-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MR+p8Tb9dIzUm81YWGUnMfYOkpkqB6fAD4d9WFC0C3Z6u4NVexr+DPvqC1tYZwLP 4yv5diDdsmNfULsphXJKMQ== 0000891618-99-004808.txt : 19991102 0000891618-99-004808.hdr.sgml : 19991102 ACCESSION NUMBER: 0000891618-99-004808 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19991017 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FATBRAIN COM INC CENTRAL INDEX KEY: 0001066010 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 770389480 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24871 FILM NUMBER: 99738754 BUSINESS ADDRESS: STREET 1: 1308 ORLEANS DR CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4085412020 MAIL ADDRESS: STREET 1: 1308 ORLEANS DR CITY: SUNNYVALE STATE: CA ZIP: 94089 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER LITERACY INC DATE OF NAME CHANGE: 19980714 8-K 1 FORM 8-K DATED OCTOBER 17, 1999 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (date of earliest event reported): October 17, 1999 FATBRAIN.COM, INC. (Exact name of registrant as specified in its charter) Delaware 0-24871 77-0389480 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 2550 Walsh Avenue, Santa Clara, CA 95051 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (408) 845-0100 2 ITEM 5. OTHER EVENTS Fatbrain.com, Inc. (the "Company") issued a press release on October 18, 1999 announcing that it had reached a definitive agreement with Vulcan Ventures Incorporated ("Vulcan"), whereby Vulcan would invest an additional $20 million in the Company. The Company issued another press release on November 1, 1999 (with the October 18, 1999 press release, collectively, the "Press Releases") announcing that it had reached a definitive agreement with Highland Capital Partners ("Highland") whereby Highland would invest $10 million in the Company pursuant to an amendment to the agreement with Vulcan (the "Amended Agreement"). The Amended Agreement contemplates the sale of One Million Four Hundred Thirty Seven Thousand Four Hundred and Seventy and (1,437,470) shares of the common stock, par value $0.001 per share, of the Company (the "Common Stock") at a purchase price of $20.87 per share and warrants to purchase Four Hundred Thirty One Thousand Two Hundred and Forty One (431,241) shares of common stock of the Company (the "Warrant Shares") at an exercise price of $26.09 per share. The Company announced that it intended to use the proceeds from the sale of the Common Stock and the Warrant Shares to advance its e-commerce initiatives, including eMatter, a digital publishing platform. The Common Stock, the warrants and the Warrant Shares sold to Vulcan and Highland (collectively, the "Investors") have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). Accordingly, these securities may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. Under the terms of the Amended Agreement, the Company has agreed to enter into a Registration Rights Agreement with the Investors to provide them with certain rights to have the Common Stock and the Warrant Shares registered under the Securities Act. In addition, the Investors and certain directors, officers and stockholders of the Company have agreed to enter into a Lock-up Agreement pursuant to which the parties agree to not sell any securities of the Company held by them until January 11, 2000 and, upon one request of the company and an underwriters of the Company, for a period not exceeding ninety (90) days following the effective date of a registration statement of the Company filed under the Securities Act. The Press Releases were issued pursuant to and in accordance with Rule 135c under the Securities Act, and therefore do not constitute offers to sell or the solicitation of offers to buy the Common Stock. Copies of the Press Releases are attached as exhibits hereto. 3 ITEM 7. EXHIBITS
Exhibit Number Description 4.1 Amended Common Stock and Warrant Purchase Agreement 4.2 Registration Rights Agreement 4.3 Lock-Up Agreement 4.4 Form of Warrant 99.1 Press Release dated October 18, 1999. 99.2 Press Release dated November 1, 1999.
4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Fatbrain.com, Inc. Date: November 1, 1999 /s/ Chris MacAskill ------------------------------------ Chris MacAskill Chief Executive Officer 5 EXHIBITS
EXHIBIT NUMBER DESCRIPTION 4.1 Amended Common Stock and Warrant Purchase Agreement 4.2 Registration Rights Agreement 4.3 Lock-Up Agreement 4.4 Form of Warrant 99.1 Press Release dated October 18, 1999 99.2 Press Release dated November 1, 1999
EX-4.1 2 AMENDED COMMON STOCK AND WARRANT PURCHASE AGMNT. 1 EXHIBIT 4.1 AMENDED AND RESTATED COMMON STOCK AND WARRANT PURCHASE AGREEMENT October 28, 1999 2 TABLE OF CONTENTS
Page 1. Purchase and Sale of the Common Shares and the Warrants.................. 2 1.1 Sale and Issuance of Common Shares and the Warrants................. 2 1.2 Closing............................................................. 2 2. Representations and Warranties of the Company............................ 2 2.1 Organization, Good Standing and Qualification....................... 2 2.2 Authorization....................................................... 3 2.3 Governmental Consents............................................... 3 2.4 Valid Issuance of Common Shares and Warrants........................ 3 2.5 Offering............................................................ 3 2.6 Litigation.......................................................... 4 2.7 SEC Filings......................................................... 4 2.8 Capitalization...................................................... 4 2.9 Intellectual Property............................................... 5 2.10 Changes............................................................ 5 2.11 Compliance with Other Instruments.................................. 5 2.12 HSR Act Compliance................................................. 6 3. Representations and Warranties of the Investors.......................... 6 3.1 Authorization....................................................... 6 3.2 Purchase Entirely for Own Account................................... 6 3.3 Disclosure of Information........................................... 7 3.4 Investment Experience............................................... 7 3.5 Accredited Investor................................................. 7 3.6 Restricted Securities............................................... 7 3.7 Further Limitations on Disposition.................................. 7 3.8 Legends............................................................. 8 3.9 HSR Act Compliance.................................................. 8 4. Conditions of Investors' Obligations at Closing.......................... 8 4.1 Representations and Warranties...................................... 8 4.2 Performance......................................................... 8 4.3 Qualifications...................................................... 8 4.4 Consents, Permits and Waivers....................................... 9 4.5 Reservation of Warrant Shares....................................... 9 4.6 Compliance Certificate.............................................. 9 4.7 Proceedings and Documents........................................... 9 4.8 Registration Rights Agreement....................................... 9 4.9 Escrow Agreement.................................................... 9 4.10 Lock-Up Agreement.................................................. 9 4.11 Board of Directors................................................. 9 4.12 Opinion of Company Counsel......................................... 9
i 3 5. Conditions of the Company's Obligations at Closing...................... 9 5.1 Representations and Warranties..................................... 10 5.2 Payment of Original Purchase Price................................. 10 5.3 Qualifications..................................................... 10 6. Miscellaneous........................................................... 10 6.1 Survival of Warranties............................................. 10 6.2 Successors and Assigns............................................. 10 6.3 Governing Law...................................................... 10 6.4 Counterparts....................................................... 10 6.5 Titles and Subtitles............................................... 10 6.6 Notices............................................................ 11 6.7 Finder's Fee....................................................... 11 6.8 Expenses........................................................... 11 6.9 Amendments and Waivers............................................. 11 6.10 Severability...................................................... 11 6.11 Corporate Securities Law.......................................... 12 6.12 Entire Agreement.................................................. 12
SCHEDULE A Schedule of Investors EXHIBIT A Form of Warrant EXHIBIT B Registration Rights Agreement EXHIBIT C Lock-Up Agreement EXHIBIT D Escrow Agreement EXHIBIT E Opinion of Counsel for the Company
4 FATBRAIN.COM, INC. AMENDED AND RESTATED COMMON STOCK AND WARRANT PURCHASE AGREEMENT THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is made as of the 28th day of October, 1999, by and among Fatbrain.com, Inc., a Delaware corporation (the "Company"), and the investors, severally and not jointly, listed on Schedule A hereto, each of which is herein referred to as an "Investor." WHEREAS, the Company and Vulcan Ventures Incorporated ("Vulcan") have entered into that certain Warrant and Common Stock Purchase Agreement dated October 17, 1999 (the "Prior Agreement"); WHEREAS, the Prior Agreement provided for an additional investor; WHEREAS, the Company and Vulcan now wish to terminate the Prior Agreement and replace it in its entirety with the following; WHEREAS, the Company desires to sell, and the Investors desire to purchase, up to 1,437,470 shares of the Company's Common Stock (the "Common Shares") at a price per share equal to Twenty Dollars and Eighty-Seven Cents ($20.87) (the "Original Purchase Price"); WHEREAS, the Company desires to sell, and the Investors desire to purchase at a per share purchase price of $0.001, warrants, in the form attached hereto as Exhibit A (the "Warrants"), to purchase up to 431,241 shares of the Company's Common Stock (the "Warrant Shares") and with an exercise price equal to Twenty Six Dollars and Nine Cents ($26.09), all as set forth on Schedule A hereto; WHEREAS, in connection with the purchase and sale of the Common Shares, the Company and the Investors wish to enter into a Registration Rights Agreement in the form of Exhibit B hereto (the "Registration Rights Agreement") providing the Investors with certain registration rights; WHEREAS, in connection with the purchase and sale of the Common Shares, the Investors and the Company wish to enter into a Lock-Up Agreement in the form of Exhibit C hereto (the "Lock-Up Agreement") with certain directors, executive officers and other five percent (5%) or greater stockholders of the Company; and WHEREAS, concurrent with the execution and delivery of this Agreement, the Company and Vulcan are entering into an Escrow Agreement in substantially the form of Exhibit D hereto (the "Escrow Agreement") providing for the payment and delivery of Vulcan's Common Shares and Warrants at the Closing (as defined below), it being understood by the Company and Vulcan that the Escrow Agreement is subject to change based upon comments received by the escrow agent thereunder. 1 5 NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of the Common Shares and the Warrants. 1.1 Sale and Issuance of the Common Shares and the Warrants. (a) On or prior to the Closing (as defined below), the Company shall have authorized (i) the sale and issuance to the Investors of the Common Shares, (ii) the sale and issuance to the Investors of the Warrants and (iii) the issuance of the Warrant Shares to be issued upon exercise of the Warrants. (b) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Closing, and the Company agrees to sell and issue to each Investor at the Closing, that number of Common Shares set forth opposite such Investor's name on Schedule A hereto for the Original Purchase Price set forth opposite such Investor's name on Schedule A hereto. (c) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Closing, and the Company agrees to sell and issue to each Investor at the Closing, a Warrant to purchase that number of shares of the Company's Common Stock as is set forth opposite such Investor's name on Schedule A hereto, for the purchase price set forth opposite such Investor's name on Schedule A hereto. The Company and each Investor agrees, severally and not jointly, that as of the date hereof the purchase price of the Warrants is equal to the fair market value of such warrants. 1.2 Closing. The purchase and sale of the Common Shares and the Warrants shall take place at the offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at 10:00 A.M. on the fifth business day after the termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"), or at such other time and place as the Company and Investors acquiring in the aggregate more than half of the Common Shares and the Common Stock issuable or issued upon exercise of the Warrants mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing the Company shall deliver to each Investor (a) a certificate representing the Common Shares that such Investor is purchasing and (b) a Warrant to purchase that number of shares of the Company's Common Stock as set forth in Section 1.1(c) above, against payment of the Original Purchase Price therefor by wire transfer from the Investors, and with respect to Vulcan pursuant to the terms of the Escrow Agreement. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that: 2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. 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. 2 6 2.2 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the Registration Rights Agreement, the Lock-Up Agreement and the Escrow Agreement, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Common Shares and the Warrants being sold hereunder and the Warrant Shares issuable upon conversion of the Warrants has been taken or will be taken prior to the Closing, and this Agreement, the Registration Rights Agreement, the Lock-Up Agreement and the Escrow Agreement constitute valid and legally 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 the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable federal or state securities laws. The sale of the Common Shares, the Warrants and the Warrant Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. 2.3 Governmental Consents. Except as may be required under the HSR Act, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, other than (i) compliance with the Securities Act of 1933, as amended (the "Act") and (ii) such filings as may be required to be made with the National Association of Securities Dealers, Inc. 2.4 Valid Issuance of Common Shares and Warrants. The Common Shares and the Warrants that are being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Registration Rights Agreement and under applicable state and federal securities laws. The Warrant Shares issuable upon conversion of the Warrants purchased under this Agreement have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Company's Amended and Restated Certificate of Incorporation, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Registration Rights Agreement and under applicable state and federal securities laws. 2.5 Offering. Subject in part to the truth and accuracy of each Investor's representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Common Shares, the Warrants and the Warrant Shares as contemplated by this Agreement are exempt from the registration requirements of any applicable state and federal securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. 3 7 2.6 Litigation. Except as disclosed in the SEC Filings (as defined below), (i) there is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company that questions the validity of this Agreement, the Registration Rights Agreement, the Lock-Up Agreement or the Escrow Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, and (ii) there is no action, suit, proceeding or investigation pending or, to the knowledge of the Company, currently threatened in writing against the Company, or against any executive officer or director of the Company which might result, either individually or in the aggregate, in any material adverse change in the business, properties, financial condition or operating results of the Company, as such business is presently conducted, or any change in the current equity ownership of the Company. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit proceeding or investigation by the Company currently pending or which the Company intends to initiate. 2.7 SEC Filings. The Company has timely filed all filings with the United States Securities and Exchange Commission (the "SEC") under the Act or under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or under the rules and regulations promulgated by the SEC (any such filing, an "SEC Filing") required to be filed by the Company pursuant to such acts and no SEC Filing contained, on the date on which such document was filed with the SEC, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in SEC Filings (including any similar documents filed after the date of this Agreement) comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), and fairly present the consolidated financial position of Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). 2.8 Capitalization. As of September 30, 1999, the authorized capital stock of the Company consisted of 5,000,000 shares of Preferred Stock, none of which were issued and outstanding, and 50,000,000 shares of Common Stock, 11,379,735 shares of which were issued and outstanding (the "Preferred Stock" and the "Common Stock" are collectively referred to herein as the "Capital Stock"). An additional 300,000 shares of Common Stock are reserved for future issuance to employees pursuant to the Company's Employee Stock Purchase Plan and an additional 3,889,910 shares of Common Stock are reserved for future issuance to employees pursuant to the Company's 1998 Omnibus Equity Incentive Plan, 1,627,941 shares of which are currently subject to outstanding options. All of the issued and outstanding shares of Capital Stock have been duly authorized, validly issued and are fully paid and nonassessable. There has been no material change in the capitalization of the Company from September 30, 1999 to the date of this Agreement. Other than as set forth in the Company's SEC Filings, warrants to purchase 50,000 shares of the Company's Common Stock, and except as may be granted under this Agreement, there are no outstanding options, warrants, rights (including conversion or 4 8 preemptive and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. 2.9 Intellectual Property. Except as disclosed in the SEC Filings, the Company has sufficient title and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted without any conflict with or infringement of the rights of others. Other than as disclosed in the SEC Filings, 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 their duties to the Company or that would conflict with the Company's business as presently proposed to be conducted. Neither the execution nor delivery of this Agreement or the other agreements contemplated hereby, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated. The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company. 2.10 Changes. Since the date of the Company's last quarterly report filed on Form 10-QSB with the SEC, there has not been, to the Company's knowledge, any material change in the assets, liabilities, financial condition or operations of the Company from that reflected in the financial statements included in such SEC Filing, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company, or any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition, operations or prospects of the Company. 2.11 Compliance with Other Instruments. The Company is not in violation or default of any term of its Amended and Restated Certificate of Incorporation or Bylaws, or of any provision of any mortgage, indenture, agreement, instrument or contract to which it is a party or by which it is bound or of any judgment, decree, order or writ. The execution, delivery and performance of and compliance with this Agreement and the other agreements contemplated hereby, and the issuance and sale of the Common Shares, the Warrants and the Warrant Shares, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of 5 9 any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 2.12 HSR Act Compliance. As applicable, the Company will (i) cause to be prepared and filed as promptly as practicable after the date hereof a Notification and Report Form relating to the transactions contemplated herein with the United States Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") under the HSR Act, in connection with its sale and issuance of the Common Shares and the Warrants hereunder, (ii) not to withdraw the aforementioned Form prior to completion or early termination of the applicable HSR Act waiting period, and (iii) to respond to all requests for further information from the FTC or DOJ as promptly and as completely as is practicable, and otherwise to use commercially reasonable efforts to ensure that its sale and issuance of the Common Shares and the Warrants shall be effected as promptly as practicable after the date hereof and in compliance with the HSR Act. 3. Representations and Warranties of the Investors. Each Investor hereby represents and warrants that: 3.1 Authorization. Such Investor has full power and authority to enter into this Agreement, the Registration Rights Agreement, and the Lock-Up Agreement and Vulcan further represents that it has full power and authority to enter into the Escrow Agreement, 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 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 Common Shares and the Warrant to be received by such Investor and the Warrant Shares issuable upon exercise of the Warrant to be received by such Investor (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 participations 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 received all the information it considers necessary or appropriate for deciding whether to purchase the Common Shares and the Warrant. 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 Common Shares and the Warrant and the business, properties, prospects and financial condition of the Company. 6 10 3.4 Investment Experience. Such Investor is an investor in 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 Common Shares and the Warrant. If other than an individual, Investor also represents it has not been organized for the purpose of acquiring the Common Shares and the Warrant. 3.5 Accredited Investor. Such Investor is an "accredited investor" 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 the Securities are 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 Act only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.7 Further Limitations on Disposition. Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless: (a) There is then in effect a Registration Statement under the Act, covering such proposed disposition and such disposition is made in accordance with such Registration Statement; (b) Such Securities are sold in compliance with SEC Rule 144 under the Act; or (c) Notwithstanding the provisions of Paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership (including limited liability companies and partnerships and their members and partners) or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse. 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 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 Act." 7 11 (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. (c) Any legend required by applicable blue sky law. 3.9 HSR Act Compliance. If required by law, such Investor will (i) cause to be prepared and filed as promptly as practicable after the date hereof a Notification and Report Form relating to the transactions contemplated herein with the FTC and the DOJ under the HSR Act, in connection with its purchase of the Common Shares and the Warrants hereunder, (ii) not to withdraw the aforementioned Form prior to completion or early termination of the applicable HSR Act waiting period, and (iii) to respond to all requests for further information from the FTC or DOJ as promptly and as completely as is practicable, and otherwise to use commercially reasonable efforts to ensure that its purchase of the Common Shares and the Warrants shall be effected as promptly as practicable after the date hereof and in compliance with the HSR Act. 4. Conditions of Investors' Obligations at Closing. The obligations of each Investor under Section 1 of 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 thereto: 4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 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 date of such Closing. 4.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 4.3 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, including the expiration or termination of the applicable waiting period under the HSR Act. 4.4 Consents, Permits and Waivers. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for the consummation of the transactions contemplated by the Agreement and the other agreements contemplated hereby. 4.5 Reservation of Warrant Shares. The Warrant Shares issuable upon exercise of the Warrants shall have been duly authorized and reserved for issuance upon such exercise. 4.6 Compliance Certificate. The President and Chief Executive Officer of the Company shall deliver to the Investors at the Closing a certificate certifying that the conditions specified in Sections 4.1, 4.3. 4.4 and 4.5 have been fulfilled. 8 12 4.7 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investors' special counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 4.8 Registration Rights Agreement. The Company and each Investor shall have entered into the Registration Rights Agreement. 4.9 Escrow Agreement. The Company and Vulcan shall have entered into the Escrow Agreement. As soon as practicable after the date hereof the Company shall have deposited that number of Common Shares and Warrants being purchased by Vulcan as set forth on Schedule A hereto into escrow pursuant to the terms of the Escrow Agreement, at which time the Vulcan shall deposit the Original Purchase Price into escrow pursuant to the terms thereof. 4.10 Lock-Up Agreement. The Company, each Investor, and the other persons named in the form of Lock-Up Agreement shall have entered into the Lock-Up Agreement. 4.11 Board of Directors. As of the Closing, the authorized number of directors shall be eight (8) members, and the Board of Directors shall be comprised of Keith E. Benjamin, Peter Bodine, Diane H. Daggatt, Alan Fisher, Tod Francis, Chris MacAskill, Kim Orumchian and Peter Wendell. 4.12 Opinion of Company Counsel. Investor shall have received from Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel for the Company, an opinion, dated as of the Closing, in substantially the form attached hereto as Exhibit E. 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 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 Original Purchase Price. The Investor shall have delivered the Original Purchase Price specified in Section 1.1, and with respect to Vulcan, payment shall be made pursuant to the terms of the Escrow Agreement. 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, including the expiration or termination of the applicable waiting period under the HSR Act. 9 13 6. Miscellaneous. 6.1 Survival of Warranties. The warranties, representations and covenants of the Company and Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of two years and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Company. 6.2 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. 6.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 6.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 6.6 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified, deposit with a nationally recognized overnight courier, confirmed facsimile or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address or addresses indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 6.7 Finder's Fee. Each party represents that it neither is nor will be obligated for any finders' fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 10 14 6.8 Expenses. Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement; provided, however that if the transactions contemplated by this Agreement are completed, then the Company shall reimburse the Investors for the reasonable fees and expenses of a single counsel for the Investors in an amount not to exceed $15,000. In addition, the Company shall reimburse the Investors for all fees incurred in connection with the filings under the HSR Act pursuant to Section 3.9 hereof. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Warrants, the Registration Rights Agreement, the Lock-Up Agreement or the Escrow Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 6.9 Amendments and Waivers. Any term of this Agreement may be amended 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 (a) the Company and (b) the holders of seventy percent (70%) of the Common Shares. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company. 6.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, 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. 6.11 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 6.12 Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. 11 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. FATBRAIN.COM, INC. By: ------------------------------------ Chris MacAskill, President and Chief Executive Officer Address: 2550 Walsh Avenue Santa Clara, CA 95051 VULCAN VENTURES INCORPORATED By: ------------------------------------- William Savoy President Address: 110 110th Avenue, N.E. Suite 550 Bellevue, WA 98004 HIGHLAND CAPITAL PARTNERS IV LIMITED PARTNERSHIP By: Highland Management Partners IV LLC ------------------------------------- By: ------------------------------------- Managing Member Address: Two International Place Boston, MA 02110 16 HIGHLAND ENTREPRENEURS' FUND IV LIMITED PARTNERSHIP By: Highland Entrepreneurs' Fund IV LLC By: ------------------------------------- Managing Member Address: Two International Place Boston, MA 02110 17 SCHEDULE A SCHEDULE OF INVESTORS
AGGREGATE ORIGINAL PURCHASE PRICE OF NUMBER OF COMMON PURCHASE PRICE NUMBER OF NAME AND ADDRESS COMMON SHARES SHARES OF WARRANT WARRANT SHARES - ---------------- ----------------- ---------------- -------------- -------------- Vulcan Ventures Incorporated $19,999,992.31 958,313 $ 287.49 287,494 110 110th Avenue, N.E. Suite 550 Bellevue, WA 98004 Highland Capital Partners IV $ 9,600,012.17 459,991 $ 136.56 136,560 Limited Partnership Two International Place Boston, MA 02110 Highland Entrepreneurs' Fund IV $ 399,994.42 19,166 $ 7.19 7,187 Limited Partnership Two International Place Boston, MA 02110 -------------- --------- -------- ------- TOTAL $29,999,998.90 1,437,470 $ 431.24 431,241 ============== ========= ======= =======
18 EXHIBIT A Form of Warrant 19 EXHIBIT B Registration Rights Agreement 20 EXHIBIT C Lock-Up Agreement 21 EXHIBIT D Escrow Agreement 22 EXHIBIT E Opinion of Counsel for the Company EX-4.2 3 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.2 FATBRAIN.COM, INC. REGISTRATION RIGHTS AGREEMENT ______________ __, 1999 2 TABLE OF CONTENTS
PAGE ---- 1. Registration Rights..................................................... 1 1.1 Definitions....................................................... 1 1.2 Shelf Registration................................................ 2 1.3 Obligations of the Company........................................ 3 1.4 Furnish Information............................................... 4 1.5 Expenses of Shelf Registration.................................... 4 1.6 Underwriting Requirements......................................... 4 1.7 Delay of Registration............................................. 4 1.8 Indemnification................................................... 5 1.9 Reports Under Securities Exchange Act of 1934..................... 7 1.10 Assignment of Registration Rights................................. 7 1.11 Limitations on Registration Rights................................ 8 1.12 Consent and Waiver of Prior Investors and Management Holders...... 8 2. Miscellaneous........................................................... 8 2.1 Successors and Assigns............................................. 8 2.2 Governing Law...................................................... 8 2.3 Counterparts....................................................... 9 2.4 Titles and Subtitles............................................... 9 2.5 Notices............................................................ 9 2.6 Expenses........................................................... 9 2.7 Amendments and Waivers............................................. 9 2.8 Severability....................................................... 9 2.9 Aggregation of Stock............................................... 9 2.10 Entire Agreement................................................... 9
Schedule A Schedule of Investors Schedule B Schedule of Prior Investors Schedule C Schedule of Management Holders i 3 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT is made as of __________ __, 1999, by and between Fatbrain.com, Inc. (formerly, Computer Literacy, Inc.), a Delaware corporation (the "Company"), the investors listed on Schedule A hereto, each of which is herein referred to as an "Investor," the investors listed on Schedule B hereto, each of which is herein referred to as a "Prior Investor" and the management holders set forth in Schedule C hereto (the "Management Holders"). RECITALS WHEREAS, the Company, certain of the Prior Investors and the Management Holders are parties to that certain Amended and Restated Investors' Rights Agreement dated May 22, 1998 (the "Prior Agreement"), WHEREAS, the Investors and the Company are parties to the Amended and Restated Common Stock and Warrant Purchase Agreement dated October 25, 1999 (the "Purchase Agreement"), and certain of the Company's and such Investors' obligations under which are conditioned upon the execution and delivery of this Agreement; and WHEREAS, in order to induce the Investors to enter into the Purchase Agreement, the Prior Investors, the Management Holders and the Company wish to confirm that the rights granted to the Investors under this Agreement shall not be impacted by the rights granted to the Prior Investors and the Management Holders in the Prior Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto further agree as follows: 1. Registration Rights. The Company covenants and agrees as follows: 1.1 Definitions. For purposes of this Section 1: (a) The term "Act" means the Securities Act of 1933, as amended. (b) The term "Form S-3" means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. (c) The term "Holder" means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.10 hereof. (d) The term "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. 4 (e) 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 Act, and the declaration or ordering of effectiveness of such registration statement or document. (f) The term "Registrable Securities" means (i) the Common Stock sold pursuant to the Investors pursuant to the Purchase Agreement, (ii) the Common Stock issuable upon exercise of the warrants sold to the Investors pursuant to the Purchase Agreement and (iii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the shares referenced in (i), and (ii) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under this Section 1 are not assigned. (g) The number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of Common Stock outstanding and the number of shares of Common Stock issuable pursuant to then exercisable securities, both of which are Registrable Securities under this Agreement. (h) The term "SEC" shall mean the Securities and Exchange Commission. 1.2 Shelf Registration. (a) The Company shall prepare and file with the SEC, as soon as practicable but in any event on or prior to December 31, 1999, a registration statement for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration") registering the resale from time to time by Holders thereof of all of the Registrable Securities. The Shelf Registration shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by the Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). The Company shall use reasonable efforts to cause the Shelf Registration to be declared effective under the Securities Act as soon as practicable and to keep the Shelf Registration continuously effective under the Securities Act until the second anniversary of the closing under the Purchase Agreement. (b) If the Shelf Registration ceases to be effective for any reason as a result of the issuance of a stop order by the SEC at any time, the Company shall use reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days of such cessation of effectiveness amend the Shelf Registration in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof. (c) The Company shall supplement and amend the Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration, if required by the Securities Act. 2 5 (d) Notwithstanding the foregoing, 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 is advisable to suspend use of the Registration Statement and prospectus for a discrete period of time due to pending material corporate developments or similar material events that have not yet been publicly disclosed and as to which the Company believes public disclosure will be prejudicial to the Company, then the Company may suspend sales of Registrable Securities under the Shelf Registration. The Company will use reasonable efforts to ensure that the use of the prospectus may be resumed, as soon as practicable and, in the case of a pending development or event referred to above, as soon as the earlier of (x) public disclosure of such pending material corporate development or similar material event or (y) in the judgment of the Company, public disclosure of such material corporate development or similar material event would not be prejudicial to the Company. Notwithstanding any other provision in this Agreement, the Company shall not under any circumstances be entitled to exercise its right under this Section 1.2(d) to suspend the effectiveness of the Registration Statement for a period in excess of an aggregate of 90 days in any 12 month period. 1.3 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective. (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. 3 6 (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed. (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. 1.4 Furnish Information. (a) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. 1.5 Expenses of Shelf Registration. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 1.2, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company (including fees and disbursements of counsel for the Company in its capacity as counsel to the selling Holders hereunder; if Company counsel does not make itself available for this purpose, the Company will pay the reasonable fees and disbursements of one counsel for the selling Holders) shall be borne by the Company. 1.6 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters). 1.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1. 1.8 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1: 4 7 (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the officers and directors of each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will pay to each such Holder, officer, director, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable 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 a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, officer, director, underwriter or controlling person. In addition, the Company will indemnify and hold harmless each Investor, the officers and directors of each Investor and each person, if any, who controls such Investor, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon claims brought by third parties (including stockholders of the Company) against the Investors in connection with the transactions contemplated by the Purchase Agreement. (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement, any of such Holder's officers and directors and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.8(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this 5 8 subsection 1.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this subsection 1.8(b) exceed the gross proceeds from the offering received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 1.8 of notice of the commencement of any 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 1.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to 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 failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.8, 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 1.8. (d) If the indemnification provided for in this Section 1.8 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 the 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 indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 6 9 (f) The obligations of the Company and Holders under this Section 1.8 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise. 1.9 Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any 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: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and (c) 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 Act and the 1934 Act, 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. 1.10 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to (A) any partner or retired partner of any Investor which is a partnership (including partners that are limited liability companies or partnerships and their respective members or partners), (B) any member of former member of any Investor which is a limited liability company, (C) any family member or trust for the benefit of any individual Investor, or (D) any transferee who acquires at least 10,000 shares (as adjusted for stock splits, stock dividends, recapitalizations and the like) of Registrable Securities, provided: (i) 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; (ii) 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 1.12 below; and (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. 1.11 Limitations on Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of seventy percent (70%) of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder 7 10 or prospective holder to include such securities in any registration filed under Section 1.2 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any registration under such Section only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of the Holders which is included. 1.12 Consent and Waiver of Prior Investors and Management Holders. By signing this Agreement, the Prior Investors and the Management Holders hereby waive for themselves and all other parties to the Prior Agreement, any and all rights they may have under the Prior Agreement, or otherwise, to include shares of common stock in registrations effected pursuant to Section 1.2 of this Agreement unless the inclusion of such securities in such registrations will not reduce the amount of the Registrable Securities of the Holders that is included in such registrations. In addition, by signing this Agreement, the Prior Investors and the Management Holders hereby amend the Prior Agreement for the sole purpose of (i) including the Investors set forth on Schedule A hereto as parties to the Prior Agreement and (ii) amending the definition of "Registrable Securities" in the Prior Agreement to include all of the shares of common stock purchased by the Investors under the Purchase Agreement. Accordingly, following execution and delivery of this Agreement, the Investors set forth on Schedule A hereto shall for all purposes be deemed "Investors" under the Prior Agreement and shall be entitled to all rights and obligations of "Investors" under the Prior Agreement as though they were original signatories thereto. 2. Miscellaneous. 2.1 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 shares of Registrable 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. 2.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 2.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 2.5 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon 8 11 personal delivery to the party to be notified, upon confirmed facsimile transmission to the party to be notified, or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 2.6 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. 2.7 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 the Company and the holders of seventy percent (70%) of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future holder of all such Registrable Securities and the Company. 2.8 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. 2.9 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. 2.10 Entire Agreement. This Agreement and the Prior Agreement (including the Schedules thereto) constitute the full and entire understanding and agreement between the parties with regard to the subject hereof and thereof. 9 12 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written. COMPANY: FATBRAIN.COM, INC. By: ------------------------------------ Chris MacAskill, President Address: 2550 Walsh Ave., Santa Clara, CA 95051 13 INVESTORS: VULCAN VENTURES INCORPORATED By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Address: 110 110th Avenue N.E. Suite 550 Bellevue, WA 98004 HIGHLAND CAPITAL PARTNERS IV LIMITED PARTNERSHIP By: Highland Management Partners IV LLC By: ---------------------------------------- Name: Managing Member Title: Address: Two International Place Boston, MA 02110 HIGHLAND ENTREPRENEURS' FUND IV LIMITED PARTNERSHIP By: Highland Entrepreneurs' Fund IV LLC By: ---------------------------------------- Name: Managing Member Title: Address: Two International Place Boston, MA 02110 14 PRIOR INVESTORS: SIERRA VENTURES V, LP By: ---------------------------------------- Its: ----------------------------------- By: ---------------------------------------- Its: ----------------------------------- Address: 3000 Sand Hill Road Building 4, Suite 210 Menlo Park, CA 94025 15 PRIOR INVESTORS: TRINITY VENTURES V, LP By: ---------------------------------------- Its: ----------------------------------- By: ---------------------------------------- Its: ----------------------------------- Address: 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 TRINITY VENTURES SIDE-BY-SIDE FUND V, LP By: ---------------------------------------- Its: ----------------------------------- By: ---------------------------------------- Its: ----------------------------------- Address: 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 16 PRIOR INVESTORS: APV TECHNOLOGY PARTNERS, L.P. By: APV Management Co., LLC Its: Managing General Partner By: ---------------------------------------- Peter G. Bodine, Managing Member Address: 535 Middlefield Road Menlo Park, CA 94025 APV TECHNOLOGY PARTNERS, L.P. By: APV Management Co., LLC Its: Managing General Partner By: ---------------------------------------- Peter G. Bodine, Managing Member Address: 535 Middlefield Road Menlo Park, CA 94025 APV TECHNOLOGY PARTNERS, L.P. By: APV Management Co., LLC Its: Managing General Partner By: ---------------------------------------- Peter G. Bodine, Managing Member Address: 535 Middlefield Road Menlo Park, CA 94025 17 PRIOR INVESTORS: AMOS NUR By: ---------------------------------------- Address: c/o Stanford University Geophysics Department Mitchell 317 Stanford, CA 94305-2215 18 PRIOR INVESTORS: NEEDHAM CAPITAL SBIC, L.P. By: ---------------------------------------- Its ------------------------------------ By: ---------------------------------------- Its ------------------------------------ Address: 445 Park Avenue, 3rd Floor New York, NY 10022 NEEDHAM CAPITAL PARTNERS II (BERMUDA), L.P. By: ---------------------------------------- Its ------------------------------------ By: ---------------------------------------- Its ------------------------------------ Address: 445 Park Avenue, 3rd Floor New York, NY 10022 NEEDHAM CAPITAL PARTNERS II, L.P. By: ---------------------------------------- Its ------------------------------------ By: ---------------------------------------- Its ------------------------------------ Address: 445 Park Avenue, 3rd Floor New York, NY 10022 19 PRIOR INVESTORS: VULCAN VENTURES INCORPORATED By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- Address: 110 110th Avenue N.E. Suite 550 Bellevue, WA 98004 20 PRIOR INVESTORS: UNTERBERG HARRIS PRIVATE EQUITY PARTNERS, LP By: ---------------------------------------- Its: ----------------------------------- Address: 10 E. 50th Street New York, NY 10022 UNTERBERG HARRIS PRIVATE EQUITY PARTNERS, CV By: ---------------------------------------- Its: ----------------------------------- Address: 10 E. 50th Street New York, NY 10022 C.E. UNTERBERG, TOWBIN 401K PROFIT SHARING PLAN FBO ANDREW ARNO By: ---------------------------------------- Its: ----------------------------------- Address: 10 E. 50th Street New York, NY 10022 C.E. UNTERBERG, TOWBIN 401K PROFIT SHARING PLAN FBO BRETT WALLACE By: ---------------------------------------- Its: ----------------------------------- Address: 10 E. 50th Street 11 21 New York, NY 10022 22 PRIOR INVESTORS: ALEX BERNSTEIN By: ---------------------------------------- Address: 10 E. 50th Street New York, NY 10022 ANDREW BLUM By: ---------------------------------------- Address: 10 E. 50th Street New York, NY 10022 THOMAS I. UNTERBERG By: ---------------------------------------- Address: 10 E. 50th Street New York, NY 10022 23 MANAGEMENT HOLDERS: CHRIS MACASKILL By: ---------------------------------------- Address: c/o Fatbrain.com, Inc. 2550 Walsh Ave., Santa Clara, CA 95051 KIM ORUMCHIAN By: ---------------------------------------- Address: c/o Fatbrain.com, Inc. 2550 Walsh Ave., Santa Clara, CA 95051 24 SCHEDULE A Schedule of Investors Vulcan Ventures Incorporated Attn: Diane H. Daggatt 110 110th Avenue N.E. Bellevue, WA 98004 Highland Capital Partners IV Limited Partnership Attn: Keith E. Benjamin Two International Place Boston, MA 02110 Highland Entrepreneurs' Fund IV Limited Partnership Attn: Keith E. Benjamin Two International Place Boston, MA 02110 25 SCHEDULE B Schedule of Prior Investors Vulcan Ventures Attn: Ralph Derrickson Amos Nur C.E. Unterberg, Towbin LLC 110 110th Avenue N.E. Stanford University Attn: Brett Wallace Bellevue, WA 98004 Geophysics Department 275 Battery Street, 29th Floor Mitchell 317 San Francisco, CA 94111 Stanford, CA 94305 Sierra Ventures V, LP Huret Family Partners, L.P. Unterberg Harris Private Equity Partners, Attn: Peter Wendell Attn: Bob Huret L.P. 3000 Sand Hill Road 601 California Street, Suite 2225 Attn: Brett Wallace Building 4, Suite 210 San Francisco, CA 94108 275 Battery Street, 29th Floor Menlo Park, CA 94025 San Francisco, CA 94111 Trinity Ventures V, LP J. Richard Fredericks Unterberg Harris Private Equity Partners, Attn: Tod Francis c/o NationsBanc Montgomery Securities C.V. 3000 Sand Hill Road 600 Montgomery Street, 24th Floor Attn: Brett Wallace Building 1, Suite 240 San Francisco, CA 94111 275 Battery Street, 29th Floor Menlo Park, CA 94025 San Francisco, CA 94111 Trinity Side-By-Side Fund V, LP Joseph M. Petri Thomas Unterberg Attn: Tod Francis c/o Summit Capital Advisors Attn: Brett Wallace 3000 Sand Hill Road 150 JFK Parkway 275 Battery Street, 29th Floor Building 1, Suite 240 Short Hills, NJ 07078 San Francisco, CA 94111 Menlo Park, CA 94025 APV Technology Partners, L.P. Needham Capital SBIC, L.P. C.E. Unterberg, Towbin 401K Profit Sharing Attn: Peter G. Bodine Attn: John Michaelson Plan FBO Andrew Arno: 535 Middlefield Road 445 Park Avenue, 3rd Floor Attn: Brett Wallace Menlo Park, Ca 94025 New York, NY 10022 275 Battery Street, 29th Floor San Francisco, CA 94111 APV Technology Partners U.S., L.P. Needham Capital Partners II, L.P. Brett William Wallace Attn: Peter G. Bodine Attn: John Michaelson c/o C.E. Unterberg, Towbin 535 Middlefield Road 445 Park Avenue, 3rd Floor 275 Battery Street, 29th Floor Menlo Park, Ca 94025 New York, NY 10022 San Francisco, CA 94111 APV Technology Partners II, L.P. Needham Capital Partners II, (Bermuda) C.E. Unterberg, Towbin 401K Profit Sharing Attn: Peter G. Bodine L.P. Plan FBO Alexander Bernstein: 535 Middlefield Road Attn: John Michaelson Attn: Brett Wallace Menlo Park, Ca 94025 445 Park Avenue, 3rd Floor 275 Battery Street, 29th Floor New York, NY 10022 San Francisco, CA 94111 Stanford University WAH Investment, L.L.C. Andrew Blum Attn: Carol Gilmer Attn: Eric Hansen 10 E. 50th Street 2770 Sand Hill Road 601 2nd Avenue South, Suite 3100 New York, NY 10022 Menlo Park, CA 94025 Minneapolis, MN 55402 G & H Partners Paine Webber, as Custodian for Andrew 155 Constitution Drive Blum IRA Menlo Park, California 94025 Attn: Ellen Dejewski Attn: Robert V. Gunderson, Jr. C/o C.E. Unterberg, Towbin Swiss Bank Tower 10 East 50th Street, 22nd Floor New York, NY 10022
26 SCHEDULE C Schedule of Management Holders CHRIS MACASKILL c/o Fatbrain.com, Inc. 2550 Walsh Ave., Santa Clara, CA 95051 KIM ORUMCHIAN c/o Fatbrain.com, Inc. 2550 Walsh Ave., Santa Clara, CA 95051 EX-4.3 4 LOCK-UP AGREEMENT 1 EXHIBIT 4.3 LOCK-UP AGREEMENT THIS LOCK-UP AGREEMENT is made as of October 17, 1999, by and among Fatbrain.com, Inc. (the "Company") and the undersigned directors, executive officers and stockholders (individually a "Party" and collectively the "Parties"). Capitalized terms not otherwise defined in this agreement have the meaning given them in the Registration Rights Agreement. RECITALS WHEREAS, in order to induce Vulcan Ventures Incorporated to enter into that certain Common Stock and Warrant Purchase Agreement of even date herewith (the "Purchase Agreement"), the Parties wish to enter into this Lock-Up Agreement (the "Agreement"). NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties hereto further agree as follows: 1. Lock-Up 1.1 Each Party hereby agrees that (i) from the date hereof until January 17, 2000 and, (ii) during the period of duration specified by the Company and an underwriter of common stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly (1) offer, pledge, sell, contract to sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly or (2) enter into any swap or similar agreement that transfers, in whole or in part, the economic risk of ownership of the Company's securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise; provided, however, that (i) such market stand-off time period shall not exceed ninety (90) days and (ii) and this stand-off provision shall not apply to gifts of the Company's securities to bona fide charitable organizations that are not affiliated with the Parties. 1.2 The restriction set forth in Section 1.1(i) above shall not apply however, with respect to sales of securities by Mr. Orumchian resulting in net proceeds to Mr. Orumchian not in excess of $150,000. 1.3 In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the securities of the Company held by each Party until the end of such period. 2. Miscellaneous 2.1 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 shares of the Company's 2 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. 2.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 2.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 2.5 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified, upon confirmed facsimile transmission to the party to be notified, or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 2.6 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. 2.7 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 the Company and each Party against which such amendment or waiver shall be binding. 2.8 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. 2.9 Aggregation of Stock. All securities of the Company 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. 2.10 Entire Agreement; Amendment; Waiver. This Agreement constitutes the full and entire understanding and agreement between the Parties with regard to the subjects hereof and thereof. 3 IN WITNESS WHEREOF, the parties have executed this Lock-Up Agreement as of the date first above written. COMPANY: FATBRAIN.COM, INC. By: ----------------------------------------------- Chris MacAskill, President Address: 2550 Walsh Ave., Santa Clara, CA 95051 4 By: ----------------------------------------------- Chris MacAskill, President and Chairman of the Board Address: 2550 Walsh Ave., Santa Clara, CA 95051 By: ----------------------------------------------- Kim Orumchian, Vice President of Engineering, Secretary and Director Address: 2550 Walsh Ave., Santa Clara, CA 95051 By: ----------------------------------------------- Donald P. Alvarez, Vice President of Finance and Chief Financial Officer Address: 2550 Walsh Ave., Santa Clara, CA 95051 By: ----------------------------------------------- Dennis F. Capolvilla, Vice President of Sales and Business Development Address: 2550 Walsh Ave., Santa Clara, CA 95051 By: ----------------------------------------------- Judy Kirkpatrick, Vice President and General Manager of Digital Publishing Address: 2550 Walsh Ave., Santa Clara, CA 95051 5 By: ----------------------------------------------- Sean M. Cumbie, Vice President of Logisitcs Address: 2550 Walsh Ave., Santa Clara, CA 95051 By: ----------------------------------------------- Peter G. Bodine, Director Address: APV Technology Partners, L.P. 535 Middlefield Road Menlo Park, CA 94025 By: ----------------------------------------------- Alan S. Fisher, Director Address: ONSALE, Inc. 1350 Willow Road Menlo Park, CA 94025 By: ----------------------------------------------- Tod H. Francis, Director Address: Trinity Ventures 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 By: ----------------------------------------------- David C. Schwab, Director Address: Sierra Ventures 3000 Sand Hill Road Building 4, Suite 210 Menlo Park, CA 94025 6 By: ----------------------------------------------- Peter C. Wendell, Director Address: Sierra Ventures 3000 Sand Hill Road Building 4, Suite 210 Menlo Park, CA 94025 VULCAN VENTURES INCORPORATED By: ----------------------------------------------- Name: ----------------------------------------------- Title: ----------------------------------------------- Address: 110 110th Avenue N.E. Suite 550 Bellevue, WA 98004 SIERRA VENTURES V, LP By: ----------------------------------------------- Its: ------------------------------------ By: ----------------------------------------------- Its: ------------------------------------ Address: 3000 Sand Hill Road Building 4, Suite 210 Menlo Park, CA 94025 7 TRINITY VENTURES V, LP By: ----------------------------------------------- Its: ------------------------------------ By: ----------------------------------------------- Its: ------------------------------------ Address: 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 HIGHLAND CAPITAL PARTNERS IV LIMITED PARTNERSHIP By: Highland Management Partners IV LLC Its: ------------------------------------ By: ----------------------------------------------- Managing Member Address: Two International Place Boston, MA 02110 HIGHLAND ENTREPRENEUR'S FUND IV LIMITED PARTNERSHIP By: Highland Entrepreneurs' Fund IV LLC Its: ------------------------------------ By: ----------------------------------------------- Managing Member Address: Two International Place Boston, MA 02110 EX-4.4 5 FORM OF WARRANT 1 EXHIBIT 4.4 THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. WARRANT TO PURCHASE COMMON STOCK OF FATBRAIN.COM, INC. VOID AFTER ___________, 2004 This Warrant is issued to _________________________, or its registered assigns ("Holder") by Fatbrain.com, Inc., a Delaware corporation (the "Company"), on ________________, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant to the terms of that certain Common Stock and Warrant Purchase Agreement dated as of the date hereof (the "Purchase Agreement") in connection with the Company's issuance to the Holder of shares of the Company's Common Stock (the "Common Shares"). 1. Purchase Shares. Subject to the terms and conditions hereinafter set forth and set forth in the Purchase Agreement, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company up to __________________ (_________) fully paid and nonassessable shares of Common Stock of the Company, as constituted on the Warrant Issue Date (the "Common Stock"). The number of shares of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be subject to adjustment pursuant to Section 6 and Section 9 hereof. 2. Exercise Price. The purchase price for the Shares shall be $26.09, as adjusted from time to time pursuant to Section 9 hereof (the "Exercise Price"). 3. Exercise Period. This Warrant shall be exercisable, in whole or in part, during the term commencing on the Warrant Issue Date and ending at 5:00 p.m. on _____________, 2004. 2 4. Method of Exercise. While this Warrant remains outstanding and exercisable in accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby. Such exercise shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form of Notice of Election attached hereto, to the Secretary of the Company at its principal offices; and (b) the payment to the Company of an amount equal to the aggregate Exercise Price for the number of Shares being purchased. 5. Net Exercise. In lieu of exercising this Warrant pursuant to Section 4, the Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Common Stock equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the holder hereof a number of shares of Common Stock computed using the following formula: Y (A - B) --------- X = A Where: X = The number of shares of Common Stock to be issued to the Holder pursuant to this net exercise; Y = The number of Shares in respect of which the net issue election is made; A = The fair market value of one share of the Common Stock at the time the net issue election is made; B = The Exercise Price (as adjusted to the date of the net issuance). For purposes of this Section 5, the fair market value of one share of Common Stock as of a particular date shall be determined as follows: the value shall be deemed to be the average of the closing prices of the securities on the Nasdaq National Market over the thirty (30) day period ending three (3) days prior to the net exercise election. 6. Assumption of Warrant. If at any time, while this Warrant, or any portion thereof, is outstanding and unexpired there shall be (i) an acquisition of the Company by another entity by means of a merger, consolidation, or other transaction or series of related transactions resulting in the exchange of the outstanding shares of the Company's Capital Stock such that stockholders of the Company prior to such transaction own, directly or indirectly, less than 50% of the voting power of the surviving entity, or (ii) a sale or transfer of all or substantially all of the Company's assets to any other person, then, as a part of such acquisition, sale or transfer, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such acquisition, sale or transfer which a holder of the shares 2 3 deliverable upon exercise of this Warrant would have been entitled to receive in such acquisition, sale or transfer if this Warrant had been exercised immediately before such acquisition, sale or transfer, all subject to further adjustment as provided in this Section 6; and, in any such case, appropriate adjustment (as determined by the Company's Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the number of Warrant Shares of the Holder is entitled to purchase) shall thereafter by applicable, as nearly as possible, in relation to any shares of Common Stock or other securities or other property thereafter deliverable upon the exercise of this Warrant. 7. Certificates for Shares. Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter (with appropriate restrictive legends, if applicable), and in any event within thirty (30) days of the delivery of the subscription notice. 8. Issuance of Shares. The Company covenants that the Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issuance thereof. The Company further covenants and agrees that, during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under Federal or State securities laws with respect to such exercise, except as provided in the Registration Rights Agreement (as defined in the Purchase Agreement). 9. Adjustment of Exercise Price and Number of Shares. The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows: (a) Subdivisions, Combinations and Other Issuances. If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by split-up or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock or Common Stock as a dividend with respect to any shares of its Common Stock, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 9(a) shall become effective at the close of business on the date the subdivision or combination becomes 3 4 effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend. (b) Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or change in the Common Stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 9(a) above), then, as a condition of such reclassification, reorganization, or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Common Stock as were purchasable by the Holder immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same. (c) Certain Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which other provisions of this Section 9 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Exercise Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring the adjustment. (d) Notice of Adjustment. When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Warrant Price, the Company shall promptly notify the holder of such event and of the number of shares of Common Stock or other securities or property thereafter purchasable upon exercise of this Warrant. 10. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect. 11. No Stockholder Rights. Prior to exercise of this Warrant, the Holder shall not be entitled to any rights of a stockholder with respect to the Shares, including (without limitation) the right to vote such Shares, receive dividends or other distributions thereon, exercise preemptive rights or be notified of stockholder meetings, and such holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. 4 5 However, nothing in this Section 11 shall limit the right of the Holder to be provided the Notices required under this Warrant or the Purchase Agreement. 12. Transfers of Warrant. Subject to compliance with applicable federal and state securities laws, this Warrant and all rights hereunder are transferable in whole or in part by the Holder to any person or entity upon written notice to the Company. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Company at its principal offices, and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the holders one or more appropriate new warrants. 13. Successors and Assigns. The terms and provisions of this Warrant and the Purchase Agreement shall inure to the benefit of, and be binding upon, the Company and the Holders hereof and their respective successors and assigns. 14. Amendments and Waivers. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Holder. 15. Lost Warrants. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant. 16. Notices. All notices required under this Warrant and shall be deemed to have been given or made for all purposes (i) upon personal delivery, (ii) upon confirmation receipt that the communication was successfully sent to the applicable number if sent by facsimile; (iii) one day after being sent, when sent by professional overnight courier service, or (iv) five days after posting when sent by registered or certified mail. Notices to the Company shall be sent to the principal office of the Company (or at such other place as the Company shall notify the Holder hereof in writing). Notices to the Holder shall be sent to the address of the Holder on the books of the Company (or at such other place as the Holder shall notify the Company hereof in writing). 17. Attorneys' Fees. If any action of law or equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to its reasonable attorneys' fees, costs and disbursements in addition to any other relief to which it may be entitled. 18. Captions. The section and subsection headings of this Warrant are inserted for convenience only and shall not constitute a part of this Warrant in construing or interpreting any provision hereof. 5 6 19. Governing Law. This Warrant shall be governed by the laws of the State of California as applied to agreements among California residents made and to be performed entirely within the State of California. [remainder of page intentionally left blank] 6 7 IN WITNESS WHEREOF, Fatbrain.com, Inc. caused this Warrant to be executed by an officer thereunto duly authorized. FATBRAIN.COM, INC. By: ------------------------------------- Chris MacAskill President and Chief Executive Officer 8 NOTICE OF EXERCISE To: FATBRAIN.COM, INC. The undersigned hereby elects to: ________ (a) Purchase _________________ shares of Common Stock of Fatbrain.com, Inc. pursuant to the terms of the attached Warrant and payment of the Exercise Price per share required under such Warrant accompanies this notice; OR ________ (b) Exercise the attached Warrant for ________ of the shares purchasable under the Warrant pursuant to the net exercise provisions of Section 5 of such Warrant. The undersigned hereby represents and warrants that the undersigned is acquiring such shares for its own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof. WARRANTHOLDER: ----------------------------------------- By: Address: ----------------------------------------- ----------------------------------------- Date: ----------------------- Name in which shares should be registered: - ------------------------------------------ EX-99.1 6 PRESS RELEASE DATED OCTOBER 18, 1999. 1 EXHIBIT 99.1 VULCAN VENTURES, INC. TO INVEST $20 MILLION IN FATBRAIN.COM, INC. PAUL ALLEN'S INVESTMENT ORGANIZATION ALSO GRANTED BOARD REPRESENTATION SANTA CLARA, CALIF. - OCTOBER 18, 1999 - Fatbrain.com, Inc. (Nasdaq: FATB), the Internet's most comprehensive bookstore for professionals, today announced that Vulcan Ventures, Inc., the investment organization of Paul G. Allen, has signed a definitive agreement to invest an additional $20 million in Fatbrain.com to help fuel its e-commerce initiatives, including eMatter, the Internet's first secure digital publishing platform. Under the terms of the agreement, Vulcan Ventures will purchase unregistered shares of common stock in Fatbrain.com for 110% of the five day average closing price of Fatbrain.com's shares through last Friday and will purchase warrants to make future investments in the Company at 125% of the initial purchase price. In addition, Diane Daggatt, New Media Analyst at Vulcan Ventures, will join Fatbrain.com's Board of Directors. The financing agreement also allows for up to $10 million of additional investment. "We believe eMatter will be important to publishing on the Internet, by creating a new platform for delivery of certain types of content," said William Savoy, President of Vulcan Ventures. Commenting on the new round of financing, Chris MacAskill, President and Chief Executive Officer of Fatbrain.com, said, "We view the increased support of Vulcan as a powerful endorsement of our success in providing innovative e-commerce solutions. We are thrilled that they share our vision in taking Fatbrain.com's e-commerce strategies to the next level as we deliver the first comprehensive marketplace for secure digital publishing." In a separate announcement today, Fatbrain.com debuted its highly anticipated eMatter initiative, introducing a wide variety of digital content from notable authors and publishers. eMatter is the first-ever secure digital publishing solution that allows people to publish and sell their works online, earning royalties of at least 50 percent on every copy sold. eMatter combines new secure digital rights technologies with Fatbrain.com's established community of customers to provide the first-ever global distribution channel for the exchange of works of all kinds. These include books, magazines, articles and specialty documents targeted to limited audiences, articles that are longer than a magazine but shorter than a book and out-of-print materials. Original eMatter content available today at http://www.fatbrain.com covers a broad range of professional topics including technology, business, finance, medicine and science, plus a variety of creative subjects such as fiction, poetry, self-help and how-to guides. ABOUT FATBRAIN.COM Fatbrain.com, the Internet's most comprehensive professional bookstore, is the first e-commerce provider to deliver secure digital publishing. Recently named the number two fastest-growing public company in Silicon Valley, Fatbrain.com offers a world-class selection of books, training materials and documentation for professionals in business and finance, technology and other industries. Through its corporate intranet bookstore program, Fatbrain.com is accessible from the desktops of more than 1.3 million employees at customer sites. Fatbrain.com offers discounts of up to 40 percent, and all in-stock orders placed by 4 PM PST ship the same business day. Visit Fatbrain.com on the Web at http://www.fatbrain.com. # # # Fatbrain.com and eMatter are trademarks of Fatbrain.com, Inc. All company and product names may be trademarks of the respective companies with which they are associated. Media Contacts: For Investor Relations, contact Paul Lesinski Morgen-Walke Associates A&R Partners Alex Wellins, Jennifer Jarman 650/363-0982 415/296-7383 plesinski@arpartners.com awellins@mwa-sf.com EX-99.2 7 PRESS RELEASE DATED NOVEMBER 1, 1999 1 FOR IMMEDIATE RELEASE HIGHLAND CAPITAL PARTNERS TO CO-INVEST $10 MILLION IN FATBRAIN.COM WITH VULCAN VENTURES Highland's Keith Benjamin to Join Fatbrain.com Board of Directors SANTA CLARA, CALIF. AND BOSTON, MA. -- NOVEMBER 1, 1999 -- Fatbrain.com, Inc. (Nasdaq: FATB), the Internet's most comprehensive bookstore for professionals, and Highland Capital Partners today announced that they have signed a definitive agreement for Highland to invest $10 million in Fatbrain.com as part of the previously announced round of financing by Vulcan Ventures, the investment organization of Paul G. Allen. The funding will be used to help fuel Fatbrain.com's e-commerce initiatives, including eMatter, the Internet's first secure digital publishing platform. Under the terms of the agreement, Highland will purchase unregistered shares of Fatbrain.com common stock for 110% of the five day average closing price of Fatbrain.com's shares through Friday, October 15, 1999. Highland will purchase warrants to make future investments in the Company at 125% of the initial purchase price. In addition, Keith Benjamin, well-known Internet analyst who recently joined Highland (see Highland press release dated 10/04/99) will become a member of Fatbrain.com's Board of Directors, increasing the total number of board members to eight. Fatbrain.com represents Benjamin's first investment since joining Highland. "We believe eMatter will revolutionize publishing, creating a compelling platform for literary works of all types. Ideal for mid-length documents, eMatter may prove very attractive in a world where we want more than pictures but don't have time to read for extended periods on one subject," said Keith Benjamin, General Partner at Highland Capital Partners. "Fatbrain.com could be the next eBay or MP3 of publishing, as it provides a new platform for the secure exchange of intellectual property." - more - 2 HIGHLAND PUMPS $10M INTO FATBRAIN.COM; BENJAMIN JOINS BOARD PAGE 2 WHY EMATTER MATTERS eMatter is the first-ever secure solution that allows authors and publishers to publish and sell their works online, earning royalties of at least 50 percent on every copy sold. The eMatter program provides a new global distribution channel for works of all kinds, including books, magazines and articles. In addition, eMatter is ideal for specialty documents, which may include articles that are longer than a magazine but shorter than a book and out-of-print materials. eMatter combines new secure digital rights technologies with Fatbrain.com's established community of customers to provide a rich channel for the exchange of timely, valuable information between writers and readers everywhere. eMatter content currently covers a broad range of professional topics including technology, business, finance, medicine and science, plus a variety of creative subjects such as fiction, poetry, self-help and how-to guides. BOARD MEMBERSHIP This is Keith Benjamin's first board seat since joining Highland Capital Partners. "I'm excited to be working with Chris MacAskill and his team. eMatter lends itself to viral marketing, enabling a very attractive business model. We do not believe this incremental value has been reflected in Fatbrain's stock." Chris MacAskill, President and Chief Executive Officer of Fatbrain.com, commented, "We are delighted that Highland Capital has chosen to join Vulcan Ventures in supporting our entrance into the exciting new digital publishing arena. This new partnership gives us the privilege of welcoming Internet visionary Keith Benjamin to our board, and we look forward to the contributions of both Keith and Diane Daggatt of Vulcan Ventures as integral members of our dynamic team." ABOUT HIGHLAND CAPITAL PARTNERS Founded in 1988, Highland Capital Partners is a leading venture capital firm focused on building companies in the Internet/E-commerce, communications, information technology and medical markets. With over $500 million under management, Highland has worked with such firms as ANDA Networks, AccessLan, Ask Jeeves, Avid Technology, Be Free, Bolt Media, CheckFree, eToys, Gamesville.com, LivePerson, Lycos, Mainspring, MapQuest, Medscape, NextCard, RoweCom, Send.com, Sybase, WebLine Communications and Wit Capital. For additional information, visit the company's web site at www.hcp.com or call 1-617-531-1500. - more - 3 HIGHLAND PUMPS $10M INTO FATBRAIN.COM; BENJAMIN JOINS BOARD PAGE 3 ABOUT FATBRAIN.COM Fatbrain.com, the Internet's most comprehensive bookstore for professionals, is the first e-commerce provider to deliver secure digital publishing through its eMatter initiative. Recently named the number two fastest-growing public company in Silicon Valley, Fatbrain.com offers a world-class selection of books, training materials and documentation for professionals in business and finance, technology and other industries. Through its corporate Intranet bookstore program, Fatbrain.com is accessible from the desktops of more than 1.3 million employees at customer sites. Fatbrain.com offers discounts of up to 40 percent, and all in-stock orders placed by 4 PM PST ship the same business day. Visit Fatbrain.com on the Web at http://www.fatbrain.com. ### This announcement may contain forward-looking statements that involve risks and uncertainties including, among others, Fatbrain.com's limited operating history, anticipated losses, the unpredictability of its future revenues, competition, risks associated with system development and operation risks, management of potential growth, and risks of new business areas, international expansion, business combinations, and strategic alliances. Actual results could differ materially from those discussed. More information about factors that potentially could affect Fatbrain.com's financial results is included in the Company's filings with the Securities and Exchange Commission, including its Registration Statement filed under its original name, Computer Literacy, Inc., on Form SB-2 on November 19, 1998, as amended. All forward looking statements are based on information available to the Company on the date hereof, and the Company assumes no obligation to update such statements. Fatbrain.com is a trademark of Fatbrain.com, Inc. All company and product names may be trademarks of the respective companies with which they are associated. For more information, contact: Fatbrain.com Morgen-Walke Associates Don Alvarez Alex Wellins, Jennifer Jarman Chief Financial Officer (415) 296-7383 (408) 845-0151 Financial Press: dona@fatbrain.com Alicia Nieva-Woodgate (415) 296-7383 Highland Capital Partners The Horn Group, Inc. Michael Gaiss Carolyn Wilkins Senior Vice President (781) 794-9933 ext. 236 (617) 531-1517 cwilkins@horngroup.com mgaiss@hcp.com -----END PRIVACY-ENHANCED MESSAGE-----