EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 6 OF THIS WARRANT
Warrant No. 1 Number of Shares: As set forth in Section 1
Date of Issuance: September 9, 2002
Engage, Inc.
Common Stock Purchase Warrant
(Void after September 9, 2009)
Engage, Inc., a Delaware corporation with a principal office located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), for value
received, hereby certifies that CMGI, Inc., a Delaware corporation, or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before the earlier of: (i) the moment
immediately prior to the consummation of a Company Sale (as defined below) or
(ii) September 9, 2009 at not later than 5:00 p.m. (Boston, Massachusetts time)
the number of shares of Common Stock, $.01 par value per share, of the Company
(the "Common Stock"), determined in accordance with Section 1 below, at a
purchase price of $0.048 per share. The shares purchasable upon exercise of this
Warrant, and the purchase price per share, each as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter referred to as the
"Warrant Shares" and the "Purchase Price," respectively.
A "Company Sale" shall mean (i) any merger or consolidation of the Company with
or into another entity as a result of which all or substantially all of the
Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (ii) any exchange of all or substantially all of
the Common Stock for cash, securities or other property pursuant to a share
exchange transaction; provided, however, a Company Sale shall not be deemed to
have occurred as a result of a merger, consolidation, exchange or other
transaction (a) for the purposes of changing the Company's jurisdiction of
incorporation, (b) with any entity controlling, controlled by or under common
control with the Company, or (c) if, immediately thereafter, all or
substantially all of the beneficial owners of the capital stock of the Company
immediately prior thereto beneficially own, directly or indirectly, at least a
majority of the then-outstanding shares of capital stock of the resulting or
acquiring entity (which shall include, without limitation, an entity which as a
result of such transaction owns the Company or substantially all of the
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Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership of the capital stock of
the Company immediately prior to such transaction. The Company shall notify the
Registered Holder, in writing of any proposed Company Sale at least 10 days
prior to the consummation of such Company Sale.
1. NUMBER OF WARRANT SHARES. This Warrant shall be exercisable, in
accordance with its terms, for the number of Warrant Shares equal to the product
of 9.9% multiplied by the Number of Outstanding Shares of Common Stock (as
defined below). For purposes of this Warrant, the "Number of Outstanding Shares
of Common Stock" shall mean (i) the number of issued and outstanding shares of
Common Stock plus (ii) the number of shares of Common Stock issuable as of the
date of exercise of this Warrant, upon the exercise or conversion of any
outstanding securities or other rights which are exercisable for or convertible
into Common Stock (other than shares issuable (a) upon exercise of this Warrant
or (b) to employees or directors of the Company pursuant to a plan adopted by
the Board of Directors of the Company) as of the earlier of: (A) the date of the
first exercise of this Warrant, or (B) the moment immediately prior to the
consummation of a Company Sale (the earlier of such dates, the "Measurement
Date").
2. REGISTRATION RIGHTS. The Warrant Shares possess certain "piggyback"
registration rights pursuant to that certain Amended and Restated Investor
Rights Agreement, dated as of September 9, 2002, by and between the Company and
CMGI, Inc.
3. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form appended hereto
as EXHIBIT I duly executed by such Registered Holder or by such Registered
Holder's duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
(b) The Registered Holder may, at its option, elect to pay some or
all of the Purchase Price payable upon an exercise of this Warrant by canceling
a portion of this Warrant exercisable for such number of Warrant Shares as is
determined by dividing (i) the total Purchase Price payable in respect of the
number of Warrant Shares being purchased upon such exercise by (ii) the excess
of the Fair Market Value per share of Common Stock as of the effective date of
exercise, as determined pursuant to subsection 3(c) below (the "Exercise Date")
over the Purchase Price per share. If the Registered Holder wishes to exercise
this Warrant pursuant to this method of payment with respect to the maximum
number of Warrant Shares purchasable pursuant to this method, then the number of
Warrant Shares so purchasable shall be equal to the total number of Warrant
Shares, minus the product obtained by multiplying (x) the total number of
Warrant Shares by (y) a fraction, the numerator of which shall be the Purchase
Price per share
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and the denominator of which shall be the Fair Market Value per share of Common
Stock as of the Exercise Date.
(c) For purposes of this Warrant, "Fair Market Value" shall mean, on
any day:
(i) the closing price of the Common Stock (or any other security
for which a closing price must be determined) on a national securities exchange
or as quoted on the Nasdaq National Market or the Nasdaq SmallCap Market on such
day, as reported by the Wall Street Journal; or
(ii) if the Common Stock (or any such other security) is quoted
on the Nasdaq National Market or the Nasdaq SmallCap Market but no sale occurs
on such day, the average of the closing bid and asked prices of the Common Stock
(or any such other security) on the Nasdaq National Market or the Nasdaq
SmallCap Market on such day, as reported by the Wall Street Journal; or
(iii) if the Common Stock (or any such other security) is not so
listed or quoted, the average of the closing bid and asked prices of the Common
Stock (or any such other security) in the U.S. over-the-counter market; or
(iv) if no such trading market is readily available, the fair
market value of the Common Stock (or any such other security) as determined by
the Company, in accordance with the following provisions:
(A) Subject to paragraph (c)(iv)(B) below, a determination
by the Company of Fair Market Value shall promptly be made in good faith by the
Company. Upon each determination of the fair market value of the Common Stock by
the Company hereunder, the Company shall promptly give notice thereof to the
Registered Holder, setting forth in reasonable detail the calculation of such
fair market value and the method and basis of determination thereof (the
"Company Determination").
(B) If the Registered Holder shall disagree with the
Company Determination and shall by notice to the Company given within 7 days
after the Company's notice of the Company Determination (an "Appraisal Notice")
elect to dispute the Company Determination, such dispute shall be resolved as
set forth in paragraph (c)(iv)(C) below.
(C) The Company shall within 7 days after an Appraisal
Notice shall have been given pursuant to paragraph (c)(iv)(B) above engage an
investment bank or other qualified appraisal firm reasonably acceptable to the
Registered Holder (the "Appraiser") to make an independent determination of the
fair market value of the Common Stock (the "Appraiser Determination"). The
Appraiser Determination shall be final and binding on the Company and the
Registered Holder. If the Company Determination and the Appraiser
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Determination differ by an amount of 15% or less of the Company Determination,
then the costs of conducting the appraisal shall be borne equally by the Company
and the Registered Holder; if the Company Determination is greater than the
Appraiser Determination by more than 15% of the Company Determination, then the
costs of conducting the appraisal shall be borne entirely by the Registered
Holder; and if the Appraiser Determination is greater than the Company
Determination by more than 15% of the Company Determination, then the costs of
conducting the appraisal shall be borne entirely by the Company; provided that
in each case costs separately incurred by the Company and the Registered Holder
shall be separately borne by them.
(d) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
3(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in subsection 3(e) below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
(e) As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full
Warrant Shares to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 5
hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares determined in
accordance with Section 1 minus the sum of (a) the number of such shares
purchased by the Registered Holder upon such exercise plus (b) the number of
Warrant Shares (if any) covered by the portion of this Warrant cancelled in
payment of the Purchase Price payable upon such exercise pursuant to subsection
3(b) above.
4. ADJUSTMENTS.
(a) GENERAL. The Purchase Price shall be subject to adjustment from
time to time pursuant to the terms of this Section 4. The number of Warrant
Shares shall be subject to adjustment from time to time pursuant to the terms of
this Section 4.
(b) RECAPITALIZATIONS. If outstanding shares of the Company's Common
Stock shall be subdivided into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision
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or at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or immediately after the record date of such
dividend be proportionately reduced and if such event occurs after the
Measurement Date the number of Warrant Shares issuable upon exercise of the
Warrant immediately prior to such subdivision or the record date of such
dividend shall, simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend, be proportionately
increased. If outstanding shares of Common Stock shall be combined into a
smaller number of shares, the Purchase Price in effect immediately prior to such
combination shall, simultaneously with the effectiveness of such combination, be
proportionately increased, and, if such event occurs after the Measurement Date,
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately reduced.
(c) MERGERS, ETC. If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 4(b) above), or
any consolidation or merger of the Company with or into another corporation
(other than a Company Sale), then, as part of any such reorganization,
reclassification, consolidation or merger, as the case may be, lawful provision
shall be made so that the Registered Holder of this Warrant shall have the right
thereafter to receive upon the exercise hereof the kind and amount of shares of
stock or other securities or property which such Registered Holder would have
been entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation or merger as the case may be, such Registered
Holder had held the number of shares of Common Stock which were then purchasable
upon the exercise of this Warrant. In any such case, appropriate adjustment (as
reasonably determined in good faith by the Board of Directors of the Company)
shall be made in the application of the provisions set forth herein with respect
to the rights and interests thereafter of the Registered Holder of this Warrant,
such that the provisions set forth in this Section 4 (including provisions with
respect to adjustment of the Purchase Price) shall thereafter be applicable, as
nearly as is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(d) CERTIFICATE OF ADJUSTMENT. When any adjustment is required to be
made pursuant to this Section 4, the Company shall promptly mail to the
Registered Holder, a certificate setting forth the Purchase Price and, if
applicable, the number of Warrant Shares issuable upon exercise of this Warrant
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such certificate shall also set forth the kind and amount of
stock or other securities or property into which this Warrant shall be
exercisable following such adjustment.
5. FRACTIONAL SHARES. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock, as determined pursuant to subsection 3(c) above.
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6. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such securities are registered
under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
7. NO IMPAIRMENT. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
8. [INTENTIONALLY OMITTED]
9. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another
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corporation (other than a consolidation or merger in which the Company is the
surviving entity), or any transfer of all or substantially all of the assets of
the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least ten (10) days prior to the
record date or effective date for the event specified in such notice.
10. RESERVATION OF STOCK. The Company will at all times use reasonable
efforts to reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, such number of Warrant Shares and other stock,
securities and property, as from time to time shall be issuable upon the
exercise of this Warrant; provided, however, that if at any time the Company
shall not have sufficient shares so available, the Company shall promptly take
corrective action to remedy such shortfall.
11. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder
of any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 6
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
12. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
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13. TRANSFERS, ETC.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) Subject to the provisions of Section 6 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, upon surrender of
this Warrant with a properly executed assignment (in the form of EXHIBIT II
hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
14. MAILING OF NOTICES, ETC. All notices and other communications from the
Company to the Registered Holder of this Warrant shall be mailed by first-class
certified or registered mail, postage prepaid, to the address furnished to the
Company in writing by the last Registered Holder of this Warrant who shall have
furnished an address to the Company in writing. All notices and other
communications from the Registered Holder of this Warrant or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth in the preamble hereto, it shall give prompt
written notice to the Registered Holder of this Warrant and thereafter all
references in this Warrant to the location of its principal office at the
particular time shall be as so specified in such notice.
15. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
16. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
17. HEADINGS. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
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18. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Engage, Inc.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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[Corporate Seal] Title: President and CEO
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ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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EXHIBIT I
PURCHASE FORM
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check
applicable box or boxes):
[ ] $______ in lawful money of the United States; and/or
[ ] The cancellation of such portion of the attached Warrant as is
exercisable for a total of _____ Warrant Shares (using a Fair Market
Value of $_____ per share for purposes of this calculation).
Signature:_____________________
Address:________________________
________________________
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant (No. ____) with respect to the number of shares of Common Stock
covered thereby set forth below, unto:
Name of Assignee Address Shares
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Dated:_____________________ Signature:_________________________
Dated:_____________________ Witness:___________________________
