Exhibit 4.6
THIS WARRANT AND THE SECURITIES WHICH MAY BE ACQUIRED UPON ITS EXERCISE HAVE
BEEN, OR WILL BE, ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
AND QUALIFICATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS UNLESS (I) THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND QUALIFICATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR (II) SUCH SALE OR TRANSFER IS IN
ACCORDANCE WITH RULE 144 ENACTED PURSUANT TO THE 1933 ACT OR (III) SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.
PREFERRED STOCK PURCHASE WARRANT
Number of Shares:86,000
Series B Preferred Stock
WEBTV NETWORKS, INC.
Void after June 30, 2002
1. ISSUANCE. This Warrant is issued to LIGHTHOUSE CAPITAL PARTNERS II,
L.P. by WEBTV NETWORKS, INC., a California 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. at a price per share of $2.50 (the "Lot A Purchase Price"), 46,000
fully paid and nonassessable shares of Series B Preferred Stock, without par
value, of the Company (the "Preferred Stock").
B. at a price per share of $5.00 (the "Lot B Purchase Price"), 20,000
fully paid and nonassessable shares of Preferred Stock; provided, that the right
to purchase shares pursuant to this SECTION 2.B shall be exercisable on or after
the date on which the aggregate "Lessor's Cost" under that certain Master
Equipment Lease Agreement, dated as of June 14, 1996, by and between the Company
and Holder (the "Master Lease"), exceeds $1,000,000 (the "First Commitment
Increase").
C. at a price per share of $7.1130 (the "Lot C Purchase Price"),
20,000 fully paid and nonassessable shares of Preferred Stock; provided, that
the right to purchase shares pursuant to this SECTION 2.C shall be exercisable
on or after the date on which the aggregate "Lessor's Cost" under the Master
Lease exceeds $1,500,000 (the "Second Commitment Increase").
(The Lot A Purchase Price, Lot B Purchase Price and Lot C Purchase Price are
sometimes referred to herein collectively as the "Purchase Price").
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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 Preferred 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. Subject to SECTION 4, the Purchase Price
is due upon surrender of the Warrant and may be paid (i) in cash or by certified
bank or cashier's 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 Preferred Stock
equal to the value of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the net issue election notice
annexed hereto duly executed, at the principal office of the Company.
Thereupon, the Company shall issue to the Holder such number of fully paid and
nonassessable shares of Preferred Stock as is computed using the following
formula:
X= Y (A-B)
--------
A
where: X = the number of shares of Preferred Stock to be issued to the
Holder pursuant to this SECTION 4.
Y = the number of shares of Preferred 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 of one share of Preferred Stock, as
determined in good faith by the Company's Board of Directors, as
at the time the net issue election is made pursuant to this
SECTION 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this SECTION 4.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant for the unexpired period of
the 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
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
or partial exercise of this Warrant, the Holder would, except as provided in
this SECTION 6, be entitled to receive a fractional share of Preferred Stock,
then the Company shall issue the next lower number of full shares of Preferred
Stock and shall pay the Holder cash in the amount equal to the product of such
fraction multiplied by the fair market value of one share of the Preferred Stock
on the date of exercise, as determined in good faith by the Company's Board of
Directors.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. This Warrant shall expire at the
close of business on June 30, 2002, 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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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 Preferred Stock and Common Stock, without par
value, of the Company (the "Common Stock"), free from all preemptive or similar
rights therein, as will be sufficient to permit, respectively, the exercise of
this Warrant in full and the conversion into shares of Common Stock of all
shares of Preferred Stock receivable upon such exercise. The Company further
covenants that such shares as may be issued pursuant to such exercise and/or
conversion will, upon issuance and payment of the sum payable upon such issuance
or compliance with SECTION 4, as the case may be, 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 Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of a
stock dividend on the Preferred Stock, the number of shares of Preferred 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. ADJUSTMENTS FOR DILUTING ISSUANCES. The other antidilution rights
applicable to the Preferred Stock and the Common Stock of the Company are set
forth in the Articles of Incorporation, as amended from time to time (the
"Articles"), 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 material manner which affects the Holder differently than the holders of the
Preferred Stock without such Holder's prior written consent, which shall not be
unreasonably withheld. The Company shall promptly provide the Holder hereof
with any restatement, amendment or modification to the Articles promptly after
the same has been made.
11. MERGERS AND RECLASSIFICATIONS. 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 Preferred 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 Preferred 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 Preferred Stock), or
any sale or conveyance to another corporation or other business organization of
all or substantially all of the assets of the Company.
12. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall, upon request, 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:
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(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; or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company;
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 twenty
(20) 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 each 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 Preferred 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 Preferred Stock upon the exercise of this Warrant
in accordance with the terms hereof will not, (i) violate or contravene the
Company's Articles 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 (other than the Company's shareholders
and Board of Directors, which consents or approvals have been obtained).
D. As long as this Warrant is, or any shares of Preferred Stock issued
upon exercise of this Warrant or any shares of Common Stock issued upon
conversion of such shares of Preferred Stock are, issued and outstanding, the
Company will provide to the Holder the financial and other information described
in that certain Lease Line Schedule No. 01 to Master Equipment Lease Agreement
No. 140 between the Company and Lighthouse Capital Partners, L.P. dated as of
June 14, 1996.
E. So long as this Warrant has not terminated, Holder shall be
entitled to receive such financial and other information as the Holder would be
entitled to receive under the Restated Series B Convertible Preferred Stock
Purchase Agreement, dated as of March 20, 1996, if Holder were a holder of that
number of shares issuable upon full exercise of this Warrant.
F. As of October 24, 1996, the authorized capital stock of the Company
consists of (i) 100,000,000 shares of Common Stock, of which 18,866,348 shares
are issued and outstanding and 86,000 shares are reserved for issuance upon the
exercise of this Warrant and the conversion of the Preferred Stock
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issued upon such exercise, (ii) 1,510,533 shares of Series A Preferred Stock,
all of which are issued and outstanding shares, (iii) 6,567,484 shares of Series
B Preferred Stock, of which 6,316,706 are issued and outstanding shares and
86,000 shares are reserved for issuance upon the exercise of this Warrant, (iv)
4,920,568 shares of Series C Preferred Stock, of which 4,819,538 are issued and
outstanding shares and (v) there are 53,000 shares of Common Stock reserved for
issuance upon the exercise of certain other warrants.
15. REGISTRATION RIGHTS. The Company hereby grants to the Holder
registration rights contained in Sections 5.2 through 5.9 of the Company's
Restated Series B Convertible Preferred Stock Purchase Agreement, dated as of
March 20, 1996 (the "Registration Rights Agreement"), so that (i) the shares of
Common Stock issuable upon conversion of the shares of Preferred Stock issuable
upon exercise of this Warrant shall be "Registrable Securities," and (ii) the
Holder shall be a "Holder," for all purposes of Sections 5.2 through 5.9 of the
Registration Rights Agreement. Such registration rights shall not be restated,
amended or modified in any material manner which affects the Holder differently
than other holders of an equivalent number of shares of Preferred Stock.
16. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
17. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Preferred 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. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Holder's rights contained herein
will be acquired for investment 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 except pursuant to a
registration or exemption.
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 Preferred 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 is an experienced and sophisticated
investor, able to fend for itself in the transactions contemplated by this
Warrant, and has such knowledge and experience in financial and business matters
that such Holder is capable of evaluating the risks and merits of acquiring the
Warrant and the Preferred Stock. The nature and amount of the Preferred Stock
subject to the Warrant is consistent with such Holder's investment objectives,
abilities and resources. The Holder is able to bear the economic risk of an
investment in the Preferred Stock and can afford to sustain a total loss on such
investment. Such Holder has not been formed or organized for the specific
purpose of acquiring the Preferred Stock. Such Holder has had, during the
course of this transaction and prior to the issuance of the Warrant, the
opportunity to ask questions of, and receive answers from, the Company and its
management concerning the Company and the terms and conditions of this Warrant.
Such Holder hereby acknowledges that such Holder or such Holder's
representatives has received all such information as such Holder considers
necessary for evaluating the risks and merits of acquiring the Preferred Stock
and for verifying the accuracy of any information furnished to such Holder or to
which such Holder had access.
E. NO MARKET. The Holder understands that there is no public market
for the Preferred Stock and that there may never be such a public market, and
that even if such a public market develops such
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Holder may never be able to sell or dispose of the Preferred Stock and may thus
have to bear the risk of such Holder's investment for a substantial period of
time, or forever. Such Holder is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the issuer, the resale
occurring not less than two (2) years after a party has purchased and paid for
the security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and the number of
shares being sold during any three (3) month period not exceeding specified
limitations.
F. LEGENDS. Such Holder acknowledge that the certificates
representing the Preferred Stock, when issued, shall contain the following
legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE
HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF
1933 AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
(b) Any legend required by applicable state securities laws.
G. BROKER'S OR FINDER'S FEES. Each Holder represents that no Person
has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or valid claim upon or against the Company for
any commission, fee or other compensation as a finder or broker because of any
act or omission by such Holder and such Holder agrees to indemnify and hold this
Company harmless against any such commissions, fees or other compensation.
H. RIGHTS OF WARRANT HOLDERS. The Holder as such shall not be
entitled to vote or receive dividends or be deemed the holder of securities of
the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder any of the rights of a shareholder of the
Company.
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 Preferred
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. Notwithstanding
the foregoing, the Holder shall not transfer this Warrant or any portion thereof
to a competitor of the Company.
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 and delivery of an indemnity agreement
reasonably satisfactory to the Company, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit
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of the Holder or other evidence reasonably satisfactory to the Company of the
loss, theft or destruction of such Warrant and delivery of an indemnity
agreement reasonably satisfactory to the Company.
19. NO IMPAIRMENT. The Company will not, by amendment of its Articles 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.
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 or 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. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm
commitment underwritten public offering of shares of Common Stock which results
in the conversion of the Preferred Stock into Common Stock pursuant to the
Company's Articles in effect immediately prior to such offering, then, effective
upon such conversion, this Warrant shall change from the right to purchase
shares of Preferred Stock to the right to purchase shares of Common Stock, and
the Holder shall thereupon have the right to purchased, at a total price equal
to that payable upon the exercise of this Warrant in full, the number of shares
of Common Stock which would have been receivable by the Holder upon the exercise
of this Warrant for shares of Preferred Stock immediately prior to such
conversion of such shares of Preferred Stock into shares of Common Stock, and in
such event 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, the provisions for the adjustment of the Purchase Price and of the
number of shares purchasable upon exercise of this Warrant and the provisions
relating to the net issue election) shall thereafter be applicable to any shares
of Common Stock deliverable upon the exercise hereof.
THIS SPACE IS INTENTIONALLY BLANK
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24. VALUE; REPORTING. The Company and the Holder agree that the value of
this Warrant on the date of grant is $100 and shall use reasonable efforts to
cooperate in the preparation of reports regarding the Warrant for tax purposes.
Dated as of: June 30, 1996 WEBTV NETWORKS, INC.
[CORPORATE SEAL] By: /S/
----------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
Attest:
--------------------------------
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SUBSCRIPTION
To:_______________________________ Date:______________________________
The undersigned hereby subscribes for ______ shares of Preferred 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 Preferred Stock pursuant to 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:
_____________________________
2.
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
SEE ATTACHED PAGES.
3.
