Exhibit 10.24
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: 2Bridge, a California corporation
Number of Shares: 10% Warrant coverage
Class of Stock: Series D Preferred
Initial Exercise Price: See Below.
Issue Date: November 15, 1999
Expiration Date: November 15, 2006, unless earlier terminated
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00, Silicon
Valley Bank ("Holder") is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the "Shares") of the
corporation (the "Company") at the initial exercise price per Share (the
"Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant. The Warrant Price shall be equal to seventy percent (70%)
of the price per share at which the Company after the Issue Date first sells its
shares of capital stock in an offering in which the Company receives not less
than $1,000,000 (the "Next Round") and the Shares subject to this Warrant shall
be the class of securities sold in the Next Round. If the Next Round does not
occur on or before July 31, 2000, then, after such date, at the option of
Holder, the Shares shall be Series C Preferred Stock and the Warrant Price shall
be $2.1328. The number of Shares subject to the Warrant shall be the quotient
derived by dividing $100,000 by the Warrant Price.
If any amount is outstanding under the Loan Agreement between the Company
and Holder dated as of the Issue Date (the "Loan Agreement") after the Maturity
Date, as defined in the Loan Agreement, Holder may purchase additional Shares
equal to the number of Shares equal to the quotient derived by dividing $39,000
by the Warrant Price, hereunder on the day after the Maturity Date, and
additional Shares equal to the number of Shares equal to the quotient derived by
dividing $39,000 by the Warrant Price, for each 45-day period (or portion
thereof) from and including the day immediately after the Maturity Date that any
amount remains outstanding under the Loan Agreement.
ARTICLE 1. EXERCISE.
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1.1 Method of Exercise. Holder may exercise this Warrant by delivering a
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duly executed Notice of Exercise in substantially the form attached as Appendix
I to the principal office of the Company. Unless Holder is exercising the
conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in
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Section 1.1, Holder may from time to time convert this Warrant at any time the
fair market value of a Share exceeds the Warrant Price, in whole or in part,
into a number of Shares determined by dividing (a) the aggregate fair market
value of the Shares or other securities otherwise issuable upon exercise of this
Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market
value of one Share. The fair market value of the Shares shall be determined
pursuant Section 1.4.
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1.3 No Rights as Shareholder. This Warrant does not entitle Holder to any
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voting rights as a shareholder of the Company prior to the exercise hereof.
1.4 Fair Market Value. If the Shares are traded in a public market, the
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fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking or public accounting firm to undertake such valuation. If the valuation
of such investment banking or public accounting firm is greater than that
determined by the Board of Directors, then all fees and expenses of such
investment banking or accounting firm shall be paid by the Company. In all other
circumstances, such fees and expenses shall be paid by Holder.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
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exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably
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satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.
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1.7.1 "Acquisition". For the purpose of this Warrant, "Acquisition"
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means any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
Company where the holders of the Company's securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.
1.7.2 Assumption of Warrant. Upon the closing of any Acquisition the
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successor entity may elect to assume the obligations of this Warrant, in which
case this Warrant shall be exercisable for the same securities, cash, and
property as would be payable for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on the
record date for the Acquisition any subsequent closing. The Warrant Price shall
be adjusted accordingly. If this Warrant is not assumed, and the fair market
value of one Share is greater than the Warrant Price, it shall be deemed to have
been converted into Shares pursuant to Section 1.2 hereof immediately prior to
the consummation of the Acquisition. If this Warrant is not assumed and is not
convertible pursuant to Section 1.2, it shall terminate immediately upon
consummation of the Acquisition if Holder fails to exercise the Warrant prior to
the Acquisition.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
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2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
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dividend On the Shares payable in common stock, or other securities or
subdivides the Shares in a transaction that increases the amount of common stock
into which the Shares are convertible, then upon exercise of this Warrant, for
each Share acquired, Holder shall receive, without cost to Holder, the total
number and kind of securities to which Holder would have been entitled had
Holder owned the Shares of record as of the date the dividend or subdivision
occurred.
2.2 Reclassification, Exchange or Substitution. Subject to Section 1.7,
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upon any reclassification, exchange, substitution, or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant, Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities and
property that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event.
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Subject to Section 4.1, such an event shall include any automatic conversion of
the outstanding or issuable securities of the Company of the same class or
series as the Shares to common stock pursuant to the terms of the Company's
Articles of Incorporation upon the closing of a registered public offering of
the Company's common stock. The Company or its successor shall promptly issue to
Holder a new Warrant for such new securities or other property. The new Warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise of the new Warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.
2.3 Adjustments for Combinations Etc. If the outstanding Shares are
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combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased and the number
of Shares proportionately decreased.
2.4 No Impairment. The Company shall not, by amendment of its Articles of
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Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares other than as described above that adversely affects
Holder's rights under this Warrant, the Warrant Price shall be adjusted downward
and the number of Shares issuable upon exercise of this Warrant shall be
adjusted upward in such a manner that the aggregate Warrant Price of this
Warrant is unchanged.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
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3.1 Representations and Warranties. The Company hereby represents and
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warrants to the Holder that all Shares which may be issued upon the exercise of
the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
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declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) arid (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant and/or
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any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within one hundred twenty (120) days after the
end of each fiscal year of the Company, the annual financial statements of the
Company.
3.4 Registration Under Securities Act of 1933, as amended. The Company
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agrees that the Shares shill be subject to the registration rights granted to
any other holders of the Company's Series C Preferred Stock
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and Holder agrees to execute an Amended and Restated Rights Agreement within
thirty (30) days from the date of this Warrant.
ARTICLE 4. MISCELLANEOUS.
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4.1 Term. This Warrant is exercisable, in whole or in part, at any time
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and from time to time on or before the Expiration Date set forth above; provided
that the Warrant and all rights of Holder hereunder shall terminate immediately
prior to Holder's initial public offering unless this Warrant is exercised by
Holder or otherwise converted into Shares pursuant to Section 1.2 hereof
immediately prior to such initial public offering.
4.2 Legends. This Warrant and the Shares (and the securities issuable,
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directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION
IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant shall be
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nontransferable, other than pursuant to (i) a transfer not involving a change in
beneficial ownership, (ii) a distribution without consideration of the Warrant
by the Holder to any of its partners or retired partners, or to the estate of
any of its partners or retired partners, or if the Holder is a limited liability
company, to any of its members or former members, or to the estate of any of its
members or former members, (iii) a pledge by Holder to its lenders in connection
with a grant by Holder of a security interest in substantially all of Holder's
personal property and (iv) any transfer by any Holder to (A) any individual or
entity with respect to which such Holder (or any person controlled by,
controlling or under common control with, such Holder) has the power to direct
investment decisions. This Warrant and the Shares issuable upon exercise of this
Warrant (and the securities issuable, directly or indirectly, upon conversion of
the Shares, if any) may not be transferred or assigned in whole or in part
without compliance with applicable federal and state securities laws by the
transferor and the transferee (including, without limitation, the delivery of
investment representation letters and legal opinions reasonably satisfactory to
the Company, as reasonably requested by the Company). The Company shall not
require Holder to provide an opinion of counsel if the transfer is to an
affiliate of Holder or if there is no material question as to the availability
of current information as referenced in Rule 144(c), Holder represents that it
has complied with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is provided
with a copy of Holder's notice of proposed sale.
4.4 Transfer Procedure. Subject to the provisions of Sections 4.2 and 4.3,
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Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the Warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable).
The Company shall have the right to refuse to transfer any portion of this
Warrant to any person who directly competes with the Company.
4.5 Notices. All notices and other communications from the Company to the
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Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
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discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
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4.7 Attorneys Fees. In the event of any dispute between the parties
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concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in
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accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
4.9 Equity Event. For purposes of this Warrant, an "equity event" shall
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mean the receipt by the Company of aggregate cash proceeds of at least
$1,000,000 from the sale of its capital stock or subordinated debt, other than
in a nonfinancing transaction to employees, officers, directors or consultants
of the Company.
4.10 Lock-Up. Holder agrees, if requested by the Company and an
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underwriter of Shares (or other securities) of the Company, not to sell, sell
short, pledge, grant an option with respect to or otherwise transfer or dispose
of any Shares (or other securities) of the Company held by the Holder during a
period of time determined by the Company and its underwriters (not to exceed one
hundred eighty (180) days) following the effective date of a registration
statement of the Company with respect to the foregoing, provided that all
executive officers, directors and holders of more than five percent (5%) of the
Company's capital stock who then hold shares (or other securities) of the
Company enter into similar arrangements.
2Bridge
By: /s/ Xxxxxx Xxxxx
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Title: CFO
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APPENDIX 1
NOTICE OF EXERCISE
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1. The undersigned hereby elects to purchase ___________ shares of the
Common/Series _________ Preferred [strike one] Stock of _______________________
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full.
2. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to ___________________________ of the Shares covered
by the Warrant.
[Strike paragraph that does not apply.]
3. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
____________________________
(Name)
____________________________
____________________________
(Address)
4. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws. In support thereof, the undersigned has executed the Investment
Representation Statement attached hereto as Exhibit A.
____________________________
(Signature)
______________________
(Date)
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