EXHIBIT 4.5
EXECUTION COPY
FOGDOG, INC.
____________________________
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
____________________________
March 3, 1999
TABLE OF CONTENTS
Page
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1. Authorization, Issuance and Sale of Securities.............................. 1
1.1 Authorization......................................................... 1
1.2 Issuance and Sale of Series C Preferred Stock......................... 1
1.3 Closing............................................................... 1
2. Representations and Warranties of the Company............................... 2
2.1 Organization, Good Standing and Qualification......................... 2
2.2 Capitalization........................................................ 2
2.3 Subsidiaries, Etc..................................................... 3
2.4 Shareholder List and Agreements....................................... 3
2.5 Issuance of Securities................................................ 3
2.6 Authority for Agreement............................................... 3
2.7 Governmental Consents................................................. 4
2.8 Litigation............................................................ 4
2.9 Employee Proprietary Information and Inventions Agreements............ 4
2.10 Acquisitions of the Company........................................... 4
2.11 Absence of Liabilities................................................ 4
2.12 Financial Statements.................................................. 4
2.13 Taxes................................................................. 5
2.14 Property and Assets................................................... 5
2.15 Intellectual Property................................................. 5
2.16 Material Contracts and Obligations.................................... 5
2.17 Compliance............................................................ 6
2.18 Books and Records..................................................... 6
2.19 Disclosures........................................................... 6
2.20 Changes............................................................... 6
2.21 Year 2000 Compliance.................................................. 6
2.22 Qualified Small Business Stock........................................ 7
2.23 Business Plan......................................................... 7
3. Representations and Warranties of the Investors............................. 7
3.1 Authorization......................................................... 7
3.2 Purchase Entirely for Own Account..................................... 8
3.3 Disclosure of Information............................................. 8
3.4 Investment Experience................................................. 8
3.5 Accredited Investor................................................... 8
3.6 Restricted Securities................................................. 8
3.7 Further Limitations on Disposition.................................... 8
3.8 Legends............................................................... 9
3.9 Transfer of Rights.................................................... 9
4. Conditions to the Investors' Obligations at the Closing.....................10
4.1 Representations and Warranties........................................10
4.2 Covenants.............................................................10
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4.3 Compliance Certificate................................................10
4.4 Proceedings...........................................................10
4.5 Consents and Approvals................................................10
4.6 Bylaws................................................................10
4.7 Board of Directors....................................................10
4.8 Second Amended and Restated Articles of Incorporation.................10
4.9 Registration Rights Agreement.........................................11
4.10 Shareholders Agreement................................................11
4.11 Voting Agreement......................................................11
4.12 Opinion of Counsel....................................................11
4.13 Minimum Amount of Subscriptions.......................................11
5. Conditions of the Company's Obligations at Closing..........................11
5.1 Representations and Warranties........................................11
5.2 Payment of Purchase Price.............................................11
5.3 Qualifications........................................................11
5.4 Minimum Amount of Subscriptions.......................................11
6. Covenants of the Company....................................................11
6.1 Financial Statements and Other Information............................12
6.2 Inspection of Property................................................12
6.3 Inspection and Visitation Rights......................................12
6.4 Limit on Information..................................................13
6.5 Option Grants.........................................................13
6.6 Qualified Small Business Stock........................................13
7. Miscellaneous...............................................................13
7.1 Survival of Representations, Warranties, Covenants and Agreements.....13
7.2 Notices...............................................................13
7.3 Expenses..............................................................15
7.4 RESERVED..............................................................15
7.5 Entire Agreement; Waivers and Amendments..............................15
7.6 Successors and Assigns................................................15
7.7 Severability..........................................................15
7.8 Governing Law.........................................................15
7.9 Strict Construction...................................................15
7.10 Captions..............................................................16
7.11 Counterparts..........................................................16
7.12 Broker's Fees.........................................................16
Exhibits
A Second Amended and Restated Articles of Incorporation
B Form of Second Amended and Restated Registration Rights Agreement
C Form of Amended and Restated Shareholders Agreement
D Form of Amended and Restated Voting Agreement
E Opinion of Counsel to the Company
F Form of Employee Proprietary Information and Inventions Agreement
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Schedules
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A Schedule of Investors
B Disclosure Schedule
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SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") is made
as of March 3, 1999 by and among Fogdog, Inc., a California corporation
(formerly known as Cedro Group, Inc.) (the "Company") and the investors listed
on the signature pages hereof (individually, an "Investor" and collectively, the
"Investors").
W I T N E S S E T H:
WHEREAS, the Company wishes to sell to the Investors, and the
Investors wish to purchase from the Company, shares of the Company's Series C
Preferred Stock, no par value per share (the "Series C Preferred Stock") subject
to the terms and in the manner further set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Company, the parties hereto hereby agree as follows:
1. Authorization, Issuance and Sale of Securities.
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1.1 Authorization. The Company has authorized the issuance and sale
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pursuant to the terms hereof of an aggregate of Fifteen Million Five Hundred
Forty-Three Thousand Thirty-Four (15,543,034) shares of Series C Preferred
Stock, at a purchase price of $1.0294 per share. The rights, preferences and
privileges of the Series C Preferred Stock shall be as set forth in the Second
Amended and Restated Articles of Incorporation (the "Restated Articles") in
substantially the form of Exhibit A attached hereto.
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1.2 Issuance and Sale of Series C Preferred Stock. Subject to the
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terms and conditions hereof, at the Closing (as defined below) the Company will
issue and sell to the Investors and the Investors will purchase from the Company
the number of shares of Series C Preferred Stock set forth opposite each
Investor's name on Schedule A.
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1.3 Closing.
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(a) The closing of the transactions contemplated herein (the "Initial
Closing") shall take place at the offices of Brobeck, Phleger & Harrison LLP,
Two Embarcadero Place, 2200 Geng Road, Palo Alto, California at 10:00 a.m. local
time on March 3, 1999, or at such other time and place as may be mutually agreed
upon by the Company and the Investors. The date on which the Closing occurs is
referred to herein as the "Closing Date." Up to Twelve Million Six Hundred
Twenty-Eight Thousand Seven Hundred Sixteen (12,628,716) shares of Series C
Preferred Stock will be issued and sold at the Initial Closing.
(b) Subject to the terms and conditions of this Agreement and
approval by the Company's Board of Directors, the Company may sell, at a
subsequent closing or closings taking place within thirty (30) days of the
Initial Closing, up to the balance of such shares of Series C Preferred Stock
authorized by the Company to such persons or entities as the Company may
determine, at the same price per share as the Series C Preferred Stock purchased
and sold at the Initial Closing. Any such sale shall be upon the same terms and
conditions as those contained herein, and such persons or entities shall become
parties to this Agreement, the Second Amended and Restated Registration Rights
Agreement (as defined below) the Second Amended and Restated Shareholders'
Agreement (as defined below) and the Voting Agreement (as defined below) and
shall have the rights and obligations set forth hereunder and thereunder. The
Initial Closing and any subsequent closings shall each be referred to as a
"Closing."
(c) At each Closing, the Company shall deliver to the Investors
participating therein certificates evidencing the number of shares of Series C
Preferred Stock set forth on Schedule A opposite such Investor's name against
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payment of the purchase price set forth on Schedule A by check or wire transfer
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of immediately available funds to an account designated by the Company in a
written notice delivered to such Investors prior to the Closing Date.
2. Representations and Warranties of the Company. Except as set forth in
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the Disclosure Schedule attached hereto as Schedule B, prepared by the Company,
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which shall be representations and warranties of the Company, the Company hereby
represents and warrants to the Investors as follows:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of California and has full corporate power and authority to conduct
its business as presently conducted and as proposed to be conducted by it and to
enter into and perform this Agreement and each of the Ancillary Agreements (as
defined in Section 2.6 below) and to carry out the transactions contemplated by
this Agreement and each of the Ancillary Agreements. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect on its
business or properties (a "Material Adverse Effect"). The Company has furnished
or made available to the Investors true and complete copies of the Restated
Articles and the Bylaws of the Company, each as amended to date and currently in
effect.
2.2 Capitalization. Upon the filing of the Restated Articles with
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the State of California, the authorized capital stock of the Company will
consist of (i) Sixty Million (60,000,000) shares of Common Stock, no par value
per share, (the "Common Stock"), of which Seven Million Two Hundred Twenty-Three
Thousand Two Hundred Seventeen (7,223,217) shares are issued and outstanding and
Four Million Three Hundred Fifty Thousand Two Hundred Seventy-Four (4,350,274)
are reserved for issuance upon exercise of options under the Company's Amended
and Restated 1996 Stock Option Plan, as amended and in effect from time to time
(the "Option Plan"), of which options for the purchase of Three Million Eight
Hundred Fifty-Four Thousand Six Hundred Ten (3,854,610) shares have been issued,
and (ii) Twenty-Six Million Ninety-One Thousand Nine Hundred One (26,091,901)
shares of Preferred Stock, which consist of (a) Two Million Eight Hundred
Thirteen Thousand Forty-Six (2,813,046) shares of Series A Preferred Stock, no
par value per share (the "Series A Preferred Stock"), of which Two Million Six
Hundred Seventy-Nine Thousand Two Hundred Sixty-Eight (2,679,268) shares are
issued and outstanding, and (b) Nine Million Six Hundred Seventy-Eight Thousand
Seven Hundred (9,678,700) shares of Series B Preferred Stock, no par value per
share (the "Series B Preferred Stock"), all of which are issued and outstanding,
and (c) Fifteen Million Five Hundred
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Forty-Three Thousand Thirty-Four (15,543,034) shares of Series C Preferred Stock
all of which may be issued pursuant to this Agreement. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable, and were issued in compliance
with all applicable securities laws. Except as contemplated by this Agreement
and except for warrants for the purchase of 220,000 shares of the Common Stock
and 133,778 shares of Series A Preferred Stock (i) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is authorized or
outstanding, (ii) the Company has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, and (iii) the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. The percentage
ownership of the Company, on a fully diluted basis, represented by the Series C
Preferred Stock purchased hereunder shall be, for each Investor, as set forth
opposite such Investor's name on the Schedule of Investors attached hereto as
Schedule A.
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2.3 Subsidiaries, Etc. Except as listed on the Disclosure Schedule,
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the Company has no subsidiaries and does not own or control, directly or
indirectly, any shares of capital stock of any other corporation or any interest
in any partnership, joint venture or other non-corporate business enterprise.
2.4 Shareholder List and Agreements. The Disclosure Schedule sets
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forth a true and complete list of the shareholders of the Company, showing the
number of shares of capital stock or other securities of the Company held by
each shareholder as of the date of this Agreement and the Closing Date. The
Company is not a party or subject to any agreement or understanding, and, to the
best of the Company's knowledge, there is no agreement or understanding between
any persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company,
except as referred to herein.
2.5 Issuance of Securities. The issuance, sale and delivery of the
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Series C Preferred Stock in accordance with this Agreement, and the issuance and
delivery of the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, have been, or will be on or prior to the Closing, duly
authorized by all necessary corporate action on the part of the Company, and all
such shares of Series C Preferred Stock and Common Stock have been duly reserved
for issuance. The Series C Preferred Stock when so issued, sold and delivered
against payment therefor in accordance with the provisions of this Agreement,
and the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, when issued upon such conversion in accordance with the Second
Restated Articles, will be duly and validly issued, fully paid and non-
assessable.
2.6 Authority for Agreement. The execution, delivery and performance
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by the Company of this Agreement and all other agreements required to be
executed by the Company on or prior to the Closing pursuant to Section 4 of this
Agreement (the "Ancillary Agreements"), and the consummation by the Company of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate action. This Agreement and the Ancillary Agreements have
been duly executed and delivered by the Company and constitute valid and
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binding obligations of the Company enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent that the indemnification provisions contained
in the Registration Rights Agreement (as defined herein) may be limited by
applicable federal or state laws. The sale of the Series C Preferred Stock, and
the subsequent conversion of the Series C Preferred Stock into Common Stock, are
not and will not be subject to any preemptive rights that have not been properly
waived or complied with.
2.7 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the offer,
issuance, sale and delivery of the Series C Preferred Stock, or the other
transactions to be consummated at the Closing, as contemplated by this
Agreement, except such filings as shall have been made prior to and shall be
effective on and as of the Closing, and except for filings required by federal
and state securities laws.
2.8 Litigation. There is no action, suit or proceeding, or
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governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, threatened, which questions the validity of this Agreement or any
Ancillary Agreement or the right of the Company to enter into or perform this
Agreement or any Ancillary Agreement, or which could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect, nor is
there any litigation pending, or, to the best of the Company's knowledge,
threatened against the Company. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgement or decree of any court or
governmental agency. The Company has not commenced nor does it currently intend
to initiate any action, suit, proceeding or investigation.
2.9 Employee Proprietary Information and Inventions Agreements. Each
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current employee, officer and consultant of the Company has executed an Employee
Proprietary Information and Inventions Agreement in substantially the form
attached hereto as Exhibit F. The Company is not aware that any of its
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employees, officers or consultants have excluded works or inventions made prior
to employment or retention by the Company from application under such agreement
except as set forth on then Disclosure Schedule, or that any such persons are in
violation thereof, and the Company will use its best efforts to prevent any such
violation.
2.10 Acquisitions of the Company. The Company has not engaged in
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substantive discussions or negotiations with a third party for the sale of all
or substantially all of the assets or stock of the Company or merger of the
Company with another entity, or the exchange of any consideration in connection
with any such sale or merger, in the six months preceding the date of this
Agreement.
2.11 Absence of Liabilities. The Company has no liabilities in
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excess of $25,000 and, to the best of its knowledge, has no material contingent
liabilities.
2.12 Financial Statements. Included in the Disclosure Schedule are
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an unaudited balance sheet and income statement at January 31, 1999, together
with related statements of operations, shareholders' equity and cash flow for
the fiscal year then ended
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(collectively, the "Financial Statements"). Such Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
except that the Financial Statements do not contain all footnotes required by
GAAP and are subject to normal year-end audit adjustments that in the aggregate
will not be material. The Financial Statements (a) are complete and correct in
all material respects, (b) are in accordance with the Company's books and
records, and (c) 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.
2.13 Taxes. The Company has filed all federal, state and foreign tax
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returns which are required to be filed by it on or prior to the Closing Date,
such returns are true and correct and all taxes shown thereon to be due have
been timely paid with exceptions not material to the Company. Income tax returns
of the Company have not been audited by the Internal Revenue Service or any
equivalent state agency or instrumentality, and no controversy with respect to
taxes of any type is pending or, to the best of the Company's knowledge,
threatened.
2.14 Property and Assets. The Company has good title to or a valid
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leasehold interest in all of its properties and assets, which comprise all of
the properties and assets necessary or useful for the conduct of its business
and none of such properties or assets is subject to any mortgage, pledge, lien,
security interest, lease, charge or encumbrance other than those the material
terms of which are described on the Disclosure Schedule, or as would not result
in a Material Adverse Effect. The Company is in compliance with all material
terms of each lease to which it is a party or is materially bound.
2.15 Intellectual Property. Set forth on the Disclosure Schedule is
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a true and complete list of all patents, patent applications, trademarks,
service marks, trademark and service mark applications, trade names, copyright
registrations and licenses presently owned or used by the Company, as well as
any agreement under which the Company has access to any material confidential
information used by the Company in its business (the "Intellectual Property
Rights"). To the best of its knowledge, the Company has sufficient title and
ownership of, or license rights to, all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information, proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any known conflict with or infringement of the rights of
others. There are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights 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 his or her best efforts to promote the interests of
the Company or that would conflict with the business of the Company as proposed
to be conducted.
2.16 Material Contracts and Obligations. The Disclosure Schedule
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sets forth a list of all material agreements or commitments of any nature to
which the Company is a party or
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by which it is bound, including without limitation (i) each agreement which
requires future expenditures by the Company in excess of $25,000 or which might
result in payments to the Company in excess of $25,000, (ii) all employment and
consulting agreements (including any agreement entitling any employee to
continued employment or any severance), employee benefit, bonus, pension,
profit-sharing, stock option, stock purchase and similar plans and
arrangements, and distributor and sales representative agreements, (iii) each
agreement with any shareholder, officer or director of the Company, or any
"affiliate" or "associate" of such persons (as such terms are defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended
(the "Securities Act")), including without limitation any agreement or other
arrangement providing for the furnishing of services by, rental of real or
personal property from, or otherwise requiring payments to, any such person or
entity, (iv) any agreement relating to the Intellectual Property Rights, and (v)
any loans or indebtedness for borrowed money, including guarantees thereof. The
Company has delivered or made available to the Investors copies of such of the
foregoing agreements as the Investors have requested. To the knowledge of the
Company, all of such agreements and contracts are valid, binding and in full
force and effect, except where the failure to so comply would not have a
Material Adverse Effect on the Company's business.
2.17 Compliance. The Company is not in violation or default of any
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provision of its Restated Articles or Bylaws, of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to the Company which would have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement and the Ancillary Agreements, and the consummation of the transactions
contemplated hereby and 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 that results in the creation of any lien,
charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
2.18 Books and Records. The minute books of the Company contain
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complete and accurate records of all meetings and other corporate actions of its
shareholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and reflects all issuances, transfers, repurchases
and cancellations of shares of capital stock of the Company.
2.19 Disclosures. Neither this Agreement nor any exhibit hereto, nor
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any report, certificate or instrument furnished to the Investors in connection
with the transactions contemplated by this Agreement, when read together,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
2.20 Changes. Since December 31, 1998, there have been no changes in
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the condition, financial or otherwise, net worth or results of operations of the
Company, other than changes occurring in the ordinary course of business which
changes have not, individually or in the aggregate, had a Material Adverse
Effect.
2.21 Year 2000 Compliance. The Company has undertaken an assessment
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of all of its IT Systems (as defined herein) and such systems are, or prior to
September 1, 1999 will
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be, Year 2000 Compliant (as defined herein). The Company is not aware of any
Material Third Party (as defined herein) or any material off-the-shelf software
that is used by the Company that will not be Year 2000 Compliant by September 1,
1999. For purposes of this Section 2.21: (a) "Year 2000 Compliant" shall mean
that the IT Systems will: (i) accurately process all date and time data
(including, but not limited to, calculating, comparing and sequencing)
including, without limiting the foregoing, between the years 1999 and earlier
and the years 2000 and later (in either direction, forward or backwards); (ii)
accurately process leap year calculations for date and time data; and (iii) when
used in combination with any other IT System, accurately process date and time
data if such other IT System properly exchanges date and time data with it; (b)
"IT Systems" shall mean any and all systems, facilities and devices by which
information (including data, text and images) is generated, stored, processed,
displayed, received or communicated, including computer hardware, computer
software and any machinery which incorporates a microchip; and (c) "Material
Third Party" shall mean any of the Company's information exchange partners,
suppliers, vendors and distributors that own any IT System which is material to
the Company's business.
2.22 Qualified Small Business Stock.
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(a) As of and immediately following the Closing, the Preferred Stock
will meet each of the requirements for qualification as "qualified small
business stock" set forth in Section 1202(c) of the Internal Revenue Code of
1986, as amended (the "Code"), including without limitation the following: (i)
the Company will be a domestic C corporation, (ii) the Company will not have
made any purchases of its own stock described in Code Section 1202(c)(3)(B)
during the one-year period preceding the Closing, and (iii) the Company's (and
any predecessor's) aggregate gross assets, as defined by Code Section
1202(d)(2), at no time from the date of incorporation of the Company and through
the Closing have exceeded or will exceed $50 million, taking into account the
assets of any corporations required to be aggregated with the Company in
accordance with Code Section 1202(d)(3).
(b) As of the Closing, at least 80% (by value) of the assets of the
Company are used by it in the active conduct of one or more qualified trades or
businesses, as defined by Code Section 1202(e)(3), and the Company is an
eligible corporation, as defined by Code Section 1202(e)(4).
2.23 Business Plan. The Company's business plan dated November 1998
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(the "Business Plan"), as furnished to the Investors, is the Company's current
business plan and the Company currently has no intention of making any material
deviations from such Business Plan.
3. Representations and Warranties of the Investors. Each Investor hereby
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represents and warrants as to itself to the Company that:
3.1 Authorization. Such Investor has full power and authority to
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enter into this Agreement and the Ancillary Agreements, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to
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the extent the indemnification provisions contained in the Registration Rights
Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series C Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion of the Series C Preferred Stock
(collectively, the "Securities") will be acquired for investment for such
Investor'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 such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
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received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities. Such Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Securities and the
business, properties, prospects and financial condition of the Company. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the Investors to
rely thereon.
3.4 Investment Experience. Such Investor is an investor in
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securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
If other than an individual, Investor also represents it has not been organized
for the purpose of acquiring the Securities.
3.5 Accredited Investor. Such Investor is an "accredited investor"
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within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that
---------------------
immediately following its purchase of the Securities hereunder, such Securities
will be characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act,
only in certain limited circumstances. In this connection, such Investor
represents that it is familiar with Rule 144 as promulgated by the SEC under the
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
3.7 Further Limitations on Disposition. Without in any way limiting
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the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 to the extent this Section is then applicable, and:
8
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Securities Act. It is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer (i) by an Investor that is a partnership to a partner or member of such
partnership or a retired partner or member of such partnership who retires after
the date hereof, or (ii) to the estate of any such partner or member or retired
partner or member or the transfer by gift, will or intestate succession of any
partner or member to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or member or his or her spouse, if any transferee
pursuant to (i) and (ii) above agrees in writing to be subject to the terms
hereof to the same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH SECURITIES ACT.
(b) Any legends required by the laws of the State of California, or
any other applicable jurisdiction.
(c) Any legend required by the Ancillary Agreements.
3.9 Transfer of Rights. Subject to the limitations in Section 3.8
------------------
above, all rights and obligations of the Investors in this Agreement and the
Ancillary Agreements may be transferred to (i) a partner or retired partner of
any Investor that is a partnership, (ii) any immediate family member of an
Investor who is an individual, or an irrevocable trust for the benefit of an
individual Investor or his or her immediate family members, (iii) any
shareholder of any Investor which is a corporation, (iv) any member of any
Investor who is a limited liability company, or (v) any transferee who acquires
not less than Four Hundred Eighty-Five Thousand Seven Hundred Twenty (485,720)
shares of Series C Preferred Stock, provided the following conditions are met,
9
(a) the Company is given written notice of such proposed transfer;
and
(b) the transferee agrees in writing to be subject to the terms
hereof and in each of the Ancillary Agreements, including all representations
and warranties and covenants contained herein or therein to the same extent as
if he or she were an original Investor hereunder.
4. Conditions to the Investors' Obligations at the Closing. The
-------------------------------------------------------
obligations of each Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against any Investor who does not consent in
writing thereto:
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 force and effect as
though made as of the Closing.
4.2 Covenants. The Company shall have performed and complied with
---------
all covenants and agreements required to be performed or complied with by it
hereunder at or prior to the Closing.
4.3 Compliance Certificate. An officer of the Company shall deliver
----------------------
to each Investor at the Closing a certificate stating that the conditions
specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by the Company and in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investors and their counsel.
4.5 Consents and Approvals. Except for filings pursuant to
----------------------
Regulation D under U.S. Federal securities laws and the "blue sky" laws having
jurisdiction over the sale of the Series C Preferred Stock, such filings to be
made in a timely fashion by the Company, all consents, approvals,
authorizations, licenses or orders of, registrations, qualifications,
designations, declarations or filings with, or notice to any governmental entity
or any other person necessary to be obtained, made or given in connection with
the transactions contemplated hereby shall have been duly obtained, made or
given and shall be in full force and effect, without the imposition upon the
Company of any condition, restriction or required undertaking.
4.6 Bylaws. A copy of the Company's Bylaws, as amended and in
------
effect, shall have been provided to the Investors prior to the Closing Date.
4.7 Board of Directors. Ray Rothrock shall have been duly elected
------------------
or appointed to the Board of Directors of the Company and to the audit and
compensation committees of the Board of Directors, effective at the Closing.
4.8 Second Amended and Restated Articles of Incorporation. The
-----------------------------------------------------
Company shall have filed the Restated Articles, containing the rights,
preferences and privileges of the Series C Preferred Stock, in substantially the
form attached hereto as Exhibit A.
---------
10
4.9 Registration Rights Agreement. The Company shall have entered
-----------------------------
into the Second Amended and Restated Registration Rights Agreement (the
"Registration Rights Agreement"), substantially in the form of Exhibit B hereto,
---------
with the Investors and the other parties named therein, and the Registration
Rights Agreement shall be in full force and effect as of the Closing.
4.10 Shareholders Agreement. The Company shall have entered into the
----------------------
Amended and Restated Shareholders Agreement (the "Shareholders Agreement"),
substantially in the form attached as Exhibit C hereto, with the Investors and
---------
the other parties named therein, and the Shareholders Agreement shall be in full
force and effect as of the Closing.
4.11 Voting Agreement. The Company and certain shareholders of the
----------------
Company listed therein shall have executed an Amended and Restated Voting
Agreement (the "Voting Agreement"), substantially in the form attached as
Exhibit D hereto, and such Voting Agreement shall be in full force and effect as
- ---------
of the Closing.
4.12 Opinion of Counsel. The Investors shall have received the
------------------
opinion of Brobeck, Phleger & Harrison LLP, counsel for the Company, dated the
Closing Date and addressed to the Investors, with respect to the matters set
forth in Exhibit E hereto and otherwise in form and substance reasonably
---------
satisfactory to the Investors and its counsel.
4.13 Minimum Amount of Subscriptions. At the Initial Closing the
-------------------------------
Investors listed on Schedule A shall purchase not less than an aggregate of
----------
Seven Million Seven Hundred Seventy-One Thousand Five Hundred Seventeen
(7,771,517) shares of Series C Preferred Stock.
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of each of the Investors contained in Section 3 shall be true 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 Payment of Purchase Price. Each Investor shall have delivered,
-------------------------
in immediately available funds to an account designated by the Company, the
consideration specified in Schedule A.
----------
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 Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.4 Minimum Amount of Subscriptions. At the Initial Closing the
-------------------------------
Investors listed on Schedule A shall purchase not less than an aggregate of
----------
Seven Million Seven Hundred Seventy-One Thousand Five Hundred Seventeen
(7,771,517) shares of Series C Preferred Stock.
6. Covenants of the Company. Until the earlier of (i) the sale of
------------------------
securities of the Company pursuant to a registration statement filed by the
Company under the Securities Act in connection with the underwritten offering of
its securities to the general public is consummated,
11
(ii) the date on which the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the Securities Exchange Act
of 1934, or (iii) a sale of all or substantially all of the Company's assets to,
or merger or other reorganization with, a public company (a "Transaction")
whereby the holders of the outstanding voting securities of the Company
immediately prior to the Transaction fail to hold equity securities representing
a majority of the voting securities of the Company or surviving entity
immediately following the Transaction, the Company shall comply with the
following covenants:
6.1 Financial Statements and Other Information. The Company shall
------------------------------------------
deliver to each Investor, so long as such Investor and its affiliates
beneficially owns at least fifty thousand (50,000) shares of Series C Preferred
Stock issued on the date hereof to such Investor, subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations:
(a) as soon as available, but in any event within fifteen (15) days
after the end of each month, monthly unaudited consolidated statements of income
and cash flows of the Company and its subsidiaries and monthly unaudited
consolidated balance sheets of the Company and its subsidiaries, and all such
statements shall be prepared in accordance with U.S. generally accepted
accounting principles ("GAAP"), consistently applied, except that they may not
contain full footnote disclosures and may be subject to normal year-end
adjustments for recurring accruals;
(b) as soon as available but in any event within one hundred twenty
(120) days after the end of each fiscal year, commencing with fiscal year 1998,
audited consolidated statements of income and cash flows of the Company and its
subsidiaries for the fiscal year, and audited consolidated balance sheets of the
Company and its subsidiaries as of the end of the fiscal year, all prepared in
accordance with GAAP, consistently applied; and
(c) not fewer than thirty days, but also not greater than seventy
days prior to the end of the Company's fiscal year, an annual budget and
operating plan prepared on a monthly basis for the Company and its subsidiaries
for the following fiscal year requested (displaying anticipated statements of
income and cash flows and balance sheets), approved by the Company's Board of
Directors, and promptly upon preparation thereof any material revisions of such
annual or other budgets and operating plans.
6.2 Inspection of Property. The Company shall permit each Investor
----------------------
and its representatives, so long as an Investor and its affiliates beneficially
own at least fifty thousand (50,000) shares of Series C Preferred Stock issued
pursuant to this Agreement, subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations, upon reasonable
notice and during normal business hours and at such other times as any such
person may reasonably request subject to Section 6.4 below, to (a) examine the
corporate and financial records of the Company and its subsidiaries and make
copies thereof or extracts therefrom and (b) discuss the affairs, finances and
accounts of any such entities with the directors, officers, key employees and
independent accountants of the Company and its subsidiaries.
6.3 Inspection and Visitation Rights. Subject to Section 6.4 below,
--------------------------------
so long as an Investor and its affiliates beneficially own at least fifty
thousand (50,000) shares of Series C
12
Preferred Stock issued pursuant to this Agreement, the Company shall invite one
(1) representative of Venrock Associates and Venrock Associates II, L.P. and one
(1) representative of Vertex Management, Inc. to attend all meetings of its
Board of Directors in a nonvoting observer capacity and, in this respect, shall
give such representative copies of all notices, minutes, consents, and other
materials that it provides to its directors. The rights granted to Investors in
this Section 6.3 shall terminate upon any initial public offering of shares of
Common Stock of the Company.
6.4 Limit on Information. Each Investor hereby agrees to hold in
--------------------
confidence and trust and not to misuse or disclose any confidential information
of the Company.
6.5 Option Grants. The Investors hereby acknowledge and agree that
-------------
the number of shares subject to the Company's stock option plans shall be
increased to reserve an additional Three Million Seven Hundred Fifty Thousand
(3,750,000) shares of Common Stock to the existing pool of shares reserved for
such stock option plans, effective upon the Closing.
6.6 Qualified Small Business Stock. The Company covenants that so
------------------------------
long as the Securities are held by an Investor (or a transferee in whose hands
the Securities are eligible to qualify as Qualified Small Business Stock as
defined in Section 1202(c) of the Code, it will use its reasonable efforts to
cause the Securities to qualify as Qualified Small Business Stock and shall make
all filings required under Section 1202(D)(1)(c) of the Code.
7. Miscellaneous.
-------------
7.1 Survival of Representations, Warranties, Covenants and
------------------------------------------------------
Agreements. The representations, warranties, covenants and agreements
- ----------
contained in this Agreement, any Ancillary Agreement or any exhibits, schedules,
attachments, written statements, documents, certificates or other items prepared
and supplied to the Investors by or on behalf of the Company in connection with
the transactions contemplated hereby shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
7.2 Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid), mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid, or transmitted by facsimile or
electronic mail (with request for immediate confirmation of receipt in a manner
customary for communications of such type and with physical delivery of the
communication being made by one of the other means specified in this Section as
promptly as practicable thereafter). Such notices, demands and other
communications shall be addressed as follows:
If to the Company:
Fogdog, Inc.
3031 Tisch Way
100 Plaza East
San Jose, CA 95128
Attention: President
Telephone: (408) 261-6222
13
Telecopy : (408) 261-6226
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T. Lazarow, Esq.
David Makarechian, Esq.
Telephone: (650) 424-0160
Telecopy : (650) 496-2885
If to the Investors:
Venrock Associates and Venrock Associates II, L.P.
30 Rockefeller Plaza, Room 5508
New York, NY 10112
Attention: Ray Rothrock
Telephone: (212) 649-5600
Telecopy: (212) 649-5788
Vertex Management Inc.
3 Lagoon Drive, Suite 220
Redwood City, CA 94065
Attention: Chua Joo Hock
Telephone: (650) 591-9300
Telecopy: (650) 591-5926
JHWhitney & Co.
630 Fifth Avenue
New York, NY 10111
Telephone: (212) 332-2400
Telecopy: (212) 332-2422
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Bernard Kury, Esq.
Telephone: (212) 259-7400
Telecopy: (212) 259-7402
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
14
7.3 Expenses. The Company shall pay reasonable legal and due
--------
diligence fees and expenses up to an aggregate of $15,000 incurred by the
Investors arising in connection with the negotiation and execution of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby; provided however, that the Company shall not be
responsible for any such fees or expenses if the transactions contemplated by
this Agreement and the Ancillary Agreements are not consummated. The Investors
have used their best efforts to keep such expenses to a minimum. The Company
shall pay all reasonable legal fees and expenses incurred by Investors in
connection with the review of amendments, waivers, consents or approvals
requested by the Company, with respect to this Agreement or the Ancillary
Agreements (except in connection with an initial public offering of shares of
the Company's Common Stock), up to an aggregate of $2,500, per such request by
the Company.
7.4 RESERVED.
--------
7.5 Entire Agreement; Waivers and Amendments. This Agreement
----------------------------------------
(including the exhibits and schedules hereto and the documents and instruments
referred to herein, including the Ancillary Agreements) contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior written or oral agreements and understandings
with respect thereto, including the Memorandum of Terms for Private Placement of
Series C Preferred Stock dated December 1, 1998, as amended. This Agreement may
only be amended or modified, and the terms hereof may only be waived, by a
writing signed by each party hereto or, in the case of a waiver, by the party
entitled to the benefit of the terms being waived.
7.6 Successors and Assigns. Except as otherwise provided herein, 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 (including
transferees of any Securities). 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.
7.7 Severability. In the event that any provision of this Agreement
------------
shall be declared invalid or unenforceable by a court of competent jurisdiction
in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent declared invalid or unenforceable without affecting
the validity or enforceability of the other provisions of this Agreement, and
the remainder of this Agreement shall remain binding on the parties hereto.
7.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of California,
without giving effect to the principles of conflicts of law thereof.
7.9 Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
15
7.10 Captions. The paragraph and subsection headings in this
--------
Agreement are inserted for convenience of reference only, and shall not affect
the interpretation of this Agreement.
7.11 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original and both of which together shall be
considered one and the same agreement.
7.12 Broker's Fees. Each party hereto represents and warrants that
-------------
no agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.12 being untrue.
[The Remainder of this Page is Intentionally Left Blank]
16
IN WITNESS WHEREOF, each of the parties hereto has caused this Series
C Preferred Stock Purchase Agreement to be duly executed on its behalf as of the
date first written above.
FOGDOG, INC.
By: /s/ Timothy P. Harrington
-----------------------------
Name: Timothy P. Harrington
---------------------------
Title: Chief Executive Officer
--------------------------
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
17
INVESTORS:
VENROCK ASSOCIATES
By: /s/ Kimberley Rummelsburg
------------------------------
Name: Kimberley Rummelsburg
Title: General Partner
VENROCK ASSOCIATES II, L.P.
By: /s/ Kimberley Rummelsburg
------------------------------
Name: Kimberley Rummelsburg
Title: General Partner
VERTEX TECHNOLOGY FUND, LTD.
By: /s/ Lee Kheng Nam
------------------------------
By: Lee Kheng Nam
------------------------------
Its: President
J.H. WHITNEY III, L.P.
By: J.H. Whitney Equity Partners III, L.L.C.
Its General Partner
By: /s/ Michael Brooks
------------------------------
Michael Brooks
Managing Member
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
18
WHITNEY STRATEGIC PARTNERS III, L.P.
By: J.H. Whitney Equity Partners III, L.L.C.
Its General Partner
By: /s/ Michael Brooks
------------------------------
Michael Brooks
Managing Member
DRAPER FISHER ASSOCIATES FUND IV, L.P.
By: /s/ Timothy Draper
------------------------------
By: Timothy Draper
------------------------
Its: Managing Director
-----------------------
DRAPER FISHER PARTNERS IV, L.L.C.
By: /s/ Timothy Draper
------------------------------
By: Timothy Draper
------------------------
Its: Managing Director
-----------------------
NOVUS VENTURES, L.P.
a Delaware limited partnership
By: DT Associates,
a Delaware General Partner
By: Dan Tompkins
------------------------------
Its: General Partner
-----------------------------
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
19
/s/ Scott F. Wilson
---------------------------------
SCOTT F. WILSON
ENCINAL PARTNERS, L.P.
By: /s/ Harry G. Whelan III
------------------------------
By:
------------------------
Its:
-----------------------
THE KEMAJO FAMILY L.P.
By: /s/ Harry G. Whelan III
------------------------------
By:
------------------------
Its:
-----------------------
JON-CIN & SON L.P.
By: /s/ Harry G. Whelan III
------------------------------
By:
------------------------
Its:
-----------------------
THE MEIER GROUP
By: /s/ Anthony Meier
------------------------------
By: G.P.
------------------------
Its:
-----------------------
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
20
HARRY GABRIEL WHELAN
By: /s/ Harry G. Whelan
------------------------------
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
21