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EXHIBIT 10.17
M4, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
5th day of August, 1998, by and between M4, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
WHEREAS, the Company desires to issue, and Purchaser desires to acquire,
stock of the Company as herein described, on the terms and conditions
hereinafter set forth;
WHEREAS, the issuance of common stock hereby is in connection with a
compensatory benefit plan for the employees, directors, officers, advisers or
consultants of the Company and is intended to comply with the provisions of Rule
701 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act").
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. PURCHASE AND SALE OF STOCK. Purchaser hereby agrees to purchase from
the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of
three million (3,000,000) shares of the Common Stock of the Company (the
"Stock") at $0.001 per share, for an aggregate purchase price of three thousand
dollars ($3,000), payable in cash.
The closing hereunder, including payment for and delivery of the Stock
shall occur at the offices of the Company immediately following the execution of
this Agreement, or at such other time and place as the parties may mutually
agree.
2. REPURCHASE OPTION. In the event Purchaser's relationship with the
Company (or a parent or subsidiary of the Company), whether as an employee or
consultant, terminates for any reason (including death or disability), or for no
reason, with or without cause, then the Company (or its designee) shall have an
irrevocable option (the "Repurchase Option"), for a period of ninety (90) days
after said termination, or such longer period as may be determined by the
Company if such later repurchase is deemed necessary by the Company for
treatment of all or part of its stock as Qualified Small Business Stock under
Section 1202 of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder, to repurchase from Purchaser or Purchaser's
personal representative, as the case may be, at the original price per share
indicated above paid by Purchaser for such Stock ("Option Price"), up to but not
exceeding the number of unvested shares of the Stock set forth on Exhibit A
hereto which is incorporated herein by this reference. The Company shall have a
unilateral right to assign the Repurchase Option to any person or entity
designated by the Board of Directors of the Company.
3. EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be
exercised by written notice signed by an officer of the Company or by any
assignee or assignees of the Company and delivered or mailed as provided in
Section 16a. Such notice shall identify the number of shares of Stock to be
purchased and shall notify Purchaser of the time, place and date
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for settlement of such purchase, which shall be scheduled by the Company within
the term of the Repurchase Option set forth in Section 2 above. The Company
shall be entitled to pay for any shares of Stock purchased pursuant to its
Repurchase Option at the Company's option in cash or by offset against any
indebtedness owing to the Company by Purchaser (including without limitation any
Note given in payment for the Stock), or by a combination of both. Upon delivery
of such notice and payment of the purchase price in any of the ways described
above, the Company shall become the legal and beneficial owner of the Stock
being repurchased and all rights and interest therein or related thereto, and
the Company shall have the right to transfer to its own name the Stock being
repurchased by the Company, without further action by Purchaser.
4. ADJUSTMENTS TO STOCK. If, from time to time, during the term of the
Repurchase Option there is any change affecting the Company's outstanding Common
Stock as a class that is effected without the receipt of consideration by the
Company (through merger, consolidation, reorganization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating,
dividend, combination of shares, change in corporation structure or other
transaction not involving the receipt of consideration by the Company), then any
and all new, substituted or additional securities or other property to which
Purchaser is entitled by reason of Purchaser's ownership of Stock shall be
immediately subject to the Repurchase Option and be included in the word "Stock"
for all purposes of the Repurchase Option with the same force and effect as the
shares of the Stock presently subject to the Repurchase Option, but only to the
extent the Stock is, at the time, covered by such Repurchase Option. While the
total Option Price shall remain the same after each such event, the Option Price
per share of Stock upon exercise of the Repurchase Option shall be appropriately
adjusted.
5. CHANGE OF CONTROL.
(a) Notwithstanding any other provision of this Agreement, in
the event that Purchaser's relationship with the Company, its successor (or any
parent or subsidiary of either), whether as an employee or consultant, is
terminated without "Cause" or if Purchaser resigns for "Good Reason" within
thirteen (13) months after the effective date of the Change of Control, then the
Repurchase Option shall lapse and terminate and the Stock shall be fully vested.
(b) In the event that lapse and termination of the Repurchase
Option constitutes a "parachute payment" within the meaning of Section 280G (as
it may be amended or replaced) of the Internal Revenue Code of 1986, as amended
or replaced (the "Code") and (ii) but for this paragraph (b), would be subject
to the excise tax imposed by Section 4999 (as it may be amended or replaced) of
the Code (the "Excise Tax"), then Purchaser's benefits hereunder shall be either
(i) delivered in full, or (ii) delivered as to such lesser extent which would
result in no portion of such benefits being subject to the Excise Tax, whichever
of the foregoing amounts, taking into account the applicable federal, state and
local income taxes and the Excise Tax, results in the receipt by Purchaser on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under the Excise Tax. Unless the
Company and Purchaser otherwise agree in writing, any determination required
under this paragraph (b) shall be made in writing in good faith by the Company's
independent public accountants (The "Accountants"). In the event of a reduction
in benefits hereunder, Purchaser
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shall be given the choice of which benefits to reduce. For purposes of making
the calculations required by this paragraph (b), the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of the
Code. The Company and Purchaser shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this paragraph (b). The Purchaser shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this paragraph (b).
(c) DEFINITIONS.
(i) For purposes of this Section 5, "Change of Control"
of the Company is defined as:
(1) Any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(other than a group consisting of the Purchaser and the members of the Board as
of the Effective Date) becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities; or
(2) The consummation of a merger or
consolidation of the Company with any other. corporation other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the
voting securities of the surviving entity or its parent outstanding immediately
after such merger or consolidation; or
(3) The approval by the Board of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
(ii) For purposes of this Section 5, "Cause" is defined
as Purchaser's (i) gross negligence or willful misconduct in connection with the
performance of his duties hereunder which in the written determination of a
majority of the Board of Directors has not been cured within thirty (30) days
following receipt by Purchaser of written notice from the Board identifying such
acts of gross negligence or willful misconduct, (ii) commission of a felony
(other than a traffic-related offense) which in the written determination of a
majority of the Board of Directors has caused material injury to the Company's
business, (iii) dishonesty with respect to a significant matter relating to the
Company's business and intended to result in personal enrichment of the
Purchaser or his family at the expense of the Company, or (iv) willful material
breach of any Independent Contractor Services Agreement or Proprietary
Information Agreement in effect between Purchaser and the Company which in the
written determination of a majority of the Board of Directors has not been cured
within thirty (30) days following receipt by Purchaser of written notice from
the Board identifying such willful material breach.
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(iii) For purposes of this Section 5, "Good Reason" is
defined as (i) the assignment to Purchaser of duties not commensurate with his
status as Chief Executive Officer, or any material reduction of the Purchaser's
duties, authority or responsibilities; (ii) the relocation of the Purchaser to a
facility or a location more than fifty (50) miles from the Purchaser's then
present location, without the Purchaser's written consent; (iii) any material
breach of this Agreement by the Company; or (iv) the occurrence of a "Change of
Control." The determination as to whether or not "Good Reason" shall exist shall
be made in good faith by Purchaser, whose determination shall be binding on the
Company, its stockholders, and the members of the Company's Board of Directors.
6. TERMINATION OF REPURCHASE OPTION. Sections 2, 3, 4 and 5 of this
Agreement shall terminate upon the exercise in full or expiration of the
Repurchase Option, whichever first occurs.
7. ESCROW OF UNVESTED STOCK. As security for Purchaser's faithful
performance of the terms of this Agreement and to insure the availability for
delivery of Purchaser's Stock upon exercise of the Repurchase Option herein
provided for, Purchaser agrees, at the closing hereunder, to deliver to and
deposit with the Secretary of the Company or the Secretary's designee ("Escrow
Agent"), as Escrow Agent in this transaction, three (3) stock assignments duly
endorsed (with date and number of shares blank) in the form attached hereto as
Exhibit C, together with a certificate or certificates evidencing all of the
Stock subject to the Repurchase Option; said documents are to be held by the
Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit B attached hereto
and incorporated by this reference, which instructions shall also be delivered
to the Escrow Agent at the closing hereunder.
8. RIGHTS OF PURCHASER. Subject to the provisions of Sections 7, 9, 12
and 14 herein, Purchaser shall exercise all rights and privileges of a
shareholder of the Company with respect to the Stock.
9. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the Stock
while the Stock is subject to the Repurchase Option. After any Stock has been
released from the Repurchase Option, Purchaser shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock except in
compliance with the provisions herein and applicable securities laws.
Furthermore, the Stock shall be subject to any right of first refusal in favor
of the Company or its assignees that may be contained in the Company's Bylaws.
10. RESTRICTIVE LEGENDS. All certificates representing the Stock shall
have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the
parties hereto):
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER,
OR SUCH HOLDER'S PREDECESSOR IN INTEREST,
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A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER
OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE
PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS
PROVIDED IN THE BYLAWS OF THE COMPANY."
(d) Any legend required by appropriate state blue sky officials.
11. INVESTMENT REPRESENTATIONS. In connection with the purchase of the
Stock, 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 Stock. Purchaser is
purchasing the Stock for investment for Purchaser's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Act.
(b) Purchaser understands that the Stock has not been registered
under the 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
Stock must be held indefinitely unless the Stock is subsequently registered
under the Act or an exemption from such registration is available. Purchaser
further acknowledges and understands that the Company is under no obligation to
register the Stock. Purchaser understands that the certificate evidencing the
Stock will be imprinted with a legend which prohibits the transfer of the Stock
unless the Stock is 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, under the Act, as in effect from time to time, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of issuance of
the securities, such issuance will be exempt from registration under the Act. In
the event the Company becomes subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the securities exempt under
Rule 701 may be sold by Purchaser ninety (90) days thereafter,
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subject to the satisfaction of certain of the conditions specified by Rule 144
and the market stand-off provision described in Section 12 below.
In the event that the sale of the Stock does not qualify under Rule 701
at the time of purchase, then the Stock may be resold by Purchaser in certain
limited circumstances subject to the provisions of Rule 144, which requires,
among other things: (i) the availability of certain public information about the
Company and (ii) the resale occurring following the required holding period
under Rule 144 after the Purchaser has purchased, and made full payment of
(within the meaning of Rule 144), the securities to be sold.
(e) Purchaser further understands that at the time Purchaser
wishes to sell the Stock there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public current information requirements of Rule 144 or
701, and that, in such event, Purchaser would be precluded from selling the
Stock under Rule 144 or 701 even if the minimum holding period requirement had
been satisfied.
(f) Purchaser further warrants and represents that Purchaser has
either (i) preexisting personal or business relationships, with the Company or
any of its officers, directors or controlling persons, or (ii) the capacity to
protect his own interests in connection with the purchase of the Stock by virtue
of the business or financial expertise of himself or of professional advisors to
Purchaser who are unaffiliated with and who are not compensated by the Company
or any of its affiliates, directly or indirectly.
12. MARKET STAND-OFF AGREEMENT. Purchaser shall not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock of the Company held by Purchaser, including the Stock (the
"Restricted Securities"), for a period of time specified by the underwriter (not
to exceed one hundred eighty (180) days) following the effective date of a
registration statement of the Company filed under the Act. Purchaser agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter which are consistent with the foregoing or which
are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to
Purchaser's Restricted Securities until the end of such period.
13. SECTION 83(b) ELECTION. Purchaser understands that Section 83(a) of
the Code, taxes as ordinary income the difference between the amount paid for
the Stock and the fair market value of the Stock as of the date any restrictions
on the Stock lapse. In this context, "restriction" includes the right of the
Company to buy back the Stock pursuant to the Repurchase Option set forth in
Section 2a above. Purchaser understands that Purchaser may elect to be taxed at
the time the Stock is 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 thirty (30) days from the date of
purchase. Even if the fair market value of the Stock at the time of the
execution of this Agreement equals the amount paid for the Stock, the 83(b)
Election must be made to avoid income under Section 83(a) in the future.
Purchaser
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understands that failure to file such an 83(b) Election in a timely manner may
result in adverse tax consequences for Purchaser. Purchaser further understands
that an additional copy of such 83(b) Election is required to 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 Stock 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 assumes all responsibility for
filing an 83(b) Election and paying all taxes resulting from such election or
the lapse of the restrictions on the Stock.
14. REFUSAL TO TRANSFER. The Company shall not be required (a) to
transfer on its books any shares of Stock of the Company which shall have been
transferred in violation of any of the provisions set forth in this Agreement or
(b) 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.
15. NO EMPLOYMENT RIGHTS. This Agreement is not an employment contract
and 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 for any reason at any time, with or without cause and
with or without notice.
16. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
sent by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at his address hereinafter shown below its signature or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party hereto.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Purchaser,
Purchaser's successors, and assigns. The Repurchase Option of the Company
hereunder shall be assignable by the Company at any time or from time to time,
in whole or in part.
(c) ATTORNEYS' FEES; SPECIFIC PERFORMANCE. Purchaser shall
reimburse the Company for all costs incurred by the Company in enforcing the
performance of, or protecting its rights under, any part of this Agreement,
including reasonable costs of investigation and attorneys' fees. It is the
intention of the parties that the Company, upon exercise of the Repurchase
Option and payment of the Option Price, pursuant to the terms of this Agreement,
shall be entitled to receive the Stock, in specie, in order to have such Stock
available for future issuance without dilution of the holdings of other
shareholders. Furthermore, it is expressly agreed between the parties that money
damages are inadequate to compensate the Company for
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the Stock and that the Company shall, upon proper exercise of the Repurchase
Option, be entitled to specific enforcement of its rights to purchase and
receive said Stock.
(d) GOVERNING LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware. The parties
agree that any action brought by either party to interpret or enforce any
provision of this Agreement shall be brought in, and each party agrees to, and
does hereby, submit to the jurisdiction and venue of, the appropriate state or
federal court for the district encompassing the Company's principal place of
business.
(e) FURTHER EXECUTION. The parties agree to take all such
further action(s) as may reasonably be necessary to carry out and consummate
this Agreement as soon as practicable, and to take whatever steps may be
necessary to obtain any governmental approval in connection with or otherwise
qualify the issuance of the securities that are the subject of this Agreement.
(f) INDEPENDENT COUNSEL. Purchaser acknowledges that this
Agreement has been prepared on behalf of the Company by ▇▇▇▇▇▇ Godward LLP,
counsel to the Company and that ▇▇▇▇▇▇ Godward LLP does not represent, and is
not acting on behalf of, Purchaser. Purchaser has been provided with an
opportunity to consult with Purchaser's own counsel with respect to this
Agreement.
(g) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes and merges all prior agreements or understandings, whether
written or oral. This Agreement may not be amended, modified or revoked, in
whole or in part, except by an agreement in writing signed by each of the
parties hereto.
(h) 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.
(i) 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
M4, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇,
Chief Executive Officer
PURCHASER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address:
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VESTING COMMENCEMENT DATE:
August 10, 1998
ATTACHMENTS:
Exhibit A -- Vesting Schedule
Exhibit B -- Joint Escrow Instructions
Exhibit C -- Stock Assignment Separate from Certificate
Exhibit D -- Section 83(b) election
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EXHIBIT A
▇▇▇▇▇ ▇▇▇▇▇ VESTING SCHEDULE
NUMBER OF SHARES
SUBJECT TO
IF CESSATION OF SERVICE OCCURS: REPURCHASE OPTION:
------------------------------- ------------------
Before August 10, 1999 2,000,000 minus 83,334 shares for
each full month of service as a
consultant, commencing on August
10, 1998
After August 10, 2001 -0- shares
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EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Common Stock Purchase
Agreement between the undersigned and M4, INC., a Delaware corporation (the
"Company"), dated as of August 5, 1998 (the "Agreement"), ___________________
_________________ hereby sells, assigns and transfers unto the Company
_______________________________ (____________) shares of common stock of the
Company, standing in the undersigned's name on the books of the Company
represented by Certificate No. ____________ herewith, and does hereby
irrevocably constitute and appoint ____________________________________ attorney
to transfer the said stock on the books of the Company with full power of
substitution in the premises. This Assignment may be used only in accordance
with and subject to the terms and conditions of the Agreement, in connection
with the repurchase of shares of Common Stock issued to the undersigned pursuant
to the Agreement, and only to the extent that such shares remain subject to the
Company's Repurchase Option under the Agreement.
Dated:
------------------------------------
Signature
------------------------------------
Print Name
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EXHIBIT C
JOINT ESCROW INSTRUCTIONS
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sir:
As Escrow Agent for both M4, INC., a Delaware corporation
("Corporation"), and the undersigned purchaser of stock of the Corporation
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Common Stock Purchase
Agreement ("Agreement"), dated August 5, 1998, to which a copy of these Joint
Escrow Instructions is attached as Exhibit C, in accordance with the following
instructions:
1. In the event the Corporation or an assignee shall elect to exercise
the Repurchase Option set forth in the Agreement, the Corporation or its
designee or assignee will give to Purchaser and you a written notice specifying
the number of shares of stock to be purchased, the purchase price, and the time
for a closing hereunder at the principal office of the Corporation. Purchaser
and the Corporation hereby irrevocably authorize and direct you to close the
transaction contemplated by such notice in accordance with the terms of said
notice.
2. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against the
simultaneous delivery to you of the purchase price (which may include suitable
acknowledgment of cancellation of indebtedness) of the number of shares of stock
being purchased pursuant to the exercise of the Repurchase Option.
3. Purchaser irrevocably authorizes the Corporation to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
4. This escrow shall terminate upon expiration or exercise in full of
the Repurchase Option, whichever occurs first.
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5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Corporation that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Corporation.
6. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Corporation or if you shall resign by
written notice to each party. In the event of any such termination, the
Corporation may appoint any officer or assistant officer of the Corporation as
successor Escrow Agent and Purchaser hereby confirms the appointment of such
successor or successors as his attorney-in-fact and agent to the full extent of
your appointment.
12. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you are authorized and directed to retain in your possession without
liability to anyone all or any part of said securities until such dispute shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such proceedings.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, including delivery
by express courier or five days after deposit in the United States Post Office,
by registered or certified mail with postage and fees prepaid, addressed to each
of the other parties hereunto entitled at the following addresses, or at such
other addresses as a party may designate by ten days' advance written notice to
each of the other parties hereto:
CORPORATION: M4, INC.
3550 General ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER: ▇▇▇▇▇ ▇▇▇▇▇
c/o M4, Inc.
3550 General ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ESCROW AGENT: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
15. By signing these Joint Escrow Instructions you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
16. You shall be entitled to employ such legal counsel and other experts
(including without limitation the firm of ▇▇▇▇▇▇ Godward LLP) as you may deem
necessary properly to advise you in connection with your obligations hereunder.
You may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor. The Corporation shall be responsible for all
fees generated by such legal counsel in connection with your obligations
hereunder.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Corporation may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
15
18. This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of Delaware, as such laws are applied
by California courts to contracts made and to be performed entirely in
California by residents of that state.
Very truly yours,
M4, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
PURCHASER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
16
August 5, 1998
Director of Internal Revenue
Internal Revenue Service Center
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: ELECTION UNDER SECTION 83(b)
Gentlemen:
This statement constitutes an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended from time to time.
Pursuant to Treasury Regulation Section 1.83-2, the following information is
submitted:
1. NAME: ▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser")
ADDRESS: -------------------------
-------------------------
SOCIAL SECURITY NO.: - -
-------- ------ ------
2. PROPERTY DESCRIPTION: 3,000,000 shares of Common Stock of M4, Inc. (the
"Company").
3. The date on which the property was transferred is August 5, 1998.
4. The taxable year for which the election is made is the calendar year 1998.
5. RESTRICTIONS:
If, on or before August 5, 2001, the employment or consulting relationship of
the Purchaser by the Company terminates for any reason, the Company shall have
the option to repurchase some of all of the property (depending on the date of
such termination) for a price equal to the cost of the property repurchased.
6. The fair market value of the property at the time of transfer with respect to
which this election is being made, determined without regard to any restrictions
other than a restriction which by its terms will never lapse is $3,000.
7. The amount paid by the undersigned taxpayer for the property is $3,000
17
8. The undersigned taxpayer hereby elects to include in gross income for 1998
the amount of 0 $, which equals the amount by which the fair market value of the
property exceeds the amount paid for such property.
9. A copy of this statement has been furnished to the Company and the transferee
of the property if different from the purchaser.
Dated: August 5, 1998.
Very truly yours,
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