Inc. (the "Company"),
a Washington corporation, and the undersigned purchaser of the Company's common
stock (the "Shareholder").
RECITALS
A. The Shareholder desires to purchase shares of the Company's common
stock upon the terms and conditions below.
B. Each of the other shareholders of the Company is entering into an
agreement substantially identical to this Agreement.
AGREEMENT
1. Sale and Purchase of Shares
Subject to the terms and conditions of this Agreement, the Shareholder
agrees to purchase from the Company, and the Company agrees to sell to the
Shareholder, 2,000,000 shares of the common stock of the Company (the "Shares",
and as further defined below) at a purchase price of $0.15 per share. In
connection with the execution of this Agreement, the Shareholder has delivered
to the Company a check in the amount of the aggregate purchase price, receipt of
which is hereby acknowledged by the Company. The sale and transfer of the Shares
shall be effective as of the date of this Agreement. "Shares" shall be defined
as the purchased Shares and all securities received in replacement of or in
connection with the Shares pursuant to 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. Disposition Prohibited
The Shareholder shall not dispose of any of his, her or its Shares except
as permitted by this Agreement, and any such attempted disposition shall be void
and
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shall not be recognized or registered upon the books of the Company. The term
"dispose" includes, but is not limited to, the acts of selling, assigning,
transferring, pledging, encumbering, giving away, devising, and any other form
of conveying, including conveyances caused by marital separation, divorce,
receivership, or bankruptcy, whether voluntary or involuntary or by operation of
law.
3. Right of First Refusal
3.1 Restriction
Before any Shares held by the Shareholder or any transferee of the
Shareholder (either being sometimes referred to as the "Holder") may be sold or
otherwise disposed of (as defined above but excluding transfers described in and
governed by Section 4), 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 (the "Right of First Refusal").
3.2 Notice of Proposed Transfer
The Holder of the Shares shall deliver to the Company a written notice (the
"Notice") stating: (a) the Holder's bona fide intention to sell or otherwise
transfer such Shares; (b) the name and address of any proposed purchaser or
other transferee ("Proposed Transferee"); (c) the number of Shares to be
transferred; and (d) the terms and conditions of any proposed sale or transfer,
including the proposed purchase price for the Shares to be transferred (the
"Offered Price").
3.3 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 or any portion 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 3.4 below.
3.4 Purchase Price
The purchase price ("Purchase Price") for the Shares purchased by the
Company or its assignee(s) under this Section 3 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.
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3.5 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 of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within thirty (30) days after receipt of the Notice or in the manner and at the
times set forth in the Notice.
3.6 Holder's Right to Transfer
If any 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 Section 3.3, 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 sixty (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 and any spouse executes an endorsement in the form attached
as Exhibit A, acknowledging that the provisions of this Agreement shall continue
to apply to the Shares in the hands of such Proposed Transferee (an
"Endorsement"). If the Shares 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.
3.7 Exception for Certain Family Transfers
Notwithstanding anything to the contrary in this Section 3, the transfer of
any or all of the Shares during the Shareholder's lifetime or on the
Shareholder's death by will or intestacy to the Shareholder's Immediate Family
or a trust for the benefit of the Shareholder's Immediate Family shall be exempt
from the provisions of this Section 3. "Immediate Family" as used herein shall
mean the Shareholder's spouse (except in the case of divorce), father, mother,
brother, sister or children or an entity in which all beneficial ownership
interests are held by the Shareholder, any of the aforementioned persons or any
other such entity. In such case, the transferee or other recipient shall receive
and hold the Shares so transferred subject to the provisions of this Agreement,
shall execute an Endorsement and there shall be no further transfer of such
Shares except in accordance with the terms of this Agreement.
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4. Involuntary Transfer
4.1 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, divorce,
legal separation or bankruptcy, but excluding a transfer to Immediate Family as
set forth in Section 3.7 above) of all or a portion of the Shares by the Holder,
the Company or its assignee(s) shall have an option to purchase all of the
Shares transferred at the greater of the purchase price paid by the Holder for
such Shares or the Fair Market Value (as defined below) of the Shares on the
date of transfer. The Holder or the Holder's executor shall promptly notify the
Secretary of the Company in writing of such involuntary transfer. The right to
purchase such Shares shall be provided to the Company or its assignee(s) for a
period of thirty (30) days following receipt by the Company of such written
notice. In the event that the proposed transfer is required by the order,
judgment or decision of a court, arbitrator or other third party, the Holder or
the Holder's executor shall notify such court, arbitrator or other third party
of the Company's rights under this Section 4.1.
4.2 Price for Involuntary Transfer
For purposes of this Agreement, the "Fair Market Value" of the Shares shall
be defined as the value of the Shares as determined by the Board of Directors of
the Company, which value reflects the then-current value of the Shares in terms
of present earnings and future prospects of the Company. The Company shall
notify the Holder or the Holder's executor of the Fair Market Value within
thirty (30) days after receipt by it of written notice of the proposed transfer
of Shares. However, if the Holder or the Holder's executor does not agree with
the valuation as determined by the Board of Directors of the Company, the Holder
or the Holder's executor shall be entitled to have the valuation determined by
an independent appraiser to be mutually agreed upon by the Company and the
Holder or the Holder's executor and whose fees shall be borne equally by the
Company and the Holder or the Holder's estate.
5. Assignment of Company Rights
The rights 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.
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6. 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 Shares shall be void unless the provisions of this Agreement
are met.
7. Termination of Rights
This Agreement shall terminate upon the closing of the first sale of Common
Stock of the Company to the general public (an "Initial Public Offering") under
a registration statement declared effective under the Securities Act of 1933, as
amended (the "Securities Act") or any successor statute. Upon termination of
this Agreement, a new certificate or certificates representing the Shares shall
be issued, on request, without the second paragraph of the legend required by
Section 10.1 and delivered to the Shareholder.
8. Representations, Warranties and Covenants of the Shareholder
The Shareholder represents, warrants and covenants to the Company that:
8.1 No Sale or Distribution; Investigation
The Shareholder is purchasing the Shares for the Shareholder's own personal
account for investment and not with a view to the sale or distribution of all or
any part of the Shares. No one other than the Shareholder has any beneficial
interest in the Shares. The Shareholder has had full opportunity to ask
questions and receive answers concerning the Shares and the financial condition
of the Company.
8.2 Authority; Binding Agreement
The Shareholder has the full legal right, power and authority to enter into
and to perform this Agreement. This Agreement constitutes the Shareholder's
valid and binding obligation, enforceable against the Shareholder in accordance
with its terms.
8.3 No Registration of Shares; Restricted Securities
The Shareholder understands that the Shares have not been registered under
the Securities Act by reason of a specific exemption, which exemption depends
upon, among other things, the bona fide nature of the Shareholder's investment
intent as expressed here. The Shareholder understands that the Shares are
characterized as "restricted securities" under the federal securities laws
because they are being acquired from the Company in a transaction not involving
a public offering and that under such laws and applicable regulations such
securities may be resold without registration
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under the Securities Act only in certain limited circumstances. In this
connection, the Shareholder represents that he, she or it is familiar with Rule
144 and Rule 701 under the Securities Act, as presently in effect, and
understands the resale limitations imposed by the Securities Act.
9. Restrictive Legends and Stop-Transfer Orders
9.1 Restrictive Legend
The Secretary of the Company shall endorse all certificates representing
Shares owned by the Shareholder and all certificates representing Shares issued
or transferred after this Agreement is entered into with the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE LAW, AND NO INTEREST MAY BE
SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (a) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (b)
THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR
THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS
CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION, OR (c) THIS CORPORATION OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
9.2 Stop Transfer Order; No Transfer in Violation of Agreement
The Shareholder agrees that, in order to ensure compliance with this
Agreement's restrictions, the Company may issue appropriate "stop transfer"
instructions to its transfer agent, if any, and that, if the Company transfers
its own
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securities, it may make appropriate notations to the same effect in its own
records. The Company shall not be required (a) 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 (b) 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.
10. Miscellaneous
10.1 Entire Agreement; Specific Enforcement; Severability
This Agreement is the entire agreement of the parties regarding its subject
matter and supersedes all prior written or oral communications or agreements.
The Shareholder expressly agrees that the Company and the other shareholders
will be irreparably damaged if this Agreement is not specifically enforced. Upon
a breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by the Shareholder, the Company shall, in addition to all other
remedies, be entitled to a temporary or permanent injunction, without showing
any actual damage, and/or a decree for specific performance, in accordance with
the provisions of this Agreement. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
such determination shall not affect the validity or enforceability of any other
part of this Agreement.
10.2 Notices
Notices given pursuant to this Agreement shall be deemed duly given on the
date of personal delivery, on the date sent by fax or three days after mailing
if mailed by certified or registered mail, return receipt requested, postage
prepaid, to the party at its address on the signature page below or such other
address of which the addressee may subsequently notify the other parties in
writing.
10.3 Expenses
Except as specifically provided to the contrary, each party shall pay his,
her or its own expenses incurred in connection with this Agreement or any
transactions contemplated by this Agreement.
10.4 Governing Law
This Agreement and the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the state of Washington
applicable to
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the construction and enforcement of contracts wholly executed and performed in
Washington.
10.5 Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.6 Amendments; Waivers
Neither this Agreement nor any provision may be amended except by written
agreement signed by the parties. No waiver of any breach or default shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
AVENUE A, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary/Treasurer
Company address: Avenue A, Inc.
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
SHAREHOLDER
Signature: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: The Highlands
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AVENUE A, INC.
SHARE PURCHASE AGREEMENT
CONSENT OF SPOUSE
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I, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, spouse of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, have read and approve the
foregoing Share Purchase Agreement (the "Agreement"). In consideration of the
terms and conditions as set forth in the Agreement, I hereby appoint my spouse
as my attorney-in-fact with respect to the amendment of or the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in the Agreement or any Shares issued
pursuant thereto under the community property laws of the state of Washington or
similar laws relating to marital property in effect in the state of our
residence as of the date of the Agreement. I have been informed of my right to
obtain independent legal counsel concerning this Agreement and the rights and
obligations provided for in this Agreement, and by execution of this Agreement,
acknowledge having either obtained such independent counsel or having waived the
same.
Date: 6/26/98
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT A
AVENUE A, INC.
SHARE PURCHASE AGREEMENT
ENDORSEMENT
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The undersigned, a Shareholder of Avenue A, Inc. (the "Company"), and his
or her spouse hereby agree to the terms and conditions of the Share Purchase
Agreement dated as of _________________, 1998 originally entered into by and
among the Company and the other party listed on the signature page and
acknowledge receipt of a copy of such Agreement and agree to be bound as a
Shareholder.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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(Signature of Shareholder) (Signature of Spouse)
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(Printed Name) (Printed Name)
6/26/98 6/26/98
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(Date) (Date)