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EXHIBIT 4.2
CELEBRATEEXPRESS.COM, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement")
is
made as of the 15th day of November, 2001,
by and among CELEBRATEEXPRESS.COM,
INC., a Washington corporation (the
"Company"), MICHAEL JEWELL AND JAN JEWELL
(the "Founders"), the holders of shares of
the Company's Series A Preferred
Stock listed on EXHIBIT A hereto (the
"Series A Holders"), the holders of the
Company's Series B Preferred Stock listed
on EXHIBIT B hereto (the "Series B
Holders"), and the holders of the Company's
Series C Preferred Stock (the
"Series C Stock") set forth on EXHIBIT C
hereto (the "Series C Holders" and,
collectively with the Founders, the Series
A Holders, and the Series B Holders,
the "Holders"). The Series A Holders, the
Series B Holders and the Series C
Holders shall be referred to collectively
hereinafter as the "Investors" and
each individually as an "Investor."
RECITALS
WHEREAS,
the Company proposes to sell and issue up to two hundred ten
thousand three hundred thirty-six (210,336)
shares of its Series C Preferred
Stock ("Series C Stock") pursuant to that
certain Series C Preferred Stock and
Warrant Purchase Agreement of even date
herewith (the "Purchase Agreement");
WHEREAS,
the Company and certain of the Holders have entered into that
certain Amended and Restated Investor
Rights Agreement, dated as of September 8,
2000, as amended by Amendment No. 1 to such
agreement dated April 16, 2001 (the
"Prior Investor Rights Agreement"), and
desire to amend and restate such
agreement with the terms and conditions of
the Agreement; and
WHEREAS,
as a condition of entering into the Purchase Agreement, the
Series C Holders have requested that the
Company extend to them registration
rights, information rights and other rights
as set forth below.
NOW, THEREFORE, in
consideration of the mutual promises, representations,
warranties, covenants and conditions set
forth in this Agreement and in the
Purchase Agreement, the parties mutually
agree as follows:
AGREEMENT
1.
REGISTRATION RIGHTS. The Company and the Investors covenant and
agree as follows:
1.1 DEFINITIONS.
For purposes of this Section 1:
(a) The terms
"register," "registered," and "registration"
refer to a registration effected by
preparing and filing a registration
statement or similar document in
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compliance with the Securities Act of 1933,
as amended (the "Securities Act"),
and the declaration or ordering of
effectiveness of such registration statement
or document;
(b) The term
"Registrable Securities" means (i) the shares
of Common Stock issuable or issued upon
conversion of any of the Company's
Series A Preferred Stock, the Series B
Preferred Stock, the Series C Stock, and
the Common Stock issuable upon exercise of
warrants to purchase Common Stock
held by the Investors, (ii) the shares of
Common Stock issued to the Founders
(the "Founders' Stock"), and (iii) any
other shares of Common Stock of the
Company issued as (or issuable upon the
conversion or exercise of any warrant,
right or other security which is issued as)
a dividend or other distribution
with respect to, or in exchange for or in
replacement of, the shares listed in
(i); provided, however, that the foregoing
definition shall exclude in all cases
any Registrable Securities sold by a person
in a transaction in which his or her
rights under this Agreement are not
assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only
be treated as Registrable Securities
if and so long as they have not been (A)
sold to or through a broker or dealer
or underwriter in a public distribution or
a public securities transaction, or
(B) sold in a transaction exempt from the
registration and prospectus delivery
requirements of the Securities Act under
Section 4(l) thereof so that all
transfer restrictions, and restrictive
legends with respect thereto, if any, are
removed upon the consummation of such
sale;
(c) The number
of shares of "Registrable Securities then
outstanding" shall be determined by the
number of shares of Common Stock
outstanding which are, and the number of
shares of Common Stock issuable
pursuant to then exercisable or convertible
securities which are, Registrable
Securities;
(d) The term
"Holder" means any person owning or having the
right to acquire Registrable Securities or
any assignee thereof in accordance
with Section 1.10 of this Agreement;
(e) The term "Form S-3" means such
form under the Securities
Act as in effect on the date hereof or any
successor form under the Securities
Act;
(f) The term
"SEC" means the Securities and Exchange
Commission; and
(g) The term "Qualified IPO" means a
firm commitment
underwritten public offering by the Company
of shares of its Common Stock
pursuant to a registration statement on
Form S-1 under the Securities Act, the
public offering price of which is not less
than $12.00 per share (appropriately
adjusted for any stock split, dividend,
combination or other recapitalization)
and which results in aggregate cash
proceeds to the Company of $20,000,000 (net
of underwriting discounts and
commissions).
1.2
COMPANY
REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for
this purpose a registration effected
by the Company for shareholders other than
the Holders) any of its stock under
the Securities Act in connection with the
public offering of such securities
solely for cash (other than a registration
relating solely to the sale of
securities to participants in a Company
stock plan or a transaction covered by
Rule
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145 under the Securities Act, a
registration in which the only stock being
registered is Common Stock issuable upon
conversion of debt securities which are
also being registered, or any registration
on any form which does not include
substantially the same information as would
be required to be included in a
registration statement covering the sale of
the Registrable Securities), the
Company shall, at such time, promptly give
each Holder written notice of such
registration. Upon the written request of
each Holder given within twenty (20)
days after mailing of such notice by the
Company in accordance with Section 3.3,
the Company shall, subject to the
provisions of Section 1.6, cause to be
registered under the Securities Act all of
the Registrable Securities that each
such Holder has requested to be
registered.
1.3 OBLIGATIONS
OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any
Registrable Securities, the Company
shall, as expeditiously as reasonably
possible:
(a) Prepare and
file with the SEC a registration statement
with respect to such Registrable Securities
and use its best efforts to cause
such registration statement to become
effective, and, upon the request of the
Holders of a majority of the Registrable
Securities registered thereunder, keep
such registration statement effective for
up to one hundred twenty (120) days.
(b) Prepare and
file with the SEC such amendments and
supplements to such registration statement
and the prospectus used in connection
with such registration statement as may be
necessary to comply with the
provisions of the Securities Act with
respect to the disposition of all
securities covered by such registration
statement for up to one hundred twenty
(120) days.
(c) Furnish to
the Holders such numbers of copies of a
prospectus, including a preliminary
prospectus, in conformity with the
requirements of the Securities Act, and
such other documents as they may
reasonably request in order to facilitate
the disposition of Registrable
Securities owned by them.
(d) Use its best
efforts to register and qualify the
securities covered by such registration
statement under such other securities or
Blue Sky laws of such jurisdictions as
shall be reasonably requested by the
Holders, provided that the Company shall
not be required in connection therewith
or as a condition thereto to qualify to do
business or to file a general consent
to service of process in any such states or
jurisdictions.
(e) In the event
of any underwritten public offering, enter
into and perform its obligations under an
underwriting agreement, in usual and
customary form, with the managing
underwriter of such offering. Each Holder
participating in such underwriting shall
also enter into and perform its
obligations under such an agreement.
(f) Notify each
Holder of Registrable Securities covered by
such registration statement at any time
when a prospectus relating thereto is
required to be delivered under the
Securities Act of the happening of any event
as a result of which the prospectus
included in such registration statement, as
then in effect, includes an untrue
statement of a material fact or omits to
state a material fact required to be stated
therein or necessary to make
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the statements therein not misleading in
the light of the circumstances then
existing, such obligation to continue for
one hundred twenty (120) days.
(g) Cause all
such Registrable Securities registered
pursuant hereunder to be listed on each
securities exchange on which similar
securities issued by the Company are then
listed.
(h) Provide a
transfer agent and registrar for all
Registrable Securities registered pursuant
hereunder and a CUSIP number for all
such Registrable Securities, in each case
not later than the effective date of
such registration.
(i) Use its best
efforts to furnish, at the request of any
Holder requesting registration of
Registrable Securities pursuant to this
Section 1, on the date that such
Registrable Securities are delivered to the
underwriters for sale in connection with a
registration pursuant to this Section
1, if such securities are being sold
through underwriters, or, if such
securities are not being sold through
underwriters, on the date that the
registration statement with respect to such
securities becomes effective, (i) an
opinion, dated such date, of the counsel
representing the Company for the
purposes of such registration, in form and
substance as is customarily given to
underwriters in an underwritten public
offering, addressed to the underwriters,
if any, and to the Holders requesting
registration of Registrable Securities and
(ii) a letter dated such date, from the
independent certified public accountants
of the Company, in form and substance as is
customarily given by independent
certified public accountants to
underwriters in an underwritten public offering,
addressed to the underwriters, if any, and
to the Holders requesting
registration of Registrable Securities.
1.4 FURNISH
INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any
action pursuant to this Section 1 with
respect to the Registrable Securities of
any selling Holder that such Holder
shall furnish to the Company such
information regarding itself, the Registrable
Securities held by it, and the intended
method of disposition of such securities
as shall be required to effect the
registration of such Holder's Registrable
Securities.
1.5 EXPENSES OF
COMPANY REGISTRATION. All expenses other than
underwriting discounts and commissions
incurred in connection with
registrations, filings or qualifications of
Registrable Securities pursuant to
Section 1.2 for each Holder (which right
may be assigned as provided in Section
1.10), including (without limitation) all
registration, filing, and
qualification fees, printers' and
accounting fees, fees and disbursements of
counsel for the Company and the reasonable
fees and disbursements (not to exceed
$10,000) of one counsel for the selling
Holder or Holders selected by them with
the approval of the Company, which approval
shall not be unreasonably withheld,
shall be borne by the Company.
1.6 UNDERWRITING
REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the
Company's capital stock, the Company
shall not be required under Section 1.2 to
include any of the Holders'
securities in such underwriting unless they
accept the terms of the underwriting
as agreed upon between the Company and the
underwriters selected by it (or by
other persons entitled to select the
underwriters), and then only in such
quantity as the underwriters determine in
their sole discretion will not
jeopardize the success of
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the offering by the Company. If the total
amount of securities, including
Registrable Securities, requested by
shareholders to be included in such
offering exceeds the amount of securities
sold other than by the Company that
the underwriters determine in their sole
discretion is compatible with the
success of the offering, then the Company
shall be required to include in the
offering only that number of such
securities, including Registrable Securities,
which the underwriters determine in their
sole discretion will not jeopardize
the success of the offering (the securities
so included to be apportioned pro
rata among the selling shareholders
according to the total amount of securities
entitled to be included therein owned by
each selling shareholder or in such
other proportions as shall mutually be
agreed to by such selling shareholders)
but in no event shall the amount of
securities of the selling Holders included
in the offering be reduced below twenty
percent (20%) of the total amount of
securities included in such offering,
unless such offering is the initial public
offering of the Company's securities.
1.7 DELAY OF REGISTRATION. No
Holder shall have any right to
obtain or seek an injunction restraining or
otherwise delaying any such
registration as the result of any
controversy that might arise with respect to
the interpretation or implementation of
this Section 1.
1.8
INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under
this Section 1:
(a) To the
extent permitted by law, the Company will
indemnify, and hold harmless each Holder,
any underwriter (as defined in the
Securities Act) for such Holder and each
person, if any, who controls such
Holder or underwriter within the meaning of
the Securities Act or the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses,
claims, damages, or liabilities (joint or
several) to which they may become
subject under the Securities Act, the
Exchange Act or other federal or state
law, insofar as such losses, claims,
damages, or liabilities (or actions in
respect thereof) arise out of or are based
upon any of the following statements,
omissions or violations (collectively a
"Violation"): (i) any untrue statement
or alleged untrue statement of a material
fact contained in such registration
statement, including any preliminary
prospectus or final prospectus contained
therein or any amendments or supplements
thereto, (ii) the omission or alleged
omission to state therein a material fact
required to be stated therein, or
necessary to make the statements therein
not misleading, or (iii) any violation
or alleged violation by the Company of the
Securities Act, the Exchange Act, any
state securities law or any rule or
regulation promulgated under the Securities
Act, the Exchange Act or any state
securities law; and the Company will pay to
each such Holder, underwriter or
controlling person, as incurred, any legal or
other expenses reasonably incurred by them
in connection with investigating or
defending any such loss, claim, damage,
liability, or action; provided, however,
that the indemnity agreement contained in
this subsection 1.8(a) shall not apply
to amounts paid in settlement of any such
loss, claim, damage, liability, or
action if such settlement is effected
without the consent of the Company (which
consent shall not be unreasonably
withheld), nor shall the Company be liable to
any Holder, underwriter or controlling
person for any such loss, claim, damage,
liability, or action to the extent that it
arises out of or is based upon a
Violation which occurs in reliance upon and
in conformity with written
information furnished expressly for use in
connection with such registration by
any such Holder, underwriter or controlling
person.
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(b) To the
extent permitted by law, each selling Holder will
indemnify and hold harmless the Company,
each of its directors, each of its
officers who has signed the registration
statement, each person, if any, who
controls the Company within the meaning of
the Securities Act, any underwriter,
any other Holder selling securities in such
registration statement and any
controlling person of any such underwriter
or other Holder, against any losses,
claims, damages, or liabilities (joint or
several) to which any of the foregoing
persons may become subject, under the
Securities Act, the Exchange Act or other
federal or state law, insofar as such
losses, claims, damages, or liabilities
(or actions in respect thereto) arise out
of or are based upon any Violation, in
each case to the extent (and only to the
extent) that such Violation occurs in
reliance upon and in conformity with
written information furnished by such
Holder expressly for use in connection with
such registration; and each such
Holder will pay, as incurred, any legal or
other expenses reasonably incurred by
any person intended to be indemnified
pursuant to this subsection 1.8(b), in
connection with investigating or defending
any such loss, claim, damage,
liability, or action; provided, however,
that the i
