BIRTHDAY EXPRESS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
OCTOBER 15, 1998
TABLE OF CONTENTS
PAGE
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1. Purchase and Sale of Preferred Stock.....................................................................1
1.1 Sale and Issuance of Series A 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...................................................................................2
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
2.12 No Conflict of Interest.........................................................................5
2.13 Rights of Registration and Voting Rights........................................................5
2.14 Title to Property and Assets....................................................................5
2.15 Labor Agreements and Actions....................................................................5
2.16 Permits.........................................................................................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.......................................................................6
3.4 Restricted Securities...........................................................................6
3.5 No Public Market................................................................................7
3.6 Legends.........................................................................................7
3.7 Accredited Investor.............................................................................7
3.8 Foreign Investors...............................................................................7
4. Conditions of the Purchasers' Obligations at Closing.....................................................7
4.1 Representations and Warranties..................................................................8
4.2 Performance.....................................................................................8
4.3 Compliance Certificate..........................................................................8
4.4 Qualifications..................................................................................8
4.5 Board of Directors..............................................................................8
4.6 Investors' Rights Agreement.....................................................................8
4.7 Voting Agreement................................................................................8
4.8 Restated Articles...............................................................................8
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4.9 Right of First Refusal Agreement................................................................8
5. Conditions of the Company's Obligations at Closing.......................................................8
5.1 Representations and Warranties..................................................................8
5.2 Performance.....................................................................................9
5.3 Qualifications..................................................................................9
5.4 Investors' Rights Agreement.....................................................................9
5.5 Voting Agreement................................................................................9
5.6 Right of First Refusal Agreement................................................................9
5.7 Minimum Subscription............................................................................9
6. Miscellaneous............................................................................................9
6.1 Survival of Warranties..........................................................................9
6.2 Transfer; Successors and Assigns................................................................9
6.3 Governing Law...................................................................................9
6.4 Counterparts....................................................................................9
6.5 Titles and Subtitles...........................................................................10
6.6 Notices........................................................................................10
6.7 Finder's Fee...................................................................................10
6.8 Attorney's Fees................................................................................10
6.9 Amendments and Waivers.........................................................................10
6.10 Severability...................................................................................10
6.11 Delays or Omissions............................................................................10
6.12 Entire Agreement...............................................................................11
6.13 Confidentiality................................................................................11
6.14 Exculpation Among Purchasers...................................................................11
6.15 Waiver of Conflicts............................................................................11
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BIRTHDAY EXPRESS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of the 15th day of October, 1998 by and between BIRTHDAY EXPRESS, 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 A 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 A Preferred Stock set forth opposite each such Purchaser's name on
EXHIBIT A attached hereto at a purchase price of $1.20 per share. The shares of
Series A 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 Venture Law Group, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., on October 15, 1998 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 1,700,000 shares of Series A Preferred Stock
of the Company are not sold at the Closing, the Company shall have the right, at
any time prior to October 30, 1998, to sell that number of shares of Series A
Preferred Stock equal to the difference between 1,700,000 minus the number of
shares of Series A 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 A 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 A Preferred Stock shall be
considered a "Purchaser" for purposes of this Agreement, and any Series A
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) 1,700,000 shares of Preferred Stock, all of which
shares have been designated Series A Preferred Stock, none of which are issued
and outstanding immediately prior to the Closing. The fights, privileges and
preferences of the Preferred Stock are as stated in the Restated Articles.
(b) 4,500,000 shares of Common Stock, 1,992,100
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 300,000 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 42,100
shares have been granted and exercised, options to purchase 257,900 shares have
been granted and are currently outstanding, and there are no 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.
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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 Investors' Rights
Agreement in the form attached hereto as EXHIBIT D (the "INVESTORS' RIGHTS
AGREEMENT"), the Right of First Refusal Agreement in the form attached hereto as
EXHIBIT E (the "RIGHT OF FIRST REFUSAL AGREEMENT"), and the 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 (i) 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 (ii) 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,
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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. 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.
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2.11 DISCLOSURE. The Company has fully provided the Purchasers
with all the information that the Purchasers have requested for deciding whether
to acquire the Stock and all information that the Company believes is reasonably
necessary to enable the Purchasers to make such a decision, including certain of
the Company's projections describing its proposed business (collectively, the
"BUSINESS PLAN"). To the extent the Business Plan was prepared by management of
the Company, the Business Plan and the financial and other projections contained
in the Business Plan were prepared in good faith; however, the Company does not
warrant that it will achieve such projections.
2.12 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.
2.13 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.
2.14 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.
2.15 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
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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.
2.16 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.
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 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
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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
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
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase, (iii)
any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax
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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 BOARD OF DIRECTORS. As of the Closing, the Board shall be
comprised of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, a vacancy for one member
elected by a majority of the holders of the Company's Common Stock and a vacancy
for one member elected by a majority of the holders of the Company's Series A
Preferred Stock.
4.6 INVESTORS' RIGHTS AGREEMENT. The Company, each Purchaser,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered the Investors'
Rights Agreement in substantially the form attached as EXHIBIT D.
4.7 VOTING AGREEMENT. The Company, each Purchaser, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered the Voting Agreement in
substantially the form attached as EXHIBIT F.
4.8 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.
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4.9 RIGHT OF FIRST REFUSAL AGREEMENT. The Company and each
Purchaser 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.
5.4 INVESTORS' RIGHTS AGREEMENT. The Company, each Purchaser,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ 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 and each
Purchaser 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 1,358,334 shares
of Series A 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
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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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Venture Law Group, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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.
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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.
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 Venture Law Group, counsel for the Company, has in the past
performed and may continue to
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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 Venture Law Group's representation of certain of the
Purchasers in such unrelated matters and to Venture Law Group's
representation of the Company in connection with this Agreement and the
transactions contemplated hereby.
[Signature Pages Follow]
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The parties have executed this Series A Preferred Stock Purchase
Agreement as of the date first written above.
COMPANY:
BIRTHDAY EXPRESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
(print)
Title:
--------------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
PURCHASERS:
-------------------------------------------
(Print Name of Purchaser)
By:
-----------------------------------------
Name:
---------------------------------------
(print)
Title:
--------------------------------------
Address:
SIGNATURE PAGE TO PURCHASE AGREEMENT
EXHIBITS
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 Investors' Rights Agreement
Exhibit E - Form of Right of First Refusal Agreement
Exhibit F - Form of Voting Agreement
Exhibit G - Form of Addendum Agreement
