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EXHIBIT 10.34
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH
MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
WARRANT AGREEMENT
To Purchase Shares of the Series C Preferred Stock of
ACADEMIC SYSTEMS CORPORATION
Dated as of June 7, 1993
WHEREAS, Academic Systems Corporation, a California corporation (the
"Company") has entered into a Master Lease Agreement dated as of June 7, 1993,
Equipment Schedule No. VL-1, and related Summary Equipment Schedules (the
"Leases") with Comdisco, Inc., a Delaware corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series C Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder certify and agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE SERIES C PREFERRED STOCK.
For value received, the Company hereby grants to the Warrantholder, and the
Warrantholder is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase, from the Company, 50,000
fully paid and non-assessable shares of the Company's Series C Preferred Stock
("Preferred Stock") at a purchase price of $.80 per share (the "Exercise
Price"). The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
(a) Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the date of execution hereof and shall be exercisable for a period
of (i) ten (10) years after the date of execution hereof, or (ii) five (5) years
from the effective date of the Company's initial public offering, whichever is
longer.
(b) Acceleration of Term. Notwithstanding the term of this Warrant
Agreement fixed pursuant to Section 2(a) hereof and the provisions of Section
B(a) below, the right to purchase Preferred Stock as granted herein shall
expire, if not previously exercised, immediately upon either: (i) the closing of
the issuance and sale of shares of Common Stock of the Company in the Company's
first public offering of securities for its own account pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Initial Public Offering"), provided that the Preferred Stock issuable to
Warrantholder upon exercise hereof shall be included in such registration
statement only upon request of Warrantholder; or (ii) a merger of the Company
with or into another corporation provided that such merger results in a per
share value of $1.60 or more for Lessee's stock (the "Accelerating Merger").
The Company shall notify the Warrantholder if the Initial Public Offering
or Accelerating Merger is proposed, within a reasonable period of time prior to
the filing of a registration statement or a firm commitment with respect to an
Accelerating Merger, as applicable, and if the Company fails to deliver such
written notice within a reasonable period of time, anything to the contrary in
this Warrant Agreement notwithstanding, the rights to purchase will not expire
until ten (10) business days after the Company delivers such notice to the
Warrantholder. Such notice shall also contain such details of the proposed
Initial Public Offering or Accelerating Merger as are reasonable in the
circumstances and notice that this Warrant Agreement is expected to expire upon
closing thereof. If such closing does not take place, the Company shall promptly
notify the Warrantholder that such proposed transaction has been terminated.
Anything to the contrary in this Warrant
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Agreement notwithstanding, the Warrantholder may rescind any exercise of its
purchase rights promptly after such notice of termination of the proposed
transaction if the exercise of Warrants occurred after the Company notified the
Warrantholder that the Initial Public Offering or Accelerating Merger was
proposed or if the exercise were otherwise precipitated by such proposed Initial
Public Offering or Accelerating Merger. In event of such rescission, the
Warrants will continue to be exercisable on the same terms and conditions.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form
attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and
executed. Upon receipt of the Notice of Exercise and the payment of the
purchase price in accordance with the terms set forth below, the Company shall
issue to the Warrantholder a certificate for the number of shares of Preferred
Stock purchased and shall execute the Notice of Exercise indicating the number
of shares which remain subject to future purchases, if any.
Notwithstanding anything to the contrary contained in Section 2 above or
this Section 3, the Warrantholder shall either (i) exercise all outstanding
warrants by paying to the Company, by cash or check, an amount equal to the
aggregate Warrant Price of the shares being purchased, or (ii) receive shares
equal to the value (as determined below) of this Warrant by surrender of the
Warrant at the principal office of the Company together with notice of such
election in which event the Company shall issue to the Warrantholder a number
of shares of Preferred computed using the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred to be issued to the
Warrantholder.
Y = the number of shares of Preferred under this Warrant.
A = the fair market value of one share of Common.
B = Exercise Price.
As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock the average of the closing prices of the
Company's Common Stock sold on all securities exchanges on which the Common
Stock may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day the Common Stock is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 p.m., New York City time, or, if on any day the
Common Stock is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked price on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the current fair market value of Common Stock
is being determined and the 20 consecutive business days prior to such day. If
at any time the Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the current fair market
value of Preferred Stock shall be the highest price per share which the Company
could obtain from a willing buyer (not a current employee or director) for
shares of Preferred Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors of the Company,
unless (i) the Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, in
which case the current fair market value of the Preferred Stock shall be deemed
to be the value received by the holders of the Company's Series C Preferred
Stock for each share of Series C Preferred Stock (or Common Stock if all such
shares have been converted into Common Stock) pursuant to the Company's
acquisition; or (ii) the Warrantholder shall purchase such shares in
conjunction with the initial underwritten public offering of the Company's
Common Stock pursuant to a registration statement filed under
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the Securities Act of 1933, as amended (the "1933 Act") in which case, the fair
market value of the shares of stock subject to this Warrant shall be the price
at which all registered shares are sold to the public in such offering.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock required to
be reserved for purposes of exercise of the Warrant Agreement hereunder by
Warrantholder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
1933 Act, as then in effect, or any similar Federal statute then enforced, or
any state securities law, required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, before such shares
may be issued upon conversion, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
This Warrant may only be exercised for a whole number of shares of
Preferred Stock. In the event that, pursuant to Section 8 below, this Warrant is
exercisable for some other security, then no fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of such fractional shares, the Company shall make a cash
payment therefor upon the basis of the Exercise Price then in effect,
aggregating for each Warrantholder all fractional shares and paying cash only
for any fractional share remaining after such aggregation.
6. NO RIGHTS AS SHAREHOLDERS.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrantholder's rights to purchase Preferred Stock as provided for herein.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Merger and Sale of Assets. Subject in all respects to Section 2(b)
above, if at any time there shall be a capital reorganization of the shares of
the Company's stock (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), or a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, or the sale of all or substantially all of the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, lawful provision shall be made so
that the Warrantholder shall thereafter be entitled to receive upon exercise of
its rights to purchase Preferred Stock, the number of shares of Preferred Stock
or other securities of the successor corporation resulting from such merger or
consolidation, to which a holder of the Preferred Stock deliverable upon
exercise of the right to purchase Preferred Stock hereunder would have been
entitled in such capital reorganization, merger, consolidation or sale if the
right to purchase such Preferred Stock hereunder had been exercised immediately
prior to such capital reorganization,
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merger, consolidation or sale. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the reorganization, merger,
consolidation or sale to the end that the provisions of this Warrant Agreement
(including adjustments of the Exercise Price and number of shares of Preferred
Stock purchasable pursuant to the terms and conditions of this Warrant
Agreement) shall be applicable after that event, as near as reasonably may be,
in relation to any shares deliverable after that event upon the exercise of the
Warrantholder's rights to purchase Preferred Stock pursuant to this Warrant
Agreement.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange, conversion or subdivision of
securities or otherwise, change, or if the Series C Preferred is converted into
Common Stock pursuant to the Company's Amended and Restated Articles of
Incorporation, any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of
any other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were
subject to the purchase rights under this Warrant Agreement immediately prior
to such combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time shall
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock, then the Exercise Price shall be adjusted, from and after the
date of determination of stockholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution.
The Warrantholder shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(e) Right to Purchase Additional Stock. If, for any reason, the total
Warrantholder's cost of equipment leased pursuant to the Leases should exceed
$400,000.00, Warrantholder shall have the right to purchase from the Company,
at the Exercise Price per share specified in Section 1 (which price may be
subject to adjustment from time to time as provided for in this Section 8), an
additional number of shares, which number shall be determined by (i)
multiplying the amount by which the Warrantholder's total equipment cost
exceeds $400,000.00 by 10%, and (ii) dividing the product thereof by the
Exercise Price per share referenced above.
(f) Notice of Adjustments. In the event that: (i) the Company shall
declare any dividend or distribution upon its stock, whether in cash, property,
stock or other securities; (ii) the Company shall offer for subscription prorata
to the holders of any class of its Preferred or other convertible stock any
additional shares of stock of any class or other rights, then the Company shall
send to the Warrantholder written notice of such event within ten (10) days
thereafter; (iii) there shall be any capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the Company's
assets; or (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in connection with each such
event, the Company shall send to the Warrantholder at least ten (10) days prior
written notice of such event.
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and
(v) the number of shares subject to purchase hereunder after giving effect to
such adjustment, and shall
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be given by first class mail, postage prepaid, addressed to the Warrantholder,
at the address as shown on the books of the Company.
(g) Registration and Listing. The Company will take all such actions as
may be necessary to assure that all shares of Preferred Stock issuable pursuant
to this Warrant Agreement by Warrantholder may be so issued without violation
of any applicable law or regulation or any requirements of any domestic stock
exchange (except for official notice of issuance, which will be immediately
transmitted by the Company upon issuance) upon which shares of Preferred Stock
or other shares of the same class may be listed. The Company will not take any
action which will result in any adjustment of the number of shares of Preferred
Stock issuable upon exercise of this Warrant Agreement if the total number of
shares of Preferred Stock issuable after such action upon exercise of the
Warrant Agreement then outstanding, together with the total number of shares of
Preferred Stock then outstanding, would exceed the total number of shares of
Preferred Stock then authorized and not reserved for any purpose other than the
purpose of issue upon exercise of the Warrant Agreement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Subject in all respect to the Schedule of Exceptions attached hereto as
Schedule 1, the Company makes the following representations and warranties:
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will
be validly issued, fully paid and non-assessable, and will be free of any
taxes, liens, charges or encumbrances of any nature whatsoever, excepting those
liens, charges or encumbrances caused or permitted to be caused by the
Warrantholder, provided, however, that the Preferred Stock issuable pursuant to
this Warrant Agreement may be subject to restrictions on transfer under state
and/or Federal securities laws. The Company has made available to the
Warrantholder true, correct and complete copies of its Amended and Restated
Articles of Incorporation and By-Laws, as amended, and minutes of all Board of
Directors (including all committees of the Board of Directors, if any) and
Shareholder meetings, if any, from May 5, 1992 through April 28, 1993. The
issuance of certificates for shares of Preferred Stock upon exercise of the
Warrant Agreement shall be made without charge to the Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Preferred
Stock; provided that the Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder. Subject to the
terms of the legend at the top of the first page of this Warrant Agreement and
applicable securities law, the Company will not close its books against the
transfer of the Warrant Agreement or of any share of Preferred Stock issued or
issuable upon exercise of the Warrant and any agreement in any manner which
interferes with the timely exercise of the Warrant.
(b) Due Authority. The execution and delivery by the Company of the
Leases, and this Warrant Agreement and the performance of all obligations of
the Company thereunder and hereunder, including the issuance to Warrantholder
of the right to acquire the shares of Preferred Stock set forth in Section 1
above (which number of shares may be from time to time adjusted pursuant to the
terms of Section 8 above) have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement
are not inconsistent with the Company's Amended and Restated Articles of
Incorporation or By-Laws, do not contravene any law or governmental rule,
regulation or order applicable to it, do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which it is a party or by which it is bound, and the
Leases and this Warrant Agreement constitute legal, valid and binding
agreements of the Company, enforceable in accordance with their respective
terms, subject to the effect of applicable bankruptcy and other similar laws
affecting the rights of creditors generally and rules of law concerning
equitable remedies.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except, if deemed appropriate by the Company, for the
filing of notices pursuant to Regulation D
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under the 1933 Act and Section 25102(f) of the California Corporate Securities
Law, which filings will be effective by the time required thereby.
(d) Litigation. Thee are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company in any court or before any governmental commission, board
or authority which, if adversely determined, will have a material adverse
effect on the ability of the Company to perform its obligations under the
Leases and this Warrant Agreement.
(e) Subsidiaries or Affiliates. The Company has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
(f) Issued Securities. All issued and outstanding shares of Common stock,
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:
(i) The authorized capital of the Company consists of (A) 15,000,000
shares of Common Stock, of which 3,870,000 shares are issued outstanding, and
(b) 7,233,107 shares of preferred stock, of which 6,983,107 shares are issued
and outstanding and are convertible into 6,983,107 shares of Common Stock at the
average price of $.73 per share.
(ii) The Company has reserved (A) 1,880,000 shares of Common Stock for
issuance under its 1992 Stock Option Plan, under which 420,000 options are
outstanding at an average price of $0.01 per share, and (B) 0 shares of Common
Stock for issuance under its Incentive Stock Option Plan, under which 0 options
are outstanding at an average price of $0 per share. There are no other options,
warrants, conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company.
(iii) In accordance with the Company's Amended and Restated Articles
of Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.
(g) Financial Statements. The Company has delivered to the Warrantholder
its consolidated financial statements for its fiscal year ended June 30, 1992,
together with the report thereon of its independent public accountants, if any,
and its unaudited Balance Sheet and Statement of Operations for the one month
period ending February 28, 1993 (the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated. The condition and operating
results of the Company as of the dates and during the periods indicated, as
reflected therein, are true and correct in all material aspects, subject as to
the Balance Sheet and Statement of Income for the one month period then ending
February 28, 1993 to normal year-end audit adjustments. Since February 28, 1993,
there has been no change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements other
than changes in the ordinary course of business which have not been,
individually or in the aggregate, materially adverse.
The Company shall deliver to the Warrantholder (i) within one hundred
twenty (120) days after the end of the Company's fiscal year, the Statement of
Operations for such fiscal year, a balance sheet of the Company as of the end of
such year and consolidated statement of cash flows for such year, which year-end
financial reports shall be in reasonable detail and certified by independent
public accountants of nationally recognized standing selected by the Company,
and (ii) within forty-five (45) days after the end of each fiscal quarter other
than the last fiscal quarter, unaudited statements of operations and a balance
sheet as of the end of such quarter.
(h) Contingent and Absolute Liabilities. The Company has no material
liabilities or obligations, absolute or contingent except the liabilities and
obligations of the Company as set forth in the Financial Statements and
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liabilities and obligations which have occurred in the ordinary course of
business, and which have not been materially adverse.
(i) Licenses, Patents and Copyrights. To the best of the Company's
knowledge, the Company owns, possesses, has access to, or can become licensed
on reasonable terms under, all patents, patent applications, trademarks, trade
names, inventions, franchises, licenses, permits, computer software and
copyrights necessary for the operation of its business as now conducted, with
no known infringement of, or conflict with, the rights of others.
(j) Employee Contracts. To the best of the Company's knowledge, no
employee of the Company is in violation of any material term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any such employee with the Company or any prior
employer because of the nature of the business conducted by the Company.
(k) Insurance. The Company has in full force and effect insurance
policies, insuring the Company and its property and business against such
losses and risks, and in such amounts, as are customary for corporations
engaged in a similar business and similarly situated and as otherwise may be
required pursuant to the terms of any other contract or agreement.
(l) Other Commitments to Register Securities. Except as set forth in the
Warrant Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act, any of its presently outstanding securities or any of its
securities which may hereafter be issued.
(m) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of the Warrantholder's right to purchase such Preferred Stock will
constitute transactions exempt from (i) the registration requirements of
Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the
qualification of the California Corporate Securities Law, in reliance upon
Section 25102(f) thereof.
(n) Compliance with Rule 144. At the written request of the Warrantholder,
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the 1933 Act, the Company shall furnish to the Warrantholder,
within ten days after receipt of such request, a written statement confirming
the Company's compliance with the filing requirements of the Securities and
Exchange Commission as set forth in such Rule, as such Rule may be amended from
time to time.
(o) No Events of Default, Material Contracts. All material contracts,
agreements and instruments to which the Company is a party are in full force and
effect in all material respects, and are valid, binding and enforceable by the
Company in accordance with their respective terms, subject to the effect of any
applicable bankruptcy and other similar laws affecting the rights of creditors
generally, and rules of law concerning equitable remedies and no event of
default, and no event which, with the passing of the time or the giving of
notice, or both, would constitute an event of default has occurred or is
continuing under any such contract, agreement of instrument.
(p) Brokers' Fees. The Company has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Warrant Agreement or
any other transaction contemplated thereby.
(q) Untrue, Misleading Statements. No representation or warranty of the
Company contained in the Leases, and this Warrant Agreement or any certificate
or exhibit furnished or to be furnished to Warrantholder pursuant thereto or in
connection with the transaction contemplated thereby (when read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading.
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(r) Indebtedness to Employees and Shareholders. The Company is not
indebted to any employee, shareholder, officer or director of the Company, and
no such employee, shareholder, officer or director is indebted to the Company.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder, which by
its execution hereof the Warrantholder hereby confirms:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder'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 Warrantholder has no present
intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the Preferred
Stock issuable upon exercise of the Warrantholder'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
Agreement will be exempt from the registration and qualifications requirements
thereof, and (i) that the Company's reliance on such exemption is predicated on
the representations set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred
Stock or Preferred Stock issuable upon exercise of such rights 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 (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act
is available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from
the beneficial owner of any of the aforementioned securities to its nominee or
from such nominee to its beneficial owner, and shall terminate as to any
particular share of Preferred Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder 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 1933 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. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
then outstanding as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense to such holder, one or
more new certificates for the Warrant or for such shares of Preferred Stock not
bearing any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience in
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.
(e) Risk of No Registration. The Warrantholder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of
the Securities Exchange Act of 1934 (the "1934 Act"), or if a registration
statement covering the securities under the 1933 Act is not in effect when it
desires to sell (i) the rights to purchase Preferred Stock pursuant to this
Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the
right to purchase, it may be required to hold such securities for an indefinite
period. The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock
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9
which might be made by it in reliance upon Rule 144 under the 1933 Act may be
made only in accordance with the terms and conditions of that Rule.
11. REQUESTS FOR REGISTRATION.
Warrantholder and Company agree that all shares of Common Stock issuable
upon conversion of Preferred Stock subject to the Warrant Agreement shall have
the same registration rights and be subject to the same terms and conditions
with respect to the registration and sale of such stock as possessed by the
Series C Preferred Shareholders as provided for in the Investors' Rights
Agreement dated February 24, 1993, by and among the Company and those certain
Purchasers identified therein, attached hereto as Exhibit II.
12. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof, as well
as applicable resale restrictions under the Federal and State securities laws,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, that
in no event shall the number of transfers of the rights and interests in all of
the Warrants exceed three (3) transfers. The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit III (the "Transfer Notice"), at its principal
offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer.
13. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
California.
(d) Counterparts. This Warrant Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Titles and Subtitles. The titles of the paragraphs and subparagraphs of
this Warrant Agreement are for convenience and are not to be considered in
construing this Agreement.
(f) Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, addressed
(i) to the Warrantholder at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000,
attention: Xxxxx Xxxx, Venture Leasing Director, cc: Legal Department, and (ii)
to the Company at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
attn.: Chief Financial Officer, or at such other address as any such party may
subsequently designate by written notice to the other party.
(g) Specific Performance. The Company recognizes and agrees that the
Warrantholder will not have an adequate remedy if the Company fails to comply
with this Agreement and that damages will not be readily ascertainable, and the
Company expressly agrees that, in the event of such failure, it shall not oppose
an application by the Warrantholder or any other person entitled to the benefit
of this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.
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(h) Survival. The representations, warranties, covenants and conditions of
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended by a
written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions and an
opinion from the Company's counsel addressed to the Warrantholder with respect
to the representations, warranties and covenants set forth in subparagraphs (a)
through (f) and subparagraphs (l), (m) and (o) of Section 9 above and shall also
supply such other documents as the Warrantholder may from time to time
reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized.
Company:
ACADEMIC SYSTEMS CORPORATION
Dated June 7, 1993 By: /s/ [SIGNATURE ILLEGIBLE]
------ -- -------------------------------
Title: VP & CFO
----------------------------
Warrantholder:
COMDISCO, INC.
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------
Title: [TITLE ILLEGIBLE]
-----------------------------
6-10-93
11
Exhibit I
NOTICE OF EXERCISE
To: ____________________
(1) The undersigned Warrantholder hereby elects to purchase ______ shares of the
Preferred Stock (or such other number and/or type of security as may be
provided pursuant to Section 8 of the Warrant Agreement) of ACADEMIC SYSTEMS
CORPORATION pursuant to the terms of the Warrant Agreement dated the 7th day
of June, 1993 (the "Warrant Agreement") between ACADEMIC SYSTEMS CORPORATION
and the Warrantholder, and tenders herewith payment of the purchase price
for such shares in full, together with all applicable transfer taxes, if
any.
(2) In exercising its rights to purchase the Preferred Stock of ACADEMIC SYSTEMS
CORPORATION, the undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as is
specified below.
----------------------------------------
(Name)
----------------------------------------
(Address)
Warrantholder: COMDISCO, INC.
By:
----------------------------------
Title:
----------------------------------
Date:
----------------------------------
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ACKNOWLEDGEMENT OF EXERCISE
The undersigned __________________________, hereby acknowledges receipt of
the "Notice of Exercise" from Comdisco, Inc., to purchase _____ shares of the
Preferred Stock, of ACADEMIC SYSTEMS CORPORATION, pursuant to the terms of the
Warrant Agreement, and further acknowledges that ______ shares remain subject
to purchase under the terms of the Warrant Agreement.
Company:
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
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Exhibit III
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form
and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
------------------------
--------------------------------------------------------------------------------
(Please Print)
whose address is
----------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:
----------------------------------
Holder's Signature:
---------------------
----------------------------------------
Signature Guaranteed:
-------------------
NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant Agreement.
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