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BIRTHDAYEXPRESS.COM, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
JULY 21, 1999
BIRTHDAYEXPRESS.COM, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF PREFERRED
STOCK...........................................................1
1.1 Sale and Issuance of Series B Preferred
Stock.........................................1
1.2 Closing;
Delivery................................................................
.....1
2. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY..................................................2
2.1 Organization, Good Standing and
Qualification.........................................2
2.2
Capitalization..........................................................
..............2
2.3
Subsidiaries............................................................
..............2
2.4
Authorization...........................................................
..............3
2.5 Valid Issuance of
Securities..........................................................3
2.6 Governmental
Consents................................................................
.3
2.7
Litigation..............................................................
..............3
2.8 Intellectual
Property................................................................
.4
2.9 Compliance with Other
Instruments.....................................................4
2.10 Agreements;
Action..................................................................
..4
2.11
Disclosure..............................................................
..............4
2.13 No Conflict of
Interest...............................................................5
2.14 Rights of Registration and Voting
Rights..............................................5
2.15 Title to Property and
Assets..........................................................6
2.16 Labor Agreements and
Actions..........................................................6
2.17
Permits.................................................................
..............6
2.18 Qualified Small
Business..............................................................6
3. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS...............................................6
3.1
Authorization...........................................................
..............6
3.2 Purchase Entirely for Own
Account.....................................................6
3.3 Disclosure of
Information.............................................................
7
3.4 Restricted
Securities..............................................................
...7
3.5 No Public
Market..................................................................
....7
3.6
Legends.................................................................
..............7
i.
3.7 Accredited
Investor................................................................
...8
3.8 Foreign
Investors...............................................................
......8
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT
CLOSING...........................................8
4.1 Representations and
Warranties........................................................8
4.2
Performance.............................................................
..............8
4.3 Compliance
Certificate.............................................................
...8
4.4
Qualifications..........................................................
..............8
4.5 Opinion of
Counsel.................................................................
...8
4.6 Secretary's
Certificate.............................................................
..9
4.7 Minimum
Subscription............................................................
......9
4.8 Board of
Directors...............................................................
.....9
4.9 Investors' Rights
Agreement...........................................................9
4.10 Voting
Agreement...............................................................
.......9
4.11 Restated
Articles................................................................
.....9
4.12 Right of First Refusal
Agreement......................................................9
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT
CLOSING.............................................9
5.1 Representations and
Warranties........................................................9
5.2
Performance.............................................................
..............9
5.3
Qualifications..........................................................
..............9
5.4 Investors' Rights
Agreement..........................................................10
5.5 Voting
Agreement...............................................................
......10
5.6 Right of First Refusal
Agreement.....................................................10
5.7 Minimum
Subscription............................................................
.....10
6.
MISCELLANEOUS...........................................................
......................10
6.1 Survival of
Warranties..............................................................
.10
6.2 Transfer; Successors and
Assigns.....................................................10
6.3 Governing
Law.....................................................................
...10
6.4
Counterparts............................................................
.............10
6.5 Titles and
Subtitles...............................................................
..10
6.6
Notices.................................................................
.............10
ii.
6.7 Finder's
Fee.....................................................................
....11
6.8 Attorney's
Fees....................................................................
..11
6.9 Amendments and
Waivers...............................................................11
6.10
Severability............................................................
.............11
6.11 Delays or
Omissions...............................................................
...11
6.12 Entire
Agreement...............................................................
......11
6.13
Confidentiality.........................................................
.............12
6.14 Exculpation Among
Purchasers.........................................................12
6.15 Waiver of
Conflicts...............................................................
...12
6.16
Expenses................................................................
.............12
iii.
EXHIBITS INDEX
EXHIBIT A - Schedule of Purchasers
EXHIBIT B - Form of Amended and Restated Articles of Incorporation
EXHIBIT C - Schedule of Exceptions to Representations and
Warranties
EXHIBIT D - Form of Amended and Restated Investors' Rights
Agreement
EXHIBIT E - Form of Amended and Restated Right of First Refusal
Agreement
EXHIBIT F - Form of Amended and Restated Voting Agreement
EXHIBIT G - Form of Addendum Agreement
EXHIBIT H - Form of Legal Opinion
BIRTHDAYEXPRESS.COM, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
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").
The parties hereby agree as follows:
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
(as
defined below) 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. The
shares of Series B Preferred Stock issued to the Purchaser pursuant to
this
Agreement shall be hereinafter referred to as the "Stock."
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, orally
or in
writing (which time and place are designated as the "Closing").
(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, at any time prior to October 30, 1999, to sell that number of
shares
of Series B Preferred Stock equal to the difference between 1,580,000
minus
the number of shares of Series B Preferred Stock issued and sold at the
Closing to one or more additional purchasers as determined by the
Company, or
to any Purchaser hereunder who wishes to acquire additional shares of
Series
B Preferred Stock at the price and on the terms set forth herein,
provided
that any such additional purchaser shall be required to execute an
Addendum
Agreement substantially in the form attached hereto as EXHIBIT G. Any
additional purchaser so acquiring shares of Series B Preferred Stock
shall be
considered a
1.
"Purchaser" for purposes of this Agreement, and any Series B Preferred
Stock
so acquired by such additional purchaser shall be considered "Stock" for
purposes of this Agreement and all other agreements contemplated hereby.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as EXHIBIT C, specifically
identifying
the relevant subsection hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation 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. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which
the
failure so to qualify would have a material adverse effect on its
business or
properties.
2.2 CAPITALIZATION. The authorized capital of the
Company
consists, or will consist immediately prior to the Closing, of:
(a) 3,150,005 shares of Preferred Stock, (i)
of
which 1,500,005 shares have been designated Series A Preferred Stock,
all of
which are issued and outstanding at Closing and (ii) 1,650,000 shares
have
been designated Series B Preferred Stock, none of which are issued and
outstanding prior to Closing. The rights, privileges and preferences of
the
Preferred Stock are as stated in the Restated Articles.
(b) 8,349,995 shares of Common Stock,
2,015,300
shares of which are issued and outstanding at Closing. All of the
outstanding
shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and
state
securities laws.
(c) The Company has reserved 1,340,000 shares
of
Common Stock for issuance to officers, directors, employees and
consultants
of the Company pursuant to its 1994 Incentive Stock Option Plan duly
adopted
by the Board of Directors and approved by the Company's shareholders
(the
"Stock Plan"). Of such reserved shares of Common Stock, no shares have
been
issued pursuant to restricted stock purchase agreements, options to
purchase
65,300 shares have been granted and exercised and are accounted for in
paragraph (b) immediately above, options to purchase 234,700 shares have
been
granted and are currently outstanding, and there are 1,040,000 shares of
Common Stock available for issuance to officers, directors, employees
and
consultants pursuant to the Stock Plan.
(d) Except (i) as provided in the Investors'
Rights Agreement and the Right of First Refusal Agreement (each as
herein
defined) and (ii) for outstanding options issued pursuant to the Stock
Plan,
there are no outstanding options, warrants, rights (including conversion
or
preemptive rights and rights of first refusal or similar rights) or
agreements, orally or in writing, for the purchase or acquisition from
the
Company of any shares of its capital stock.
2.3 SUBSIDIARIES. The Company does not currently own
or
control, directly or indirectly, any interest in any other corporation,
association or other business entity.
2.
2.4 AUTHORIZATION. All corporate action on the part of
the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Amended and
Restated Investors' Rights Agreement in the form attached hereto as
EXHIBIT D
(the "Investors' Rights Agreement"), the Amended and Restated Right of
First
Refusal Agreement in the form attached hereto as EXHIBIT E (the "Right
of
First Refusal Agreement"), and the Amended and Restated Voting Agreement
in
the form attached hereto as EXHIBIT F (the "Voting Agreement" and
collectively with this Agreement, the Investors' Rights Agreement and
the
Right of First Refusal Agreement, the "Agreements"), the performance of
all
obligations of the Company hereunder and thereunder and the
authorization,
issuance and delivery of the Stock and the Common Stock issuable upon
conversion of the Stock (together, the "Securities") has been taken or
will
be taken prior to the Closing, and the Agreements, when executed and
delivered by the Company, shall constitute valid and legally binding
obligations of the Company, enforceable against the Company in
accordance
with their terms except (a) as limited by applicable bankruptcy,
insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of
general
application affecting enforcement of creditors' rights generally, as
limited
by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the
indemnification
provisions contained in the Investors' Rights Agreement may be limited
by
applicable federal or state securities laws.
2.5 VALID ISSUANCE OF SECURITIES. The Stock that is
being
issued to the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein,
will
be duly and validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement and applicable state and
federal
securities laws. Based in part upon the representations of the
Purchasers in
this Agreement and subject to the provisions of Section 2.6 below, the
Stock
will be issued in compliance with all applicable federal and state
securities
laws. The Common Stock issuable upon conversion of the Stock has been
duly
and validly reserved for issuance, and upon issuance in accordance with
the
terms of the Restated Articles, shall be duly and validly issued, fully
paid
and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable federal and state securities laws and will be
issued
in compliance with all applicable federal and state securities laws.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order
or
authorization of, or registration, qualification, designation,
declaration or
filing with, any federal, state or local governmental authority on the
part
of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for filings pursuant
to
applicable state securities laws and Regulation D of the Securities Act
of
1933, as amended (the "Securities Act").
2.7 LITIGATION. To the Company's knowledge, there is
no
action, suit, proceeding or investigation pending or currently
threatened
against the Company or any of its subsidiaries that questions the
validity of
the Agreements or the right of the Company to enter into them, or to
consummate the transactions contemplated hereby or thereby, or that
might
result, either individually or in the aggregate, in any material adverse
changes in the assets, condition or affairs of the Company, financially
or
otherwise, or any change in the current equity ownership of the Company,
nor
is the Company aware that there is any basis for the foregoing.
3.
Neither the Company nor any of its subsidiaries is a party or subject to
the
provisions of any order, writ, injunction, judgment or decree of any
court or
government agency or instrumentality. There is no action, suit,
proceeding or
investigation by the Company or any of its subsidiaries currently
pending or
which the Company or any of its subsidiaries intends to initiate.
2.8 INTELLECTUAL PROPERTY. To its knowledge, the
Company
owns or possesses sufficient legal rights to all patents, trademarks,
service
marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary for its business without any
conflict with, or infringement of the rights of others. The Company has
not
received any communications alleging that the Company has violated or,
by
conducting its business, would violate any of the patents, trademarks,
service marks, tradenames, copyrights, trade secrets or other
proprietary
rights or processes of any other person or entity. The Company is not
aware
that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best
efforts to
promote the interest of the Company or that would conflict with tile
Company's business. Neither the execution or delivery of this Agreement,
nor
the carrying on of the Company's business by the employees of the
Company,
nor the conduct of the Company's business as proposed, will, to the
Company's
knowledge, conflict with or result in a breach of the terms, conditions,
or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated. The Company
does
not believe it is or will be necessary to use any inventions of any of
its
employees (or persons it currently intends to hire) made prior to their
employment by the Company.
2.9 COMPLIANCE WITH OTHER INSTRUMENTS
(a) The Company is not in violation or
default of
any provisions of its Restated Articles or Bylaws or of any instrument,
judgment, order, writ, decree or contract to which it is a party or by
which
it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company. The execution,
delivery and performance of the Agreements and the consummation of the
transactions contemplated hereby or thereby will not result in any such
violation or be in conflict with or constitute, with or without the
passage
of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which
results in the creation of any lien, charge or encumbrance upon any
assets of
the Company.
(b) To its knowledge, the Company has avoided
every condition, and has not performed any act, the occurrence of which
would
result in the Company's loss of any right granted under any license,
distribution agreement or other agreement.
2.10 AGREEMENTS; ACTION. There are no agreements,
understandings or proposed transactions between the Company and any of
its
officers, directors, affiliates, or any affiliate thereof.
2.11 DISCLOSURE. The Company has provided each
Purchaser
with all the information reasonably available to it without undue
expense
that such Purchaser has requested for deciding whether to purchase the
Stock
and all information that the Company believes is
4.
reasonably necessary to enable such Purchaser to make such decision. To
the
best of the Company's knowledge, neither this Agreement nor any other
agreements, written statements or certificates made or delivered in
connection herewith contains any untrue statement of a material fact or
omits
to state a material fact necessary to make the statements herein or
therein
not misleading.
2.12 FINANCIAL STATEMENTS. The Company has delivered
to
each Purchaser its unaudited financial statements (balance sheet and
profit
and loss statement) as at, and for the twelve-month period ended May 31,
1999
(the "Financial Statements"). The Financial Statements have been
prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated and with each other,
except
that the Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial Statements
fairly
present the financial condition and operating results of the Company as
of
the dates, and for the periods, indicated therein, subject to normal
year-end
audit adjustments. Except as set forth in the Financial Statements, the
Company has no material liabilities, contingent or otherwise, other than
(i)
liabilities incurred in the ordinary course of business subsequent to
May 31,
1999 and (ii) obligations under contracts and commitments incurred in
the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements,
which, in
both cases, individually or in the aggregate, are not material to the
financial condition or operating results of the Company. Except as
disclosed
in the Financial Statements, the Company is not a guarantor or
indemnitor of
any indebtedness of any other person, firm, or corporation. The Company
maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted
accounting
principles.
2.13 NO CONFLICT OF INTEREST. The Company is not
indebted,
directly or indirectly, to any of its officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the
ordinary
course of business or relocation expenses of employees. To the Company's
knowledge, none of the Company's officers or directors, or any members
of
their immediate families, are, directly or indirectly, indebted to the
Company (other than in connection with purchases of the Company's stock)
or
have any direct or indirect ownership interest in any firm or
corporation
with which the Company is affiliated or with which the Company has a
business
relationship, or any firm or corporation which competes with the Company
except that officers, directors and/or shareholders of the Company may
own
stock in (but not exceeding two percent of the outstanding capital stock
of)
any publicly traded company that may compete with the Company. To the
Company's knowledge, none of the Company's officers or directors or any
members of their immediate families are, directly or indirectly,
interested
in any material contract with the Company. The Company is not a
guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.14 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except
as
contemplated in the Investors' Rights Agreement, the Company has not
granted
or agreed to grant any registration rights, including piggyback rights,
to
any person or entity. To the Company's knowledge, except as contemplated
in
the Voting Agreement, no shareholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.
5.
2.15 TITLE TO PROPERTY AND ASSETS. The Company owns
its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the
ordinary
course of business and do not materially impair the Company's ownership
or
use of such property or assets. With respect to the property and assets
it
leases, the Company is in compliance with such leases and, to its
knowledge,
holds a valid leasehold interest free of any liens, claims or
encumbrances.
2.16 LABOR AGREEMENTS AND ACTIONS. The Company is not
bound
by or subject to (and none of its assets or properties is bound by or
subject
to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or,
to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other
labor
dispute involving the Company pending, or to the knowledge of the
Company
threatened, which could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the
Company, nor is the Company aware of any labor organization activity
involving its employees. The employment of each officer and employee of
the
Company is terminable at the will of the Company. To its knowledge, the
Company has complied in all material respects with all applicable state
and
federal equal employment opportunity laws and with other laws related to
employment.
2.17 PERMITS. The Company and each of its subsidiaries
has
all franchises, permits, licenses and any similar authority necessary
for the
conduct of its business, the lack of which could materially and
adversely
affect the business, properties, prospects, or financial condition of
the
Company. The Company is not in default in any material respect under any
of
such franchises, permits, licenses or other similar authority.
2.18 QUALIFIED SMALL BUSINESS The Company represents
and
warrants to the Purchasers that, to the best of its knowledge, the
Company is
a "QUALIFIED SMALL BUSINESS" within the meaning of Section 1202(d) of
the
Internal Revenue Code of 1986, as amended (the "Code"), as of the date
hereof
and the Shares should qualify as "QUALIFIED SMALL BUSINESS STOCK" as
defined
in Section 1202(c) of the Code as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser
hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and
authority to enter into this Agreement. The Agreements, when executed
and
delivered by the Purchaser, will constitute valid and legally binding
obligations of the Purchaser, enforceable in accordance with their
terms,
except (a) as limited by applicable bankruptcy, insolvency,
reorganization,
moratorium, fraudulent conveyance, and any other laws of general
application
affecting enforcement of creditors' rights generally, and as limited by
laws
relating to the availability of a specific performance, injunctive
relief, or
other equitable remedies, or (b) to the extent the indemnification
provisions
contained in the Investors' Rights Agreement may be limited by
applicable
federal or state securities laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement
is
made with the Purchaser in reliance upon the Purchaser's representation
to
the Company, which by the
6.
Purchaser's execution of this Agreement, the Purchaser hereby confirms,
that
the Securities to be acquired by the Purchaser will be acquired for
investment for the Purchaser's own account, not as a nominee or agent,
and
not with a view to the resale or distribution of any part thereof, and
that
the Purchaser has no present intention of selling, granting any
participation
in, or otherwise distributing the same. By executing this Agreement, the
Purchaser further represents that the Purchaser does not presently have
any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person,
with
respect to any of the Securities. The Purchaser has not been formed for
the
specific purpose of acquiring the Securities.
3.3 DISCLOSURE OF INFORMATION. The Purchaser has had
an
opportunity to discuss the Company's business, management, financial
affairs
and the terms and conditions of the offering of the Stock with the
Company's
management and has had an opportunity to review the Company's
facilities. The
Purchaser understands that such discussions, as well as the Business
Plan and
any other written information delivered by the Company to the Purchaser,
were
intended to describe the aspects of the Company's business which it
believes
to be material.
3.4 RESTRICTED SECURITIES. The Purchaser understands
that
the Securities have not been, and will not be registered under the
Securities
Act, by reason of a specific exemption from the registration provisions
of
the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of the Purchaser's
representations as expressed herein. The Purchaser understands that the
Securities are "restricted securities" under applicable U.S. federal and
state securities laws and that, pursuant to these laws, the Purchaser
must
hold the Securities indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities,
or an
exemption from such registration and qualification requirements is
available.
The Purchaser acknowledges that the Company has no obligation to
register or
qualify the Securities for resale except as set forth in the Investors'
Rights Agreement. The Purchaser further acknowledges that if an
exemption
from registration or qualification is available, it may be conditioned
on
various requirements including, but not limited to, the time and manner
of
sale, the holding period for the Securities, and on requirements
relating to
the Company which are outside of the Purchaser's control, and which the
Company is under no obligation and may not be able to satisfy.
3.5 NO PUBLIC MARKET. The Purchaser understands that
no
public market now exists for any of the securities issued by the
Company, and
that the Company has made no assurances that a public market will ever
exist
for the Securities.
3.6 LEGENDS. The Purchaser understands that the
Securities,
and any securities issued in respect of or exchange for the Securities,
may
bear one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS
CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE
"ACT") AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF
7.
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT
REQUIRED UNDER THE ACT."
(b) Any legend set forth in the other
Agreements.
(c) Any legend required by the Blue Sky laws
of
any state to the extent such laws are applicable to the shares
represented by
the certificate so legended.
3.7 ACCREDITED INVESTOR. The Purchaser is an
accredited
investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
3.8 FOREIGN INVESTORS. If the Purchaser is not a
United
States person (as defined by Section 7701(a)(30) of the Internal Revenue
Code
of 1986, as amended), such Purchaser hereby represents that it has
satisfied
itself as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Stock or any use of
this
Agreement, including (a) the legal requirements within its jurisdiction
for
the purchase of the Stock, (b) any foreign exchange restrictions
applicable
to such purchase, (c) any governmental or other consents that may need
to be
obtained, and (d) the income tax and other tax consequences, if any,
that may
be relevant to the purchase, holding, redemption, sale, or transfer of
the
Stock. Such Purchaser's subscription and payment for and continued
beneficial
ownership of the Stock, will not violate any applicable securities or
other
laws of the Purchaser's jurisdiction.
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The
obligations of each Purchaser to the Company under this Agreement are
subject
to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES. The
representations and
warranties of the Company contained in Section 2 shall be true and
correct in
all material respects on and as of the Closing with the same effect as
though
such representations and warranties had been made on and as of the date
of
the Closing.
4.2 PERFORMANCE. The Company shall have performed and
complied with all covenants, agreements, obligations and conditions
contained
in this Agreement that are required to be performed or complied with by
it on
or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the
Company
shall deliver to the Purchasers at the Closing a certificate certifying
that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful
issuance and sale of the Stock pursuant to this Agreement shall be
obtained
and effective as of the Closing.
4.5 OPINION OF COUNSEL. Such Purchaser shall have
received
an opinion of counsel from Cooley Godward LLP, counsel to the Company,
in
substantially the form attached as EXHIBIT H hereto.
8.
4.6 SECRETARY'S CERTIFICATE. The Company shall
deliver a
certificate, executed by the Secretary of the Company, certifying as to:
(a)
resolutions adopted by the Company's Board of Directors and shareholders
relating to the transactions contemplated by this Agreement; (b)
Restated
Articles of the Company; and (c) Bylaws of the Company.
4.7 MINIMUM SUBSCRIPTION. The Company shall have
received
payment for, and the Purchasers shall have purchased, at least 841,346
shares
of Series B Preferred Stock.
4.8 BOARD OF DIRECTORS. As of the Closing, the Board
shall
be comprised of Michael Jewell, Jan Jewell, Ron Weinstein, Robert Nelsen
and a
vacancy for one member elected by a majority of the holders of the
Company's
Common Stock.
4.9 INVESTORS' RIGHTS AGREEMENT. The Company, each
Purchaser, Michael Jewell, Jan Jewell and holders representing the
requisite
number of outstanding shares of Series A Preferred Stock of the Company
(the
"Requisite Holders") shall have executed and delivered the Investors'
Rights
Agreement in substantially the form attached as EXHIBIT D.
4.10 VOTING AGREEMENT. The Company, each Purchaser,
Michael
Jewell and Jan Jewell and the Requisite Holders shall have executed and
delivered the Voting Agreement in substantially the form attached as
EXHIBIT F.
4.11 RESTATED ARTICLES. The Company shall have filed
the
Restated Articles with the Secretary of State of Washington on or prior
to the
Closing Date, which shall continue to be in full force and effect as of
the
Closing Date.
4.12 RIGHT OF FIRST REFUSAL AGREEMENT. The Company
and the
Requisite Holders shall have executed and delivered the Right of First
Refusal
Agreement in substantially the form attached as EXHIBIT E.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following
conditions,
unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The
representations and
warranties of each Purchaser contained in Section 3 shall be true and
correct
on and as of the Closing with the same effect as though such
representations
and warranties had been made on and as of the Closing.
5.2 PERFORMANCE. All covenants, agreements and
conditions
contained in this Agreement to be performed by the Purchasers on or
prior to
the Closing shall have been performed or complied with in all material
respects.
5.3 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United
States or of any state that are required in connection with the lawful
issuance
and sale of the Stock pursuant to this Agreement shall be obtained and
effective as of the Closing.
9.
5.4 INVESTORS' RIGHTS AGREEMENT. The Company, each
Purchaser, Michael Jewell and Jan Jewell and the Requisite Holders shall
have
executed and delivered the Investors' Rights Agreement in substantially
the
form attached as EXHIBIT D.
5.5 VOTING AGREEMENT. The Company, each Purchaser,
Michael
Jewell and Jan Jewell and the Requisite Holders shall have executed and
delivered the Voting Agreement in substantially the form attached as
EXHIBIT F.
5.6 RIGHT OF FIRST REFUSAL AGREEMENT. The Company,
each
Purchaser and the Requisite Holders shall have executed and delivered
the Right
of First Refusal Agreement in substantially the form attached as EXHIBIT
E.
5.7 MINIMUM SUBSCRIPTION. The Company shall have
received
payment for, and the Purchasers shall have purchased, at least 841,346
shares
of Series B Preferred Stock.
6. MISCELLANEOUS
6.1 SURVIVAL OF WARRANTIES. Unless otherwise set
forth in
this Agreement, the warranties, representations and covenants of the
Company
and the Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
6.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon
the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party
other than
the parties hereto or their respective successors and assigns any
rights,
remedies, obligations, or liabilities under or by reason of this
Agreement,
except as expressly provided in this Agreement.
6.3 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the
parties
hereto shall be governed, construed and interpreted in accordance with
the laws
of the State of Washington, without giving effect to principles of
conflicts of
law.
6.4 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.
6.5 TITLES AND SUBTITLES. The titles and subtitles
used in
this Agreement are used for convenience only and are not to be
considered in
construing or interpreting this Agreement.
6.6 NOTICES. Any notice required or permitted by
this
Agreement shall be in writing and shall be deemed sufficient upon
delivery,
when delivered personally or by overnight courier or sent by telegram or
fax,
or forty-eight (48) hours after being deposited in the U.S. mail, as
certified
or registered mail, with postage prepaid, addressed to the party to be
notified
at such party's address as set forth on the signature page or EXHIBIT A
hereto,
or as subsequently modified by written notice, and (a) if to the
Company, with
a copy to Christopher W. Wright,
10.
Cooley Godward LLP, 5200 Carillon Point, Kirkland, Washington 98033-7356
or (b)
if to the Purchasers, with a copy to such party's address as set forth
on the
signature page or EXHIBIT A hereto.
6.7 FINDER'S FEE. Each party represents that it
neither is
nor will be obligated for any finder's fee or commission in connection
with
this transaction. Each Purchaser agrees to indemnify and to hold
harmless the
Company from any liability for any commission or compensation in the
nature of
a finder's fee (and the costs and expenses of defending against such
liability
or asserted liability) for which each Purchaser or any of its officers,
employees, or representatives is responsible.
6.8 ATTORNEY'S FEES. If any action at law or in
equity
(including arbitration) is necessary to enforce or interpret the terms
of any
of the Agreements, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any
other
relief to which such party may be entitled.
6.9 AMENDMENTS AND WAIVERS. Any term of this
Agreement may
be amended or waived only with the written consent of the Company and
the
holders of at least a majority of the Common Stock issued or issuable
upon
conversion of the Stock. Any amendment or waiver effected in accordance
with
this Section 6.9 shall be binding upon the Purchasers and each
transferee of
the Stock (or the Common Stock issuable upon conversion thereof), each
future
holder of all such securities, and the Company.
6.10 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 (a) such provision shall be excluded from this
Agreement, (b)
the balance of the Agreement shall be interpreted as if such provision
were so
excluded and (c) the balance of the Agreement shall be enforceable in
accordance with its terms.
6.11 DELAYS OR OMISSIONS. No delay or omission to
exercise
any right, power or remedy accruing to any party under this Agreement,
upon any
breach or default of any other party under this Agreement, shall impair
any
such right, power or remedy of such non-breaching or non-defaulting
party nor
shall it be construed to be a waiver of any such breach or default, or
an
acquiescence therein, or of or in any similar breach or default
thereafter
occurring; nor shall any waiver of any single breach or default be
deemed a
waiver of any other breach or default theretofore or thereafter
occurring. Any
waiver, permit, consent or approval of any kind or character on the part
of any
party of any breach or default under this Agreement, or any waiver on
the part
of any party of any provisions or conditions of this Agreement, must be
in
writing and shall be effective only to the extent specifically set forth
in
such writing. All remedies, either under this Agreement or by law or
otherwise
afforded to any party, shall be cumulative and not alternative.
6.12 ENTIRE AGREEMENT. This Agreement, and the
documents
referred to herein constitute the entire agreement between the parties
hereto
pertaining to the subject matter hereof, and any and all other written
or oral
agreements relating to the subject matter hereof existing between the
parties
hereto are expressly canceled.
11.
6.13 CONFIDENTIALITY. Each party hereto agrees that,
except
with the prior written permission of the other party, it shall at all
times
keep confidential and not divulge, furnish or make accessible to anyone
any
confidential information, knowledge or data concerning or relating to
the
business or financial affairs of the other parties to which such party
has been
or shall become privy by reason of this Agreement, discussions or
negotiations
relating to this Agreement, the performance of its obligations hereunder
or the
ownership of Stock purchased hereunder. The provisions of this Section
6.13
shall be in addition to, and not in substitution for, the provisions of
any
separate nondisclosure agreement executed by the parties hereto with
respect to
the transactions contemplated hereby.
6.14 EXCULPATION AMONG PURCHASERS. Each Purchaser
acknowledges that it is not relying upon any person, firm or
corporation, other
than the Company and its officers and directors, in making its
investment or
decision to invest in the Company. Each Purchaser agrees that no
Purchaser nor
the respective controlling persons, officers, directors, partners,
agents, or
employees of any Purchaser shall be liable to any other Purchaser for
any
action heretofore or hereafter taken or omitted to be taken by any of
them in
connection with the purchase of the Stock.
6.15 WAIVER OF CONFLICTS. Each party to this
Agreement
acknowledges that Cooley Godward LLP, counsel for the Company, has in
the past
performed and may continue to perform legal services for certain of the
Purchasers in matters unrelated to the transactions described in this
Agreement, including the representation of such Purchasers in venture
capital
financings and other matters. Accordingly, each party to this Agreement
hereby
(a) acknowledges that they have had an opportunity to ask for
information
relevant to this disclosure; and (b) gives its informed consent to
Cooley
Godward LLP's representation of certain of the Purchasers in such
unrelated
matters and to Cooley Godward LLP's representation of the Company in
connection
with this Agreement and the transactions contemplated hereby.
6.16 EXPENSES. Irrespective of whether the Closing is
effected, each party shall pay all costs and expenses that it incurs
with
respect to the negotiation, execution, delivery and performance of this
Agreement. In the event that the Closing is effected, the Company shall
reimburse the reasonable fees and expenses of Testa, Hurwitz &
Thibeault, LLP,
special counsel for the Purchasers, not to exceed $10,000.
[SIGNATURE PAGES FOLLOW]
12.
The parties have executed this Series B Preferred Stock
Purchase
Agreement as of the date first written above.
COMPANY:
BIRTHDAYEXPRESS.COM, INC.
By:
----------------------------------
Name:
--------------------------------
(Print)
Title:
-------------------------------
Address: 11220 - 120th Avenue
N.E.
Kirkland, Washington
98033
PURCHASERS:
-------------------------------------
(Print Name of Purchaser)
By:
----------------------------------
Name:
--------------------------------
(Print)
Title:
-------------------------------
Address:
-----------------------------
-----------------------------
SIGNATURE PAGE TO SERIES B STOCK PURCHASE AGREEMENT
