Exhibit 3
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 13 OF THE
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 6, 1996,
BETWEEN i VILLAGE INC. AND THE OTHER PARTIES THERETO (THE "REGISTRATION
RIGHTS AGREEMENT"), AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, i VILLAGE INC., HAS AGREED TO DELIVER TO THE
HOLDER HEREOF A NEW WARRANT, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF i VILLAGE INC.
May 6, 1996
i VILLAGE INC.
STOCK SUBSCRIPTION WARRANT
THIS CERTIFIES that, for value received, AMERICA ONLINE,
INC. ("AOL"), or assigns, is entitled to subscribe for and purchase from i
VILLAGE INC., a Delaware corporation (the "Corporation"), up to a maximum of
800,000 shares (the "Warrant Shares") of Series B Preferred Stock, $.0005 par
value (the "Preferred Stock"), of the Corporation at the price of $2.50 per
share (the "Warrant Price"), at such times as shall be determined in
accordance with Section 1 hereof during the period (the "Exercise Period")
commencing with the earlier of the date hereof and ending with the fifth
anniversary of such date. This Warrant is being issued pursuant to a Series
B Preferred Stock Purchase Agreement (the "Purchase Agreement") dated the
date hereof, between the Corporation and the other parties thereto and as an
inducement to, and in consideration of, AOL's entering into and performing
the Information Provider Agreement dated as of May 6, 1996 (the "IPA")
between AOL and the Corporation, which includes, among other things, AOL's
commitment to carry four channels (in addition to "Parent Soup") over its
proprietary commercial online network, which currently has over 5,000,000
subscribers. Terms used but not defined herein shall have the meanings set
forth in the Purchase Agreement or the Amended and Restated Stockholders'
Agreement, dated the date hereof, among the Corporation and the other parties
thereto (the "Stockholders' Agreement").
SECTION 1. Number of Warrant Shares Exercisable
Hereunder.
This Warrant shall be or become exercisable as to that
number of Warrant Shares, and at such times, as are determined in accordance
with Schedule A attached hereto.
SECTION 2. Exercise of Warrant.
Subject to the provisions of Section 1 hereof, the rights
represented by this Warrant may be exercised by the holder hereof as to those
Warrant Shares for which this Warrant is then exercisable as determined in
accordance with said Section 1, in whole or in part, at any time during the
Exercise Period, by the surrender of this Warrant (properly endorsed) at the
office of the Corporation, or at such other agency or office of the
Corporation in the United States of America as it may designate by notice in
writing to the holder hereof at the address of such holder appearing on the
books of the Corporation, and by payment to the Corporation of the Warrant
Price in cash or by check for each Warrant Share being purchased. In the
event of the exercise of the rights represented by this Warrant, a
certificate or certificates for the Warrant Shares so purchased, registered
in the name of the holder, and if such Warrant Exercise shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder
hereof, of like tenor to this Warrant, shall be delivered to the holder
hereof within a reasonable time, not exceeding ten days, after the rights
represented by this Warrant shall have been so exercised. The person in
whose name any certificate for Warrant Shares is issued upon exercise of this
Warrant shall for all purposes be deemed to have become the holder of record
of such shares on the date on which the Warrant was surrendered and payment
of the Warrant Price and any applicable taxes was made, irrespective of the
date of delivery of such certificate, except that, if the date of such
surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which
the stock transfer books are open.
SECTION 3. Exchange of Warrant.
(a) At any time and from time to time during
the Exercise Period, the holder may, at its option, exchange this Warrant, in
whole or in part (a "Warrant Exchange"), into the number of Warrant Shares
determined in accordance with paragraph (b) below, by the surrender of this
Warrant, accompanied by a properly completed and executed Notice of Exchange
in the form attached, at the agency or office of the Corporation referred to
in Section 2.
(b) In connection with any Warrant Exchange,
this Warrant shall represent the right to subscribe for and acquire the
excess (rounded to the next higher integer) of (i) the number (the "Total
Number") of Warrant Shares specified in the Notice of Exchange over (and for
which this Warrant would otherwise be exercisable) (ii) the number of Warrant
Shares equal to the quotient obtained by dividing (A) the product of the
Total Number and the existing Warrant Price by (B) the Fair Market Value.
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(c) Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean:
(i) if the Corporation's Common Stock
is traded on an exchange or is quoted on the National Association of
Securities Dealers, Inc., Automated Quotation ("NASDAQ") National
Market System, then the average of the closing or last sale prices,
respectively, reported for the twenty (20) trading days ended
immediately preceding the Determination Date; or if the Corporation's
Common Stock is not traded on an exchange or on the NASDAQ National
Market System but is traded in the over-the-counter market, then the
mean of the average of the closing bid and asked prices reported for
the twenty (20) trading days ended immediately preceding the
Determination Date;
(ii) in the event of a Warrant Exchange
in connection with a merger or consolidation of the Corporation or a
sale of all outstanding capital stock or sale of all or substantially
all of the assets, the value of the consideration received or
receivable by the stockholders of the Corporation for each share of
Common Stock held (assuming, in the case of a sale of assets, the
Corporation is liquidated immediately following such sale and the
consideration paid to the Corporation is immediately distributed to
its stockholders); and
(iii) in all other circumstances, the
fair market value per share of outstanding Common Stock as determined
by a nationally recognized independent investment banking firm
jointly selected by the Corporation and the holder of this Warrant
or, if such selection cannot be made within five days after delivery
of the Notice of Exchange, by a nationally recognized independent
investment banking firm selected by the American Arbitration
Association in accordance with its rules.
(d) The closing of any Warrant Exchange shall
take place at the offices of the Corporation on the date specified in the
Notice of Exchange (the "Exchange Date"), which shall be not less than five
and not more than 30 days after the delivery of such Notice. At such
closing, the Corporation shall issue and deliver to the holder or its
designee a certificate or certificates for the Warrant Shares to be issued
upon such Warrant Exchange, registered in the name of the holder or such
designee, and if such Warrant Exchange shall not have been for all Warrant
Shares, a new Warrant, registered in the name of the holder, of like tenor to
this Warrant for the number of shares still subject to this Warrant following
such Warrant Exchange (i.e., the excess of (i) the number of shares subject
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to this Warrant immediately before such Warrant Exchange over (ii) the Total
Number).
SECTION 4. Adjustment of Warrant Price.
If, at any time during the Exercise Period, the number of
outstanding shares of Preferred Stock is (i) increased by a stock dividend
payable in shares of Preferred Stock or by a subdivision or split-up of
shares of Preferred Stock, or (ii) decreased by a combination of shares of
Preferred Stock, then, following the record date fixed for the determination
of holders of Preferred Stock entitled to receive the benefits of such stock
dividend, subdivision, split-up, or combination, the Warrant Price shall be
adjusted to a new amount equal to the product of (A) the Warrant Price in
effect on such record date and (B) the quotient obtained by dividing (x) the
number of shares of Preferred Stock outstanding on such record date (without
giving effect to the event referred to in the foregoing clause (i) or (ii),
by (y) the number of shares of Preferred Stock which would be outstanding
immediately after the event referred to in the foregoing clause (i) or (ii),
if such event had occurred immediately following such record date.
SECTION 5. Adjustment of Warrant Shares.
Upon each adjustment of the Warrant Price as provided in
Section 4, the Holder shall thereafter be entitled to subscribe for and
purchase, at the Warrant Price resulting from such adjustment, the number of
Warrant Shares equal to the product of (i) the number of Warrant Shares
existing prior to such adjustment and (ii) the quotient obtained by dividing
(A) the Warrant Price existing prior to such adjustment by (B) the new Warrant
Price resulting from such adjustment. No fractional shares of Preferred Stock
shall be issued as a result of any such adjustment, and any fractional shares
resulting from the computations pursuant to this paragraph shall be eliminated
without consideration.
SECTION 6. Covenants as to Preferred Stock and
Common Stock.
(a) The Corporation covenants and agrees that
all shares of Preferred Stock which may be issued upon the exercise of the
rights represented by this Warrant, and all shares of Common Stock which may
be issued upon the conversion of the Preferred Stock, will, upon issuance, be
validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof. The Corporation further
covenants and agrees that the Corporation will from time to time take all
such action as may be requisite to assure that the stated or par value per
share of the Preferred Stock and the Common Stock is at all times equal to or
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less than the then effective Warrant Price per share of Preferred Stock
issuable upon exercise of this Warrant. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of (a) shares of
its Preferred Stock to provide for the exercise of the rights represented by
this Warrant and (b) shares of Common Stock to provide for the conversion of
the Preferred Stock issuable upon exercise of this Warrant. The Corporation
further covenants and agrees that if any shares of capital stock to be
reserved for the purpose of the issuance of shares of Preferred Stock upon
the exercise of this Warrant or the conversion of Preferred Stock require
registration with or approval of any governmental authority under any Federal
or state law before such shares may be validly issued or delivered upon
exercise, then the Corporation will in good faith and expeditiously as
possible endeavor to secure such registration or approval, as the case may
be. If and so long as the Preferred Stock issuable upon the exercise of this
Warrant or the Common Stock issuable upon conversion of the Preferred Stock
is listed on any national securities exchange, the Corporation will, if
permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of such capital stock.
(b) The Corporation further covenants and
agrees that the holder hereof will be entitled to the benefits of any
adjustment prior to the exercise hereof pursuant to any anti-dilution
protection afforded to holders of Preferred Stock.
SECTION 7. No Shareholder Rights.
This Warrant shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Corporation.
SECTION 8. Restrictions on Transfer, Rights Under
Purchase Agreement; Etc.
The holder of this Warrant by acceptance hereof agrees that
the transfer of this Warrant, the shares of Preferred Stock issuable upon the
exercise of this Warrant and the shares of Common Stock issuable upon
conversion of such shares of Preferred Stock are subject to the provisions of
Section 13 of the Registration Rights Agreement and this Warrant. The shares
of Preferred Stock issuable upon exercise of this Warrant and the shares of
Common Stock issuable upon conversion of such shares of Preferred Stock shall
be entitled to all rights and benefits accorded thereto in the Purchase
Agreement, and the applicable provisions of the Purchase Agreement are hereby
incorporated herein by reference.
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SECTION 9. Transfer of Warrant; Amendment.
(a) This Warrant and all rights hereunder are
transferable, in whole, or in part, in accordance with the Stockholders'
Agreement, at the agency or office of the Corporation referred to in Section
2, by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so
endorsed the holder hereof may be treated by the Corporation and all other
persons dealing with this Warrant as the absolute owner hereof for any
purposes and as the person entitled to exercise the rights represented by
this Warrant, or to the transfer hereof on the books of the Corporation, any
notice to the contrary notwithstanding; but until each transfer on such
books, the Corporation may treat the registered holder hereof as the owner
hereof for all purposes.
(b) The terms and provisions of this Warrant
may not be modified or amended, except under the written consent of the
Corporation and the Holders of a majority of Warrant Shares issuable upon
exercise hereof.
SECTION 10. Reorganizations, Etc.
In case, at any time during the Exercise Period, of any
capital reorganization, of any reclassification of the stock of the
Corporation (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), or the consolidation or
merger of the Corporation with or into another corporation (other than a
consolidation or merger in which the Corporation is the continuing operation
and which does not result in any change in the Preferred Stock and Common
Stock) or of the sale of all or substantially all the properties and assets
of the Corporation as an entirety to any other corporation, this Warrant
shall, after such reorganization, reclassification, consolidation, merger or
sale, be exercisable for the kind and number of shares of stock or other
securities or property of the Corporation or of the corporation resulting
from such consolidation or surviving such merger or to which such properties
and assets shall have been sold to which such holder would have been entitled
if he had held the Preferred Stock issuable upon the exercise hereof
immediately prior to such reorganization, reclassification, consolidation,
merger or sale.
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SECTION 11. Lost, Stolen, Mutilated or Destroyed
Warrant.
If this Warrant is lost, stolen, mutilated or destroyed, the
Corporation may, on such terms as to indemnity or otherwise as it may in its
discretion impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as
the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant
shall constitute an original contractual obligation of the Corporation,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
shall be at any time enforceable by anyone.
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IN WITNESS WHEREOF, the undersigned has caused this Warrant
to be executed by its duly authorized officer on the date first above
written.
i VILLAGE INC.
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
ATTEST: /s/ Xxxxxx Xxxxxxx
---------------------------
Secretary
Schedule A
Number of Shares For Which the
Warrant Shall be Exercisable:
Performance Milestone Percentage of Maximum Number
of Warrant Shares
1) Execution and Delivery of the 33 1/3%
Information Provider Agreement
dated as of May 6, 1996 (the
"IPA")
2) Commercial Launch of the First 33 1/3%
Online Area (as defined in the
IPA)
3) Commercial Launch of Second Online 33 1/3%
Area (as defined in the IPA)
Form of Subscription
[To be signed upon exercise of Warrant]
The undersigned, the holder of the Warrants Shares, hereby
irrevocably elects to exercise the purchase rights represented by such
Warrant for, and to purchase thereunder, _________ shares of Series B
Preferred Stock of i VILLAGE INC., and herewith makes payment of $ __________
therefor, and requests that the certificates for such shares be issued in
the name of and delivered to, __________________________ whose address is
________________________________________________.
Dated: __________________________________
(Signature)
__________________________________
(Address)
__________________
[FN]
All or any portion of which can be paid by cancellation of
indebtedness under and surrender of Secured Convertible Notes.
Notice of Exchange
(To be executed by the Holder in
order to exchange the Warrant.)
The undersigned hereby irrevocably elects to exchange this
Warrant into _______ shares (the foregoing number constituting the "Total
Number" referred to in Section 3(b) of this Warrant) of Series B Preferred
Stock of i VILLAGE INC., minus any shares to be deducted from the foregoing
number in accordance with the terms of this Warrant, according to the
conditions thereof. The undersigned desires to consummate such exchange on
______________________________.
Dated: _________________________________
Name of Holder
By:_______________________________
Form of Assignment
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns
and transfers unto the right represented by the Warrant to purchase
___________ shares of Series B Preferred Stock of i VILLAGE INC., to which
the Warrant relates, and appoints Attorney to transfer such right on the
books of i VILLAGE INC., with full power of substitution in the premises.
Dated: _________________________________
(Signature)
Signed in the presence of:
_____________________________
