NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT is made as of March 17, 1999 by
and between ▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation (the "COMPANY"), and the
persons or entities named on the signature page attached hereto (individually, a
"PURCHASER" and collectively, the "PURCHASERS").
The Parties hereby agree as follows:
1. AMOUNT AND TERMS OF THE LOAN; PURCHASE AND SALE OF THE WARRANTS
1.1 THE LOAN. Subject to the terms of this Agreement, the Company
shall borrow from the Purchaser and the Purchaser shall lend to the Company up
to the amount set forth opposite the Purchaser's name on the attached Schedule
of Purchasers (each, a "LOAN AMOUNT") pursuant to convertible promissory notes
in the form attached hereto as EXHIBIT A-1 in connection with Purchasers who are
GSCP Stockholders (as defined in that certain Stockholders' Agreement, dated as
of June 2, 1997, as amended, by and between the Company and the stockholders
named therein) and in the form attached hereto as EXHIBIT A-2 in connection with
all other Purchasers (collectively the "NOTES"). The Loan Amounts are
hereinafter referred to collectively as the "LOAN."
1.2 ISSUANCE OF WARRANTS. The Company will issue to the Purchaser,
severally and not jointly, warrants in the form attached hereto as EXHIBIT B
(the "WARRANTS") to purchase up to that number of shares of the Company's common
stock, par value $0.01 per share (the "COMMON STOCK" as set forth opposite the
Purchaser's name on the Schedule of Purchasers (each, a "WARRANT AMOUNT") at a
per share exercise price of $10.00.
1.3 ISSUANCE OF ADDITIONAL WARRANTS. In the event the Loan remains
outstanding as of March 17, 2000, effective on such date, the Company will issue
to the Purchaser, severally and not jointly, warrants that are identical to the
Warrants except that the issuance date of such additional warrants (the
"SECONDARY WARRANTS") shall be March 17, 2000, and the two-year term of such
Secondary Warrants shall commence as of March 17, 2000.
2. THE CLOSING
2.1 CLOSING DATES. The closing as to the purchase and sale of the
Notes and the Warrants (the "CLOSING") shall be held no later than March 17,
1999, at the offices of ▇▇▇▇▇.▇▇▇ Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other time as the Company and the Purchasers of a
majority of the Notes shall agree (the "CLOSING DATE").
2.2 DELIVERY. At the Closing (i) the Purchaser will deliver to the
Company a check or wire transfer of funds in the amount of such Purchaser's Loan
Amount; and (ii) the Company shall deliver to the Purchaser a Note representing
such Purchaser's Loan Amount, and an executed Warrant.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
3.1 CORPORATE POWER. The Company has all requisite corporate power
to execute and deliver this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
3.2 AUTHORIZATION. All corporate action on the part of the Company,
its directors and its stockholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the performance of
the Company's obligations hereunder, including the issuance and delivery of the
Notes and Warrants and the reservation of the equity securities issuable upon
conversion of the Notes or exercise of the Warrants has been taken or will be
taken prior to the Closing. As the exact terms of the New Series A Preferred or
Next Round Preferred (each as defined in the Notes), as applicable, are not
currently fixed, no shares of such series have been authorized or reserved for
issuance upon conversion of the Notes. Upon authorization of the New Series A
Preferred or Next Round Preferred, as applicable, such reservations will be
made. This Agreement, the Notes and the Warrants, when executed and delivered
by the Company, shall constitute valid and binding obligations of the Company
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency, the relief of debtors and, with
respect to rights to indemnity, subject to federal and state securities laws.
The shares of Common Stock, New Series A Preferred or Next Round Preferred, as
applicable, or other equity securities of the Company, when issued in compliance
with the provisions of this Agreement, the Notes or the Warrants, will be
validly issued, fully paid and non-assessable and free of any liens or
encumbrances.
3.3 GOVERNMENTAL CONSENTS. All consents, approvals, orders or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement, the
offer, sale or issuance of the Notes, the Warrants and the equity securities
issuable upon exercise of the Warrants, conversion of the Note or the
consummation of any other transaction contemplated hereby shall have been
obtained and will be effective at the Closing, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
3.4 OFFERING. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, issue and
sale of the Notes and Warrants are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"1933 ACT"), and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 PURCHASE FOR OWN ACCOUNT. The Purchaser represents that it is
acquiring the Notes, the equity securities issuable upon conversion of the
Notes, the Warrants and the equity securities issuable upon exercise of the
Warrants (collectively, the "SECURITIES") solely for its
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own account and beneficial interest for investment and not for sale or with a
view to distribution of the Securities or any part thereof, has no present
intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the same, and does
not presently have reason to anticipate a change in such intention.
4.2 INFORMATION AND SOPHISTICATION. The Purchaser acknowledges that
it has received all the information it has requested from the Company and
considers necessary or appropriate for deciding whether to acquire the Notes and
Warrants. The Purchaser 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 Notes and Warrants and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser. The Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
4.3 ABILITY TO BEAR ECONOMIC RISK. The Purchaser acknowledges that
investment in the Notes and Warrants involves a high degree of risk, and
represents that it is able, without materially impairing its financial
condition, to hold the Securities for an indefinite period of time and to suffer
a complete loss of its investment.
4.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, the Purchaser further agrees not to make
any disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a registration statement under
the 1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) The Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the 1933 Act.
(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 gift, will or intestate succession to any spouse or lineal
descendants or ancestors (or to a custodian or trustee for the benefit of the
Purchaser or his or her spouse, lineal descendants or ancestors), if all
transferees agree in writing to be subject to the terms hereof to the same
extent as if they were Purchasers hereunder.
4.5 ACCREDITED INVESTOR. The Purchaser is an "accredited investor"
as such term is defined in Rule 501 under the 1933 Act.
5. MISCELLANEOUS
5.1 BINDING AGREEMENT. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any
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rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Illinois as applied to agreements among Illinois
residents, made and to be performed entirely within the State of Illinois.
5.3 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.
5.4 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.
5.5 NOTICES. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the Company at ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief Financial Officer, or
to the Purchaser at its address shown on the signature page, or at such other
address as such party may designate by ten (10) days advance written notice to
the other party.
5.6 MODIFICATION; WAIVER. No modification or waiver of any provision
of this Agreement, the Notes or the Warrants or consent to departure therefrom
shall be effective unless in writing and approved by the Company and a majority
in interest of the Notes (determined by reference to the principal amount of the
Notes outstanding).
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY
▇▇▇▇▇.▇▇▇ INC.
By:
Name: ___________________________
Title: _________________________
PURCHASER:
_________________________
Address:
Tax ID:
[Signature Page to Note and Warrant Purchase Agreement]
5
Exhibit A-1
to
Note and Warrant Purchase Agreement
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT SUCH
REGISTRATION IS NOT REQUIRED.
CONVERTIBLE PROMISSORY NOTE
[FOR USE WITH ▇▇▇▇▇▇▇ INVESTORS]
$_________ March __, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, ▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation
("BORROWER"), hereby unconditionally promises to pay to _____________
("LENDER"), in lawful money of the United States of America and in
immediately available funds, the principal sum of $_______ (the "LOAN")
together with accrued and unpaid interest thereon, payable on the dates and
in the manner set forth below.
This Convertible Promissory Note (the "NOTE") is non-negotiable and is
executed and delivered in connection with that certain Note and Warrant
Purchase Agreement dated as of March __, 1999, by and between Borrower and
Lender (as the same may from time to time be amended, modified or
supplemented, the "PURCHASE AGREEMENT"). All terms defined in the Purchase
Agreement shall have the same definitions when used herein, unless otherwise
defined herein. In the event of any conflict between the terms of this Note
and the terms of the Purchase Agreement, the terms of the Purchase Agreement
shall control.
1. PRINCIPAL REPAYMENT. The outstanding principal amount of the
Loan shall be payable on March __, 2001, subject to the conversion of the
Note into certain of Borrower's capital stock as further described in Section
5 below. Except with the prior consent of the Lender or as otherwise provided
herein, Borrower may not prepay this Note.
2. INTEREST RATE. Borrower further promises to pay interest on the
sum of the unpaid principal balance of the Loan outstanding on each day, from
the date of this Note until all such principal amounts shall have been repaid in
full or converted into capital stock of the Borrower, which interest shall be
payable at the rate of eight percent (8%) per annum or the maximum rate
permissible by law (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans), whichever is less. Interest shall be payable at maturity and shall be
calculated on the basis of a 365-day year for the actual number of days elapsed.
3. PLACE OF PAYMENT. All amounts payable hereunder shall be payable
to Lender at the address it specifies to Borrower in writing.
4. APPLICATION OF PAYMENTS. Payment on this Note shall be applied
first to accrued interest, and thereafter to the outstanding principal balance
hereof.
5. CONVERSION.
(a) CONVERSION BY THE BORROWER.
(1) This Note shall automatically be converted upon the next
closing of a sale of a series of Preferred Stock (the "NEXT ROUND PREFERRED") in
which the gross proceeds to the Borrower are at least $5,000,000 (a "QUALIFIED
FINANCING"), not including the conversion of the aggregate amount due under the
"Notes" (as defined below) and any additional funds tendered in connection
therewith by investors of the Company holding notes or shares of the Company
immediately prior to the closing of such sale of Preferred Stock (the "BRIDGE
FINANCING"), into fully paid and non-assessable shares of a new series of Series
A Preferred Stock (the "NEW SERIES A PREFERRED") having an "Issue Price" (as
defined in the Company's Certificate of Incorporation, as amended) equal to the
Conversion Price (as defined in subparagraph (c) below); provided that the
aggregate amount raised by the Company in the Qualified Financing combined with
the amount raised by the Company in connection with the Bridge Financing is at
least $10,000,000. "Notes" means, collectively, a reference to this Note and
those certain other Convertible Promissory Notes issued by the Company on or
about the date hereof and which are substantially similar to this Note.
(2) If not previously converted as provided herein, this Note
shall automatically be converted immediately prior to the closing of a firmly
underwritten public offering of Common Stock or other equity security of the
Company into fully paid and non-assessable shares of shares of Common Stock of
the Company.
(b) CONVERSION BY LENDER. At any time following the next
closing of a sale of Next Round Preferred by the Company in a transaction or
series of transactions in which the gross proceeds do not constitute a Qualified
Financing, this Note may be converted at the option of Lender into fully paid
and non-assessable shares of the New Series A Preferred.
(c) CONVERSION BY LENDER UPON A MERGER. This Note may be
converted at the option of Lender into fully paid and non-assessable shares of
shares of Common Stock of the Company immediately prior to the consummation of a
Merger. As used herein, "MERGER" means (i) the merger or consolidation of the
Company into or with another corporation in which the stockholders of the
Company immediately prior to the consummation of such merger or consolidation
shall own 50% or less of the voting securities of the surviving corporation,
(ii) the sale, transfer or lease (but not including a transfer or lease by
pledge or mortgage to a bona fide lender) of all or substantially all of the
assets of the Company, or (iii) the sale of 50% or more of the outstanding
capital stock of the Company. A conversion of this Note in connection with a
Merger shall be effective upon the closing of such Merger, subject to the due,
proper and prior surrender of this Note; provided, however, that should such
Merger not be consummated, the Company shall return this Note to the Lender and
the parties shall be returned to their respective
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positions vis-a-vis this Note as they held prior to the surrender by Lender
of this Note. If the Note is not converted by Lender as provided in
subparagraphs (b) or (c), then upon or immediately prior to the consummation
of a Merger, Borrower shall be permitted to prepay the Note without penalty
or premium.
(d) NUMBER OF SHARES; CONVERSION PRICE. The number of shares
of the applicable security issuable to the holder of this Note upon conversion
shall be equal to the principal balance and accrued but unpaid interest that is
being converted, divided by the Conversion Price. "CONVERSION PRICE" means (1)
with respect to a conversion of the Note into shares of New Series A Preferred
pursuant to subparagraphs (a)(1) or (b) above, the price per share at which
Borrower sells the Next Round Preferred, or (2) with respect to a conversion of
the Note into shares of Common Stock pursuant to subparagraphs (a)(2) or (c)
above, $10.00 per share.
(e) MECHANICS OF CONVERSION. Upon conversion of the Note, (i)
the Note shall become fully paid and satisfied, (ii) Lender shall surrender the
Note, duly endorsed, to Borrower's office or such other address Borrower shall
designate, (iii) if applicable, the Next Round Preferred issued to Lender upon
such conversion automatically thereupon shall become subject to the restrictions
upon such series of "Preferred Stock" under and as defined in that certain
Stockholders' Agreement dated as of June 2, 1997, as amended, between the
Company and its stockholders (the "Stockholders' Agreement") and Lender
automatically thereupon shall become a party to the Stockholders' Agreement in
accordance with the terms of the Joinder Agreement attached as EXHIBIT C to the
Purchase Agreement (except in the case where Lender is already a party to the
Stockholders' Agreement, in which case Lender hereby reaffirms its obligations
under the Stockholders' Agreement), and (iv) if applicable, if requested by the
Company, Lender shall execute and deliver to the Company the Joinder Agreement
(except in the case where Lender is already a party to the Stockholders'
Agreement) and such other documents or instruments reasonably necessary to
evidence the conversion and the other terms of this paragraph. Any conversion
other than a conversion which occurs automatically upon its terms shall require
notice by the Lender not less than five business days prior to the proposed
conversion date. The Company shall provide the Lender with not less than fifteen
business days prior written notice of any firmly underwritten public offering or
Merger.
(f) ADJUSTMENTS TO CONVERSION PRICE FOR CERTAIN EVENTS. The
Conversion Price shall be subject to adjustment from time to time as follows:
(1) If the number of outstanding shares of the
Preferred Stock of Borrower is increased by a stock dividend, stock split-up or
by a subdivision of shares, then, following the record date fixed for the
determination of holders of Preferred Stock entitled to receive such stock
dividend, split-up or subdivision, the Conversion Price shall be appropriately
decreased so that the number of shares of New Series A Preferred issuable on
conversion of this Note shall be increased in proportion to such increase of
outstanding shares of Preferred Stock.
(2) If the number of shares of Preferred Stock
outstanding is decreased by a combination of the outstanding shares of Preferred
Stock, then, following the record date of such combination, the Conversion Price
shall be appropriately increased so that the number of
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shares of New Series A Preferred issuable on conversion of this Note shall be
decreased in proportion to such decrease in outstanding shares of Preferred
Stock.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to this
Section 5, Borrower at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Lender a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. Borrower shall,
upon the written request at any time of Lender, furnish or cause to be furnished
to Lender a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price, at the time in effect, and (iii) the
number of shares of New Series A Preferred and the amount, if any, of other
property which at the time would be received upon the conversion of this Note.
(h) NOTICES OF RECORD DATE. In the event of any taking by
Borrower of a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, any security or right
convertible into or entitling the holder thereof to receive Preferred Stock or
other securities of Borrower, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, Borrower shall mail to Lender at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution, security or right, and the amount and character of such dividend,
distribution, security or right.
(i) ISSUE TAXES. Borrower shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery of shares of
New Series A Preferred on conversion of this Note pursuant hereto; provided,
however, that Borrower shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. Borrower
shall at all times reserve and keep available out of its authorized but unissued
shares of Preferred Stock or other securities, solely for the purpose of
effecting the conversion of this Note, such number of its shares of Preferred
Stock or other securities from time to time issuable upon such conversion; and
if at any time the number of authorized but unissued shares of Preferred Stock
or other securities shall not be sufficient to effect the conversion of this
Note, the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of
Preferred Stock or other securities to such number of shares as shall be
sufficient for such purpose, including, without limitation, using its best
efforts to obtain the requisite stockholder approval of any necessary amendment
to the Certificate of Incorporation.
(k) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of this Note. All shares of New Series A Preferred
(including fractions thereof) issuable upon conversion of this Note, along with
any other Notes held by the same Lender shall be aggregated for purposes of
determining the number of whole shares issuable upon conversion. In lieu of
issuing any fractional shares, Borrower shall pay to the Lender in cash any
remainder resulting after the number of whole shares is determined as a result
of the conversion.
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6. WAIVER. Borrower waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note, and shall pay
all costs of collection when incurred, including, without limitation, reasonable
attorneys' fees, costs and other expenses.
7. ATTORNEY'S FEES. In the event of default by the Borrower (or its
assignee) in the payment of principal or interest due on this Note, Lender shall
be entitled to receive and Borrower (or its assignee) agrees to pay all
reasonable costs of collection incurred by Lender, including, without
limitation, reasonable attorney's fees for consultation and suit.
8. GOVERNING LAW. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
9. SUCCESSORS AND ASSIGNS. The provisions of this Note shall inure
to the benefit of and be binding on any successor to Borrower and shall extend
to any permitted holder hereof.
BORROWER:
▇▇▇▇▇.▇▇▇ INC.
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, C.E.O.
5
Exhibit A-2
to
Note and Warrant Purchase Agreement
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT SUCH REGISTRATION IS NOT
REQUIRED.
CONVERTIBLE PROMISSORY NOTE
[FOR USE WITH NON-▇▇▇▇▇▇▇ INVESTORS]
$_________ March __, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, ▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation ("BORROWER"),
hereby unconditionally promises to pay to _____________ ("LENDER"), in lawful
money of the United States of America and in immediately available funds, the
principal sum of $_______ (the "LOAN") together with accrued and unpaid interest
thereon, payable on the dates and in the manner set forth below.
This Convertible Promissory Note (the "NOTE") is non-negotiable and is
executed and delivered in connection with that certain Note and Warrant Purchase
Agreement dated as of March __, 1999, by and between Borrower and Lender (as
the same may from time to time be amended, modified or supplemented, the
"PURCHASE AGREEMENT"). All terms defined in the Purchase Agreement shall have
the same definitions when used herein, unless otherwise defined herein. In the
event of any conflict between the terms of this Note and the terms of the
Purchase Agreement, the terms of the Purchase Agreement shall control.
1. PRINCIPAL REPAYMENT. The outstanding principal amount of the
Loan shall be payable on March __, 2001, subject to the conversion of the Note
into certain of Borrower's capital stock as further described in Section 5
below. Except with the prior consent of the Lender or as otherwise provided
herein, Borrower may not prepay this Note.
2. INTEREST RATE. Borrower further promises to pay interest on the
sum of the unpaid principal balance of the Loan outstanding on each day, from
the date of this Note until all such principal amounts shall have been repaid in
full or converted into capital stock of the Borrower, which interest shall be
payable at the rate of eight percent (8%) per annum or the maximum rate
permissible by law (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans), whichever is less. Interest shall be payable at maturity and shall be
calculated on the basis of a 365-day year for the actual number of days elapsed.
3. PLACE OF PAYMENT. All amounts payable hereunder shall be payable
to Lender at the address it specifies to Borrower in writing.
4. APPLICATION OF PAYMENTS. Payment on this Note shall be applied
first to accrued interest, and thereafter to the outstanding principal balance
hereof.
5. CONVERSION.
(a) AUTOMATIC CONVERSION.
(1) This Note shall automatically be converted upon
the next closing of a sale of a series of Preferred Stock (the "NEXT
ROUND PREFERRED") in which the gross proceeds to the Borrower are at
least $5,000,000 (a "QUALIFIED FINANCING"), not including the conversion
of the aggregate amount due under the "Notes" (as defined below) and any
additional funds tendered in connection therewith by investors of the
Company holding notes or shares of the Company immediately prior to the
closing of such sale of Preferred Stock (the "BRIDGE FINANCING"), into
fully paid and non-assessable shares of the Next Round Preferred;
provided that the aggregate amount raised by the Company in the
Qualified Financing combined with the amount raised by the Company in
connection with the Bridge Financing is at least $10,000,000. "Notes"
means, collectively, a reference to this Note and those certain other
Convertible Promissory Notes issued by the Company on or about the date
hereof and which are substantially similar to this Note.
(2) If not previously converted as provided herein,
this Note shall automatically be converted immediately prior to the
closing of a firmly underwritten public offering of Common Stock or
other equity security of the Company into fully paid and non-assessable
shares of shares of Common Stock of the Company.
(b) CONVERSION BY LENDER. At any time following the next
closing of a sale of Next Round Preferred by the Company in a transaction or
series of transactions in which the gross proceeds do not constitute a Qualified
Financing, this Note may be converted at the option of Lender into fully paid
and non-assessable shares of the Next Round Preferred.
(c) CONVERSION BY LENDER UPON A MERGER. This Note may be
converted at the option of Lender into fully paid and non-assessable shares of
shares of Common Stock of the Company immediately prior to the consummation of a
Merger. As used herein, "MERGER" means (i) the merger or consolidation of the
Company into or with another corporation in which the stockholders of the
Company immediately prior to the consummation of such merger or consolidation
shall own 50% or less of the voting securities of the surviving corporation,
(ii) the sale, transfer or lease (but not including a transfer or lease by
pledge or mortgage to a bona fide lender) of all or substantially all of the
assets of the Company, or (iii) the sale of 50% or more of the outstanding
capital stock of the Company. A conversion of this Note in connection with a
Merger shall be effective upon the closing of such Merger, subject to the due,
proper and prior surrender of this Note; provided, however, that should such
Merger not be consummated, the Company shall return this Note to the Lender and
the parties shall be returned to their respective positions vis-a-vis this Note
as they held prior to the surrender by Lender of this Note. If the
2
Note is not converted by Lender as provided in subparagraphs (b) or (c), then
upon or immediately prior to the consummation of a Merger, Borrower shall be
permitted to prepay the Note without penalty or premium.
(d) NUMBER OF SHARES; CONVERSION PRICE. The number of shares
of the applicable security issuable to the holder of this Note upon conversion
shall be equal to the principal balance and accrued but unpaid interest that is
being converted, divided by the Conversion Price. "CONVERSION PRICE" means (1)
with respect to a conversion of the Note into shares of Next Round Preferred
pursuant to subparagraphs (a)(1) or (b) above, the price per share at which
Borrower sells the Next Round Preferred, or (2) with respect to a conversion of
the Note into shares of Common Stock pursuant to subparagraphs (a)(2) or (c)
above, $10.00 per share.
(e) MECHANICS OF CONVERSION. Upon conversion of the Note, (i)
the Note shall become fully paid and satisfied, (ii) Lender shall surrender the
Note, duly endorsed, to Borrower's office or such other address Borrower shall
designate, (iii) if applicable, the Next Round Preferred issued to Lender upon
such conversion automatically thereupon shall become subject to the restrictions
upon such series of "Preferred Stock" under and as defined in that certain
Stockholders' Agreement dated as of June 2, 1997, as amended, between the
Company and its stockholders (the "Stockholders' Agreement") and Lender
automatically thereupon shall become a party to the Stockholders' Agreement in
accordance with the terms of the Joinder Agreement attached as EXHIBIT C to the
Purchase Agreement (except in the case where Lender is already a party to the
Stockholders' Agreement, in which case Lender hereby reaffirms its obligations
under the Stockholders' Agreement), and (iv) if applicable, if requested by the
Company, Lender shall execute and deliver to the Company the Joinder Agreement
(except in the case where Lender is already a party to the Stockholders'
Agreement) and such other documents or instruments reasonably necessary to
evidence the conversion and the other terms of this paragraph. Any conversion
other than a conversion which occurs automatically upon its terms shall require
notice by the Lender not less than five business days prior to the proposed
conversion date. The Company shall provide the Lender with not less than fifteen
business days prior written notice of any firmly underwritten public offering or
Merger.
(f) ADJUSTMENTS TO CONVERSION PRICE FOR CERTAIN EVENTS. The
Conversion Price shall be subject to adjustment from time to time as follows:
(1) If the number of outstanding shares of the
Preferred Stock of Borrower is increased by a stock dividend, stock split-up or
by a subdivision of shares, then, following the record date fixed for the
determination of holders of Preferred Stock entitled to receive such stock
dividend, split-up or subdivision, the Conversion Price shall be appropriately
decreased so that the number of shares of Next Round Preferred issuable on
conversion of this Note shall be increased in proportion to such increase of
outstanding shares of Preferred Stock.
(2) If the number of shares of Preferred Stock
outstanding is decreased by a combination of the outstanding shares of Preferred
Stock, then, following the record date of such combination, the Conversion Price
shall be appropriately increased so that the number of shares of Next Round
Preferred issuable on conversion of this Note shall be decreased in proportion
to such decrease in outstanding shares of Preferred Stock.
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(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to this
Section 5, Borrower at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Lender a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. Borrower shall,
upon the written request at any time of Lender, furnish or cause to be furnished
to Lender a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price, at the time in effect, and (iii) the
number of shares of Next Round Preferred and the amount, if any, of other
property which at the time would be received upon the conversion of this Note.
(h) NOTICES OF RECORD DATE. In the event of any taking by
Borrower of a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, any security or right
convertible into or entitling the holder thereof to receive Preferred Stock or
other securities of Borrower, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, Borrower shall mail to Lender at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution, security or right, and the amount and character of such dividend,
distribution, security or right.
(i) ISSUE TAXES. Borrower shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery of shares of
Next Round Preferred on conversion of this Note pursuant hereto; provided,
however, that Borrower shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. Borrower
shall at all times reserve and keep available out of its authorized but unissued
shares of Preferred Stock or other securities, solely for the purpose of
effecting the conversion of this Note, such number of its shares of Preferred
Stock or other securities from time to time issuable upon such conversion; and
if at any time the number of authorized but unissued shares of Preferred Stock
or other securities shall not be sufficient to effect the conversion of this
Note, the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of
Preferred Stock or other securities to such number of shares as shall be
sufficient for such purpose, including, without limitation, using its best
efforts to obtain the requisite stockholder approval of any necessary amendment
to the Certificate of Incorporation.
(k) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of this Note. All shares of Next Round Preferred (including
fractions thereof) issuable upon conversion of this Note, along with any other
Notes held by the same Lender shall be aggregated for purposes of determining
the number of whole shares issuable upon conversion. In lieu of issuing any
fractional shares, Borrower shall pay to the Lender in cash any remainder
resulting after the number of whole shares is determined as a result of the
conversion.
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6. WAIVER. Borrower waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note, and shall pay
all costs of collection when incurred, including, without limitation, reasonable
attorneys' fees, costs and other expenses.
7. ATTORNEY'S FEES. In the event of default by the Borrower (or its
assignee) in the payment of principal or interest due on this Note, Lender shall
be entitled to receive and Borrower (or its assignee) agrees to pay all
reasonable costs of collection incurred by Lender, including, without
limitation, reasonable attorney's fees for consultation and suit.
8. GOVERNING LAW. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
9. SUCCESSORS AND ASSIGNS. The provisions of this Note shall inure
to the benefit of and be binding on any successor to Borrower and shall extend
to any permitted holder hereof.
BORROWER:
▇▇▇▇▇.▇▇▇ INC.
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, C.E.O.
5
Exhibit B
to
Note and Warrant Purchase Agreement
Warrant No. W __
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
▇▇▇▇▇.▇▇▇ INC.
____________________
(VOID AFTER THE DATE THAT IS TWO (2) YEARS AFTER THE DATE HEREOF)
This certifies that _________________________ (the "Holder"), or assigns, for
value received, is entitled to purchase from ▇▇▇▇▇.▇▇▇ Inc., a Delaware
corporation (the "Company"), having a place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ up to _______ fully paid and nonassessable
shares of common stock, $.01 par value, of the Company (the "Common Stock"), at
a purchase price per share (the "Stock Purchase Price") equal to the lesser of
(a) $10.00 or (b) the price per share at which the Company sells the Next Round
Preferred (as defined in a certain Convertible Promissory Note issued to the
original holder hereof pursuant to the Note Purchase Agreement (as defined
below)), at any time, and from time to time, on or after the date hereof through
5:00 p.m. (Central Time) on the date two (2) years after the date hereof, such
later date being referred to herein as the "Expiration Date."
The Stock Purchase Price and the number of shares purchasable hereunder
are subject to adjustment as provided in Section 3 of this Warrant.
This Warrant was originally issued in connection with the execution
and delivery of a certain Note and Warrant Purchase Agreement, dated as of
March __, 1999, by and between the Company and the Holder (the "Note Purchase
Agreement"). Terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Note Purchase Agreement.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the Holder
of record hereof, at any time or from time to time, on or after the date hereof
up to the Expiration Date for all or any part of the shares of Common Stock (but
not for a fraction of a share) which may be purchased hereunder; provided,
however, that this Warrant must be either exercised or the Warrant terminates
immediately before the closing of a firmly underwritten public offering of
Common Stock or other equity security of the Company; provided that the Company
has given the holder of this Warrant at least fifteen (15) days prior written
notice of such closing.
1.2 ISSUANCE OF CERTIFICATES. The Company agrees that the shares of
Common Stock purchased under this Warrant shall be and are deemed to be issued
to the Holder hereof as the record owner of such shares as of the close of
business on the date on which (i) this Warrant shall have been surrendered,
properly endorsed, to the Company, (ii) the Company shall have received the
completed Subscription Form (a copy of which is attached hereto as EXHIBIT A),
the Investment Representations Letter (a copy of which is attached hereto as
EXHIBIT B), and, if requested by the Company (except in the case where the
Holder is already a party to the Stockholders' Agreement), the Joinder Agreement
(a copy of which is attached as EXHIBIT C to the Note Purchase Agreement) duly
executed by the Holder, and (iii) the Holder shall have made payment for such
shares. Certificates for the shares of Common Stock so purchased, together with
any other securities or property to which the Holder hereof is entitled upon
such exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense within a reasonable time after the rights represented by this
Warrant have been so exercised. Each stock certificate so delivered shall be in
such denominations of Common Stock as may be requested by the Holder hereof and
shall be registered in the name of such Holder. In case of a purchase of less
than all the shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant or Warrants of like
tenor for the balance of the shares purchasable under the Warrant surrendered
upon such purchase to the Holder hereof within a reasonable time. Upon exercise
of this Warrant, (i) the Common Stock issued to the Holder upon such conversion
automatically thereupon shall become subject to the restrictions upon "Common
Stock" under and as defined in that certain Stockholders' Agreement dated as of
June 2, 1997, as amended, between the Company and its stockholders (the
"Stockholders' Agreement"), (ii) the Holder automatically thereupon shall become
a party to the Stockholders' Agreement in accordance with the terms of the
Joinder Agreement attached as EXHIBIT C to the Note Purchase Agreement (except
in the case where the Holder is already a party to the Stockholders' Agreement,
in which case the Holder hereby reaffirms its obligations under the
Stockholders' Agreement), and (iii) if requested by the Company, the Holder
shall execute and deliver to the Company such other documents or instruments
reasonably necessary to evidence the exercise of this Warrant and the other
terms of this paragraph.
1.3 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Stock Purchase Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
2
office of the Company together with the properly endorsed Form of Subscription
and notice of such election in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of Common Stock (at the date
of such calculation)
B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; PROVIDED, HOWEVER, that in the event the Company makes an initial public
offering of its Common Stock the fair market value per share shall be: (i) if
the Warrant is being converted in connection with and contingent upon a public
offering of the Company's securities, and if the Company's registration
statement relating to such public offering has been declared effective by the
U.S. Securities and Exchange Commission, then the fair market value of the
Common Stock shall be the initial "Price to Public" specified in the final
prospectus with respect to such offering multiplied by the number of shares of
Common Stock into which each share of Common Stock is then convertible; or (ii)
if the Warrant is not being converted in connection with and contingent upon a
public offering of the Company's securities, then as follows: (x) if traded on
a securities exchange or the Nasdaq National Market, the fair market value of
the Common Stock shall be deemed to be the average of the daily closing prices
per share of such stock for the 20 consecutive trading days commencing 30
trading days before the date of calculation, and the fair market value of the
Common Stock shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of
Common Stock is then convertible or (y) if otherwise traded in an
over-the-counter market, the fair market value of the Common Stock shall be
deemed to be the median of the average of the reported closing bid and ask
prices of the Common Stock over the 30-day period ending five business days
prior to the date of calculation, and the fair market value of the Common Stock
shall be deemed to be such fair market value of the Common Stock multiplied by
the number of shares of Common Stock into which each share of Common Stock is
then convertible.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the
3
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. The Company will not take any
action which would result in any adjustment of the Stock Purchase Price (as
set forth in Section 3 hereof) (i) if the total number of shares of Common
Stock issuable after such action upon exercise of all outstanding warrants
and options, together with all shares of Common Stock then outstanding and
all shares of Common Stock then issuable upon the conversion of all
convertible securities then outstanding, would exceed the total number of
shares of Common Stock then authorized by the Company's Certificate of
Incorporation, or (ii) if the total number of shares of Common Stock issuable
after such action upon the conversion of all outstanding shares of Common
Stock, together with all shares of Common Stock then issuable upon the
conversion of all shares of Common Stock then issuable upon exercise of all
outstanding warrants and options, together with all shares of Common Stock
then outstanding and all shares of Common Stock then issuable upon exercise
of all warrants and options and upon the conversion of all convertible
securities then outstanding would exceed the total number of shares of Common
Stock then authorized by the Company's Certificate of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
3.1 SUBDIVISION OF COMBINATION OF STOCK. In case the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the Holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
3.2.1 Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Common Stock, or any rights or
4
options to subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash
dividend; or
3.2.3 Common Stock or additional stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than (i) shares
of Common Stock issued as a stock split, adjustments in respect of which shall
be covered by the terms of Section 3.1 above or (ii) an event for which
adjustment is otherwise made pursuant to Section 3.3 below);
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses 3.2.2 and 3.2.3 above) which such Holder
would hold on the date of such exercise had he been the Holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
3.3.1 If any recapitalization, reclassification or
capital reorganization of the capital stock of the Company (including any
merger not described in Section 3.3.2 below) shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities,
or other assets or property (a "Restructuring"), then, as a condition of such
Restructuring, lawful and adequate provisions shall be made whereby the
Holder hereof shall thereafter have the right to purchase and receive (in
lieu of the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby) such shares of stock, securities or other assets or property as may
be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby. In any Restructuring described above,
appropriate provision shall be made with respect to the rights and interests
of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock
Purchase Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof.
3.3.2 In the event of a consolidation or merger of the
Company with another corporation in which the holders of the Company's voting
securities before the transaction beneficially own 50% or less of the voting
securities of the surviving entity after the transaction, or the sale of all or
substantially all of its assets of the Company (a "Change of Control"), any
unexercised portion of this Warrant shall be deemed to have been automatically
converted pursuant to Section 1.3 hereof and thereafter the Holder shall
participate in the Change of Control on the same terms as other holders of the
Common Stock; provided however, that if the Stock Purchase Price in effect
immediately prior to the Change of Control exceeds the value of the stock,
securities or other assets or property (determined in good faith by the Board of
5
Directors of the Company) issuable or payable with respect to one share of
Common Stock immediately theretofore purchasable and receivable upon exercise of
the rights represented hereby, the Warrant shall terminate and be of no further
effect as of the Change of Control.
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock Purchase
Price or any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered Holder of this
Warrant at the address of such Holder as shown on the books of the Company. The
notice shall be signed by an officer of the Company and shall state the Stock
Purchase Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
3.5.1 the Company shall declare any cash dividend upon its
Common Stock;
3.5.2 the Company shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
3.5.3 there shall be any Restructuring or Change of Control;
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.5.5 there shall be an initial public offering of securities
of the Company;
then, in any one or more of said cases, the Company shall give, by first
class mail, postage prepaid, addressed to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company, (a) at least ten
(10) days prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
Restructuring, Change of Control, dissolution, liquidation or winding-up, and
(b) in the case of any such Restructuring, Change of Control, dissolution,
liquidation, winding-up or public offering, at least ten (10) days prior
written notice of the date when the same shall take place; PROVIDED, HOWEVER,
that the Holder shall make a best efforts attempt to respond to such notice
as early as possible after the receipt thereof. Any notice given in
accordance with the foregoing clause (a) shall also specify, in the case of
any such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such Restructuring, Change
of Control, dissolution, liquidation, winding-up or public offering, as the
case may be.
3.6 CERTAIN EVENTS. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 3 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, the Board of Directors of the
6
Company shall make an adjustment in the number and class of shares available
under the Warrant, the Stock Purchase 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 Stock Purchase 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 adjustment.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provision hereof in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the Stock Purchase Price or as a stockholder of the Company,
whether such liability is asserted by the Company or by its creditors.
7. REGISTRATION RIGHTS. The registration rights of the Holder (including
Holder's successors) with respect to the shares of Common Stock issuable upon
exercise of this Warrant will be subject to the same rights and obligations
under the Registration Rights Agreement, dated as of June 2, 1997, as amended,
by and among the Company and certain investors, as the Common Stock, and the
holders thereof.
8. WARRANTS NON-TRANSFERABLE. This Warrant is not transferable and the
shares acquired upon exercise hereof shall not be transferred or assigned in
whole or in part except in compliance with the Stockholders' Agreement and
applicable federal and state securities laws.
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the Holder of this Warrant and of the Holder of
shares of Common Stock issued upon exercise of this Warrant, referred to in
Sections 7 and 8 shall survive the exercise of this Warrant.
10. NOTICES. Any notice, request or other document required or permitted to
be given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by first-class mail, postage prepaid, to each such Holder at its
address as shown on the books of the Company
7
or to the Company at the address indicated therefor in the first paragraph of
this Warrant or such other address as either may from time to time provide to
the other.
11. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Illinois.
12. 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 such 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.
13. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
8
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer, thereunto duly authorized as of the day and
year first written above.
▇▇▇▇▇.▇▇▇ INC.,
a Delaware corporation
By: _____________________________
Name: __________________________
Title: __________________________
9
EXHIBIT A
TO WARRANT
SUBSCRIPTION FORM
Date:______________, 19___
▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Ladies and Gentlemen:
/ / The undersigned hereby elects to exercise the warrant issued to it by
________________ (the "Company") and dated ____________________, 1999,
Warrant No. W-__ (the "Warrant") and to purchase thereunder __________
shares of the Common Stock (as defined in the Warrant) of the Company
(the "Shares") at a purchase price per share of $_________, or an
aggregate purchase price of ___________________________________
($__________) (the "Purchase Price").
/ / The undersigned hereby elects to convert ___________________ percent
(___%) of the value of the Warrant pursuant to the provisions of Section
1.3 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
The undersigned also makes the representations set forth on the attached
EXHIBIT B of the Warrant.
Very truly yours,
__________________________________________
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
EXHIBIT B
TO WARRANT
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO ▇▇▇▇▇.▇▇▇ INC. ALONG
WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE OF THE
WARRANT DATED __________________, 199__, WILL BE ISSUED.
_____________________, 19__
▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Ladies and Gentlemen:
The undersigned, _______________________________________ ("Purchaser"),
intends to acquire up to _______________ shares of the Common Stock (as defined
in the Warrant to purchase such Common Stock held by the Purchaser (the
"Warrant")) of ▇▇▇▇▇.▇▇▇ Inc. (the "Company") from the Company pursuant to the
exercise or conversion of the Warrant. The Common Stock will be issued to
Purchaser in a transaction not involving a public offering and pursuant to an
exemption from registration under the Securities Act of 1933, as amended (the
"1933 Act") and applicable state securities laws. Purchaser has been advised
that the Common Stock has not been registered under the 1933 Act or state
securities laws on the ground that this transaction is exempt from registration,
and that reliance by the Company on such exemptions is predicated in part on
Purchaser's representations set forth in this letter. Accordingly, Purchaser
represents, warrants and agrees as follows:
1. Purchaser is acquiring the Common Stock for its own account and
beneficial interest, to hold for investment and not for sale or with a
view to distribution of the Common Stock or any part thereof. Purchaser
has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing
the same, and does not presently have reason to anticipate a change in
such intention.
2. Purchaser acknowledges that it has received all the information
it has requested from the Company and considers necessary or appropriate
for deciding whether to acquire the Common Stock. Purchaser 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 Stock and to obtain any additional information necessary to
verify the accuracy of the information given the Purchaser. Purchaser
further represents
that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risk of this
investment.
3. Purchaser is an "accredited investor" as such term is defined in
Rule 501 under the ▇▇▇▇ ▇▇▇.
4. Purchaser acknowledges that investment in the Common Stock
involves a high degree of risk, and represents that it is able, without
materially impairing its financial condition, to hold the Common Stock
for an indefinite period of time and to suffer a complete loss of its
investment.
5. Purchaser has been informed that under the 1933 Act, the Common
Stock must be held indefinitely unless it is subsequently registered
under the 1933 Act or unless an exemption from such registration (such
as Rule 144) is available with respect to any proposed transfer or
disposition by Purchaser of the Common Stock. Purchaser further agrees
that the Company may refuse to permit Purchaser to sell, transfer or
dispose of the Common Stock (except as permitted under Rule 144) unless
there is in effect a registration statement under the 1933 Act and any
applicable state securities laws covering such transfer, or unless
Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not
required. Purchaser shall not make any sale, transfer or other
disposition of the Common Stock in violation of the 1933 Act or the
General Rules and Regulations promulgated thereunder by the Securities
and Exchange Commission or in violation of any applicable state
securities law.
6. Purchaser also understands and agrees that there will be placed
on the certificate(s) for the Common Stock, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"1933 Act"), or any state securities laws. These shares have
been acquired for investment and may not be sold or otherwise
transferred in the absence of an effective registration statement
for these shares under the 1933 Act and applicable state
securities laws, or an opinion of counsel satisfactory to the
Company that registration is not required and that an applicable
exemption is available."
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Common Stock with Purchaser's counsel.
Very truly yours,
__________________________________________
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
2
Exhibit C
to
Note and Warrant Purchase Agreement
JOINDER AGREEMENT
The undersigned stockholder ("Investor") hereby covenants and agrees to
become a party to that certain Stockholders' Agreement (the "Stockholders'
Agreement") dated as of June 2, 1997, as amended, among ▇▇▇▇▇.▇▇▇ Inc., a
Delaware corporation formerly known as JAMtv Corporation ("▇▇▇▇▇.▇▇▇"), and the
"Stockholders" named therein, and hereby undertakes all of the respective
representations, warranties, obligations and duties of, and accepts all of the
benefits of, an "Existing Investor" and a "Stockholder" (but not a "GSCP
Stockholder") under and as defined in the Stockholders' Agreement.
Dated as of ____________________
___________________________________
[Print name of Investor]
By:_________________________________
Its:__________________________________
▇▇▇▇▇.▇▇▇ hereby covenants and agrees that Investor is hereby made a
party to the Stockholders' Agreement, and hereby undertakes all of the
respective representations, warranties, obligations and duties of the "Company"
under the Stockholder's Agreement, including the grant to Investor of all of the
benefits of the "Existing Investors" and the "Stockholders" (but not the "GSCP
Stockholders") under and as defined in the Stockholders' Agreement.
Dated as of ____________________
▇▇▇▇▇.▇▇▇ INC.
By: _________________________________
Its:__________________________________