Exhibit 99.10
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WARRANT
to Purchase Common Stock of
PEAPOD, INC.,
a Delaware corporation
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Warrant No. B-2
Original Issue Date: April 14, 2000
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NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS
CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF,
AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES AND
REGULATIONS THEREUNDER AND THIS WARRANT.
Warrant No. B-2
WARRANT
TO PURCHASE 3,566,667 SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT) OF
PEAPOD, INC.
THIS IS TO CERTIFY THAT KONINKLIJKE AHOLD N.V., (the "Purchaser") or its
registered assigns, is entitled, at any time prior to the Expiration Date
(such term, and certain other capitalized terms used herein being hereinafter
defined), to purchase from Peapod, Inc., a Delaware corporation (the
"Company"), 3,566,667 shares of the Common Stock of the Company (subject to
adjustment as provided herein), at a purchase price per share equal to $3.00
(the initial "Exercise Price"), subject to adjustment as provided herein.
1. DEFINITIONS
As used in this Warrant (including the Subscription Form), the following
terms have the respective meanings set forth below:
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person and, shall include (a) in
the case of a person who is an individual, (i) members of such specified
person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified person or members of such person's
immediate family as determined in accordance with the foregoing clause (i),
and (b) any person that directly or indirectly owns more than 5% of any class
of capital stock or other interest of such specified person. For the purposes
of this definition, "control," when used with respect to any person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, for
purposes of this Warrant, the Purchaser and its Affiliates shall not be deemed
Affiliates of the Company.
"After-Tax Basis" when referring to a payment that is required hereunder
(the "target amount"), shall mean a total payment (the "total amount") that,
after deduction of all federal, state and local taxes that are required to be
paid by the recipient in respect of the receipt or accrual of such total
amount, is equal to the target amount.
"Agreed Rate" shall mean the rate of interest announced publicly by
Citibank, N.A. in New York, New York, from time to time, as Citibank, N.A.'s
base rate.
"Appraisal Procedure" if applicable, shall mean the following procedure to
determine the fair market value, as to any security, for purposes of the
definition of "Fair Value" or the fair market value, as to any other property
(in either case, the "valuation amount"). The valuation amount shall be
determined in good faith by the Board of Directors; provided, however, that if
the Majority Warrant Holders disagree with such valuation amount within
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a reasonable period of time (not to exceed twenty (20) days after notice
thereof) the valuation amount shall be determined by an investment banking
firm of national recognition, which firm shall be reasonably acceptable to the
Board of Directors and the Majority Warrant Holders. If the Board of Directors
and the Majority Warrant Holders are unable to agree upon an acceptable
investment banking firm within ten (10) days after the date either party
proposed that one be selected, the investment banking firm will be selected by
an arbitrator located in New York City, New York, selected by the American
Arbitration Association (or if such organization ceases to exist, the
arbitrator shall be chosen by a court of competent jurisdiction). The
arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Board of Directors and
the Majority Warrant Holders, of not more than six investment banking firms of
national standing in the United States, of which no more than three may be
named by the Board of Directors and no more than three may be named by the
Majority Warrant Holders. The arbitrator may consider, within the ten-day
period allotted, arguments from the parties regarding which investment banking
firm to choose, but the selection by the arbitrator shall be made in its sole
discretion from the list of six. The Board of Directors and the Majority
Warrant Holders shall submit their respective valuations and other relevant
data to the investment banking firm, and the investment banking firm shall as
soon as practicable thereafter make its own determination of the valuation
amount. The final valuation amount for purposes hereof shall be the average of
the two valuation amounts closest together, as determined by the investment
banking firm, from among the valuation amounts submitted by the Company and
the Majority Warrant Holders and the valuation amount calculated by the
investment banking firm. The determination of the final valuation amount by
such investment-banking firm shall be final and binding upon the parties. The
Company shall pay the fees and expenses of the investment banking firm and
arbitrator (if any) used to determine the valuation amount. If required by any
such investment banking firm or arbitrator, the Company shall execute a
retainer and engagement letter containing reasonable terms and conditions,
including, without limitation, customary provisions concerning the rights of
indemnification and contribution by the Company in favor of such investment
banking firm or arbitrator and its officers, directors, partners, employees,
agents and Affiliates.
"Appraised Value" per share of Common Stock as of a date specified herein
shall mean the value of such a share as of such date as determined by an
investment bank of nationally recognized standing selected jointly by the
Majority Warrant Holders and the Company. If the Company and the Majority
Warrant Holders cannot agree on a mutually acceptable investment bank, then
the Company and the Majority Warrant Holders shall each choose one such
investment bank and the respective chosen firms shall jointly select a third
investment bank, which shall make the determination. The Company shall pay the
costs and fees of each such investment bank (including any such investment
bank selected by the Majority Warrant Holders), and the decision of the
investment bank making such determination of Appraised Value shall be final
and binding on the Company and all affected Holders of Warrants or Warrant
Stock. Such Appraised Value shall be determined as a pro rata portion of the
value of the Company taken as a whole, based on the higher of (A) the value
derived from a hypothetical sale of the entire Company as a going concern by a
willing seller to a willing buyer (neither acting under any compulsion) and
(B) the liquidation value of the entire Company. No discount shall be applied
on account of (i) any Warrants or Warrant Stock representing a minority
interest, (ii) any lack of liquidity of the Common Stock or the Warrants,
(iii) the fact that the Warrants or Warrant Stock may constitute "restricted
securities" for securities law purposes, (iv) the existence of any call option
or (v) any other grounds.
"Book Value" per share of Common Stock as of a date specified herein shall
mean the consolidated book value of the Company and its Subsidiaries as of
such date divided by the number of shares of Common Stock Outstanding on such
date. Such book value shall be determined in accordance with GAAP, except that
there shall be no reduction in such book value by reason of any amount that
may be required either as an offset to or reserve against retained earnings or
as a deduction from book value as a result of the issuance, existence,
anticipated exercise of, or anticipated cost to the Company of the repurchase
of, any of the Warrants.
"Business Day" shall mean a day other than a Saturday, Sunday or day on
which banking institutions in New York are authorized or required to remain
closed.
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"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean the Common Stock of the Company, par value $0.01
per share, as constituted on the Original Issue Date, and any capital stock
into which such Common Stock may thereafter be changed, and shall also include
(i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of any Common Stock upon any
reclassification thereof which is also not preferred as to dividends or
liquidation over any other class of stock of the Company and which is not
subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation (as defined in Section 4.6 hereof) received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.6 hereof.
"Company" shall mean Peapod, Inc., a Delaware corporation, and any
successor corporation.
"Current Market Price" shall mean as of any specified date the average of
the Daily Market Price of one share of the Common Stock for the shorter of (x)
the 10 consecutive Business Days immediately preceding such date or (y) the
period commencing on the Business Day next following the first public
announcement by the Company of any event giving rise to an adjustment of the
Exercise Price pursuant to Section 4 below and ending on such date.
"Daily Market Price" shall mean, with respect to one share of Common Stock
and for any Business Day: (i) if the Common Stock is then listed on a national
securities exchange or is authorized for quotation on NASDAQ and is designated
as a National Market System security, the last sale price of one share of
Common Stock, regular way, on such day on the principal stock exchange or
market system on which such Common Stock is then listed or authorized for
quotation, or, if no such sale takes place on such day, the average of the
closing bid and asked prices for one share of Common Stock on such day as
reported on such stock exchange or market system or (ii) if the Common Stock
is not then listed or authorized for quotation on any national securities
exchange or designated as a National Market System security on NASDAQ but is
traded over-the-counter, the average of the closing bid and asked prices for
one share of Common Stock as reported on NASDAQ or the Electronic Bulletin
Board or in the National Daily Quotation Sheets, as applicable.
"Designated Office" shall have the meaning set forth in Section 10 hereof.
"Dilution Fee" shall have the meaning set forth in Section 12 hereof.
"Dilution Fee Payment Date" shall have the meaning set forth in Section 12
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Securities" shall have the meaning set forth in Section 4.11
hereof.
"Exercise Date" shall have the meaning set forth in Section 2.1 hereof.
"Exercise Notice" shall have the meaning set forth in Section 2.1 hereof.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1 hereof.
"Exercise Price" shall mean, in respect of a share of Common Stock at any
date herein specified, the initial Exercise Price set forth in the preamble of
this Warrant, as adjusted from time to time pursuant to Sections 2.4 and 4
hereof.
"Expiration Date" shall mean the tenth anniversary of the Original Issue
Date.
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"Fair Value" per share of Common Stock as of any specified date shall mean
(A) if the Common Stock is publicly traded on such date, the Current Market
Price per share or (B) if the Common Stock is not publicly traded on such
date, (1) the fair market value per share of Common Stock as determined in
good faith by the Board of Directors of the Company and set forth in a written
notice to each Holder or (2) if the Majority Warrant Holders object in writing
to such price as determined by the Board of Directors within thirty (30) days
after receiving notice of same, the Appraised Value per share as of such date.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, which are in effect from time to
time, consistently applied.
"Holder" shall mean (a) with respect to this Warrant, the person in whose
name the Warrant set forth herein is registered on the books of the Company
maintained for such purpose and (b) with respect to any other Warrant or
shares of Warrant Stock, the person in whose name such Warrant or Warrant
Stock is registered on the books of the Company maintained for such purpose.
"HSR Approval" shall mean the expiration of all waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
applicable rules and regulations and any similar state acts applicable to the
issuance of Series B Preferred Stock as contemplated by the Purchase
Agreement.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Majority Warrant Holders" shall mean, with respect to a given
determination, the Holders of Warrants, the holders of the Previously Issued
Warrants and the holders of the Warrants (Preferred Stock) representing the
right to acquire more than fifty percent (50%) of the Common Stock underlying
all of the then outstanding Warrants, the Previously Issued Warrants and the
Warrants (Preferred Stock).
"NASD" shall mean the National Association of Securities Dealers, Inc., or
any successor corporation thereto.
"NASDAQ" shall mean the NASDAQ quotation system, or any successor reporting
system.
"Opinion of Counsel" shall mean a written opinion of outside counsel
experienced in Securities Act matters chosen by the Holder of this Warrant or
Warrant Stock issued upon the exercise hereof and reasonably acceptable to the
Company.
"Original Issue Date" shall mean the date on which this Warrant was issued,
as set forth on the cover page of this Warrant.
"Outside Date" shall mean the date that is one hundred and twenty (120)
days after the date hereof or, if the Holder exercises this Warrant or the
Warrants (Preferred Stock) and as a direct result of such exercise, the
Stockholders Meeting (as defined in the Purchase Agreement) is delayed, one
hundred and twenty (120) days plus the number of days of such delay after the
date hereof.
"Outstanding" shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock, except shares then owned or held by or for the account
of the Company or any Subsidiary, and shall include all shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in shares of Common Stock.
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"person" shall mean any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Preferred Stock" shall mean convertible preferred stock of the Company.
"Previously Issued Warrants" shall mean the Warrant dated April 10, 2000
issued by the Company to the Purchaser, and all warrants issued upon transfer,
division or combination of, or in substitution for, such warrant or any other
such warrant.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of April
14, 2000, by and between the Company and the Purchaser.
"Restricted Common Stock" shall mean shares of Common Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced
by a certificate bearing the restrictive legend set forth in Section 8.2(a)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Series B Preferred Stock" shall mean the Series B Preferred Stock to be
authorized pursuant to the Certificate of Designation in the form attached as
Exhibit I to the Purchase Agreement.
"Share Withholding Option" shall have the meaning set forth in Section
2.1(c) hereof.
"Stockholder Approval" shall mean the approval by the Company's
stockholders of the issuance of the shares of Series B Preferred Stock and the
Warrants, and the other transactions contemplated pursuant to the Purchase
Agreement.
"subsidiary" shall mean, with respect to any person, (a) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such person, by a subsidiary of such person, or by such person and
one or more subsidiaries of such person, (b) a partnership in which such
person or a subsidiary of such person is, at the date of determination, a
general partner of such partnership, or (c) any other person (other than a
corporation) in which such person, a subsidiary of such person or such person
and one or more subsidiaries of such person, directly or indirectly, at the
date of determination thereof, has (i) at least a majority ownership interest,
(ii) the power to elect or direct the election of the directors or other
governing body of such person, or (iii) the power to direct or cause the
direction of the affairs or management of such person. For purposes of this
definition, a person is deemed to own any capital stock or other ownership
interest if such person has the right to acquire such capital stock or other
ownership interest, whether through the exercise of any purchase option,
conversion privilege or similar right.
"Subsidiary" shall mean a subsidiary of the Company.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of
any interest therein, which would constitute a "sale" thereof or a transfer of
a beneficial interest therein within the meaning of the Securities Act.
"Warrant Price" shall mean an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of all or a portion of this Warrant
pursuant to Section 2.1 hereof, multiplied by (ii) the Exercise Price as of
the date of such exercise.
"Warrants" shall mean this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, this Warrant or any other
such Warrant. All Warrants shall at all times be identical as to terms and
conditions, except as to the number of shares of Common Stock for which they
may be exercised and their date of issuance.
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"Warrants (Preferred Stock)" shall mean the Warrant (Preferred Stock)
issued by the Company to the Purchaser pursuant to the Purchase Agreement, and
all warrants issued upon transfer, division or combination of, or in
substitution for, such warrant or any other such warrant.
"Warrant Stock" generally shall mean the shares of Common Stock issued,
issuable or both (as the context may require) upon the exercise of Warrants.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise. (a) From and after the Original Issue Date and
until 5:00 P.M., New York time, on the Expiration Date, the Holder of this
Warrant may from time to time exercise this Warrant, on any Business Day, for
all or any part of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the Holder shall (i)
deliver to the Company at its Designated Office a written notice of the
Holder's election to exercise this Warrant (an "Exercise Notice"), which
Exercise Notice shall be irrevocable and specify the number of shares of
Common Stock to be purchased, together with this Warrant and (ii) pay to the
Company the Warrant Price in accordance with Section 2.1(c) (the date on which
both such delivery and payment shall have first taken place being hereinafter
sometimes referred to as the "Exercise Date"). Such Exercise Notice shall be
in the form of the subscription form appearing at the end of this Warrant as
Annex A, duly executed by the Holder or its duly authorized agent or attorney.
(b) Upon receipt by the Company of such Exercise Notice, Warrant and
payment (if applicable), the Company shall, as promptly as practicable, and in
any event within five (5) Business Days thereafter, execute (or cause to be
executed) and deliver (or cause to be delivered) to the Holder a certificate
or certificates representing the aggregate number of full shares of Common
Stock issuable upon such exercise, together with cash in lieu of any fraction
of a share, as hereafter provided. The stock certificate or certificates so
delivered shall be, to the extent possible, in such denomination or
denominations as the exercising Holder shall reasonably request in the
Exercise Notice and shall be registered in the name of the Holder or, subject
to Section 8 below, such other name as shall be designated in the Exercise
Notice. This Warrant shall be deemed to have been exercised, and such stock
certificate or certificates shall be deemed to have been issued, and the
Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of the shares evidenced by such stock
certificate or certificates for all purposes, as of the Exercise Date.
(c) Payment of the Warrant Price shall be made at the option of the Holder
by one or more of the following methods: (i) by delivery of a certified or
official bank check in the amount of such Warrant Price payable to the order
of the Company, (ii) by instructing the Company to withhold a number of shares
of Warrant Stock then issuable upon exercise of this Warrant with an aggregate
Fair Value equal to such Warrant Price (the "Share Withholding Option"), (iii)
by surrendering to the Company shares of Common Stock previously acquired by
the Holder with an aggregate Fair Value equal to such Warrant Price, (iv) by
surrendering to the Company dividends due and owing by the Company to the
Holder equal to such Warrant Price, or (v) by providing to the Company goods
or services with a fair value as specified in any contract pursuant to which
such goods or services are provided or, if not specified, as determined by the
Board of Directors equal to such Warrant Price (or if the Majority Warrant
Holders object in writing to such determination within thirty (30) days after
receiving notice of same, as determined by an independent expert of national
recognition in the relevant industry, which expert shall be reasonably
acceptable to the Board of Directors and the Majority Warrant Holders, and if
the Board of Directors and the Majority Warrant Holders are unable to agree
upon an acceptable independent expert within ten (10) days after the date
either party proposed that one be selected, the independent expert will be
selected by an arbitrator located in New York City, New York, selected by the
American Arbitration Association (or if such organization ceases to exist, the
arbitrator shall be chosen by a court of competent jurisdiction)). In the
event of any withholding of Warrant Stock or surrender of Common Stock
pursuant to clause (ii) or (iii) above where the number of shares whose Fair
Value is equal to the Warrant Price is not a whole number, the number of
shares withheld by or surrendered to the Company shall be rounded up to the
nearest whole share and the Company shall make a cash payment to the Holder
based on the incremental fraction of a share being so withheld by or
surrendered to the Company in an amount determined in accordance with Section
2.3 hereof.
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(d) If this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the certificate or certificates representing the
shares of Common Stock being issued, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of
Common Stock called for by this Warrant. Such new Warrant shall in all other
respects be identical to this Warrant. Notwithstanding any provision herein to
the contrary, the Company shall not be required to register shares of Common
Stock in the name of any person who acquired this Warrant (or part hereof) or
any shares of Warrant Stock otherwise than in accordance with this Warrant.
(e) All Warrants delivered for exercise shall be canceled by the Company.
(f) On the date of exercise of the Warrants the Company shall use
commercially reasonable efforts to satisfy all the conditions set forth in
Section 7.2 of the Purchase Agreement other than the condition set forth in
Section 7.2(n), provided that if the Company shall have used its commercially
reasonable efforts to satisfy such conditions and such conditions shall not
have been satisfied, the Holder shall have no rights or remedies arising as a
result of such failure.
2.2 Payment of Taxes. All shares of Common Stock issuable upon the exercise
of this Warrant pursuant to the terms hereof shall be validly issued, fully
paid and nonassessable, issued without violation of any preemptive rights and
free and clear of all Liens (other than any created by actions of the Holder).
The Company shall pay all expenses in connection with, and all issuance,
transfer, stamp and other similar taxes and other governmental charges that
may be imposed with respect to, the issue or delivery thereof, unless such tax
or charge is imposed by law upon the Holder, in which case such taxes or
charges shall be paid by the Holder and the Company shall reimburse the Holder
therefor on an After-Tax Basis. The Company shall not, however, be required to
pay any tax or governmental charge which may be payable in respect of any
Transfer involved in the issue and delivery of shares of Common Stock issuable
upon exercise of this Warrant in a name other than that of the Holder of the
Warrants to be exercised, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount
of any such tax, or has established to the satisfaction of the Company that
such tax has been paid.
2.3 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share that the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay to such Holder an amount in
cash equal to such fraction multiplied by the Fair Value.
2.4 Reduced Exercise Price. On the Outside Date, in the event that the HSR
Approval or the Stockholders Approval shall not have been obtained, the
Exercise Price shall be reduced to an amount equal to 50% of the Exercise
Price in effect immediately prior to the Outside Date.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 8 hereof, each transfer of
this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the Designated Office, together with a written
assignment of this Warrant in the form of Xxxxx X hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes
described in Section 2.2 in connection with the making of such transfer. Upon
such surrender and delivery and, if required, such payment, the Company shall,
subject to Section 8, execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned in compliance with
Section 8, may be exercised by the new Holder for the purchase of shares of
Common Stock without having a new Warrant issued.
3.2 Division and Combination. Subject to compliance with the applicable
provisions of this Warrant including, without limitation, Section 8, this
Warrant may be divided or combined with other Warrants upon
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presentation hereof at the Designated Office, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with the
applicable provisions of this Warrant as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than pursuant to Section 2.2 hereof) any new Warrant or
Warrants required to be issued under this Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at the Designated
Office, books for the registration and transfer of the Warrants.
4. ANTIDILUTION PROVISIONS
The number of shares of Common Stock for which this Warrant is exercisable
and the Exercise Price shall be subject to adjustment from time to time as set
forth in this Section 4.
4.1 Upon Issuance of Common Stock. If the Company shall, at any time or
from time to time after the Original Issuance Date, issue any shares of Common
Stock, options to purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common Stock, or options
to purchase or rights to subscribe for such convertible or exchangeable
securities, other than shares of Series B Preferred Stock issued to the
Purchaser or Excluded Securities, without consideration or for consideration
per share less than either (a) the Exercise Price or (b) the Fair Value of the
Common Stock, in each case, in effect immediately prior to the issuance of
such Common Stock or securities, then such Exercise Price shall forthwith be
adjusted to a price equal to the lower of (x) the Exercise Price in effect
immediately prior thereto, or (y) the lowest consideration per share for which
such shares of Common Stock or such options, rights or convertible or
exchangeable securities are issued (plus the additional consideration required
to be paid upon exercise, exchange or conversion of such options, rights or
convertible or exchangeable securities).
4.2 Upon Acquisition of Common Stock. If the Company or any Subsidiary
shall, at any time or from time to time after the Original Issuance Date,
directly or indirectly, redeem, purchase or otherwise acquire (a) any shares
of Common Stock for a consideration per share greater than the Fair Value of
shares of Common Stock immediately prior to such event, or (b) any options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock (other than shares of Series
B Preferred Stock issued to the Purchaser that are redeemed according to their
terms), or options to purchase or rights to subscribe for such convertible or
exchangeable securities, in either case, for a consideration per share of
Common Stock for which such options, rights or convertible or exchangeable
securities are exercisable, convertible or exchangeable, that is greater than
the amount, if any, by which the Fair Value of shares of Common Stock
immediately prior to such event exceeds the per share exercise, exchange,
subscription, conversion or purchase price applicable to such options, rights
or convertible or exchangeable securities, then, in the case of (a) or (b),
the Exercise Price shall forthwith be lowered to a price equal to the price
obtained by multiplying:
(i) the Exercise Price in effect immediately prior to such event, by
(ii) a fraction of which (x) the denominator shall be the Fair Value
per share of Common Stock immediately prior to such event and (y) the
numerator shall be the result of dividing:
(A) (1) the product of (a) the number of shares of Common Stock
outstanding on a fully-diluted basis and (b) the Fair Value per share
of Common Stock, in each case, immediately prior to such event, minus
(2) the aggregate consideration paid by the Company in such event, by
(B) the number of shares of Common Stock outstanding on a fully-
diluted basis immediately prior to such event, minus the number of
shares of Common Stock purchased or acquired, or for which the options,
rights or convertible or exchangeable securities acquired were
exercisable, convertible or exchangeable.
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For purposes of this Section 4, "fully diluted basis" shall be determined
in accordance with the treasury method of GAAP and Section 4.3.
4.3 Provisions Applicable to Adjustments. For the purposes of any
adjustment of an Exercise Price pursuant to Sections 4.1 and 4.2, the
following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash in a public
offering or private placement, the consideration shall be deemed to be the
amount of cash paid therefor before deducting therefrom any discounts,
commissions or placement fees payable by the Company to any underwriter or
placement agent in connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock for a consideration
in whole or in part other than cash, the consideration other than cash
shall be deemed to be the Fair Value thereof as determined in accordance
with the Appraisal Procedure.
(iii) In the case of the issuance of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock, or options to purchase or rights to
subscribe for such convertible or exchangeable securities, except for
shares of Series B Preferred Stock issued to the Purchaser or options to
acquire Excluded Securities:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal
to the consideration (determined in the manner provided in
subparagraphs (i) and (ii) above), if any, received by the Company upon
the issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered
thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange of any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities, options, or rights were issued
and for a consideration equal to the consideration received by the
Company for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received
by the Company upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in
each case to be determined in the manner provided in paragraphs (i) and
(ii) above);
(C) on any change in the number of shares or exercise price of
Common Stock deliverable upon exercise of any such options or rights or
conversions of or exchanges for such securities, other than a change
resulting from the antidilution provisions thereof, the applicable
Exercise Price shall forthwith be readjusted to such Exercise Price as
would have been obtained had the adjustment made upon the issuance of
such options, rights or securities not converted prior to such change
or options or rights related to such securities not converted prior to
such change been made upon the basis of such change;
(D) upon the expiration of any such options or the termination of
any rights, convertible securities or exchangeable securities, the
applicable Exercise Price shall forthwith be readjusted to such
Exercise Price as would have been in effect at the time of such
expiration or termination had such options, rights, convertible
securities or exchangeable securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued;
and
(E) no further adjustment of the Exercise Price adjusted upon the
issuance of any such options, rights, convertible securities or
exchangeable securities shall be made as a result of the actual
issuance of Common Stock on the exercise of any such rights or options
or any conversion or exchange of any such securities.
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4.4 Upon Stock Dividends or Splits. If, at any time after the Original
Issuance Date, the number of shares of Common Stock outstanding is increased
by a stock dividend payable in shares of Common Stock or by a subdivision or
split-up of shares of Common Stock, then, following the record date for the
determination of holders of Common Stock entitled to receive such stock
dividend, or to be affected by such subdivision or split-up, the Exercise
Price shall be appropriately decreased so that the number of shares of Common
Stock purchasable on exercise of the Warrants shall be increased in proportion
to such increase in outstanding shares.
4.5 Upon Combinations. If, at any time after the Original Issuance Date,
the number of shares of Common Stock outstanding is decreased by a combination
of the outstanding shares of Common Stock into a smaller number of shares of
Common Stock, then, following the record date to determine shares affected by
such combination, the Exercise Price shall be appropriately increased so that
the number of shares of Common Stock purchasable on exercise of each of the
Warrants shall be decreased in proportion to such decrease in outstanding
shares.
4.6 Upon Reclassifications, Reorganizations, Consolidations or Mergers. In
the event of any capital reorganization of the Company, any reclassification
of the stock of the Company (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
stock dividend or subdivision, split-up or combination of shares), any sale or
transfer to another Person of the property of the Company as an entirety or
substantially as an entirety, or any consolidation or merger of the Company
with or into another corporation (where the Company is not the surviving
corporation or where there is a change in or distribution with respect to the
Common Stock), each Warrant shall after such reorganization, reclassification,
consolidation, transfer or merger be exercisable for the kind and number of
shares of stock or other securities or property of the Company or of the
successor corporation resulting from such consolidation, transfer or surviving
such merger, if any, to which the holder of the number of shares of Common
Stock deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon exercise of such Warrant would
have been entitled upon such reorganization, reclassification, consolidation,
transfer or merger. The provisions of this clause shall similarly apply to
successive reorganizations, reclassifications, consolidations, transfers, or
mergers.
Notwithstanding anything contained in this Agreement to the contrary, in
the event that the Company shall effect any of the transactions described in
this Section 4.6, each person (other than the Company) which may be required
to issue a new Warrant as provided above shall assume by written instrument
delivered to, and reasonably satisfactory to, the Majority Warrant Holders (i)
the obligations of the Company under this Agreement (and if the Company shall
survive the consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any continuing
obligations of the Company under this Agreement) and (ii) the obligation to
deliver to all Holders such new Warrants as, in accordance with the foregoing
provisions of this Section 4.6, such Holders may be entitled to receive, and
such Person shall have similarly delivered to such Holders an opinion of
counsel for such Person, which counsel shall be reasonably satisfactory to the
Majority Warrant Holders, stating that this Agreement shall thereafter
continue in full force and effect and that the terms hereof (including,
without limitation, all of the provisions of this Section 4.6, shall be
applicable to the stock, securities, cash or property which such person may be
required to deliver upon any exercise of any of the Warrants or such new
Warrant or the exercise of any rights pursuant hereto.
4.7 Deferral in Certain Circumstances. In any case in which the provisions
of this Section 4 shall require that an adjustment shall become effective
immediately after a record date of an event, the Company may defer until the
occurrence of such event issuing to the Holder of any Warrant exercised after
such record date and before the occurrence of such event the shares of capital
stock issuable upon such exercise by reason of the adjustment required by such
event and issuing to such Holder only the shares of capital stock issuable
upon such exercise before giving effect to such adjustments; provided,
however, that the Company shall deliver to such Holder an appropriate
instrument or due bills evidencing such Xxxxxx's right to receive such
additional shares.
4.8 Other Anti-Dilution Provisions. If the Company has issued or issues any
securities on or after the Original Issuance Date containing provisions
protecting the holder or holders thereof against dilution in any
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manner more favorable to such holder or holders thereof than those set forth
in this Section 4, such provisions (or any more favorable portion thereof)
shall be deemed to be incorporated herein as if fully set forth in this
Warrant and, to the extent inconsistent with any provision of this Warrant,
shall be deemed to be substituted therefor.
4.9 Appraisal Procedure. In any case in which the provisions of this
Section 4 shall necessitate that the Appraisal Procedure be utilized for
purposes of determining an adjustment to the Exercise Price, the Company may
defer until the completion of the Appraisal Procedure and the determination of
the adjustment (1) issuing to the Holder of any Warrant exercised after the
date of the event that requires the adjustment and before completion of the
Appraisal Procedure and the determination of the adjustment, the shares of
capital stock issuable upon such exercise by reason of the adjustment required
by such event and issuing to such Holder only the shares of capital stock
issuable upon such exercise before giving effect to such adjustment and (2)
paying to such Holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section 2.3 above; provided, however, that the
Company shall deliver to such holder an appropriate instrument or due bills
evidencing such holder's right to receive such additional shares or cash.
4.10 Adjustment of Number of Shares Purchasable. Upon any adjustment of the
Exercise Price as provided in Section 4.1, 4.2, 4.4, 4.5 or 4.6, the Holders
of the Warrants shall thereafter be entitled to purchase upon the exercise
thereof, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/100th of a share) obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable on the exercise
hereof immediately prior to such adjustment and dividing the product thereof
by the Exercise Price resulting from such adjustment.
4.11 Exceptions. Section 4 shall not apply to (i) any issuance of Common
Stock upon exercise of any options or warrants outstanding on April 14, 2000,
(ii) the issuance of shares of Common Stock, in an aggregate amount not to
exceed 500,000 shares to XxXxxx Group, L.P., (iii) the issuance of shares of
Common Stock, in an aggregate amount not to exceed 2,600,000 shares upon
exercise of options or warrants that have been approved by the Board of
Directors, or any issuance of such options or warrants, (iv) shares of Common
Stock issued pursuant to the Company's current employee stock purchase plan in
an amount not to exceed 114,000 shares (the securities referred to in clauses
(i), (ii), (iii) and (iv) being collectively referred to as "Excluded
Securities"), (iv) any issuance of Common Stock in an underwritten public
offering at a price per share at least equal to the Exercise Price then in
effect if the underwriting discount does not exceed 7%, or (v) the issuance of
Series B Preferred Stock and Warrants (Preferred Stock) to the Purchaser
pursuant to the Purchase Agreement.
4.12 Notice of Adjustment of Exercise Price. Whenever the Exercise Price is
adjusted as herein provided:
(i) the Company shall compute the adjusted Exercise Price in accordance
with this Section 4 and shall prepare a certificate signed by the Company's
independent accounting firm, setting forth the adjusted Exercise Price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed at each office or agency
maintained for such purpose or exercise of Warrants; and
(ii) a notice stating that the Exercise Price has been adjusted and
setting forth the adjusted Exercise Price shall forthwith be prepared by
the Company, and as soon as practicable after it is prepared, such notice
shall be mailed by the Company at its expense to all Holders at their last
addresses as they shall appear in the stock register.
4.13 Other Dilutive Events. If any event occurs as to which the provisions
of this Section 4 are not strictly applicable or, if strictly applicable,
would not fairly and adequately protect the conversion rights of the Holders
in accordance with the essential intent and principles of such provisions,
then the Board of Directors shall make such adjustments in the application of
such provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary to protect such purchase rights as aforesaid;
provided that no such adjustment will increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined
pursuant to this Section 4.
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5. NO IMPAIRMENT; REGULATORY COMPLIANCE AND COOPERATION; NOTICE OF EXPIRATION
(a) The Company shall not by any action, including, without limitation,
amending its charter documents or through any reorganization,
reclassification, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other similar voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company shall take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, free and clear of all Liens, and shall use
its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
(b) The Company shall deliver to each Holder of Warrants on or before six
months prior to the tenth anniversary of the Original Issue Date, but no
earlier than nine months prior to the tenth anniversary of the Original Issue
Date, advance notice of such tenth anniversary and of the anticipated
Expiration Date. If the Company fails to fulfill in a timely manner the notice
obligation set forth in the prior sentence, it shall provide such notice as
soon as possible thereafter.
6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Original Issue Date, the Company shall at all times
reserve and keep available for issuance upon the exercise of the Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock issuable pursuant to the terms hereof, when issued upon
exercise of this Warrant with payment therefor in accordance with the terms
hereof, shall be duly and validly issued and fully paid and nonassessable, not
subject to preemptive rights and shall be free and clear of all Liens. Before
taking any action that would result in an adjustment in the number of shares
of Common Stock for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction over such action. If any shares of Common Stock
required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority under any
federal or state law (other than under the Securities Act or any state
securities law) before such shares may be so issued, the Company will in good
faith and as expeditiously as possible and at its expense endeavor to cause
such shares to be duly registered.
7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS
7.1 Notices of Corporate Actions.
In case:
(a) the Company shall take an action or an event shall occur, that
would require an Exercise Price adjustment pursuant to Section 4; or
(b) the Company shall grant to the holders of its Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class; or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock), or
of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
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(e) the Company or any Subsidiary shall commence a tender offer for all
or a portion of the outstanding shares of Common Stock (or shall amend any
such tender offer to change the maximum number of shares being sought or
the amount or type of consideration being offered therefor);
then the Company shall cause to be filed at each office or agency maintained
for such purpose, and shall cause to be mailed to all Holders of Warrants at
their last addresses as they shall appear in the stock register, at least 30
days prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record who will be entitled to such dividend, distribution, rights or
warrants are to be determined, (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the
other material terms thereof (or the material terms of the amendment thereto).
Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Exercise
Price and the number and kind or class of shares or other securities or
property which shall be deliverable or purchasable upon the occurrence of such
action or deliverable upon exercise of the Warrants. Neither the failure to
give any such notice nor any defect therein shall affect the legality or
validity of any action described in clauses (a) through (e) of this Section
7.1.
7.2 Taking of Record. In the case of all dividends or other distributions
by the Company to the holders of its Common Stock with respect to which any
provision of any Section hereof refers to the taking of a record of such
holders, the Company will in each such case take such a record and will take
such record as of the close of business on a Business Day.
7.3 Closing of Transfer Books. The Company shall not at any time, except
upon dissolution, liquidation or winding up of the Company, close its stock
transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
8. TRANSFER RESTRICTIONS
The Holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this Section 8.
8.1 Restrictions on Transfers. Neither this Warrant nor any shares of
Restricted Common Stock issued upon the exercise hereof shall be transferred,
sold, assigned, exchanged, mortgaged, pledged, hypothecated or otherwise
disposed of or encumbered except in compliance with the provisions of the
Securities Act, the rules and regulations thereunder and this Warrant. Each
certificate, if any, evidencing such shares of Restricted Common Stock issued
upon any such Transfer, other than in a public offering pursuant to an
effective registration statement, shall bear the restrictive legend set forth
in Section 8.2(a), and each Warrant issued upon such Transfer shall bear the
restrictive legend set forth in Section 8.2(b), unless the Company determines
that, or the Holder delivers to the Company an Opinion of Counsel to the
effect that, such legend is not required for the purposes of compliance with
the Securities Act. Holders of the Warrants or the Restricted Common Stock, as
the case may be, shall not be entitled to Transfer such Warrants or such
Restricted Common Stock except in accordance with this Section 8.1.
8.2 Restrictive Legends.
(a) Except as otherwise provided in this Section 8, each certificate for
Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OF
OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS
OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT AND THE
RULES AND REGULATIONS THEREUNDER."
(b) Except as otherwise provided in this Section 8, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAW. THE WARRANT REPRESENTED BY THIS
CERTIFICATE AND THE STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OF
OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS
OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES
AND REGULATIONS THEREUNDER AND THIS WARRANT."
8.3 Termination of Securities Law Restrictions. Notwithstanding the
foregoing provisions of this Section 8, the restrictions imposed by Section
8.1 upon the transferability of the Warrants and the Restricted Common Stock
and the legend requirements of Section 8.2(a) and (b) shall terminate as to
any particular Warrant or shares of Restricted Common Stock when the Company
shall have received from the Holder thereof an Opinion of Counsel to the
effect that such legend is not required in order to ensure compliance with the
Securities Act. Whenever the restrictions imposed by Section 8.1 shall
terminate as to this Warrant, as herein above provided, the Holder hereof
shall be entitled to receive from the Company, at the expense of the Company,
a new Warrant with no restrictive legend, and none of the Warrants issued upon
registration of transfer, division or combination of, or in substitution for,
such Warrant or Warrants shall have any similar restrictive legend endorsed
thereon. Whenever the restrictions imposed by this Section shall terminate as
to any share of Restricted Common Stock, as herein above provided, the Holder
thereof shall be entitled to receive from the Company, at the Company's
expense, a new certificate representing such Common Stock not bearing the
restrictive legend set forth in Section 8.2(a).
9. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it (it
being understood that the written indemnification agreement of or affidavit of
loss of the Holder shall be a sufficient indemnity) and, in case of
mutilation, upon surrender and cancellation hereof, the Company will execute
and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, however, that, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company
for cancellation.
10. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency, which may be the principal executive offices of
the Company (the "Designated Office"), where the Warrants may be presented for
exercise, registration of transfer, division or combination as provided in
this Warrant. Such Designated Office shall initially be the office of the
Company at 0000 Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000. The Company may from time
to time change the Designated Office to another office of the Company or its
agent within the United States by notice given to all registered Holders at
least ten (10) Business Days prior to the effective date of such change.
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11. FINANCIAL AND BUSINESS INFORMATION
If at any time prior to the Expiration Date, the Company is not required to
file reports under Section 13 or 15(d) of the Exchange Act, the Company shall
furnish to Holders of Warrants the following:
(a) Quarterly Reports. As soon as available, but not later than 45 days
after the end of each quarterly accounting period, (A) a consolidated
balance sheet of the Company as of the end of such period and consolidated
statements of income, cash flows and changes in stockholders' equity for
such quarterly accounting period and for the period commencing at the end
of the previous fiscal year and ending with the end of such period, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles consistently
applied, subject to normal year-end adjustments and the absence of footnote
disclosure, and (B) a report by management of the Company of the operating
and financial highlights of the Company and its Subsidiaries for such
period, which shall include an analysis of the operations of the Company
and its Subsidiaries for such period.
(b) Annual Reports. As soon as available, but not later than 90 days
after the end of each fiscal year of the Company, audited consolidated
financial statements of the Company, which shall include statements of
income, cash flows and changes in stockholders' equity for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance
with generally accepted accounting principles, consistently applied, and
accompanied by the report of a "Big 5" firm of independent certified public
accountants selected by the Company's Board of Directors (the
"Accountants"). The Company and its Subsidiaries shall maintain a system of
accounting sufficient to enable its Accountants to render the report
referred to in this Section 11(b).
(c) Miscellaneous. Promptly upon becoming available, each of the
following:
(i) notification in writing of the existence of any default under
any material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of their assets are bound;
(ii) upon request, copies of all reports prepared for or delivered
to the management of the Company or its Subsidiaries by its
accountants; and
(iii) upon request, any other routinely collected financial or other
information available to management of the Company or its Subsidiaries
(including, without limitation, routinely collected statistical data).
The Company shall comply with any written request from any Holder that the
Company not provide such Holder with any of the foregoing information for any
period of time.
12. DILUTION FEE
In the event any dividends are declared with respect to the Common Stock,
as of the record date established by the Board of Directors the Company shall
pay the Holder of this Warrant as a dilution fee (the "Dilution Fee") an
amount (whether in the form of cash, securities or other property) equal to
the amount (and in the form) of the dividends that such Holder would have
received had this Warrant been exercised for purchase of Common Stock
immediately prior to the record date of such dividend, such Dilution Fee to be
payable on the payment date of the dividend established by the Board of
Directors (the "Dilution Fee Payment Date"). The record date for any such
Dilution Fee shall be the record date for the applicable dividend, and any
such Dilution Fee shall be payable to the persons in whose name this Warrant
is registered at the close of business on the applicable record date.
13. MISCELLANEOUS
13.1 Nonwaiver. No course of dealing or any delay or failure to exercise
any right hereunder on the part of the Company or the Holder shall operate as
a waiver of such right or otherwise prejudice the rights, powers or remedies
of such person.
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13.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or communication hereunder to be made pursuant to the
provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or by reputable air
courier service with tracking capability and charges prepaid or by facsimile,
addressed as follows:
(a) if to any Holder of this Warrant or of Warrant Stock issued upon
the exercise hereof, at its last known address appearing on the books of
the Company maintained for such purpose;
(b) if to the Company, at the Designated Office;
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, or three (3) Business Days
after the same shall have been deposited in the United States mail, or one (1)
Business Day after the same shall have been sent by Federal Express or another
recognized overnight courier service.
13.3 Indemnification. If the Company fails to make, when due, any payments
provided for in this Warrant, the Company shall pay to the Holder hereof (a)
interest at the Agreed Rate on any amounts due and owing to such Holder and
(b) such further amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees and
expenses incurred by such Holder in collecting any amounts due hereunder. The
Company shall indemnify, save and hold harmless the Holder hereof and the
Holders of any Warrant Stock issued upon the exercise hereof from and against
any and all liability, loss, cost, damage, reasonable attorneys' and
accountants' fees and expenses, court costs and all other out-of-pocket
expenses incurred in connection with or arising from any default hereunder by
the Company. This indemnification provision shall be in addition to the rights
of such Holder or Holders to bring an action against the Company for breach of
contract based on such default hereunder.
13.4 Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such Holder to pay the Exercise Price for any
Warrant Stock other than pursuant to an exercise of this Warrant or any
liability as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
13.5 Remedies. Each Holder of Warrants and/or Warrant Stock, in addition to
being entitled to exercise its rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights provided
under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees, in an action for specific
performance, to waive the defense that a remedy at law would be adequate.
13.6 Successors and Assigns. Subject to the provisions of Sections 3.1, 8.1
and 8.2, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the permitted
successors and assigns of the Holder hereof. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to time of this
Warrant and to the extent applicable, all Holders of shares of Warrant Stock
issued upon the exercise hereof (including transferees), and shall be
enforceable by any such Holder.
13.7 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the
Company and the Majority Warrant Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for which
such Warrant is exercisable or to increase the price at which such shares may
be purchased upon exercise of such Warrant (before giving effect to any
adjustment as provided therein) without the written consent of the Holder
thereof.
13.8 Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
J-16
13.9 Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this
Warrant.
13.10 GOVERNING LAW; JURISDICTION. (a) IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT WITH RESPECT TO
THE VALIDITY OF THIS WARRANT, THE ISSUANCE OF WARRANT STOCK UPON EXERCISE
HEREOF AND THE RIGHTS AND DUTIES OF THE COMPANY WITH RESPECT TO REGISTRATION
OF TRANSFER, WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS WARRANT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY
OF THIS WARRANT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
COMPANY AT ITS ADDRESS PROVIDED PURSUANT TO SECTION 13.2, SUCH SERVICE TO
BECOME EFFECTIVE SEVEN DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE HOLDER OF THIS WARRANT TO SERVE PROCESS IN ANY OF THE MATTERS
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION. THE COMPANY HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS WARRANT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING UNDER OR WITH RESPECT HERETO.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and its corporate seal to be impressed hereon and attested by its Secretary or
an Assistant Secretary.
Peapod, Inc.
/s/ Xxxxxx X. Xxxxxxxxx
By: _________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
Attest:
/s/ Xxx Xxxxxxxxxx
By: _________________________________
Name: Xxx Xxxxxxxxxx
Title: Secretary
J-17
ANNEX A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned Holder of this Warrant irrevocably exercises this Warrant
for the purchase of shares Common Stock of Peapod, Inc. and herewith
makes payment of the Warrant Price as follows (check one or more of the
following):
[_]by delivery herewith of a certified or official bank check in the amount
of such Warrant Price payable to the order of the Company;
[_]hereby instructs the Company to withhold a number of shares of Warrant
Stock then issuable upon exercise of this Warrant with an aggregate Fair
Value equal to such Warrant Price;
[_]herewith surrenders to the Company shares of Common Stock previously
acquired by the Holder with an aggregate Fair Value equal to such
Warrant Price;
[_]herewith surrenders to the Company dividends due and owing by the
Company to the Holder equal to such Warrant Price; or
[_]by providing to the Company goods or services with a fair value equal to
such Warrant Price;
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased
(and any securities or other property issuable upon such exercise) be issued
in the name of and delivered to whose address is
and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in this Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common
Stock issuable hereunder be delivered to the undersigned.
-------------------------------------
(Name of Registered Owner)
-------------------------------------
(Signature of Registered Owner)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
J-18
ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the assignee named below all of the rights
of the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
Name and
Address
of No. of Shares of
Assignee Common Stock
-------- ----------------
and does hereby irrevocably constitute and appoint
attorney-in-fact to register such transfer onto the books of Peapod, Inc.
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
----------------
Signature: __________________________
Witness: ____________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
J-19
TABLE OF CONTENTS
Page
----
1. DEFINITIONS........................................................... 1
2. EXERCISE OF WARRANT................................................... 8
2.1 Manner of Exercise................................................. 8
2.2 Payment of Taxes................................................... 10
2.3 Fractional Shares.................................................. 10
2.4 Reduced Exercise Price............................................. 11
3. TRANSFER, DIVISION AND COMBINATION.................................... 11
3.1 Transfer........................................................... 11
3.2 Division and Combination........................................... 11
3.3 Expenses........................................................... 11
3.4 Maintenance of Books............................................... 11
4. ANTIDILUTION PROVISIONS............................................... 11
4.1 Upon Issuance of Common Stock...................................... 12
4.2 Upon Acquisition of Common Stock................................... 12
4.3 Provisions Applicable to Adjustments............................... 13
4.4 Upon Stock Dividends or Splits..................................... 14
4.5 Upon Combinations.................................................. 15
4.6 Upon Reclassifications, Reorganizations, Consolidations or Mergers. 15
4.7 Deferral in Certain Circumstances.................................. 16
4.8 Other Anti-Dilution Provisions..................................... 16
4.9 Appraisal Procedure................................................ 16
4.10 Adjustment of Number of Shares Purchasable......................... 16
4.11 Exceptions......................................................... 17
4.12 Notice of Adjustment of Exercise Price............................. 17
4.13 Other Dilutive Events.............................................. 17
5. NO IMPAIRMENT; REGULATORY COMPLIANCE AND COOPERATION; NOTICE OF
EXPIRATION........................................................... 18
6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY............................... 18
7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS......... 19
7.1 Notices of Corporate Actions....................................... 19
7.2 Taking of Record................................................... 20
7.3 Closing of Transfer Books.......................................... 20
8. TRANSFER RESTRICTIONS................................................. 20
8.1 Restrictions on Transfers.......................................... 20
8.2 Restrictive Legends................................................ 21
8.3 Termination of Securities Law Restrictions......................... 21
9. LOSS OR MUTILATION.................................................... 22
10. OFFICE OF THE COMPANY................................................. 22
11. FINANCIAL AND BUSINESS INFORMATION.................................... 22
12. DILUTION FEE.......................................................... 23
J-20
Page
----
13. MISCELLANEOUS.......................................................... 24
13.1 Nonwaiver.......................................................... 24
13.2 Notice Generally................................................... 24
13.3 Indemnification.................................................... 24
13.4 Limitation of Liability............................................ 25
13.5 Remedies........................................................... 25
13.6 Successors and Assigns............................................. 25
13.7 Amendment.......................................................... 25
13.8 Severability....................................................... 25
13.9 Headings........................................................... 26
13.10 GOVERNING LAW; JURISDICTION........................................ 26
ANNEX A SUBSCRIPTION FORM
ANNEX B ASSIGNMENT FORM
J-21
