Exhibit 99.4
▇▇▇▇▇.▇▇▇, INC.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "AGREEMENT") is made as of the
____ day of _____ 2005 (the "EFFECTIVE DATE") by and between ▇▇▇▇▇.▇▇▇, Inc., a
Washington corporation (the "COMPANY"), and the undersigned purchaser (the
"PURCHASER").
RECITAL
The Company desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Company, __________ (______) shares of the Company's common
stock, no par value (the "SHARES") at a purchase price of $0.10 per Share, to be
paid by the Purchaser in cash, a full recourse promissory note, services
performed or cancellation of indebtedness (the "PURCHASE PRICE").
AGREEMENT
In consideration of the foregoing, and the promises and covenants contained
herein, the parties hereby agree as follows:
1. Sale and Issuance of Common Stock.
(a) Subject to the terms and conditions of this Agreement, in exchange
for the Purchase Price, the Company agrees to issue to the Purchaser the Shares.
(b) The closing will occur at the offices of the Company or such other
location designated by the Company's board of directors, at a mutually agreeable
time.
(c) At the closing, the Purchaser will deliver to the Company the
Purchase Price, and the Company will deliver to the Purchase a certificate
representing the Shares.
2. Legends. The Purchaser acknowledges and agrees that the certificate
representing the Shares shall have endorsed thereon the legend, in substantially
the following form:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
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(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
REPURCHASE OPTION IN FAVOR OF THE COMPANY OR ITS ASSIGNEE, AND OTHER
RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY."
3. Warranties and Representations. In connection with the proposed transfer
of the Shares, the Purchaser hereby agrees, represents and warrants as follows:
(a) The Purchaser represents that the Purchaser is an "accredited
investor" as defined in Rule 501 of Regulation D promulgated under the Act.
(b) The Purchaser is a resident of the state set forth on the
signature page hereto.
(c) The Purchaser is purchasing the Shares solely for his own account
for investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "ACT"). The Purchaser further represents that he does not have any
present intention of selling, offering to sell or otherwise disposing of or
distributing the Shares or any portion thereof; and that the entire legal and
beneficial interest of the Shares he is purchasing is being purchased for, and
will be held for the account of, the Purchaser only and neither in whole nor in
part for any other person.
(d) The 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. The
Purchaser further represents and warrants that (i) he is familiar with the
Company and its plans, operations and financial condition with the Company's
officers, (ii) has received all such information as he deems necessary and
appropriate to enable him to evaluate the financial risk inherent in making an
investment in the Shares, and (iii) has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof. The Purchaser has such knowledge
and experience in financial and business matters that he is capable of (i)
evaluating the merits and risks of the purchase of the Shares pursuant to the
terms of this Agreement and (ii) protecting his interests in connection
therewith.
(e) The Purchaser realizes that his purchase of the Shares will be a
highly speculative investment, and he is able, without impairing his financial
condition, to hold the Shares for an indefinite period of time and to suffer a
complete loss on his investment.
(f) The Company has disclosed to the Purchaser that:
(i) The sale of the Shares has not been registered under the Act,
and the Shares must be held indefinitely unless a transfer of the Shares is
subsequently registered under the Act or an exemption from such registration is
available, and that the Company is under no obligation to register the Shares or
any portion thereof; and
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(ii) The Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(g) The Purchaser understands that the Shares have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon the Purchaser's investment intention and
representations to the Company.
4. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
5. Company Share Repurchase Option.
(a) Grant of Share Repurchase Option. In the event of the occurrence
of any Repurchase Event, as defined below, the Company will have the right, but
not the obligation, to repurchase the Shares acquired by the Purchaser pursuant
to the Agreement (and any shares issued thereon or received with respect thereto
pursuant to a stock split, combination, reorganization, or similar event) (the
"REPURCHASE SHARES") under the terms and subject to the conditions set forth in
this Section 5 (the "SHARE REPURCHASE OPTION"). Each of the following events
shall constitute a "REPURCHASE EVENT":
(i) Termination of the Purchaser's provision of continuous
service to the Company or its parent, either as an employee, officer, director
or a consultant ("SERVICE"), for any reason or no reason, with or without cause,
including death or disability. The Repurchase Period, as defined below, shall
commence on the date of termination of the Purchaser's Service; or
(ii) The receivership, bankruptcy or other creditor's proceeding
regarding the Purchaser or the taking of any of the Purchaser's shares of stock
by legal process, such as a levy of execution. The Repurchase Period, as defined
below, shall commence on the date the Company receives actual notice of the
commencement of pendency of the receivership, bankruptcy or other creditor's
proceeding or the date of such taking, as the case may be.
(b) Exercise of Share Repurchase Option. The Company may exercise the
Share Repurchase Option by written notice to the Purchaser, the Purchaser's
legal representative, or other holder of the Repurchase Shares, as the case may
be, during the Repurchase Period. The "REPURCHASE PERIOD" shall be the period
commencing at the time set forth in Section 5(a) above and ending on the date
ninety (90) days after the commencement of the Repurchase Period. If the Company
fails to give notice during the Repurchase Period, the Share Repurchase Option
shall terminate (unless the Company and the Purchaser have extended the time for
the exercise of the Share Repurchase Option) unless and until there is a
subsequent Repurchase Event. If there is a subsequent Repurchase Event, the
Share Repurchase Option shall again become exercisable as provided in this
Section 5. The Share Repurchase Option may be exercised for less than all of the
Repurchase Shares, as determined by the Company in its sole discretion.
(c) Payment for Repurchase Shares. The repurchase price per share
being repurchased by the Company pursuant to the Share Repurchase Option will
depend on either (i) the length of the Purchaser's Service period with the
Company, as set forth in the table below, or (ii) the Milestones (as defined on
EXHIBIT A) achieved by the Company during the period of the
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Purchaser's Service, as set forth in the below table, and will be the greater of
the two numbers, if there is more than one indicated. The Repurchase Option will
terminate upon after four (4) years of Service to the Company or upon the
achievement of any four (4) Milestones during the Purchaser's Service period,
whichever occurs sooner.
REPURCHASE PRICE PER
LENGTH OF SERVICE SHARE
----------------- --------------------
Less than one (1) year of Service or
achievement of any one Milestone: $0.20
More than one (1) year of Service, but less than two (2) $0.40
years of Service or achievement of any two (2)
Milestones:
More than two (2) years of Service, but less than three $0.80
(3) years of Service or achievement of any three
(3) Milestones:
More than three (3) years of Service $2.00
(d) Payment of Purchase Price. If the Company elects to repurchase the
Repurchase Shares, the Company will pay the Purchaser the Purchaser Price in
cash on or before the last day of the Repurchase Period. For purposes of the
foregoing, cancellation of any indebtedness of the Purchaser to the Company
shall be treated as payment to the Purchaser in cash to the extent of the unpaid
principal and any accrued interest canceled.
(e) Assignment of Share Repurchase Option. The Company shall have the
right to assign the Share Repurchase Option at any time, whether or not such
option is then exercisable, to one or more persons as may be selected by the
Company in its sole discretion.
(f) Limitations on Transfer. The Shares subject to the Share
Repurchase Option may only be transferred to (i) a Purchaser's ancestors,
descendants or spouse or to a trustee for their benefit or the benefit of
Purchaser, or (ii) a Purchaser's members, shareholder or partners, provided that
such transferee or transferees shall agree in writing (in a form satisfactory to
the Company or its parent) to take the Shares subject to all the terms and
conditions of this Agreement providing for the Share Repurchase Option.
(g) Transfers in Violation of Agreement. The Company or its parent
shall not be required (i) to transfer on its books any shares of Shares of the
Company 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 accord the right to vote as such owner or to pay dividends to any
transferee to whom such shares shall have been so transferred.
6. Election Under Section 83(b) of the Code. The Purchaser understands that
he should consult with his tax advisor regarding the advisability of filing with
the Internal Revenue Service an election under Section 83(b) of the Code
("ELECTION NOTICE"). The Election Notice, in the form attached hereto as EXHIBIT
B, must be filed no later than thirty (30) days after the date
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on which Purchaser executes the Agreement. The Shares acquired upon execution of
the Agreement are nontransferable and may be subject to a substantial risk of
forfeiture. Failure to file Election Notice may result in adverse tax
consequences to the Purchaser. The Purchaser acknowledges that he has been
advised to consult with a tax advisor prior to the execution of the Agreement
regarding the tax consequences to the Purchaser of the execution of the
Agreement. AN ELECTION UNDER SECTION 83(b) MUST BE FILED WITHIN 30 DAYS AFTER
THE DATE ON WHICH THE PURCHASER PURCHASES THE SHARES SHARES. THIS TIME PERIOD
CANNOT BE EXTENDED. THE PURCHASER ACKNOWLEDGES THAT TIMELY FILING OF A SECTION
83(b) ELECTION IS THE PURCHASER'S SOLE RESPONSIBILITY, EVEN IF THE PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS BEHALF.
7. "Market Stand-Off" Agreement. The Purchaser hereby agrees that in
connection with the initial public offering ("IPO") of the Company's Common
Stock should such offering occur, during the period of duration (not to exceed
180 days) specified by the Company or an underwriter of Common Stock of the
Company following the effective date of the registration statement of the
Company filed under the Act with respect to the IPO, he shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase, pledge or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by him at any time during such period except Common Stock included in such
registration. The Purchaser agrees to the terms of any form of such a stand-off
agreement as approved by the Company or an underwriter of the IPO.
8. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, or upon delivery to an overnight courier service
addressed to the other party at the address hereinafter shown below his or its
authorized signature or at such other address as such party may designate by ten
(10) days' advance written notice to the other party.
9. Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each party.
10. Entire Agreement; Amendments. This Agreement, together with the
agreements referenced herein and therein, shall be construed under the laws of
the State of Washington, and constitute the entire agreement of the parties with
respect to the subject matter hereof and thereof superseding all prior written
or oral agreements, and no amendment or addition hereto or thereto shall be
deemed effective unless agreed to in writing by the parties.
11. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way and shall be construed in accordance with the
purposes and tenor and effect of this Agreement.
12. Counterparts. This Agreement may be executed in counterparts each of
which shall be an original, but all of which shall constitute one instrument.
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13. Counsel. The Purchaser has had the opportunity to consult with his own
legal counsel before executing this Agreement. Purchaser understands and
acknowledges that DLA ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ US LLP is counsel to the Company
and not to the Purchaser.
[SIGNATURE PAGE OF COMMON STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PURCHASER" "COMPANY"
▇▇▇▇▇.▇▇▇, Inc.
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
Address: Address:
---------------------------- -------------------------------
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EXHIBIT A
MILESTONES
MILESTONES
- The Company (including its parent) raises at least $3,000,000 in capital
after the date of this Agreement.
- The Company or its parent becomes subject to the periodic reporting
requirements of Sections 13 or 15(d) of the Securities Exchange Act.
- The Company's or its parent's quarterly EBITDA (determined in accordance
with GAAP) exceeds $1,000,000.
- The Company's or its parent's quarterly gross margin (determined in
accordance with GAAP) exceeds $4,000,000.
- The Company's or its parent's quarterly gross revenues (determined in
accordance with GAAP) exceeds $5,000,000.
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EXHIBIT B
83(B) ELECTION NOTICE
March ___, 2005
Please provide the Internal Revenue
Service Office where you file your
income taxes
-------------------------------------
-------------------------------------
RE: ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED
Gentlemen:
The following information is submitted pursuant to Treas. Reg. Section
1.83-2 in connection with this election by the undersigned under Section 83(b)
of the Internal Revenue Code of 1986, as amended.
THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE:
Name: (the "TAXPAYER")
--------------------------
Address:
-----------------------
-----------------------
I.D. No.:
----------------------
THE FOLLOWING IS A DESCRIPTION OF EACH ITEM OF PROPERTY WITH RESPECT TO
WHICH THE ELECTION IS MADE:
________ shares of Common Stock of ▇▇▇▇▇.▇▇▇, Inc. (the "STOCK")
purchased from ▇▇▇▇▇.▇▇▇, Inc. (the "COMPANY") pursuant a stock
purchase agreement.
THE PROPERTY WAS TRANSFERRED TO THE UNDERSIGNED ON:
March ___, 2005.
THE TAXABLE YEAR FOR WHICH THE ELECTION IS MADE IS:
Year 2005
THE NATURE OF THE RESTRICTION TO WHICH THE PROPERTY IS SUBJECT:
The Stock may be repurchased by the Company or its assignee upon the
occurrence of certain events. These repurchase rights lapse over time
with regard
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to a portion of the Stock based on the continued performance of
services by the taxpayer to the Company over time.
THE FOLLOWING IS 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 EACH PROPERTY WITH RESPECT TO WHICH THE ELECTION
IS MADE:
$________ (__________ shares at $0.10 per share).
THE FOLLOWING IS THE AMOUNT PAID FOR THE PROPERTY:
$__________
A copy of this election has been furnished to the Company for which
services are performed by the undersigned.
Please acknowledge receipt of this election by signing or stamping the
enclosed copy of this letter and returning it to the undersigned in the enclosed
envelope.
Very truly yours,
----------------------------------------
[Name of Purchaser]
Enclosures
cc: Chief Financial Officer, ▇▇▇▇▇.▇▇▇, Inc.
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