1-800-FLOWERS.COM, INC.
INVESTORS' RIGHTS AGREEMENT
DATED AS OF
MAY 20, 1999
TABLE OF CONTENTS
Page
----
1. DEFINITIONS.................................................................1
1.1 Capitalized Terms..................................................1
1.2 Definitions........................................................1
2. registration rights.........................................................3
2.1 Demand Registration Rights.........................................3
2.2 Company Registration...............................................5
2.3 Obligations of the Company.........................................6
2.4 Furnish Information................................................8
2.5 Expenses of Registration...........................................8
2.6 Underwriting Requirements..........................................9
2.7 Damages............................................................9
2.8 Indemnification....................................................9
2.9 Reports Under Securities Exchange Act of 1934.....................11
2.10 Form S-3 Registration.............................................12
2.11 Assignment of Registration Rights.................................13
2.12 Limitations on Subsequent Registration Rights.....................13
2.13 "Market Stand-Off"Agreement.......................................13
2.14 Amendments........................................................14
2.15 Termination of Registration Rights................................14
3. Covenants of the Company AND THE INVESTORS.................................14
3.1 Pre-emptive Rights................................................14
3.2 Delivery of Financial Statements..................................16
3.3 Inspection........................................................16
3.4 Right of First Refusal............................................16
4. MISCELLANEOUS..............................................................17
4.1 Survival of Covenants.............................................17
4.2 Legend on Securities..............................................17
4.3 Successors and Assigns............................................17
4.4 Governing Law.....................................................18
4.5 Counterparts......................................................18
4.6 Titles and Subtitles; Gender......................................18
4.7 Notices...........................................................18
4.8 Expenses..........................................................18
4.9 Amendments and Waivers............................................19
4.10 Severability......................................................19
4.11 Aggregation of Stock..............................................19
4.12 Entire Agreement; Amendment; Waiver...............................19
i
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made as
of the 20th day of May, 1999, by and between 1-800-FLOWERS.COM, Inc., a Delaware
corporation (the "Company"), Mr. James F. McCann and Mr. Christopher G. McCann
(collectively, the "Management Stockholders"), and the persons designated as
Investors on the signature pages hereto (each, an "Investor" and, collectively,
the "Investors").
RECITALS
WHEREAS, the Company, the Management Stockholders and the
Investors are parties to the Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"); and
WHEREAS, in order to induce the Company and the Management
Stockholders to enter into the Purchase Agreement and to induce the Investors
that are parties to the Purchase Agreement to invest funds in the Company
pursuant to the Purchase Agreement, the Investors, the Management Stockholders
and the Company hereby agree that this Agreement shall govern the rights of the
Investors and the Management Stockholders to cause the Company to register
shares of Common Stock issued or issuable to the Investors and the Management
Stockholders and certain other matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS.
1.1 CAPITALIZED TERMS. Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
1.2 DEFINITIONS. The following capitalized terms as used in
this Agreement shall have the meanings set forth below.
(a) An "Affiliate" of any Person means a Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with the first mentioned Person. A Person shall be
deemed to control another Person if such first Person possesses directly or
indirectly the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) The term "Board of Directors" means the Board of Directors
of the Company.
(c) The term "Class B Common Stock" shall mean the Class B
Common Stock of the Company, par value $0.01 per share, and any other securities
into which the Class B Common Stock may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or otherwise.
(d) The term "Common Stock" (including the shares of Class A
Common Stock issued or issuable upon conversion of the Class B Common Stock and
the Preferred Stock) shall mean the Class A Common Stock of the Company, par
value $0.01 per share, and any other securities into which the Class A Common
Stock may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(e) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC in lieu of such form as currently
in effect which similarly permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(f) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 2.11 hereof.
(g) The term "Initial Public Offering" shall mean the initial
sale of securities pursuant to an effective registration statement filed by the
Company under the Securities Act (as hereinafter defined) in connection with a
firm commitment underwritten offering of its securities to the general public.
(h) The term "Investor" shall mean an Investor or its
Permitted Transferees.
(i) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
(j) The term "Permitted Transferee" shall mean (i) with
respect to any Management Stockholder or an Investor, (A) the spouse, children,
grandchildren or parents thereof, or a trust of which such Management
Stockholder or Investor is the settlor and a trustee for the benefit of such
spouse, children or parents, provided that any such trust does not require or
permit distribution of any Registrable Securities during the term of this
Agreement, or (B) the heirs, executors, administrators, guardians or
conservators thereof, and (ii) with respect solely to the Investors, (A) any
such Investor's affiliates, partners, members, directors, employees, general
partners or managing members of such Investor; (B) a liquidating trust
established for the benefit of any partners or members of such Investor; or (C)
any investment fund or other entity controlled or managed by an Affiliate of
such Investor.
(k) The term "Person" shall mean an individual, a corporation,
a partnership, a joint venture, a trust, an unincorporated organization, a
limited liability company, and any other entity or organization, governmental or
otherwise.
(l) The term "Preferred Stock" (including the shares of Series
A Preferred Stock issued or issuable upon conversion of the Series B Preferred
Stock) shall mean the Series A Preferred Stock of the Company, and any other
securities into which the Preferred Stock may be converted or exchanged pursuant
to a plan or recapitalization, reorganization, merger, sale of assets or
otherwise.
(m) The term "Pro Rata Share" shall mean the percentage that
the Shares held by the Investors then represents of all Shares, giving effect to
the conversion of convertible
2
securities and assuming the exercise of all vested outstanding options, warrants
or subscription rights.
(n) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(o) The term "Registrable Securities" means (i) the Common
Stock now held or issuable or issued upon conversion of the Preferred Stock and
held by the Investors or their Permitted Transferees (it being understood that
for purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person has the right to then acquire or
obtain from the Company any Registrable Securities, whether or not such
acquisition has actually been effected), (ii) any shares of Common Stock held by
the Management Stockholders and any Permitted Transferees (including Common
Stock issued upon conversion of the Class B Common Stock), (iii) any shares of
Common Stock issued or issuable upon the exercise of warrants held by the
Investors or their Permitted Transferees; and (iv) any shares of Common Stock
issued or issuable with respect to any such shares described in clause (i) or
(ii) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that notwithstanding anything to the contrary
contained herein, "Registrable Securities" shall not at any time include any
securities (i) registered and sold pursuant to the Securities Act, or (ii) sold
to the public pursuant to Rule 144 promulgated under the Securities Act.
(p) 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.
(q) The term "SEC" shall mean the Securities and Exchange
Commission.
(r) The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
(s) The term "Shares" means the shares of Common Stock and any
other equity securities now or hereafter issued by the Company, together with
any options thereon and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend, stock split or in exchange
for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATION RIGHTS.
(a) If the Company shall receive at any time after one (1)
year after the effective date of the first registration statement for an Initial
Public Offering of securities of the Company, a written request from the
Investors or their Permitted Transferees holding at least a
3
majority of the Registrable Securities held in the aggregate by the Investors
and their Permitted Transferees that the Company file a registration statement
under the Securities Act covering the registration of at least that number of
Registrable Securities yielding gross proceeds of $10,000,000, then the Company
shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Investors; and
(ii) use its best efforts to file, as soon as
practicable and in any event within sixty (60) days of the receipt of such
request, a registration statement with the SEC under the Securities Act covering
all Registrable Securities which the Investors request to be registered (within
twenty (20) days of the mailing of such notice by the Company in accordance with
Section 4.7) subject to the limitations of Section 2.1(b), and thereafter to use
its best efforts to cause the registration statement to be declared effective as
soon as practicable.
(b) If the Holders initiating the registration request
hereunder (the "Initiating Holders") intend to distribute the Registrable
Securities by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to Section 2.1(a) and the Company shall
include such information in the written notice referred to in Section 2.1(a).
The managing underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Investor to include his Registrable Securities in such
registration shall be conditioned upon such Investor's participation in such
underwriting and the inclusion of such Investor's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Investor) to the extent provided herein. All
Investors proposing to distribute their securities through such underwriting
shall (together with the Company as provided in Section 2.3(j)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2.1, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the number of shares of Registrable Securities that may be
included in the underwriting shall be reduced to a number deemed satisfactory by
such managing underwriter, provided that the shares to be excluded shall be
determined in the following sequence: (i) first, securities held by any other
Persons (other than the Investors holding Registrable Securities) having a
contractual, incidental "piggy back" right to include such securities in the
registration statement, (ii) second, shares sought to be registered by the
Company, (iii) third, Registrable Securities of Holders who are not Investors,
and (iv) fourth, Registrable Securities held by the Investors, it being
understood that no shares shall be registered for the account of the Company or
any stockholder other than the Investors unless all Registrable Securities for
which Investors have requested registration have been registered. Any reduction
of the number of Registrable Securities pursuant to clauses (ii), (iii) or (iv)
shall be made with respect to each tranche on a pro rata basis within each
tranche (based upon the aggregate number of shares of Common Stock or
Registrable Securities held by the holders in each tranche).
(c) Notwithstanding the foregoing, if the Company shall
furnish to the Initiating Holders a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company it would be materially
4
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than one hundred and twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than twice in any
twelve (12) month period.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 2.1:
(i) After the Company has effected one (1)
registration pursuant to this Section 2.1 and such registration has been
declared or ordered effective;
(ii) During the period starting with the date thirty
(30) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date ninety (90) days after the effective date of, a
registration subject to Section 2.2 hereof; provided that the Company is
actively employing in good faith its best efforts to cause such registration
statement to become effective; or
(iii) If the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.10 below.
2.2 COMPANY REGISTRATION.If the Company at any time proposes
to register (including for this purpose a registration effected by the Company
for stockholders other than the Holders) any of its stock or other securities
under the Securities Act in connection with a firm commitment underwritten
public offering of such securities (other than an Initial Public Offering
consummated by December 31, 1999 or a registration statement relating either to
the sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or a SEC Rule 145 transaction), the Company
shall, at such time, promptly give each Holder at least thirty (30) days written
notice of its intention to do so. Upon the written request of each Holder given
within twenty (20) days after receipt of such notice by the Holder in accordance
with Section 4.7, the Company shall use its best efforts to cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered; PROVIDED, HOWEVER, that if the
Company is advised in writing in good faith by the managing underwriter of the
Company's securities that the amount to be sold by persons other than the
Company (collectively, "Selling Stockholders") is greater than the amount which
can be offered without adversely affecting the offering, the Company may reduce
the amount offered for the accounts of Selling Stockholders (including such
holders of Registrable Securities) to a number deemed satisfactory by such
managing underwriter; and PROVIDED FURTHER, that the shares to be excluded shall
be determined in the following order of priority: (i) first, securities held by
any Persons not having any such contractual, incidental registration rights,
(ii) second, securities held by any Persons having contractual, incidental
registration rights pursuant to an agreement which is not this Agreement, and
(iii) third, Registrable Securities held by the Management Stockholders and the
Investors PRO RATA based upon the aggregate number of Registrable Securities
requested to be registered pursuant to this Section 2.2.
5
2.3 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 2 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as possible:
(a) Use its best efforts to prepare and file with the SEC a
registration statement on the appropriate form under the Securities Act with
respect to such securities, which form shall comply in all material respects
with the requirements of the SEC, and use its best efforts to cause such
registration statement to become and remain effective until the completion of
the proposed offering (but for no more than One Hundred Eighty (180) days);
provided, however, that (i) such One Hundred Eighty (180) day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such One Hundred Eighty
(180) day period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment which (I)
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(II) reflects facts or events representing a material or fundamental change in
the information set forth in the registration statement, the incorporation by
reference of information required to be included in (I) and (II) above to be
contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1934
Act in the registration statement;
(b) Use its best efforts to 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 sale or
other disposition of all of the securities covered by such registration
statement;
(c) Furnish to the Holders and the underwriters, if any, such
numbers of copies of such registration statement, any amendments thereto, any
documents incorporated by reference therein, the 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 sale or other disposition of the 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 and do any and all other acts and things that may be necessary under
such securities and blue sky laws to enable such selling Holders to consummate
the sale or other disposition of the securities owned by them; 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, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Securities
Act;
6
(e) Within a reasonable time before each filing of the
registration statement or prospectus or amendments or supplements thereto with
the SEC, furnish to counsel selected by any holders of Registrable Securities
copies of such documents proposed to be filed, which documents shall be subject
to the reasonable approval of such counsel and any written comments from the SEC
with respect to such documents;
(f) Promptly notify each selling Holder of Registrable
Securities, such selling Holder's counsel and any underwriter and (if requested
by any such Person) confirm such notice in writing, of the happening of any
event which makes any statement made in the registration statement or related
prospectus untrue or which requires the making of any changes in such
registration statement or prospectus so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made not misleading; and, as promptly as
practicable thereafter, prepare and file with the SEC and furnish a supplement
or amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(g) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a registration statement and, if one is issued,
use its best efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement at the earliest possible moment;
(h) If requested by the managing underwriter or underwriters
(if any), any selling holder, or such selling Holder's counsel, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as such Person requests to be included therein with respect to the
selling Holder or the securities being sold, including, without limitation, with
respect to the securities being sold by such selling Holder to such underwriter
or underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of an underwritten offering of
the securities to be sold in such offering, and promptly make all required
filings of such prospectus supplement or post-effective amendment;
(i) Make available to each selling Holder, any underwriter
participating in any disposition pursuant to a registration statement, and any
attorney, accountant or other agent or representative retained by any such
selling Holder or underwriter (collectively, the "Inspectors"), upon request,
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration statement
subject, in each case, to such confidentiality agreements as the Company shall
reasonably request;
(j) 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 or underwriters of such offering;
7
(k) Use its best efforts to cause all such Registrable
Securities registered pursuant to such registration statement to be listed on
each securities exchange or quoted on the quotation system on which the
Company's Common Stock is then listed or quoted (or if the Common Stock of the
Company is not yet listed or quoted, then on such exchange or quotation system
as the selling Holders of Registrable Securities and the Company shall mutually
agree);
(l) 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;
(m) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 2, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 2, 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;
(n) Otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC and make generally
available to its security holders an earnings statement of the Company which
will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any comparable successor provisions); and
(o) Otherwise cooperate with the underwriter(s), the SEC and
other regulatory agencies and take all reasonable actions and execute and
deliver or cause to be executed and delivered all documents reasonably necessary
to effect the registration of any securities under this Agreement.
2.4 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 2
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 reasonably be required to effect the registration of
such Holder's Registrable Securities.
2.5 EXPENSES OF REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 2.1 or Section 2.2
(which right may be assigned as provided in Section 2.11), 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 of
8
a single counsel for the selling Holders shall be borne by the Company. The
Investors shall bear the expenses with respect to registrations pursuant to
Section 2.10 PRO RATA.
2.6 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 2.2 to include any of the Holders'
securities in such underwriting unless such Holders accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the Company.
2.7 DAMAGES. The Company recognizes and agrees that each
holder of Registrable Securities will not have an adequate remedy if the Company
fails to comply with the terms and provisions of this Agreement and that damages
will not be readily ascertainable, and the Company expressly agrees that, in the
event of such failure, it shall not oppose an application by any holder of
Registrable Securities or any other Person entitled to the benefits of this
Agreement requiring specific performance of any and all provisions hereof or
enjoining the Company from continuing to commit any such breach of this
Agreement.
2.8 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 2:
(a) The Company shall indemnify and hold harmless each selling
Holder, each underwriter (as defined in the Securities Act) and each Person who
participates in the offering of securities under such registration statement,
and each other Person, if any, who controls (within the meaning of the
Securities Act) such seller, underwriter or participating Person (individually
and collectively, the "Indemnified Person"), against any losses, claims, damages
or liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (joint or several), or actions in
respect thereof, to which such Indemnified Person may become subject under the
Securities Act or any other statute or at common law which arise out of or are
based upon: (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, (iii) any violation or alleged violation by the Company
of the Securities Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any state
securities law or (iv) any breach of any representation, warranty, agreement or
covenant made by the Company in this Agreement, and the Company shall pay to
each such Indemnified 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
Company shall not be liable to any Indemnified Person in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission in such registration statement, preliminary or final
prospectus, or amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Person
expressly for use therein.
9
(b) To the extent permitted by law, each selling Holder of
Registrable Securities included in such registration being effected shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each underwriter, any other
Holder selling securities in such registration statement and any Person who
controls (within the meaning of the Securities Act) the Company, such
underwriter or such Holder (individually or collectively, also the "Indemnified
Person"), against any losses, claims, damages, or liabilities (joint or
several), or actions in respect thereof, to which they may become subject, under
the Securities Act or any other statute or at common law, which arise out of or
are based upon any other statute or at common law, which arises out of or is
based upon: (i) any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, (ii) any omission or alleged omission by such selling Holder to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading under the circumstances in which such
statements were made or (iii) any breach of any representation, warranty,
agreement or covenant made by such Holder in this Agreement; in the case of (i)
and (ii) to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by such selling holder specifically for use therein; and such
selling holder shall reimburse any Indemnified Person for any legal fees
incurred in investigating or defending any such liability; provided, however,
that such selling Holder's obligations hereunder shall be limited to an amount
equal to the proceeds (net of underwriting discounts, commissions and expenses)
to such selling Holder of the securities sold in any such registration; and
provided further, that no selling Holder shall be required to indemnify any
Person against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency is corrected
in the final prospectus or for any liability which arises out of the failure of
any Person to deliver a prospectus as required by the Securities Act.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of a complaint, claim or notice of the commencement of any liability
or action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 2.8, promptly notify the indemnifying party of such complaint, claim,
notice or action, and such indemnifying party shall have the right to
investigate and assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The Person claiming indemnification shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and the expenses of such counsel shall not be at the expense of the
Person against whom indemnification is sought (unless the indemnifying party
fails to promptly defend, in which case the reasonable fees and expenses of such
separate counsel shall be borne by the Person against whom indemnification is
sought). The failure to deliver written notice to the
10
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party for
any losses, claims, damages or liabilities for which indemnification would
otherwise be available under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.
In no event shall a Person against whom indemnification is sought be obligated
to indemnify any Person for any settlement of any claim or action effected
without the indemnifying Person's prior written consent which shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 2.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Company, the respective selling Holders of Registrable Securities, severally and
not jointly, and the underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company, the respective selling Holders of Registrable Securities, severally and
not jointly, and the underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the selling Holders of Registrable
Securities or the underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the selling Holders of Registrable Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 2.8 were determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. In no event, however, shall
a Selling Stockholder be required to contribute any amount under this Section
2.8 in excess of the proceeds (net of underwriting discounts, commissions and
expenses) received by such Selling Stockholder from its sale of Registrable
Securities under such registration statement. No person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.
(e) If one or more of the Holders enter into an underwriting
agreement in connection with the registration of their Registrable Securities,
the provisions of such underwriting agreement concerning indemnification shall
supercede the provisions of this Section 2.8. The obligations of the Company and
Holders under this Section 2.8 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 2, and
otherwise, and the termination of this Agreement.
2.9 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view
to making available to the Holders the benefits of Rule 144 (together, with any
successor rule, Rule 144) promulgated under the Securities Act and any other
rule or regulation of the SEC that may at any
11
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public, and take all
action as may be required as a condition to the availability of SEC Rule 144;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act;
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form; and
(e) facilitate and expedite transfers of Registrable
Securities pursuant to SEC Rule 144, including providing timely notice to its
transfer agent to expedite such transfers.
2.10 FORM S-3 REGISTRATION. After the first public offering of
its securities registered under the Securities Act, the Company shall use its
commercially reasonable efforts to qualify and remain qualified to register
securities on Form S-3 (or any successor form) under the Securities Act. In case
the Company shall receive from any Holder or Holders a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company shall use its best
efforts to:
(a) promptly give at least thirty (30) days written notice of
the proposed registration, and any related qualification or compliance, to all
other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that
12
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 2.10: (1) if Form S-3 is
not available for such offering by the Holders; (2) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than One Million Dollars
($1,000,000); (3) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than ninety (90) days after receipt of the request of the Holder or Holders
under this Section 2.10; provided, however, that the Company shall not utilize
this right more than once in any twelve (12) month period; (4) if the Company
has, within the twelve (12) month period preceding the date of such request,
already effected two (2) registrations on Form S-3 for the Holders pursuant to
this Section 2.10; or (5) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall use its best
efforts to file a registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders. Registrations effected
pursuant to this Section 2.10 shall not be counted as demands for registration
or registrations effected pursuant to Sections 2.1 or 2.2, respectively.
2.11 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities pursuant to this Section 2 may be
assigned (but only with all related obligations) by a Holder to (i) a Permitted
Transferee (as defined above) of such Registrable Securities or (ii) a
transferee who acquires at least 60,000 shares of Registrable Securities
(adjusted for any stock dividend, combination, stock split or reclassification),
provided in both cases: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 2.13 below.
2.12 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Investors holding of a majority of the outstanding
Registrable Securities held by the Investors, (a) allow purchasers of the
Company's securities to become a party to this Agreement or (b) grant any other
registration rights to any third parties other than subordinate piggyback
registration rights.
2.13 "MARKET STAND-OFF" AGREEMENT. Each Investor and
Management Stockholder hereby agrees that, during the period of duration
specified by the Company and the managing underwriter of Common Stock or other
securities of the Company, following the date of the first sale to the public
pursuant to a registration statement of the Company filed under the Securities
Act, it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant
13
any option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of the Company held by it at any
time during such periods except Common Stock included in such registration;
provided, however, that:
(a) officers and directors of the Company, and all holders of
more than Five Percent (5%) of the outstanding capital stock of the Company,
enter into similar written agreements; and
(b) for the Initial Public Offering, such market stand-off
time period shall not exceed one hundred eighty (180) days, and for any other
offering, such period shall not exceed ninety (90) days.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
the Investors (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. Notwithstanding the
foregoing, the obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms which may be promulgated in the future, or a registration relating solely
to a SEC Rule 145 transaction on Form S-4 or similar forms which may be
promulgated in the future.
2.14 AMENDMENTS. The provisions of this Section 2 may be
amended, and the Company may take any action herein prohibited or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of (i) each of the Investors and (ii) the
Management Stockholders.
2.15 TERMINATION OF REGISTRATION RIGHTS. The rights set forth
in Sections 2.1, 2.2. and 2.10 herein shall terminate with respect to a Holder
upon the earlier of (i) the third anniversary of the Initial Public Offering,
and (ii) the date on which such Holder may sell all of its Registrable
Securities pursuant to Rule 144 under the Securities Act.
3. COVENANTS OF THE COMPANY AND THE INVESTORS.
The Company agrees for the benefit of the Investors that it
shall comply with the covenants set forth in Sections 3.1, 3.2 and 3.3 and each
of the Investors agrees for the benefit of the Company that it shall comply with
the covenants set forth in Section 3.4, provided that all covenants set forth in
this Section 3 shall terminate as of the closing of the earlier of (i) the
Company's Initial Public Offering with an aggregate offering price of at least
$25,000,000 and (ii) the acquisition of the Company by another entity by means
of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Company, or a sale of all or substantially all of the assets of the Company.
3.1 PRE-EMPTIVE RIGHTS. So long as an Investor holds at least
60,000 Registrable Securities or at least 60,000 shares of Series B Preferred
Stock (adjusted for any stock dividend, combination, stock split or
reclassification), the Company hereby grants such Investor certain pre-emptive
rights with respect to future sales of equity securities by the Company. The
Company agrees that it will not sell or issue any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Securities"),
14
unless the Company shall first submit a written offering of such Securities to
the Investors in accordance with the following provisions:
(1) The Company shall deliver a notice by certified
mail ("Notice") to the Stockholders stating (i) that the Company is offering
such Securities, (ii) the number of such Securities to be offered, and (iii) the
price and material terms, if any, upon which it proposes to offer such
Securities, and offering the Stockholders the opportunity to purchase their Pro
Rata Share of the Securities on terms and conditions, including price, not less
favorable than those on which the Company proposes to sell such Securities to a
third party or parties.
(2) Within twenty (20) days after receipt of the
Notice, the Stockholders may elect to purchase or obtain, at the price and on
the terms and conditions specified in the Notice, up to their Pro Rata Share of
such Securities. The Company shall promptly, in writing, inform each Stockholder
who purchases all the Securities available to it (each a "Fully Exercising
Stockholder") of any other Stockholder's failure to do likewise. During the ten
(10) day period commencing after the receipt of such information, each Fully
Exercising Stockholder shall be entitled to obtain that portion of the
Securities not subscribed for by the other Stockholders which is equal to the
proportion that the number of Shares issued and held by, or issuable to, such
Fully Exercising Stockholder bears to the total number of Shares issued and held
by, or issuable to, all Fully Exercising Stockholders who wish to purchase some
of the unsubscribed Securities.
(3) If all Securities referred to in the Notice which
the Stockholders are entitled to obtain pursuant to Section 3.1(1) are not
elected to be obtained as provided in Section 3.1(2) hereof, the Company may,
during the sixty (60) day period following the expiration of the period provided
in Section 3.1(2) hereof, offer the remaining unsubscribed portion of such
Securities to any person or persons at a price not less than, and upon terms and
conditions no more favorable to the offeree than those specified in the Notice.
If the Company does not consummate a sale of the Securities within such sixty
(60) day period, the right provided hereunder shall be deemed to be revived and
such Shares shall not be offered unless first re-offered to the Stockholders in
accordance herewith.
(4) The pre-emptive rights in this Section 3.1 shall
not be applicable (i) to the issuance or sale of Common Stock (or the grant of
options therefor) under the Company's stock option and stock purchase plans
currently in effect or hereinafter adopted (collectively, the "Plans"), (ii) to
the issuance of securities pursuant to the conversion or exercise of convertible
or exercisable securities outstanding as of the date hereof, (iii) to the
issuance of securities pursuant to strategic alliances or other partnering
agreements approved by the Board of Directors, (iv) to the issuance of
Securities pursuant to an acquisition of all or substantially all of the stock
or assets of another entity, (v) to issuances of Securities within 40 days of
the date hereof; PROVIDED, such issuances are made on no more favorable terms
than the terms of the Securities issued to the Investors under the Purchase
Agreement, or (vi) issuances of Class A Common Stock upon the conversion of
Preferred Stock, and issuances of Series A Preferred Stock upon the conversion
of Series B Preferred Stock.
(5) The pre-emptive rights set forth in this Section
3.1 may not be assigned or transferred except by the Investors to a Permitted
Transferee.
15
3.2 DELIVERY OF FINANCIAL STATEMENTS. The Company will
maintain a comparative system of accounts in accordance with generally accepted
accounting principles, keep full and complete financial records and furnish to
the Investors the following reports:
(a) as soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year, a copy of the balance sheet
of the Company as of the end of such year, together with statements of income
and retained earnings and cash flow of the Company for such year, audited and
reported on by independent public accountants of recognized national standing
reasonably satisfactory to the Board of Directors, prepared in accordance with
generally accepted accounting principles and practices consistently applied;
(b) as soon as available and in any event within fifty-five
(55) days after the end of each quarter of each fiscal year, a copy of the
balance sheet of the Company as of the end of such quarter, together with
statements of income and retained earnings and cash flow of the Company for the
period commencing at the end of the previous fiscal quarter and ending with the
end of such fiscal quarter, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the chief financial officer of the Company as
having been prepared in a manner consistent with generally accepted accounting
principles and practices consistently applied;
(c) at least thirty (30) days prior to the beginning of each
fiscal year, monthly financial projections for the upcoming fiscal year in
detail reasonably satisfactory to the Investors; and
(d) such other information relating to the financial
condition, business, prospects or results of operations as Investors holding a
majority of the Registrable Securities then held by the Investors may reasonably
request.
3.3 INSPECTION. For so long as an Investor holds at least
60,000 Registrable Securities or at least 60,000 shares of Series B Preferred
Stock (adjusted for any stock dividend, combination, stock split or
reclassification), the Company will, upon reasonable prior notice to the
Company, permit authorized representatives (including, without limitation,
accountants and legal counsel) of such Investor, at the Investor's expense, to
visit and inspect any of the properties of the Company, including its books of
account (and to make copies thereof and take extracts therefrom), and to discuss
its affairs, finances and accounts with its officers, administrative employees
and independent accountants, all at such reasonable times during normal business
hours and as often as may be reasonably requested by the Investors; provided,
that the Company may, as a condition to the exercise of such visitation or
inspection rights, require such persons to execute a standard form
non-disclosure agreement in form and substance satisfactory to the Company.
3.4 RIGHT OF FIRST REFUSAL. If at any time an Investor desires
to transfer any shares of Registrable Securities or Series B Preferred Stock
other than to a Permitted Transferee, then such Investor shall deliver a written
notice to the Company (the "Offer Notice"). The Offer Notice shall state in
reasonable detail the type and number of Registrable Securities to be
transferred (the "Offered Securities") and the terms and conditions of such
proposed transfer, including the aggregate purchase price to be paid for the
Offered Securities and the identity of the proposed transferee(s). The Company
shall have twenty (20) days from the date of delivery
16
of the Offer Notice to deliver a written notice to such Investor (the
"Acceptance Notice"), electing to purchase all or a portion of the Offered
Securities on the terms and conditions, and for the aggregate purchase price,
set forth in the Offer Notice, in which case the closing of the purchase by the
Company of such shares shall take place as soon as practicable but in no event
more than 30 days after delivery of the Acceptance Notice. In the event that the
Company does not deliver an Acceptance Notice within 20 days of receipt of the
Offer Notice, the Investor shall offer (the "Second Offer Notice") the Offered
Securities to the remaining Investors and the Management Stockholders on a pro
rata basis. The remaining Investors and the Management Stockholders shall have
twenty (20) days from the receipt of such Second Offer Notice to deliver a
written notice to the offering Investor electing to purchase all or a portion of
the Offered Securities offered to such Investor or Management Stockholder in the
Second Offer Notice on the terms and conditions, and for the aggregate purchase
price, set forth in the Second Offer Notice, in which case the closing of the
purchase by the other Investors and Management Stockholders of such shares shall
take place as soon as practicable but in no event more than 30 days after
delivery of their Acceptance Notice. Any Offered Securities not purchased by the
Company, the other Investors or the Management Stockholders may be sold by the
offering Investor to third parties on terms no less favorable to the offering
Investor for a period of sixty (60) days.
4. MISCELLANEOUS.
4.1 SURVIVAL OF COVENANTS. Each of the parties hereto agrees
that each covenant and agreement made by it in this Agreement or in any
certificate, instrument or other document delivered pursuant to this Agreement
is material, shall be deemed to have been relied upon by the other parties and,
except as provided herein, shall remain operative and in full force and effect
after the date hereof regardless of any investigation. This Agreement shall not
be construed so as to confer any right or benefit upon any Person other than the
parties hereto and their respective successors and permitted assigns to the
extent contemplated herein.
4.2 LEGEND ON SECURITIES. The Company, the Investors and the
Management Stockholders acknowledge and agree that the following legend shall be
typed on each certificate evidencing any of the securities issued hereunder held
at any time by any of the Investors, the Management Stockholders or their
Permitted Transferees:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
PROVISIONS OF AN INVESTORS' RIGHTS AGREEMENT DATED AS OF MAY 20, 1999, INCLUDING
THEREIN CERTAIN RESTRICTIONS ON TRANSFER. A COMPLETE AND CORRECT COPY OF THIS
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
4.3 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.
17
4.4 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of New York, exclusive of the provisions
thereof governing conflicts of laws.
4.5 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.6 TITLES AND SUBTITLES; GENDER. 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. The use in this
Agreement of the masculine pronoun in reference to a party hereto shall be
deemed to include the feminine member, and vice versa as the context may
require.
4.7 NOTICES. Any notice, request, demand or other
communication required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery to the party to be
notified, upon the date of transmittal of services via telecopy to the party to
whom notice is being given, or on the fifth day after deposit in the United
States Post Office, by registered or certified mail, with postage and fees
prepaid, return receipt requested, and addressed to the other party to:
(a) if to the Company, c/o 1-800-FLOWERS.COM, Inc., 1600
Stewart Avenue, Westbury, New York 11590, attention to Chief Executive Officer,
with a copy to Brobeck, Phleger & Harrison LLP, New York, New York 10019,
attention to Alexander D. Lynch, or such other address designated by the Company
to the Investors and the other parties hereto in writing;
(b) if to the Investors, at the mailing address as shown on
the signature pages hereto, with a copy to (i) Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006, attention to Laurent
Alpert, (ii) Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, 155
Constitution Drive, Menlo Park, California 94025, attention to Steve Spurlock,
(iii) Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017, attention to William Curbow, and (iv) Sullivan & Cromwell, 125 Broad
Street, New York, New York 10004, attention to Stephen A. Grant, or at such
other address designated by an Investor to the Company and the other Investors
in writing.
(c) if to the Management Stockholders, attention to James F.
McCann and Christopher G. McCann, c/o 1-800-FLOWERS.COM, Inc., 1600 Stewart
Avenue, Westbury, New York 11590, with a copy to Brobeck, Phleger & Harrison
LLP, New York, New York 10019, attention to Alexander D. Lynch, and Gallagher,
Walker, Bianco & Plastaras, 98 Willis Avenue, Mineola, New York 11501, attention
to Jerry Gallagher, or such other address designated by the Management
Stockholders to the Company and the Investors hereto in writing.
4.8 EXPENSES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
18
4.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (i) the Company, (ii)
Management Stockholders (or their Permitted Transferees) representing a majority
in interest of the Common Stock held by all Management Stockholders (or their
Permitted Transferees), and (iii) each of the Investors (or their Permitted
Transferees) holding eighty-five percent (85%) of the sum of Registrable
Securities and Series B Preferred Stock then outstanding and held by the
Investors (or their Permitted Transferees). Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under the Purchase Agreement then outstanding, each future
holder of all such securities, and the Company.
4.10 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
4.11 AGGREGATION OF STOCK. All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
4.12 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement and
the documents referred to herein constitute the entire agreement among the
parties with regard to the subjects hereof and thereof.
[Remainder of this page intentionally left blank]
19
IN WITNESS WHEREOF, the parties have caused this Investors'
Rights Agreement to be duly executed and delivered as of the date first above
written.
1-800-FLOWERS.COM, INC.
By: /s/ James F. McCann
__________________________________
Name: James F. McCann
Title: Chief Executive Officer
MANAGEMENT STOCKHOLDERS:
________________________
JAMES F. MCCANN
/s/ James F. McCann
_____________________________________
Address: 1600 Stewart Avenue
Westbury, NY 11590
CHRISTOPHER G. MCCANN
/s/ Christopher G. McCann
_____________________________________
Address: 1600 Stewart Avenue
Westbury, NY 11590
INVESTORS' RIGHTS AGREEMENT
SOFTBANK AMERICA INC.
By: /s/ Steven J. Murray
________________________________
Name: Steven J. Murray
Title: Treasurer
INVESTORS' RIGHTS AGREEMENT
FORUM HOLDING AMSTERDAM B.V.
By: /s/ Jean-Bernard Tellio
_______________________________________
Name: Jean-Bernard Tellio
Address: Lokatellikade 1
Parnassustoren
1076 AZ Amsterdam
THE NETHERLANDS
INVESTORS' RIGHTS AGREEMENT
CHASE VENTURE CAPITAL ASSOCIATES
By: Chase Capital Partners,
its General Partner
By: /s/ Stephen P. Murray
__________________________________
Stephen P. Murray
General Partner
INVESTORS' RIGHTS AGREEMENT
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners II, L.P.
Benchmark Founders' Fund II, L.P.
Benchmark Founders' Fund II-A, L.P.
Benchmark Members' Fund, L.P.
By: Benchmark Capital Management Co. II, L.L.C.,
its general partner
By: /s/ Kevin Harvey
_________________________________________
Managing Member
BENCHMARK CAPITAL PARTNERS III, L.P.
as nominee for
Benchmark Capital Partners III, L.P.
Benchmark Founders' Fund III, L.P.
Benchmark Founders' Fund III-A, L.P.
Benchmark Members' Fund III, L.P.
By: Benchmark Capital Management Co. III, L.L.C.,
its general partner
By: /s/ Kevin Harvey
_________________________________________
Managing Member
BENCHMARK INVESTORS III, L.P.
By: Benchmark Capital Management Co. III, L.L.C.,
its general partner
By: /s/ Kevin Harvey
_________________________________________
Managing Member
INVESTORS' RIGHTS AGREEMENT
BROBECK, PHLEGER & HARRISON LLP
By: /s/ Alexander D. Lynch
_________________________________________
Name: Alexander D. Lynch
Title: Partner
INVESTORS' RIGHTS AGREEMENT
/s/ T. Guy Minetti
-----------------------------------------
T. Guy Minetti
/s/ Gerard M. Gallagher
-----------------------------------------
Gerard M. Gallagher
/s/ Alexander D. Lynch
-----------------------------------------
Alexander D. Lynch
/s/ Kenneth R. McVay
-----------------------------------------
Kenneth R. McVay
INVESTORS' RIGHTS AGREEMENT