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Series B Preferred Stock Purchase Agreement

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BIRTHDAYEXPRESS.COM, INC. SERIES B PREFERRED STOCK PURCHASE AGREEMENT

July 21, 1999

This Series B Preferred Stock Purchase Agreement (the "Agreement") is made as of the 21st day of July, 1999 by and between BIRTHDAYEXPRESS.COM, INC., a Washington corporation (the "Company") and the investors listed on Exhibit A attached hereto (each a "Purchaser" and together the "Purchasers").

1. PURCHASE AND SALE OF PREFERRED STOCK.

1.1 Sale and Issuance of Series B Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of the State of Washington on or before the Closing the Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit B (the "Restated Articles").

(b) Subject to the terms and conditions of this Agreement, each Purchaser agrees to purchase at the Closing and the Company agrees to sell and issue to each Purchaser at the Closing that number of shares of Series B Preferred Stock set forth opposite each such Purchaser's name on Exhibit A attached hereto at a purchase price of $8.32 per share.

1.2 Closing; Delivery.

(a) The purchase and sale of the Stock shall take place at the offices of Cooley Godward LLP, 5200 Carillon Point, Kirkland, Washington 98033-7356, at 10:00 a.m., on July 21, 1999 or at such other time and place as the Company and the Purchasers mutually agree upon.

(b) At the Closing, the Company shall deliver to each Purchaser a certificate representing the Stock being purchased thereby against payment of the purchase price therefor by cancellation of indebtedness owed by the Company, check payable to the Company or by wire transfer to the Company's bank account.

(c) If 1,580,000 shares of Series B Preferred Stock of the Company are not sold at the Closing, the Company shall have the right to sell additional shares prior to October 30, 1999, subject to execution of an Addendum Agreement.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

2.1 Organization, Good Standing and Qualification.

The Company is duly organized and validly existing under the laws of the State of Washington and has all requisite corporate power and authority to carry on its business.

2.2 Capitalization.

The authorized capital of the Company consists, or will consist immediately prior to the Closing, of the following:

(a) Preferred Stock: 3,150,005 shares, including 1,500,005 Series A Preferred Stock and 1,650,000 Series B Preferred Stock.

(b) Common Stock: 8,349,995 shares.

(c) Reserved Common Stock under the Stock Plan.

(d) No other outstanding options, warrants, rights or agreements except as disclosed.

2.3 Subsidiaries.

The Company does not currently own or control any interest in any other corporation, association or other business entity.

2.4 Authorization.

All corporate action necessary for authorization, execution and delivery of this Agreement and related agreements has been taken or will be taken prior to Closing.

2.5 Valid Issuance of Securities.

The Stock and Common Stock issuable upon conversion will be duly and validly issued, fully paid and nonassessable.

2.6 Governmental Consents.

No consent, approval, order or authorization is required except for applicable securities filings.

2.7 Litigation.

To the Company's knowledge, there is no pending or threatened action that would materially adversely affect the Company.

2.8 Intellectual Property.

The Company owns or possesses sufficient legal rights to its intellectual property and is not aware of violations of others' rights.

2.9 Compliance with Other Instruments.

The Company is not in violation or default of its Restated Articles, Bylaws, or any material agreement or law applicable to it.

2.10 Agreements; Action.

There are no undisclosed agreements or proposed transactions with officers, directors, affiliates or related persons.

2.11 Disclosure.

The Company has provided all information reasonably requested by each Purchaser.

2.12 Financial Statements.

The Company has delivered unaudited financial statements for the twelve-month period ended May 31, 1999.

2.13 No Conflict of Interest.

The Company is not indebted to officers or directors except as disclosed, and no material conflicts exist.

2.14 Rights of Registration and Voting Rights.

Except as contemplated in the Investors' Rights Agreement, no registration rights have been granted.

2.15 Title to Property and Assets.

The Company owns its property and assets free and clear of material encumbrances.

2.16 Labor Agreements and Actions.

The Company is not subject to labor agreements and there are no material labor disputes pending.

2.17 Permits.

The Company has all permits and licenses necessary for its business.

2.18 Qualified Small Business.

The Company represents that it is a qualified small business for purposes of Section 1202 of the Internal Revenue Code.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

3.1 Authorization.

Such Purchaser has full power and authority to enter into this Agreement.

3.2 Purchase Entirely for Own Account.

The Securities are being acquired for investment for the Purchaser's own account and not with a view to resale.

3.3 Disclosure of Information.

The Purchaser has had an opportunity to discuss the Company's business and review its facilities.

3.4 Restricted Securities.

The Purchaser understands that the Securities have not been registered under the Securities Act and are restricted securities.

3.5 No Public Market.

No public market now exists for the Company's securities.

3.6 Legends.

The Securities may bear restrictive legends required by law or by the other Agreements.

3.7 Accredited Investor.

The Purchaser is an accredited investor as defined in Regulation D.

3.8 Foreign Investors.

If the Purchaser is not a United States person, it has satisfied itself as to the laws of its jurisdiction.

4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING.

The obligations of each Purchaser to the Company are subject to the fulfillment of the following conditions on or before Closing:

4.1 Representations and Warranties. The Company's representations and warranties shall be true and correct in all material respects.

4.2 Performance. The Company shall have performed and complied with all covenants and obligations required on or before Closing.

4.3 Compliance Certificate. The President shall deliver a certificate certifying conditions 4.1 and 4.2.

4.4 Qualifications. All required governmental authorizations and approvals shall be obtained.

4.5 Opinion of Counsel. Purchaser shall have received an opinion from Cooley Godward LLP.

4.6 Secretary's Certificate. The Company shall deliver a certificate from the Secretary.

4.7 Minimum Subscription. The Company shall have received payment for at least 841,346 shares of Series B Preferred Stock.

4.8 Board of Directors. The Board shall be comprised of Michael Jewell, Jan Jewell, Ron Weinstein, Robert Nelsen and one vacancy.

4.9 Investors' Rights Agreement. The parties shall have executed and delivered the Investors' Rights Agreement.

4.10 Voting Agreement. The parties shall have executed and delivered the Voting Agreement.

4.11 Restated Articles. The Restated Articles shall have been filed and remain in full force and effect.

4.12 Right of First Refusal Agreement. The parties shall have executed and delivered the Right of First Refusal Agreement.

5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.

The obligations of the Company to each Purchaser are subject to the following conditions:

5.1 Representations and Warranties. The Purchaser's representations and warranties shall be true and correct.

5.2 Performance. All covenants and conditions to be performed by the Purchasers shall have been performed.

5.3 Qualifications. All required governmental authorizations shall be obtained and effective.

5.4 Investors' Rights Agreement. The Investors' Rights Agreement shall have been executed and delivered.

5.5 Voting Agreement. The Voting Agreement shall have been executed and delivered.

5.6 Right of First Refusal Agreement. The Right of First Refusal Agreement shall have been executed and delivered.

5.7 Minimum Subscription. The Company shall have received payment for at least 841,346 shares.

6. MISCELLANEOUS.

6.1 Survival of Warranties. The warranties, representations and covenants shall survive execution and Closing.

6.2 Transfer; Successors and Assigns. The Agreement binds and benefits the parties and their successors and assigns.

6.3 Governing Law. This Agreement shall be governed by the laws of the State of Washington.

6.4 Counterparts. This Agreement may be executed in counterparts.

6.5 Titles and Subtitles. Titles are for convenience only.

6.6 Notices. Notices shall be delivered to the addresses on the signature page or Exhibit A.

6.7 Finder's Fee. Each party represents it is not obligated for any finder's fee or commission.

6.8 Attorney's Fees. Prevailing party entitled to reasonable attorney's fees and costs.

6.9 Amendments and Waivers. Amendments require written consent of the Company and majority holders of the Stock.

6.10 Severability. Unenforceable provisions shall be renegotiated or excluded as provided.

6.11 Delays or Omissions. Delay or omission to exercise rights shall not constitute waiver.

6.12 Entire Agreement. This Agreement and referenced documents constitute the entire agreement.

6.13 Confidentiality. Confidential information shall be kept confidential.

6.14 Exculpation Among Purchasers. Purchasers are not relying on other Purchasers.

6.15 Waiver of Conflicts. Consent to Cooley Godward LLP's representation of certain Purchasers in unrelated matters.

6.16 Expenses. Each party pays its own costs, subject to reimbursement of certain Purchasers' counsel fees up to $10,000.

SIGNATURE PAGES FOLLOW

The parties have executed this Series B Preferred Stock Purchase Agreement as of the date first written above.

COMPANY:

BIRTHDAYEXPRESS.COM, INC.

By:

Name:

Title:

Address:

PURCHASER:

By:

Name:

Title:

Address:

Purchase and Closing Information

Use the fields below to provide closing details and purchaser information consistent with Exhibit A and related transaction documents.

Agreement date:

Closing date:

Company name:

Company state of incorporation:

Purchaser name:

Purchaser entity type:

Number of shares purchased:

Purchase price per share:

Total purchase price:

Company address:

Purchaser mailing address:

Is the purchaser an accredited investor?

Is the purchaser a non-U.S. person?

Notes:

Signature confirmation:

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What a Series B Preferred Stock Purchase Agreement Is

A Series B Preferred Stock Purchase Agreement is a legally binding contract between a company and investors setting the terms for the sale and purchase of Series B preferred shares. It defines purchase price, number of shares, closing conditions, investor rights and preferences, liquidation and dividend priorities, conversion mechanics, anti-dilution protection, registration and transfer restrictions, board and voting rights, and representations and warranties. The agreement also allocates indemnities and spells out conditions precedent to closing, making it the central document that governs the economics and governance implications of a Series B financing round.

Why this Agreement Matters for Founders and Investors

It clarifies economic terms and investor protections, reduces post-closing disputes, and documents conditions necessary for closing. Clear allocation of rights and remedies helps both sides manage dilution, governance, and exit expectations.

Why this Agreement Matters for Founders and Investors

Who Typically Prepares and Signs This Agreement

Post-closing, transfer agents, investor relations, and corporate secretaries implement share issuance, update cap table, and manage filings.

  • Founders and C-suite: Review economic and governance impacts, confirm capitalization, and authorize company execution.
  • Lead investors and VC funds: Negotiate preferences, protective provisions, and investor rights; execute on behalf of funds.
  • Company counsel and investor counsel: Draft, negotiate, and clear legal and disclosure points before closing.

Core Components of a Professional Series B Preferred Stock Purchase Agreement

A comprehensive agreement balances economic terms, governance effects, and contractual protections so signers understand obligations and remedies at closing and beyond.

Purchase Price

Specifies per-share price, total purchase amount, payment method, and any escrow or holdback mechanics to secure closing obligations.

Capitalization

Provides pre- and post-money cap table schedules, fully diluted share counts, and treatment of options, warrants, and convertible instruments.

Liquidation Preference

Defines distribution waterfall on sale or liquidation, participation rights, and whether preferences are cumulative or noncumulative.

Conversion Rights

Sets conversion terms to common stock, conversion price adjustments, and mechanics for voluntary or automatic conversions at exit.

Protective Provisions

Lists investor veto rights for key corporate actions such as new issuances, mergers, amendments, and executive hires.

Representations

Contains company and investor reps and warranties, indemnities, closing conditions, and standard disclosure schedules.

Step-by-Step: How to Prepare, Negotiate, and Execute

Follow a structured sequence from drafting to closing to reduce negotiation friction and ensure regulatory compliance.

  • 01
    Draft Initial SPA: Company counsel prepares a draft reflecting the deal terms.
  • 02
    Negotiate Key Terms: Discuss price, preferences, board seats, and protective provisions.
  • 03
    Deliver Disclosure Schedules: Company provides schedule documents and cap table for review.
  • 04
    Execute at Closing: Parties sign, funds transfer, shares issued, and filings completed.

Configuring an Online Signing Workflow for the Agreement

Set up signer order, authentication, and document templates to match closing protocol and regulatory needs.

Field Configuration
Signer Order Sequential signing: Company then lead investor then other investors
Authentication Email plus SMS code or identity verification for high-assurance signers
Templates Save SPA version with conditional exhibits for future rounds
Notifications Automatic reminders and completion receipts for all signers

Where to Send or File the Executed Agreement and Related Filings

After execution, route copies to the parties, corporate records, transfer agent, and complete applicable securities notices.

  • Company Records: Deliver fully executed SPA and disclosure schedules to corporate secretary
  • Transfer Agent: Provide executed documents and subscription details to update cap table
  • Securities Filings: File Form D and state blue-sky notices where required after first sale
  • Investor Files: Send executed copies to each investor for their legal and tax records

eSignature Vendor Comparison for Executing a Series B SPA

Compare common capability and pricing dimensions relevant to high-value securities agreements; signNow appears first for parity in evaluation.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No envelope cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Essential Information and Fields to Include

Investor Identifier: Name and taxpayer ID
Company Details: Legal name and state of formation
Economic Terms: Price, shares, and payment terms
Protective Rights: Board and veto provisions
Closing Conditions: Deliverables required to close
Signatures: Signer name, title, and date

Penalties and Legal Risks of an Incorrect or Incomplete Agreement

Contract Rescission: Material defects can allow rescission remedies
Securities Violations: Noncompliance may trigger SEC enforcement
Tax Exposure: Incorrect investor data can cause withholding liabilities
Dilution Disputes: Ambiguous anti-dilution clauses prompt litigation
Indemnity Claims: Breached reps can lead to costly indemnities
Closing Delays: Missing conditions or signatures postpone funding

Common Preparation Mistakes to Avoid

  • Using an outdated capitalization schedule that omits option pools or convertible notes leads to incorrect ownership math and post-closing disputes.
  • Failing to specify precise conversion formulas and adjustment triggers creates ambiguity during exit events and can produce costly litigation.
  • Neglecting state securities notice filings and Form D timing can result in administrative penalties and rescission risks for investors.
  • Allowing informal sign-off without explicit authority or corporate approval (board consent, charter amendments) risks invalidating the issuance.

Practical Tips for Accurate, Efficient Completion

Adopt standard clauses where appropriate, maintain a current cap table, and centralize document execution to reduce errors and speed closing.

Use a Current Cap Table
Confirm fully diluted shares, option pools, and outstanding convertible instruments before finalizing share counts and purchase price calculations to prevent post-closing disputes.
Sequence Approvals
Obtain board and shareholder consents, and complete charter or bylaw amendments before signing to ensure the issuance is authorized and effective at closing.
Standardize Exhibits
Attach uniform disclosure schedules and subscription forms so all investors receive identical information, minimizing negotiation variance and administrative work.
Use Auditable eSigning
Choose an eSignature workflow with a detailed audit trail and strong signer authentication to provide admissible evidence of intent and attribution.

Illustrative Use Cases for a Series B SPA

These concise scenarios show how terms and process differ depending on the parties and objectives.

Growth SaaS Round

A mid-stage SaaS company negotiates preferred conversion terms to incentivize future M&A

  • Lead investor secures a board seat to monitor scaling
  • Post-closing the company issues shares, updates its cap table, files Form D, and integrates investor reporting covenants for quarterly KPIs.

Cross-Border Lead

A U.S. company takes a series B lead from an overseas fund, adding tax and transfer restrictions

  • Parties add investor-side indemnities and AML representations
  • Counsel coordinates Form D, state notices, and counsel clears tax identification and wire instructions before funds transmit.

Typical Signatories and Their Authority

General Counsel

Company general counsel or authorized director usually signs on behalf of the issuing company after board approval and any required shareholder consent has been granted.

Authorized Investor Signer

A fund’s managing member or an authorized officer executes on behalf of the investor entity, with power verified via corporate resolution or trust instrument.

Digital Signing and Integration Considerations

Choose a solution that supports PDF/DOCX, integrates with systems like Salesforce or NetSuite, and provides tamper-evident signed documents with an auditable record of consent.

  • Authentication Options: Email, SMS code, or advanced ID verification
  • Audit Trail: Timestamps, IP address, and action log
  • Integrations: CRM, cloud storage, and accounting systems

Frequently Asked Questions About Series B Preferred Stock Purchase Agreements

Answers to common legal, filing, and signing questions to help avoid delays and compliance issues during a Series B financing.


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