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EXHIBIT 10.35
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY
OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION.
THE SALE OF THESE SECURITIES HAS NOT BEEN QUALIFIED WITH ANY STATE SECURITIES
AUTHORITIES. THE RIGHTS OF ALL PARTIES TO THIS WARRANT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY
AND LEGAL COUNSEL FOR THE COMPANY.
Void after March 25, 2004
THE LIGHTSPAN PARTNERSHIP, INC.
SERIES E PREFERRED STOCK PURCHASE WARRANT
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THIS CERTIFIES THAT, for value received, _______________ and its registered
assigns (hereinafter called the "Holder") is entitled to purchase from The
Lightspan Partnership, Inc. (the "Company"), at any time prior to 5:00 p.m.
Pacific Standard Time on the Expiration Date, as such term is defined in Section
1 hereof, _________ shares of the Company's Series E Preferred Stock ("Warrant
Shares").
The Exercise Price per share of this warrant shall be $5.00. This Warrant
may be exercised in whole or in part at the option of the Holder.
1. Term. This Warrant shall be exercisable through March 25, 2004 (the
"Expiration Date").
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the Holder, in whole or in part, by:
2.1 the surrender of this Warrant (with the notice of exercise form
attached hereto as Attachment A and the Investment Representation Statement
attached hereto as Attachment B duly executed) at the principal office of the
Company; and
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2.2 the payment to the Company, by check or wire, of an amount
equal to the then applicable Exercise Price per share multiplied by the number
of Warrant Shares then being purchased.
If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable hereunder. Upon receipt by the Company of this Warrant and such
notice of exercise, together with, if applicable, the aggregate Exercise Price,
at such office, or by the stock transfer agent or warrant agent of the Company
at its office, the Holder shall be deemed to be the holder of record of the
applicable Warrant Shares, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of the Warrant Shares.
2.3 Net Exercise. In addition to and without limiting the rights
of the Holder under the terms of this Warrant, the Holder may elect to convert
this Warrant or any portion thereof (the "Conversion Right") into Warrant
Shares, the aggregate value of which Warrant Shares shall be equal to the value
of this Warrant or the portion thereof being converted. The Conversion Right may
be exercised by the Holder by surrender of this Warrant at the principal office
of the Company together with notice of the Holder's intention to exercise the
Conversion Right, in which event the Company shall issue to the Holder a number
of Warrant Shares computed using the following formula:
Y(A - B)
X = ------------------
A
Where:
X - The Number of Warrant Shares to be issued to the holder upon
exercise of Conversion Right.
Y - The number of Warrant Shares issuable under this Warrant.
A - The fair market value of one Warrant Share, as determined in
good faith by the board of directors of the Company, as at the
time the Conversion Right is exercised pursuant to this
Section 2.
B - Exercise Price (as adjusted to the date of such calculations).
3. Stock Fully Paid; Reservation of Warrant Shares. All shares of stock
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be fully
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paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its stock to
provide for the exercise of the rights represented by this Warrant. In the
event that there is an insufficient number of Warrant Shares reserved for
issuance pursuant to the exercise of this Warrant, the Company will take
appropriate action to authorize an increase in the capital stock to allow for
such issuance or similar issuance acceptable to the Holder.
4. Adjustment of Exercise Price and Number of Warrant Shares. The number
and kind of Warrant Shares purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
4.1 Reclassification; Merger. In case of any reclassification or
change of outstanding securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or any other corporate reorganization in which the Company shall
not be the continuing or surviving entity of such consolidation, merger or
reorganization, or any transaction in which in excess of 50% of the Company's
voting power is transferred, or any sale of all or substantially all of the
stock or assets of the Company, the Company shall, as condition precedent to
such transaction, execute a new Warrant or cause such successor or purchasing
corporation, as the case may be, to execute a new Warrant, providing that the
Holder shall have the right to exercise such new Warrant and upon such exercise
to receive, in lieu of each share of stock theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change, merger or
acquisition by a holder of one share of stock. Such new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 4. The provisions of this Section
4.1 shall similarly apply to successive reclassifications, changes, mergers,
and acquisitions.
4.2 Subdivisions or Combination of Warrant Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide
or combine its stock, the Exercise Price shall be proportionately decreased in
the case of a subdivision or increased in the case of a combination.
4.3 Stock Dividends. If the Company at any time while this Warrant
is outstanding and unexpired shall pay a dividend with respect to stock payable
in, or make any other distribution with respect to stock (except any
distribution specifically provided for in the foregoing Sections 4.1 and 4.2)
of, stock, then the Exercise Price shall be adjusted, from and after the date
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of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (1) the
numerator of which shall be the total number of shares of stock outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of shares of stock outstanding immediately
after such dividend or distribution.
4.4 Adjustment of Number of Warrant Shares. Upon each adjustment in
the Exercise Price, the number of shares of stock purchasable hereunder shall
be adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Warrant Shares purchasable immediately prior to such adjustment
in the Exercise Price by a fraction, the numerator of which shall be the
Exercise Price immediately prior to such adjustment and the denominator of
which shall be the Exercise Price immediately thereafter.
5. Fractional Warrant Shares. No fractional Warrant Shares will be
issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Exercise Price then in effect.
6. Compliance with Securities Act; Non-transferability of Warrant;
Disposition of Shares of Stock.
6.1 Compliance with Securities Act. The Holder, by acceptance
hereof, agrees that this Warrant and the Warrant Shares are being acquired for
investment and that he will not offer, sell or otherwise dispose of this
Warrant or any Warrant Shares except under circumstances which will not result
in a violation of the Securities Act of 1933, as amended (the "Act"). Upon
exercise of this Warrant, the Holder hereof shall confirm in writing, in a form
of Attachment B, that the Warrant Shares so purchased are being acquired for
investment and not with a view toward distribution or resale. In addition, the
Holder shall provide such additional information regarding such Holder's
financial and investment background as the Company may reasonably request. This
Warrant and all Warrant Shares (unless registered under the Act) shall be
stamped or imprinted with a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMPANY AND WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION."
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6.2 Transferability of Warrant. This Warrant may not be transferred or
assigned in whole or in part without (i) the prior written consent of the
Company and (ii) compliance with applicable federal and state securities laws;
provided, however, that the Warrant may be transferred without the prior
written consent of the Company in the following transactions:
A transfer of the Warrant in whole by a Holder who is a natural
person during such Xxxxxx's lifetime or on death by will or intestacy to such
Xxxxxx's immediate family or to any custodian or trustee for the account of
such Holder or such Xxxxxx's immediate family. "Immediate family" as used
herein shall mean spouse, lineal descendant, father, mother, brother, or sister
of the Holder.
A transfer of the Warrant in whole to the Company or to any
shareholder of the Company.
A transfer of the Warrant in whole or in part to a person who, at the
time of such transfer, is or is an affiliate of an officer or director of the
Company.
A transfer of the Warrant in whole pursuant to and in accordance with
the terms of any merger, consolidation, reclassification of shares or capital
reorganization of the corporate shareholder or pursuant to a sale of all or
substantially all of the stock or assets of a corporate shareholder.
A transfer of the Warrant in whole to a parent, subsidiary or
affiliate of a Holder.
A transfer of the Warrant in whole by a Holder which is a limited or
general partnership to any of its partners or former partners.
6.3 Disposition of Warrant Shares. Upon exercise of the Warrant Shares,
the Holder will be entitled to any registration rights granted the other
holders of securities issued in the Next Financing. With respect to any offer,
sale or other disposition of any Warrant Shares prior to registration of such
shares, the Holder and each subsequent Holder of this Warrant agrees to give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such Xxxxxx's counsel, if
reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Act as then in effect or any federal or state law then in effect) of such
Warrant Shares and indicating whether or not under the Act certificates for
such shares to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to ensure compliance
with the Act; provided, however, that no such opinion of counsel or no action
letter shall be necessary for a transfer without consideration by a Holder
which is a partnership to a partner of such partnership, so long as such
transfer is made
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pursuant to the terms of the partnership agreement, or to the transfer by gift,
will or intestate succession by the Holder to his or her spouse or lineal
descendants or ancestors or any trust for the benefit of any of the foregoing if
the transferee agrees in writing to be subject to the terms hereof to the same
extent as if he/she were an original Holder hereunder. Notwithstanding the
foregoing, such Warrant Shares may be offered, sold or otherwise disposed of in
accordance with Rule 144.
7. Rights of Shareholders. No Holder of this Warrant shall be entitled to
vote or receive dividends or be deemed the holder of stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this Warrant has been exercised and the Warrant Shares shall
have become deliverable, as provided herein.
8. Governing Law. The terms and conditions of this Warrant shall be
governed by and construed in accordance with California law.
9. Miscellaneous. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof my be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and the registered Holder. All notices and other communications from
the Company to the Holder shall be delivered by hand or mailed by first-class
registered or certified mail, postage prepaid, to the address furnished to the
Company in writing by the Holder.
THE LIGHTSPAN PARTNERSHIP, INC.
By:
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Xxxx Xxxxxx
Chief Executive Officer
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ATTACHMENT A
NOTICE OF EXERCISE
TO: The Lightspan Partnership, Inc.
1. The undersigned hereby elects to purchase _________ shares of stock of
The Lightspan Partnership, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full,
together with all applicable transfer taxes, if any.
1. The undersigned hereby elects to convert the attached Warrant into
Warrant Shares in the manner specified in Section 2.3 of the Warrant. This
conversion is exercised with respect to ___________________________ of the
Shares covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY.]
2. Please issue a certificate or certificates representing said shares of
stock in the name of the undersigned or in such other name as is specified
below:
Name: _______________________________
Address: ____________________________
____________________________
____________________________
3. The undersigned represents that the aforesaid shares of stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Attachment B.
__________________________________
WARRANTHOLDER
By: ______________________________
Title: ___________________________
Date: ________________________
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ATTACHMENT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
COMPANY : THE LIGHTSPAN PARTNERSHIP, INC.
SECURITY :
AMOUNT :
DATE :
In connection with the purchase of the above-listed securities and underlying
stock (the "Securities"), I, the Purchaser, represent to the Company the
following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission ("SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities, except as may be
required under an Investor Rights Agreement entered into by the Company. In
addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Purchaser.
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(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions.
(e) I further understand that at the time I wish to sell the
Securities there may be no public market upon which to make such a sale.
(f) I further understand that in the event all of the requirements
of rule 144 are not satisfied, registration under the Securities Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
that pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
---------------------------------
WARRANTHOLDER
---------------------------------
(signature)
---------------------------------
(title)
Date:
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