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Exhibit 4.1
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT. THIS WARRANT AND THE
SECURITIES TO BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”) OR ANY STATE SECURITIES LAWS.
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE
_______ SHARES
OF THE COMMON STOCK
OF
drugstore.com
inc.
EFFECTIVE DATE: July 19,
2007
EXPIRATION DATE: July 19,
2017
This certifies that
_______ or its transferees or assigns (each individually,
the “ Holder ”) for the agreed upon value
of $2.53 and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, shall be
entitled to purchase from DRUGSTORE .
COM INC . , a Delaware
corporation (the “ Company ”), having its
principal place of business at 411 108 th Ave NE, Suite 1400, Bellevue, WA
98004 , a maximum
of ______ fully paid and nonassessable shares of the
Company’s Common Stock (“ Common Stock
”) for cash at a price equal to $2.53 per share
(the “ Exercise Price ”) at any time, or
from time to time, up to and including 5:00 p.m. Pacific time
on the Expiration Date, upon the surrender to the Company at its
principal place of business (or at such other location as the
Company may advise the Holder in writing) of this Warrant properly
endorsed, a Form of Subscription in substantially the form attached
hereto duly filled in and signed and, as applicable, upon payment
in cash or by check of the aggregate Exercise Price for the number
of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof, or the surrender of the
right to acquire the number of shares of Common Stock determined in
accordance with Section 1.2. The Exercise Price and the number
of shares of Common Stock purchasable hereunder are subject to
adjustment as provided in Section 3 of this
Warrant.
The Warrant is being issued
pursuant to the Agreement between the Company and the Holder dated
as of June 19, 2007 (the “Purchase
Agreement”). The Holder of this Warrant is subject to certain
restrictions, and entitled to certain rights as set forth in the
Purchase Agreement. This Warrant is referred to as the
“Warrant” in the Purchase Agreement.
This Warrant is subject to
the following terms and conditions:
1. E
XERCISE ; I SSUANCE OF
C ERTIFICATES ; P AYMENT
FOR S HARES .
1.1 General. This
Warrant is exercisable at the option of the holder of record hereof
at any time or from time, to time, up to the Expiration Date for
all or any part of the shares of Common Stock (but not for a
fraction of a share), which may be purchased hereunder. This
Warrant may be exercised by the holder of record hereof by
tendering to the Company at its principal office a completed notice
of exercise in the form attached hereto as
Exhibit A (the
“ Notice of
Exercise ”). The Company agrees that the shares of
Common Stock purchased under this Warrant shall be and are deemed
to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this
Warrant, properly endorsed, and appropriate payment for such shares
shall have each been delivered to the Company at its principal
place of business. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which
the Holder is entitled upon such exercise, shall be delivered to
the Holder by the Company at the Company’s expense within a
reasonable time after the rights represented by this Warrant have
been so exercised, and in any event, within ten (10) business
days of such exercise. In case of a purchase of less than all the
shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant or
Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder
hereof within a reasonable time. Each stock certificate so
delivered shall be in such denominations of Common Stock as may be
requested by the Holder hereof and shall be registered in the name
designated by such Holder.
1.2 Net Issue Exercise
. Holder agrees that it cannot “net issue exercise”
this Warrant in accordance with the provisions of this section,
except in connection with or following an Organic Change (as
defined in Section 3.3 below). Notwithstanding any provisions
herein to the contrary, if the fair market value of one share of
the Company’s Common Stock is greater than the Exercise Price
(at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect a “Net
Issue Exercise” pursuant to which it will receive shares
equal to the value (as determined below) of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at
the principal office of the Company together with the properly
endorsed Form of Subscription and notice of such election in which
event the Company shall issue to the Holder a number of shares of
Common Stock computed using the following formula:
Where X = the number of
shares of Common Stock to be issued to the Holder
Y = the number of shares of
Common Stock purchasable under the Warrant or, if only a portion of
the Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such exercise)
A = the fair market value of
one share of the Company’s Common Stock
B = Exercise Price (as
adjusted to the date of such exercise).
For purposes of the above calculation,
the fair market value of one share of Common Stock shall be
determined by the Company’s Board of Directors in good faith,
as of the date of exercise of the Warrant; provided, however, that
where there is a public market for the Company’s Common
Stock, the fair market value per share shall be the average of the
closing prices of the Company’s Common Stock quoted on the
Nasdaq National Market (or similar system) or on any exchange on
which the Common Stock is listed, whichever is applicable, over the
five (5) trading day period commencing on the trading day
immediately following the day on which the Warrant is
exercised.
2.
2. S HARES
TO BE F ULLY P
AID ; R ESERVATION OF
S HARES . The Company covenants and agrees that
all shares of Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free
from all preemptive rights of any shareholder and free of all
taxes, liens and charges with respect to the issue thereof. The
Company further covenants and agrees that, during the period within
which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of
authorized but unissued Common Stock, or other securities and
property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all such
action as may be reasonably necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of any
domestic securities exchange upon which the Common Stock may be
listed; provided, however, that the Company shall not be required
to effect a registration under Federal or State securities laws
with respect to such exercise. The Company will not take any action
which would result in any adjustment of the Exercise Price (as set
forth in Section 3 hereof) if the total number of shares of
Common Stock issuable (i) upon exercise of the Warrant would
exceed 10% of the total number of shares of Common Stock
outstanding on the Effective Date or (ii) after such action
upon exercise of all outstanding warrants, together with all shares
of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion
of all convertible securities and other equity purchase rights then
outstanding, would exceed the total number of shares of Common
Stock then authorized by the Company’s Articles/Certificate
of Incorporation (the “Company Charter”).
3. A
DJUSTMENT OF E XERCISE
P RICE AND N UMBER
OF S HARES . The Exercise Price
and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in Sections 3.1 and 3.2
below. Upon each adjustment of the Exercise Price, the Holder of
this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Exercise Price resulting from such
adjustment.
3.1 Subdivision or
Combination of Stock . In case the Company shall at any time
subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely,
in case the outstanding shares of Common Stock of the Company shall
be combined into a smaller number of shares (by reverse stock split
or otherwise), the Exercise Price in effect immediately prior to
such combination shall be proportionately increased.
3.
3.2 Dividends in Common
Stock, Other Stock, Property, Reclassification . If at any time
or from time to time the Holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise
of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Common Stock or
any shares of stock or other securities which are at any time
directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other
distribution,
(b) any cash paid or
payable otherwise than as a cash dividend, or
(c) Common Stock or
additional stock or other securities or property (including cash)
by way of spinoff, split-up, reclassification, combination of
shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of
which shall be covered by the terms of Section 3.1
above),
then, and in each such case, the Holder
hereof shall, upon the exercise of this Warrant, be entitled to
receive, in addition to the number of shares of Common Stock
receivable thereupon, and without payment of any additional
consideration therefor, the amount of stock and other securities
and property (including cash in the cases referred to in clauses
(b) and (c) above) (collectively, “ Other
Property ”) which such Holder would hold on the date
of such exercise had he been the holder of record of such Common
Stock as of the date on which holders of Common Stock received or
became entitled to receive such Other Property. Notwithstanding the
foregoing, the Company may, in lieu of delivering such Other
Property to the Holder, adjust the Exercise Price of the Warrant or
the number of shares of Common Stock to be delivered upon exercise
of the Warrant as the Board of Directors, in its reasonable
judgment, deems appropriate and equitable, in order to take into
account the value of such Other Property.
3.3 Reorganization,
Consolidation, Merger or Sale . If any recapitalization or
reorganization of the capital stock of the Company other than
pursuant to Section 3.2(c) above, or any consolidation or
merger of the Company with another corporation, or the sale of all
or substantially all of its assets shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property as consideration for such
holders’ shares of Common Stock (an “ Organic
Change ”), then, as a condition of such Organic
Change, lawful and adequate provisions shall be made by the Company
whereby the Holder hereof shall thereafter have the right to
purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately t
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