EXHIBIT 4.4
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Warrant No. __________ Number of Shares: 200,000
REDENVELOPE, INC.
Void after February 28, 2007
1. ISSUANCE. This Warrant is issued to LIGHTHOUSE CAPITAL PARTNERS III
, L.P. by REDENVELOPE, INC., a Delaware corporation (hereinafter with its
successors called the "Company").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "Holder"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the Company
the following securities (collectively, the "Shares"):
(a) One Hundred and Fifty Thousand (150,000) fully paid and
nonassessable shares of Common Stock, $0.001 par value, of the Company (the
"Common Stock") at a price per share equal to $0.50; and
(b) Fifty Thousand (50,000) fully paid and nonassessable
shares of Common Stock at a price per share equal to the lesser of (i) the price
per share equal to the Fair Market Value (as defined in SECTION 4 below) of one
share of Common Stock, determined as of the closing of the Company's next round
of preferred stock equity financing raising at least $10,000,000 (the "Next
Round of Financing") on or before September 30, 2000 or (ii) $1.00 per share;
provided, however, that if the Company has not closed the Next Round of
Financing at the time of exercise or if the Company undergoes a Reorganization
(as defined in SECTION 11 below), the price per share pursuant to this SECTION
2(b) shall be $1.00.
The prices per share referred to in SECTIONS 2(a) and 2(b) above shall
collectively be referred to herein as the "Purchase Price."
Until such time as this Warrant is exercised in full or expires, the Purchase
Price and the securities issuable upon exercise of this Warrant are subject to
adjustment as hereinafter provided. The person or persons on whose name or names
any certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in
cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, or (iii) by any combination of the foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock
equal to the net value of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the duly executed net issue
election notice annexed
hereto specifying whether the Shares for which such net issue election is made
shall be for Shares under SECTION 2(a) or SECTION 2(b) above, at the principal
office of the Company. Thereupon, the Company shall issue to the Holder such
number of fully paid and nonassessable shares of Common Stock as is computed
using the following formula:
Y (A-B)
X = -------
A
where: X = the number of shares of Common Stock to be issued to
the Holder pursuant to this SECTION 4.
Y = the number of shares of Common Stock covered by this
Warrant in respect of which the net issue election is
made pursuant to this SECTION 4.
A = the Fair Market Value (defined below) of one share of
Common Stock as determined at the time the net issue
election is made pursuant to this SECTION 4.
B = the Purchase Price in effect under this Warrant (for
the shares for which the net issue election is made)
at the time the net issue election is made pursuant
to this SECTION 4.
"Fair Market Value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(i) If the net issue election is made in connection with
and contingent upon the closing of the sale of the Company's Common
Stock to the public in a public offering pursuant to a Registration
Statement under the 1933 Act (a "Public Offering"), and if the
Company's Registration Statement relating to such Public Offering
("Registration Statement") has been declared effective by the
Securities and Exchange Commission, then the initial "Price to Public"
specified in the final prospectus with respect to such offering.
(ii) If the net issue election is not made in connection
with and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange or the Nasdaq
National Market, the fair market value of the Common Stock
shall be deemed to be the average of the closing or last
reported sale prices of the Common Stock on such exchange or
market over the five day period ending five business days
prior to the Determination Date;
(B) If otherwise traded in an over-the-counter
market, the fair market value of the Common Stock shall be
deemed to be the average of the closing ask prices of the
Common Stock over the five day period ending five business
days prior to the Determination Date; and
(C) If there is no public market for the Common
Stock, then fair market value shall be determined in good
faith by the Company's Board of Directors.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. FRACTIONAL SHARES. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.
7. EXPIRATION DATE; AUTOMATIC EXERCISE; ACCELERATION OF TERM UPON
SALE OR MERGER OF THE COMPANY.
(a) AUTOMATIC EXERCISE. This Warrant shall expire at the close of
business on March 31, 2007, and shall be void thereafter. Notwithstanding the
foregoing, this Warrant shall automatically be deemed to be exercised in full
pursuant to the provisions of Section 4 hereof, without any further action on
behalf of the Holder, immediately prior to the time this Warrant would
otherwise expire pursuant to the preceding sentence.
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(b) ACCELERATION OF TERM UPON SALE OR MERGER OF THE COMPANY.
Notwithstanding the term of this Common Stock Purchase Warrant fixed pursuant to
Section 7(a) hereof and provided Holder has received advance notice of at least
ten (10) days and has not earlier exercised, this Warrant shall automatically be
exercised in full pursuant to Section 4 hereof, without any action by Holder
immediately prior to the sale or other conveyance of all or substantially all of
the Company's assets, or the merger or consolidation of the Company with or into
another corporation (other than a merger or consolidation for the principle
purpose of changing the domicile of Company), that results in the transfer of
fifty percent (50%) or more of the outstanding voting power of the Company (a
"Sale of the Company").
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock, free from all preemptive or
similar rights therein, as will be sufficient to permit the exercise of this
Warrant in full. The Company further covenants that such shares as may be issued
pursuant to such exercise will, upon issuance, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Common Stock, by split-up or otherwise, or combine the
Common Stock, or issue additional shares of Common Stock in payment of a stock
dividend on the Common Stock, the number of shares of Common Stock issuable on
the exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.
10. ANTIDILUTION RIGHTS. The other antidilution rights applicable to
the Common Stock of the Company, if any, are set forth in the Third Amended and
Restated Certificate of Incorporation, as amended from time to time (the
"Certificate"), a true and complete copy in its current form which is attached
hereto as EXHIBIT A. Such rights shall not be restated, amended or modified in
any manner which affects the Holder differently than the holders of Common Stock
without such Holder's prior written consent. The Company shall promptly provide
the Holder hereof with any restatement, amendment or modification to the
Certificate promptly after the same has been made.
11. MERGERS AND RECLASSIFICATIONS. Subject to Section 7(b), if after
the date hereof the Company shall enter into any Reorganization (as hereinafter
defined), then, as a condition of such Reorganization, lawful provisions shall
be made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the Holder, so that the Holder shall thereafter
have the right to purchase, at a total price not to exceed that payable upon the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder of
the number of shares of Common Stock which might have been purchased by the
Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holder to the end that the provisions hereof (including without limitation,
provisions for the adjustment of the Purchase Price and the number of shares
issuable hereunder and the provisions relating to the net issue election) shall
thereafter be applicable in relation to any shares of stock or other securities
and property thereafter deliverable upon exercise hereof. For the purposes of
this Section 11, the term "Reorganization" shall include without limitation any
reclassification, capital reorganization or change of the Common Stock (other
than as a result of a subdivision, combination or stock dividend provided for in
Section 9 hereof), or any consolidation of the Company with, or merger of the
Company into, another corporation or other business organization (other than a
merger in which the Company is the surviving corporation and which does not
result in any reclassification or change of the outstanding Common Stock), or
any sale or conveyance to another corporation or other business organization of
all or substantially all of the assets of the Company or, a Sale of the Company.
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12. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the Purchase
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
13. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase, sell or otherwise acquire or dispose of any
shares of stock of any class or any other securities or property, or to receive
any other right;
(b) any reclassification of the capital stock of the
Company, capital reorganization of the Company, consolidation or merger
involving the Company, or sale or conveyance of all or substantially all of its
assets then in each such event the Company will provide or cause to be provided
to the Holder a written notice thereof. Such notice shall be provided at least
ten (10) business days prior to the date specified in such notice on which any
such action is to be taken; or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then in each such event (unless otherwise stated above) the Company will provide
or cause to be provided to the Holder a written notice thereof. Such notice
shall be provided at least ten (10) days prior to the date specified in such
notice on which any such action is to be taken.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by the Holder on the basis of the
following representations, warranties and covenants made by the Company:
(a) The Company has all necessary authority to issue, execute
and deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized, issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance with
its terms.
(b) The shares of Common Stock issuable upon the exercise of
this Warrant have been duly authorized and reserved for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable.
(c) The issuance, execution and delivery of this Warrant do
not, and the issuance of the shares of Common Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or contravene
the Company's Certificate or by-laws, or any law, statute, regulation, rule,
judgment or order applicable to the Company, (ii) violate, contravene or result
in a breach or default under any contract, agreement or instrument to which the
Company is a party or by which the Company or any of its assets are bound or
(iii) require the consent or approval of or the filing of any notice or
registration with any person or entity.
(d) As long as this Warrant is, or any shares of Common Stock
issued upon exercise of this Warrant are, issued and outstanding, the Company
will provide to the Holder the financial and other information described in
SECTION 6.3 of that certain Loan and Security Agreement between the Company and
Lighthouse Capital Partners III, L.P. dated as of March 6, 2000.
(e) As of the date hereof, the authorized capital stock of the
Company consists of (i) 35,000,000 shares of Common Stock, of which [3,980,831]
shares are issued and outstanding and 200,000 shares are reserved for issuance
upon the exercise of this Warrant, (ii) 7,913,224 shares of Series A Preferred
Stock, of which 7,694,809 are issued and outstanding shares, (iii) 4,510,000
shares of Series B Preferred Stock, of which 4,510,000 are issued and
outstanding shares, (iv) 6,491,498 shares of Series C Preferred Stock, of which
6,491,498 are issued and outstanding shares, and (v) 3,000,000 shares of Series
D Preferred Stock, of which 2,278,996 are issued and
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outstanding shares. Attached hereto as EXHIBIT B is a capitalization table
summarizing the capitalization of the Company.
15. REGISTRATION RIGHTS. The Company agrees to use its best efforts to
amend the Company's Amended and Restated Investors' Rights Agreement dated as of
November 2, 1999 (the "Registration Rights Agreement") as soon as reasonably
practicable following the date hereof, so that (i) the shares of Common Stock
issuable upon exercise of this Warrant shall be "Registrable Securities," and
(ii) the Holder shall be a "Holder" for all purposes of such Registration Rights
Agreement provided, however, that the Holder executes and becomes subject to the
terms and conditions of the Registration Rights Agreement as a Holder
thereunder.
16. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder and the Company.
17. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Common Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
(a) INVESTMENT PURPOSE. This Warrant and the Common Stock
issuable upon exercise hereof (the "Securities") are being acquired for
investment for the Holder's own account and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same.
(b) ACCREDITED INVESTOR. Holder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
(c) PRIVATE ISSUE. The Holder understands (i) that the Common
Stock issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be exempt
from the registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this SECTION 17.
(d) FINANCIAL RISK. The Holder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities and has the ability to bear the economic risks of its investment.
(e) RESTRICTED SECURITIES. The Holder understands that the
Securities are "restricted securities" under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Holder must hold the
Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. The Holder
acknowledges that the Company has no obligation to register or qualify the
Securities for resale except as set forth in the Investors' Rights Agreement
with respect to Registrable Securities. The Holder further acknowledges that if
an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Holder's control, and which the
Company is under no obligation and may not be able to satisfy.
(f) NO PUBLIC MARKET. The Holder understands that no public
market now exists for any of the securities issued by the Company, that the
Company has made no assurances that a public market will ever exist for the
Securities.
(g) LEGENDS. The Holder understands that the Common Stock
issuable upon exercise of this Warrant, and any securities issued in respect
thereof or exchange therefor, may bear one or all of the following legends:
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(i) "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
(ii) Any legend required by the Blue Sky laws of
any state to the extent such laws are applicable to the shares represented by
the certificate so legended.
18. NOTICES, TRANSFERS, ETC.
(a) Any notice or written communication required or permitted
to be given to the Holder may be given by certified mail or delivered to the
Holder at the address most recently provided by the Holder to the Company.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment notice annexed hereto duly
executed, for transfer of this Warrant as an entirety by the Holder, the Company
shall issue a new warrant of the same denomination to the assignee. Upon
surrender of this Warrant to the Company, together with the assignment hereof
properly endorsed, by the Holder for transfer with respect to a portion of the
shares of Common Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the
Holder hereof, and shall issue to such Holder a new warrant covering the number
of shares in respect of which this Warrant shall not have been transferred. In
no event, however, shall the Company be required to transfer this Warrant in
part unless the transferee acquires the right to purchase at least 10,000 shares
of stock hereunder (as adjusted pursuant to SECTION 9 and 11 above).
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such.
19. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance of performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
20. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
California without regard to its principles governing conflicts of laws.
21. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
22. BUSINESS DAYS. If the last or appointed day for the taking of any
action required of the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
23. VALUE. The Company and the Holder agree that the value of this
Warrant on the date of grant is $100.
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24. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Holder of this Warrant shall not have or exercise any rights by virtue hereof as
a stockholder of the Company.
25. MARKET STAND-OFF AGREEMENT. Holder hereby agrees that, during the
period of duration (up to, but not exceeding, 180 days) specified by the Company
and an underwriter of Common Stock or other securities of the Company, following
the date of the final prospectus distributed in connection with a registration
statement of the Company filed under the 1933 Act, it shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of the Company held by it
at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers, directors and holders of more than 1% of the
outstanding equity securities of the Company and all other persons with
registration rights (whether or not pursuant to this Agreement) enter agreements
in the same form as the agreement executed by the Holder.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the securities of every person
subject to the foregoing restriction until the end of such period, and the
Holder agrees that, if so requested, Holder will execute an agreement in the
form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section 25.
Notwithstanding the foregoing, the obligations described in this
Section 25 shall not apply to a registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to an SEC Rule 145 transaction on Form
S-4 or similar forms which may be promulgated in the future.
Dated: Xxxxx 0, 0000 XXXXXXXXXXX, INC.
By: /s/ Xxx Xxxxxxx
-------------------------
Name: Xxx Xxxxxxx
Title: Chief operating officer
[CORPORATE SEAL]
Attest:
____________________________________
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LIGHTHOUSE CAPITAL PARTNERS III, L.P.
By: LIGHTHOUSE MANAGEMENT PARTNERS III, L.L.C., its general partner
By: _____________________________________
Name: ___________________________________
Title: Managing Member
Counterpart Signature Page to Lighthouse Warrant
SUBSCRIPTION
To: ___________________________ Date: ________________
The undersigned hereby subscribes for _________________shares of Common
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
_______________________________
Signature
_______________________________
Name for Registration
_______________________________
Mailing Address
NET ISSUE ELECTION NOTICE
To: ___________________________ Date: ________________
The undersigned hereby elects under SECTION 4 to surrender the right to
purchase ______________shares of Common Stock under SECTION ___ of this Warrant.
The certificate(s) for such shares issuable upon such net issue election shall
be issued in the name of the undersigned or as otherwise indicated below:
_______________________________
Signature
_______________________________
Name for Registration
_______________________________
Mailing Address
1
ASSIGNMENT
For value received ______________________________________________hereby
sells, assigns and transfers unto ______________________________________________
________________________________________________________________________________
[Please print or typewrite name and address of Assignee]
the within Warrant, and does hereby irrevocably constitute and appoint__________
__________________ its attorney to transfer the within Warrant on the books of
the within named Company with full power of substitution on the premises.
Dated: _____________________________
In the Presence of:
____________________________________
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