EXHIBIT 10.25
THIS WARRANT AND ANY SHARES OF SERIES C PREFERRED ISSUED UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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 AFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE WARRANT
EVIDENCED HEREBY IS TRANSFERABLE ONLY PURSUANT TO SECTION 5 HEREOF.
No. WC-3 XXXxXXXX.XXX, INC. May 12, 1999
SERIES C PREFERRED STOCK PURCHASE WARRANT
This certifies that, for good and valuable consideration, Rodale Press,
Inc. ("Rodale"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to acquire from XXXxXXXX.xxx, Inc. (the "Company"), in
whole or from time to time in part, up to 23,163 fully paid and nonassessable
shares of Series C Preferred Stock, par value $0.001 per share, of the Company
("Warrant Stock") at a purchase price per share of $1.67 (the "Exercise Price").
Such number of shares, type of security 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 or series
of adjustments.
1. Exercise of Warrant
(a) Expiration Time. The term "Expiration Time" means the earliest to
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occur of the following: (i) immediately prior to the closing of an IPO (as
defined below); or (ii) immediately prior to the closing of a Change of Control
Transaction (as defined below); or (iii) 11:59 p.m., Pacific Time, on the date
five years from the date hereof. As used herein, "IPO" shall mean the first firm
commitment underwritten public offering of the Company's Common Stock registered
under the Securities Act of 1933, as amended (the "Securities Act"); a "Change
of Control Transaction" shall mean the Company's sale or lease of all or
substantially all of its assets or the acquisition of the Company by another
entity by means of merger or consolidation resulting in the exchange of the
outstanding shares of the Company for securities or consideration issued, or
caused to be issued, by the acquiring corporation or its subsidiary, unless the
stockholders of the Company immediately prior to such transaction hold at least
50% of the voting power of the surviving corporation in such a transaction.
(b) Exercise Procedure. The purchase rights represented by this
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Warrant are exercisable, in whole or in part, at any time and from time to time
at or after the date hereof 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 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, 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 wire transfer or by certified bank check
payable to the order of the Company, in an amount, payable in United States
dollars, equal to the purchase price of the shares thereby purchased);
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whereupon the holder of this Warrant shall be entitled to receive from the
Company a stock certificate in proper form representing the number of shares of
Warrant Stock so purchased, and a new Warrant in substantially identical form
for the purchase of that number of shares of Warrant Stock equal to the
difference, if any, between the number of shares of Warrant Stock subject hereto
and the number of shares of Warrant Stock as to which this Warrant is so
exercised.
(c) Minimum Exercise. The holder shall purchase a minimum of 1,000
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shares of Warrant Stock upon any exercise hereunder.
(d) Conversion Right. In addition to and without limiting the rights
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of the Holder under the terms of this Warrant, the Holder shall have the right
to convert this Warrant or any portion thereof into shares of Series C Preferred
Stock prior to the Expiration Time (the "Conversion Right"). Upon exercise of
the Conversion Right with respect to the number of shares of Warrant Stock that
are exercisable pursuant to this Warrant, the Company shall deliver to the
Holder (without payment by the Holder of the Exercise Price or any cash or other
consideration) that number of shares of fully paid and nonassessable Series C
Preferred Stock equal to the quotient obtained by dividing (i) the Fair Market
Value (as defined in Section 2) of the aggregate number of shares of Warrant
Stock exercisable pursuant to this Warrant on the date of conversion, which
value shall be equal to (A) the aggregate Fair Market Value of the shares of
Warrant Stock on the date of conversion less (B) the aggregate Exercise Price of
the shares of Warrant Stock immediately prior to the exercise of the Conversion
Right by (ii) the Fair Market Value of one share of Series C Preferred Stock on
the date of conversion.
2. Issuance of Shares; No Fractional Shares or Scrip
Certificates for shares of Warrant Stock purchased hereunder shall be
delivered to the holder hereof promptly after the date on which this Warrant
shall have been exercised 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 of this Warrant have been duly authorized and will,
upon such exercise, 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 shall for all purposes be deemed to have been issued as of the
close of business on the date on which this Warrant shall have been exercised in
accordance with the terms hereof. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon the exercise of this Warrant,
an amount equal to such fraction multiplied by the Fair Market Value of a share
of Warrant Stock on the date of exercise shall be paid in cash or check to the
holder of this Warrant. Fair Market Value shall mean (i) the fair market value
as determined in good faith by the Board of Directors of the Company or (ii) in
the event of an IPO, the Fair Market Value shall equal the initial public
offering price of the Company's Common Stock multiplied by 3.5650.
3. Charges, Taxes and Expenses
The holder shall pay all issue and transfer taxes and other incidental
expenses in respect of the issuance of certificates for shares of Warrant Stock
upon the exercise of this Warrant, and such certificates shall be issued in the
name of the holder of this Warrant.
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4. No Rights as a Stockholder
This Warrant does not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company prior to the exercise hereof.
5. Restrictions on Transfer; Lock-Up
(a) Restrictions on Warrant. This Warrant is not transferable except
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to affiliates of the Warrantholder, whether by sale, pledge or other
disposition, voluntarily or by operation of law or otherwise without the prior
written consent of the Company, which consent may be withheld in the Company's
sole discretion. Any transfer in violation hereof shall be void and the Warrant
shall terminate immediately upon any such purported transfer.
(b) Restrictions on Transfer of Warrant Stock. In no event will the
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holder make a disposition of the Warrant Stock unless and until (i) it shall
have notified the Company of the proposed disposition, and (ii) if requested by
the Company, it shall have furnished the Company with an opinion of counsel
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the Securities Act provisions relating to
sale of an unregistered security has been taken, or (B) an exemption from the
registration requirements of the Securities Act is available. Notwithstanding
the foregoing, the restrictions imposed upon the transferability of the Warrant
Stock shall terminate as to any particular share of Warrant Stock when (1) such
security shall have been sold without registration in compliance with Rule 144
under the Securities Act, or (2) a letter shall have been issued to the holder
at its request by the staff of the Securities and Exchange Commission or a
ruling shall have been issued to the holder at its request by such Commission
stating that no action shall be recommended by such staff or taken by such
Commission, as the case may be, if such security is transferred without
registration under the Securities Act in accordance with the conditions set
forth in such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required, or (3) such security shall
have been registered under the Securities Act and sold by the holder thereof in
accordance with such registration.
(c) Lock-Up. In the event of any registration of the Company's
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securities, the holder will not, upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of the Warrant Stock or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Warrant Stock, whether or not any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of such Warrant Stock, in cash or otherwise, without the prior written consent
of the Company or such underwriters, as the case may be, for such period of time
(not to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters.
(d) Restrictive Legends. The certificates representing the Warrant
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Stock and any securities of the Company issued with respect thereto shall be
imprinted with legends restricting transfer except in compliance with the terms
hereof and with applicable Federal and state securities laws.
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6. Exchange and Registry of Warrant
The Company shall maintain at the office or agency referred to in Section
1(b) hereof a registry showing the name and address of the registered holder of
this Warrant. This Warrant may be surrendered for exercise in accordance with
its terms at such office or agency of the Company, and the Company shall be
entitled to rely in all respects upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant
On receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and in
case of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company will execute and deliver to the holder, in lieu thereof, a
new Warrant in substantially identical form.
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 in the United States or the State of California, then such
action may be taken or such right may be exercised on the next succeeding
business day.
9. Adjustment to Number and Type of Securities and Exercise Price
The type and number of securities of the Company issuable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as set forth
below:
(a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
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etc. The Exercise Price and the number and type of securities and/or other
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property issuable upon exercise of this Warrant shall be appropriately and
proportionately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number or character of outstanding shares of Warrant Stock or underlying
common stock, so that the number and type of securities and/or other property
issuable upon exercise of this Warrant shall be equal to that which would have
been issuable with respect to the number of shares of Warrant Stock subject
hereto at the time of such event, had such shares of Warrant Stock then been
outstanding.
(b) Adjustment for Reorganization, Consolidation, Merger, etc. In
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case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization, shall receive, in lieu of the Warrant Stock issuable on
such exercise prior to the date of such Reorganization, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon the date of such Reorganization if such holder had exercised this
Warrant immediately prior thereto.
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(c) Certificate as to Adjustments. In case of any adjustment in the
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Exercise Price or number and type of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by an officer
of the Company, setting forth such adjustment and showing in reasonable detail
the facts upon which such adjustment is based.
10. Representations and Covenants of Rodale
Rodale represents and covenants to the Company as follows:
(a) Investment Purpose This Warrant and the Warrant Stock will be
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acquired for investment for Rodale' own account, and not as a nominee or agent
and not with a view to the distribution of any part thereof. Rodale further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person, or to any third person, with respect to this Warrant.
(b) Private Issue Rodale understands (i) that the Warrant and the
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Warrant Stock issuable upon exercise of this Warrant are not registered under
the Securities Act, or qualified under applicable state securities laws, on the
ground that the issuance of 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
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(c) Sales of Series C Preferred Stock Rodale represents and warrants
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that Rodale is familiar with the provisions of Rule 144 promulgated under the
Securities Act which, in substance, permits limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer) in a non-public offering subject to the
satisfaction of certain conditions, including, among other things: (i) the
availability of certain public information about the Company; (ii) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and
(iii) in the case of an affiliate, or of a non-affiliate who has held the
securities less than two years, the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as such term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable. Rodale
acknowledges that in the event the applicable requirements of Rule 144 are not
met, registration under the Securities Act or compliance with another exemption
from registration will be required for any disposition of the Series C Preferred
Stock issuable upon exercise of this Warrant.
(d) No Public Market Rodale understands that no public market now
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exists for any of the securities issued by the Company and that a public market
may never exist for the Series C Preferred Stock.
(e) Financial Risk Rodale has such knowledge and experience in
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financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(f) Receipt of Information Rodale has received and reviewed this
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Warrant; it, its attorney and its accountant have had access to, and an
opportunity to review all documents and other materials requested of, the
Company; it and they have been given an opportunity to ask any and all questions
of, and receive answers from, the Company concerning the terms and conditions of
this Warrant and to
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evaluate the suitability of an investment in this Warrant; and, in evaluating
the suitability of an investment in this Warrant, it and they have not relied
upon any representations or other information (whether oral or written) other
than as set forth herein.
11. Notices of Record Date, etc.
In the event of:
(a) any taking by the Company of a record of the holders of Series C
Preferred Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution,
(b) an IPO, or
(c) a Change of Control Transaction;
then and in each such event the Company will mail to the holder hereof a notice
specifying, if then known, (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and if known stating
the amount and character of such dividend, distribution or right, (ii) the date
on which the IPO is anticipated to close, or (iii) the anticipated date on which
any Change of Control Transaction is to take place, and if known the time, if
any is to be fixed, as to which the holders of record of Series C Preferred
Stock shall be entitled to exchange their shares for securities or other
property deliverable on such Change of Control Transaction. Such notice shall
be delivered to the holder hereof at least ten (10) days prior to the date
therein specified.
12. Governing Law
This Warrant shall be governed by and construed in accordance with the laws
of the State of California applicable to contracts made and to be performed
wholly within such state.
13. Complete Agreement and Modifications
This Warrant and any documents referred to herein or executed
contemporaneously herewith constitute the Company's and Rodale's entire
agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Warrant may not be amended, altered or modified except by a
writing signed by the Company and the holder of this Warrant.
14. Authorization
All corporate action on the part of the Company and its directors necessary
for the authorization, execution, delivery and performance of the Warrant by the
Company, the authorization, sale, issuance and delivery of the Warrant Stock.
The Warrant, when executed and delivered by the Company, shall constitute valid
and binding obligations of the Company, enforceable in accordance with its
terms. The Warrant Stock, when issued in compliance with the provisions of this
Warrant, will be validly issued, fully paid and nonassessable, and will have the
rights, preferences, privileges and restrictions described in the Company's
Amended and Restated Certificate of Incorporation (the "Certificate"); the
common stock issuable upon conversion of the Warrant Stock has been duly and
validly reserved and, when issued in compliance with the provisions of the
Certificate, will be validly issued, fully paid and nonassessable; and the
Warrant Stock and the common stock issued upon conversion thereof will be free
of any liens or encumbrances (assuming the
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Warrantholder takes the Warrant Stock with no notice thereof) other than any
liens or encumbrances created by or imposed on the Warrantholders; provided,
however, that the Warrant Stock and the common stock issuable upon conversion
thereof may be subject to restrictions on transfer under state or federal
securities laws and restrictions.
15. Governmental Consent
No consent, approval order or authorization of or registration,
qualification, designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with offer, sale
or issuance of the Warrant Stock or the common stock issued upon conversion
thereof, or the consummation of any other transaction contemplated hereby,
except the qualification (or taking of such action as may be necessary to secure
an exemption from qualification, if available) of the offer and sale of the
Warrant Stock and the common stock issued upon conversion thereof under
applicable Blue Sky laws, which filings and qualifications, if required, will be
accomplished in a timely manner.
16. Notices
Except as otherwise provided herein, all notices under this Warrant shall
be in writing and shall be delivered by personal service, facsimile, courier
service promising overnight delivery or certified mail (if such service is not
available, then by first class mail), postage prepaid. Notices shall be
addressed as follows:
If to Rodale: Rodale Press, Inc.
000 X. 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: President
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Gross, McGinley, XxXxxxx & Xxxxx, LLP
00 Xxxxx 0xx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Company: XXXxXXXX.xxx, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
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17. Waivers Strictly Construed
With regard to any power, remedy or right provided herein or otherwise
available to any party hereunder (i) no waiver or extension of time shall be
effective unless expressly contained in a writing signed by the waiving party;
and (ii) no alteration, modification or impairment shall be implied by reason of
any previous waiver, extension of time, delay or omission in exercise, or other
indulgence.
18. Severability
The validity, legality or enforceability of the remainder of this Warrant
shall not be affected even if one or more of its provisions shall be held to be
invalid, illegal or unenforceable in any respect.
* * *
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IN WITNESS WHEREOF, the Company and Rodale have caused this Warrant to be
executed by their duly authorized representatives.
XXXxXXXX.XXX, INC.,
a Delaware corporation
By: /s/ Xxx XxXxxxxx
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Xxx XxXxxxxx, Jr., President
RODALE PRESS, INC.
By: /s/ Xxxxxxx X. Corpora
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Xxx Xxxxxxx, President
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NOTICE OF EXERCISE
To: XXXxXXXX.xxx, Inc., a Delaware corporation
(1) The undersigned hereby elects to purchase __________ shares of Series C
Preferred Stock of XXXxXXXX.xxx, Inc., a Delaware corporation, pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price in full.
(2) The undersigned represents that the aforesaid shares 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, except in
compliance with applicable Federal and state securities laws.
(3) The undersigned accepts such shares subject to the restrictions on
transfer set forth in the attached Warrant.
Holder:_____________________________________
__________________________ By: _______________________________________
(Date)
Name:_______________________________________
Title:______________________________________
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