EXHIBIT W-1
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR SUCH TRANSACTION IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND LAWS.
XXXXXXXXX.XXX, INC.
SERIES C PREFERRED STOCK PURCHASE WARRANT
This certifies that, in consideration for $100.00 and other value received,
__________________, or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or after
January 31, 2000, if XxxxxXxxx.xxx, Inc., a Washington corporation (the
"Company"), has not completed a sale in an underwritten public offering under
the Securities Act of 1933, as amended (the "Act"), of shares of its Common
Stock in which (i) the aggregate price paid by the public for the shares
shall be at least $10,000,000, and (ii) the price per share paid by the
public for such shares shall be at least $10.00 per share (the "Trigger
Date"), at or prior to 11:59 pm., Pacific time, on May 17, 2002 (the
"Expiration Time"), to acquire from the Company, in whole or in part, up to
such number of fully paid and nonassessable shares of Series C Preferred
Stock of the Company described on Schedule A hereto ("Warrant Stock") at a
purchase price per share of $0.01 (the "Exercise Price") subject to the terms
set forth in Section 1 below. Notwithstanding the foregoing, should the
Company be sold or acquired on or before January 31, 2000 at an effective
price per share to the Purchasers (as such term is defined in the Series C
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") between
the Company and the Purchasers of even date herewith) of $10.00, then this
Warrant shall be become null and void, and non-exercisable. Such number of
shares and Exercise Price are subject to adjustment as provided herein, and
all references to "Warrant Stock" and "Exercise Price" herein shall be deemed
to include any such adjustment.
1. EXERCISE OF WARRANT
The purchase rights represented by this Warrant are exercisable by the
registered holders hereof, in whole or in part, at any time and from time to
time on or after the Trigger Date and at or prior to the Expiration Time by
the surrender of this Warrant and the Notice of Exercise form attached hereto
duly executed to the office of the Company at 0000 Xxxxxxxx Xxxxxx Xxxx,
Xxxxxxx, XX 00000 (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address
of such holder appearing on the books of the Company), and upon payment of
the Exercise Price for the shares thereby purchased (by cash or by check or
bank draft payable to the order of the Company or by cancellation of
indebtedness of
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the Company to the holder hereof, if any, at the time of exercise in an
amount equal to the purchase price of the shares thereby purchased);
whereupon the holders of this Warrant shall be entitled to receive from the
Company stock certificates in proper form representing the number of shares
of Warrant Stock so purchased. This Warrant is exercisable for the number of
shares of Warrant Stock determined according to Schedule A attached hereto.
2. CONVERSION OF WARRANT
The registered holder hereof shall have the right to convert this Warrant, in
whole or in part, at any time and from time to time on or after the Trigger
Date and at or prior to the Expiration Time, by the surrender of this Warrant
and the Notice of Conversion form attached hereto duly executed to the office
of the Company at the address set forth in Section 1 hereof (or such other
office or agency of the Company as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Company), into shares of Warrant Stock (determined according to
Schedule A) as provided in this Section 2. Upon exercise of this conversion
right, the holder hereof shall be entitled to receive that number of shares
of Warrant Stock of the Company equal to the quotient obtained by dividing
[(A - B)(X)] by (A), where:
A = the Conversion Price (as defined in the Company's
Articles of Incorporation, as amended) of one share of
Warrant Stock on the date of conversion of this Warrant.
B = the Exercise Price for one share of Warrant Stock
under this Warrant, which initially is $0.01.
X = the number of shares of Warrant Stock as to which
this Warrant is being converted (determined according to
Schedule A).
No fractional shares or script representing fractional shares shall be issued
upon the exercise of this Warrant. In lieu of any fractional share to which
the registered holder would otherwise be entitled, the Company shall make a
cash payment equal to the Exercise Price multiplied by such fraction.
Upon conversion of this Warrant in accordance with this Section 2, the
registered holders hereof shall be entitled to receive certificates for the
number of shares of Warrant Stock determined in accordance with the foregoing.
3. ISSUANCE OF SHARES
Certificates for shares purchased hereunder or issuable upon conversion hereof
shall be delivered to the holder hereof within a reasonable time after the date
on which this Warrant shall have been exercised or converted in accordance with
the terms hereof. The Company hereby represents and warrants that all shares of
Warrant Stock which may be issued upon the exercise and
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payment of the Exercise Price, or conversion of this Warrant, will, upon such
exercise or conversion, be duly and validly authorized and issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of
the issuance thereof (other than liens or charges created by or imposed upon
the holder of the Warrant Stock). The Company agrees that the shares so
issued shall be and be deemed to be issued to such holder as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been exercised or converted in accordance with the terms hereof.
4. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the holder hereof
for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the
holder of this Warrant.
5. NO RIGHTS AS SHAREHOLDERS
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Company prior to the exercise or conversion
hereof.
6. EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the registered
holder at the above-mentioned office or agency of the Company, for a new
Warrant of like tenor and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name
and address of the registered holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance
with its terms, at such office or agency of the Company, and the Company
shall be entitled to rely in all respects, prior to written notice to the
contrary, upon such registry.
7. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated,
the Company will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
8. SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday or a Sunday or
shall be a legal holiday, then such action may be taken or such right may be
exercised on the next succeeding day not a legal holiday.
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9. RECLASSIFICATION, CONVERSION, ETC.
If the Company at any time shall, by reclassification of securities or
otherwise, change the Warrant Stock into the same or a different number of
securities of any class or classes, including, without limitation, conversion
of the Warrant Stock into Common Stock in accordance with the Articles of
Incorporation upon an initial public offering or otherwise, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or
other securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in
full for cash immediately prior to such change. The Exercise Price hereunder
shall be adjusted if and to the extent necessary to reflect such change. If
the Warrant Stock or other securities issuable upon exercise or conversion
hereof are subdivided or combined into a greater or smaller number of shares
of such security, the number of shares issuable hereunder shall be
proportionately increased or decreased, as the case may be, and the Exercise
Price shall be proportionately reduced or increased, as the case may be, in
both cases according to the ratio which the total number of shares of such
security to be outstanding immediately after such event bears to the total
number of shares of such security outstanding immediately prior to such
event. The Company shall give the holder prompt written notice of any change
in the type of securities issuable hereunder, any adjustment of the Exercise
Price for the securities issuable hereunder, and any increase or decrease in
the number of shares issuable hereunder.
10. TRANSFERABILITY
Prior to the Expiration Time and subject to compliance with applicable laws
by the transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if such are requested by the Company), this Warrant and all rights
hereunder are transferable by the holder hereof, in whole or in part, at the
office or agency of the Company referred to in Section 1 hereof, to any
affiliate or constituent partner of the holder. Any such transfer shall be
made in person or by the holder's duly authorized attorney, upon surrender of
this Warrant together with the Assignment Form attached hereto properly
endorsed. Notwithstanding the foregoing, no investment representation letter
or opinion of counsel shall be required for any transfer of this Warrant (or
any portion thereof) or any shares of Warrant Stock or Common Stock issued
upon exercise or conversion hereof or thereof (i) in compliance with Rule 144
or Rule 144A of the Act, or (ii) by gift, will or intestate succession by the
Holder to his or her spouse or lineal descendants or ancestors or any trust
for any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 10.
In addition, if the holder of the Warrant (or any portion thereof) or any
Warrant Stock or Common Stock issued upon exercise or conversion hereof or
thereof delivers to the Company an unqualified opinion of counsel that no
subsequent transfer of such Warrant, Warrant Stock or Common Stock shall
require registration under the Act, the Company shall, upon such contemplated
transfer, promptly deliver new documents/certificates for such Warrant,
Warrant Stock or Common Stock that do not bear the legend set forth in
Section 12(b) hereof. In the event that certificates for shares of Warrant
Stock are to be
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issued in a name other than the holder of this Warrant, this Warrant when
surrendered for exercise or conversion shall be accompanied by the Assignment
Form attached hereto duly executed by the holder hereof.
11. REGISTRATION RIGHTS
Upon exercise of this Warrant, the registered holder shall have and be
entitled to exercise, together with all other holders of Registrable
Securities possessing registration rights under that certain Registration
Rights Agreement, of even date herewith, by and between the Company and the
parties who have executed the counterpart signature pages thereto or are
otherwise bound thereby (the "Registration Rights Agreement"), the rights of
registration granted under the Registration Rights Agreement to Registrable
Securities. By its receipt of this Warrant, the registered holder agrees to
be bound by the Registration Rights Agreement.
12. COMPLIANCE WITH SECURITIES LAWS
(a) The registered holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock or Common
Stock to be issued upon exercise or conversion hereof or thereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock or
Common Stock to be issued upon exercise or conversion hereof or thereof
except under circumstances that will not result in a violation of the
federal or state securities laws. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of Warrant Stock or Common
Stock so purchased are being acquired solely for the holder's own account
and not as a nominee for any other party, for investment, and not with a
view toward distribution or resale.
(b) The Warrant and all shares of Warrant Stock or Common Stock issued
upon exercise or conversion hereof or thereof shall be stamped or imprinted
with a legend in substantially the following form (in addition to any
legend required by state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS SPECIFIED IN
THE SERIES C PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF
MAY 17, 1999 BETWEEN THE ISSUER (THE "COMPANY") AND CERTAIN
PURCHASERS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH
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RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL
BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE."
13. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Series C Preferred Stock a
sufficient number of shares to provide for the issuance of Warrant
Stock upon the exercise or conversion of this Warrant;
(b) during the period this Warrant or the Warrant Stock issuable hereunder
is outstanding, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon conversion of the Warrant Stock issuable
upon exercise or conversion of this Warrant;
(c) the issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock
certificates, upon exercise of this Warrant, to execute and issue the
necessary certificates for the shares of Warrant Stock issuable upon
exercise or conversion of this Warrant;
(d) the Company has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder,
to issue the Common Stock issuable upon conversion of the Warrant
Stock and to carry out and perform its obligations under the terms of
this Warrant; and
(e) all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Company, the authorization, sale,
issuance and delivery of the Warrant Stock and the Common Stock
issuable upon conversion of the Warrant Stock and the performance of
the Company's obligations hereunder has been taken;
(f) the Warrant Stock and the Common Stock issuable upon conversion of the
Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Company's Articles of Incorporation, as amended, will
be validly issued, fully paid and nonassessable, and free of any liens
or encumbrances, and will be issued in compliance with all applicable
federal and state securities laws; and
(g) the issuance of the Warrant Stock and the Common Stock issuable upon
conversion of the Warrant Stock will not be subject to any preemptive
rights,
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rights of first refusal or similar rights except as contemplated by
the Stock Purchase Agreement and the Related Agreements (as defined
in the Stock Purchase Agreement).
14. COOPERATION
The Company will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment.
15. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the laws
of the State of Washington.
[Rest of page intentionally left blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officers.
Dated: May 17, 1999
XxxxxXxxx.xxx, Inc.
By___________________________________
Title________________________________
ACCEPTED: May 17, 1999
By:_________________________________
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NOTICE OF EXERCISE
To: XxxxxXxxx.xxx, Inc.
(1) The undersigned hereby elects to purchase ___________shares of Series C
Preferred Stock of XxxxxXxxx.xxx, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full, together
with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Series C Preferred Stock in the name of the undersigned or in such other name
as is specified below:
__________________________
(Name)
__________________________
(Address)
(3) The undersigned represents that the aforesaid shares of Series C
Preferred Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
________________________________ ___________________________________
(Date) (Signature)
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NOTICE OF CONVERSION
To: XxxxxXxxx.xxx, Inc.
(1) The undersigned hereby elects to convert the attached Warrant into such
number of shares of Series C Preferred Stock of XxxxxXxxx.xxx, Inc. as is
determined pursuant to Section 3 of such Warrant, which conversion shall be
effected pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares of
Series C Preferred Stock in the name of the undersigned or in such other name
as is specified below:
__________________________
(Name)
__________________________
(Address)
(3) The undersigned represents that the aforesaid shares of Series C
Preferred Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
________________________________ __________________________________
(Date) (Signature)
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_____________________________________________________________________________
(Please Print)
whose address is ____________________________________________________________
(Please Print)
Dated: ______________________________
Holder's Signature:__________________
Holder's Address:____________________
_____________________________________
Guaranteed Signature:________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or
any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
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SCHEDULE A
If a First Closing and Second Closing (as those terms as defined in the
Purchase Agreement of even date herewith) have both occurred on or prior to
exercise of this Warrant, then this Warrant shall be exercisable for
_______shares of Series C Preferred.
If only a First Closing has occurred on or prior to exercise of this Warrant,
then this Warrant is exercisable _______ shares of Series C Preferred.
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Investor List
Purchaser Number of Warrants
--------- ------------------
Riverside Partnership 284,308
The Productivity Fund IV, L.P. 32,308
Xxxx Xxxxxxxxxxx 5,385
Xxxx Xxx 1,077
