NEITHER THIS WARRANT NOR THE STOCK PURCHASABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
OF SUCH SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO; (ii) AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION,
(iii) AN OPINION OF COUNSEL FOR HOLDER, REASONABLY SATISFACTORY TO COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED, (iv) RECEIPT OF A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION, OR (v) OTHERWISE COMPLYING WITH THE
PROVISIONS OF ARTICLE III OF THIS WARRANT. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AS HEREIN PROVIDED.
November 12, 1998
WARRANT TO PURCHASE COMMON STOCK
OF
GRIC COMMUNICATIONS, INC.
Void after November 11, 2003
GRIC Communications, Inc., a California corporation (the "COMPANY"),
with principal offices at 0000 XxXxxxxx Xxxx., Xxxxxxxx, XX 00000, hereby
acknowledges that America Online, Inc., a Delaware corporation ("AOL") or
registered assigns, is entitled, subject to the terms and conditions of this
Warrant, to purchase from the Company at any time after the above specified date
of this Warrant and prior to the Expiration Date (as defined below), up to
260,000 fully paid and non-assessable Warrant Shares (as hereinafter defined),
subject to adjustment of such number of shares pursuant to Article IV hereof, at
a price per share equal to the Warrant Price (as defined below), upon surrender
of this Warrant at the principal offices of the Company, together with a duly
executed subscription form in the form attached hereto as EXHIBIT 1 and
simultaneous payment of the full Warrant Price for each Warrant Share so
purchased in lawful money of the United States. The Warrant Price and the number
and character of Warrant Shares purchasable under this Warrant are subject to
adjustment as provided in Article IV herein.
This Warrant is issued pursuant to that certain Warrant Purchase Agreement
of even date herewith (the "PURCHASE AGREEMENT"), by and among the Company and
AOL.
ARTICLE I
DEFINITIONS
"ARTICLES OF INCORPORATION" means the Amended and Restated Articles of
Incorporation of Company, as filed with the California Secretary of State on
June 29, 1998.
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"COMMISSION" means the Securities and Exchange Commission, or any other
federal agency then administering the Exchange Act or the Securities Act, as
defined herein.
"COMMON STOCK" means Company's Common Stock, any stock into which such
stock shall have been changed or any stock resulting from any reclassification
of such stock, and any other capital stock of Company of any class or series now
or hereafter authorized having the right to share in distributions either of
earnings or assets of Company without limit as to amount or percentage.
"COMPANY" means GRIC COMMUNICATIONS, INC., a California corporation, and
any successor corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"EXPIRATION DATE" means the earliest to occur of (i) the fifth anniversary
of the date first written above and (ii) the first anniversary of the date on
which the Roaming Services Agreement dated 6/11/98 between GRIC and AOL is
terminated.
"FAIR MARKET VALUE" means
(i) If shares of Common Stock are being sold pursuant to a
Registration and Fair Market Value is being determined as of the closing of the
public offering, the "price to public" specified for such shares in the final
prospectus for such public offering;
(ii) If shares of Common Stock are then listed or admitted to
trading on any national securities exchange or traded on any national market
system and Fair Market Value is not being determined as of the date described in
clause (i) of this definition, the average of the daily closing prices for the
ten (10) trading days before such date. The closing price for each day shall be
the last sale price on such date or, if no such sale takes place on such date,
the average of the closing bid and asked prices on such date, in each case as
officially reported on the principal national securities exchange or national
market system on which such shares are then listed, admitted to trading or
traded;
(iii) If no shares of Common Stock are then listed or admitted to
trading on any national securities exchange or traded on any national market
system or being offered to the public pursuant to a Registration, the average of
the reported closing bid and asked prices thereof on such date in the
over-the-counter market as shown by the National Association of Securities
Dealers automated quotation system or, if such shares are not then quoted in
such system, as published by the National Quotation Bureau, Incorporated or any
similar successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected in good faith by the Board of
Directors;
2
(iv) If no shares of Common Stock are then listed or admitted to
trading on any national exchange or traded on any national market system, if no
closing bid and asked prices thereof are then so quoted or published in the
over-the-counter market and if no such shares are being offered to the public
pursuant to a Registration, the Fair Market Value of a share of Common Stock
shall be as determined in good faith by Company's Board of Directors after
taking into consideration all factors it deems appropriate, including, without
limitation, recent sale and offer prices of the capital stock of the Company in
a private transaction negotiated at arms-length.
"FISCAL YEAR" means the fiscal year of Company.
"HOLDER" means the person in whose name this Warrant is registered on the
books of Company maintained for such purpose.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, government entities and authorities and other organizations, whether or
not legal entities.
"PREFERRED STOCK" means the Preferred Stock of Company, as defined in the
Articles of Incorporation.
"PRINCIPAL EXECUTIVE OFFICE" means Company's office at 0000 XxXxxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000, or such other office as designated in
writing to Holder by Company.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"RIGHTS AGREEMENT" means the Third Amended and Restated Registration Rights
Agreement, dated as of December 24, 1997, as amended after December 24, 1997, by
and among Company and the shareholders of Company named therein, attached hereto
as EXHIBIT "D".
"RULE 144" means Rule 144 as promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that the Commission may promulgate.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"SHAREHOLDER" means a holder of one or more Warrant Shares.
3
"WARRANT" means this warrant and all warrants issued upon the partial
exercise, transfer or division of or in substitution for any Warrant.
"WARRANT PRICE" means a price per Warrant Share equal to the lower of (i)
the last price at which Series D Preferred Stock is issued by the Company or
(ii) $4.00 per share, subject to adjustment as provided in Article IV hereof.
"WARRANT SHARES" means the shares of Common Stock issuable upon the
exercise of this Warrant provided that if under the terms hereof there shall be
a change such that the securities purchasable hereunder shall be issued by an
entity other than Company or there shall be a change in the type or class of
securities purchasable hereunder, then the term shall mean the securities
issuable upon the exercise of the rights granted hereunder.
ARTICLE II
EXERCISE
2.1. EXERCISE RIGHT; MANNER OF EXERCISE. Holder may exercise this
Warrant, in whole or in part, at any time and from time to time on or prior to
the Expiration Date upon (i) surrender of this Warrant, together with an
executed Notice of Exercise, substantially in the form of EXHIBIT "A" attached
hereto, at the Principal Executive Office, and (ii) payment to Company of the
aggregate Warrant Price for the number of Warrant Shares specified in the Notice
of Exercise (such aggregate Warrant Price the "TOTAL WARRANT PRICE"). The Total
Warrant Price shall be paid in cash or by check. The issuance of Warrant
Shares upon exercise of this Warrant shall be made without charge to Holder for
any issuance tax with respect thereto or any other cost incurred by Company in
connection with the exercise of this Warrant and the related issuance of Warrant
Shares.
2.2. CONVERSION RIGHT. In lieu of exercising this Warrant as
specified in Section 2.1, Holder may from time to time convert this Warrant, in
whole or in part, into the number of Warrant Shares determined by dividing (a)
the aggregate Fair Market Value of the Warrant Shares issuable upon exercise of
this Warrant minus the Total Warrant Price of such Warrant Shares by (b) the
Fair Market Value of one Warrant Share. The Holder shall surrender this Warrant,
together with an executed Notice of Exercise, substantially in the form of
EXHIBIT "A" attached hereto, at the Principal Executive Office. In such event,
Xxxxxx will execute and deliver to Company the Investment Representation
Certificate attached as EXHIBIT "B." The issuance of Warrant Shares upon
exercise of this Warrant shall be made without charge to Holder for any issuance
tax with respect thereto or any other cost incurred by Company in connection
with the exercise of this Warrant and the related issuance of Warrant Shares.
2.3. DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, 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.
4
2.4. FRACTIONAL SHARES. Company shall not issue fractional shares
of Common Stock or scrip representing fractional shares of Common Stock upon any
exercise or conversion of this Warrant. As to any fractional share of Common
Stock which Holder would otherwise be entitled to purchase from Company upon
such exercise or conversion, Company shall purchase from Holder such fractional
share at a price equal to an amount calculated by multiplying such fractional
share (calculated to the nearest 1/100th of a share) by the Warrant Price of a
share of Common Stock on the date of the Notice of Exercise, as applicable, as
determined in good faith by Company's Board of Directors. Payment of such
amount shall be made in cash or by check payable to the order of Holder at the
time of delivery of any certificate or certificates arising upon such exercise
or conversion.
ARTICLE III
REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
3.1. MAINTENANCE OF REGISTRATION BOOKS. Company shall keep at the
Principal Executive Office a register in which, subject to such reasonable
regulations as it may prescribe, it shall provide for the registration, transfer
and exchange of this Warrant. Company and any Company agent may treat the
Person in whose name this Warrant is registered as the owner of this Warrant for
all purposes whatsoever and neither Company nor any Company agent shall be
affected by any notice to the contrary.
3.2. RESTRICTIONS ON TRANSFERS.
(a) COMPLIANCE WITH SECURITIES ACT. Holder, by acceptance
hereof, agrees: (i) that this Warrant and the Common Stock to be issued upon
exercise hereof are being acquired for investment, solely for Xxxxxx's own
account and not as a nominee for any other Person, (ii) that Holder is an
"Accredited Investor" as such term is defined in Rule 501 of the Securities Act,
and (iii) that Holder will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act. Upon
exercise of this Warrant, Xxxxxx shall confirm in writing, by executing the form
attached as EXHIBIT "B" hereto, that the shares of Common Stock purchased upon
exercise hereof are being acquired for investment, solely for Xxxxxx's own
account and not as a nominee for any other Person, and not with a view toward
distribution or resale and that Holder is an Accredited Investor.
(b) CERTIFICATE LEGENDS. This Warrant, all shares of Common
Stock issued upon exercise of this Warrant (unless Registered under the
Securities Act) shall be stamped or imprinted with a legend in substantially the
following form (in addition to any legends required by applicable state
securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
OF SUCH SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATING
5
THERETO, (ii) AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION, (iii) RECEIPT
OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION, OR (iv)
OTHERWISE COMPLYING WITH THE PROVISIONS OF ARTICLE III OF THE WARRANT
UNDER WHICH THIS SECURITY WAS ISSUED.
PROVIDED, HOWEVER, that such legend shall not be required if (i) in the
opinion of counsel registration of any future transfer is not required by the
applicable provisions of the Securities Act, (ii) the Company shall have waived
the requirements of such legends or (iii) the transfer of Warrant Shares shall
be made in compliance with the requirements of Rule 144(k).
(c) DISPOSITION OF WARRANT OR SHARES. With respect to any
offer, sale or other disposition of this Warrant, or of any shares of Common
Stock issued upon exercise of this Warrant prior to Registration of such shares,
Holder or the Shareholder, as the case may be, agrees to give written notice to
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of Xxxxxx's or Shareholder's counsel, if reasonably requested by
Company, to the effect that such offer, sale or other disposition may be
effected without Registration under the Securities Act or qualification under
any applicable state securities laws of this Warrant or such shares, as the case
may be, and indicating whether or not under the Securities Act certificates for
this Warrant or such shares, as the case may be, to be sold or otherwise
disposed of require any restrictive legend as to applicable restrictions on
transferability in order to insure compliance with the Securities Act. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, Company, as promptly as practicable, shall notify Holder or the
Shareholder, as the case may be, that it may sell or otherwise dispose of this
Warrant or such shares, as the case may be, all in accordance with the terms of
the notice delivered to Company. If a determination has been made pursuant to
this subsection (c) that the opinion of counsel for Holder or the Shareholder,
as the case may be, is not reasonably satisfactory to Company, Company shall so
notify Holder or the Shareholder, as the case may be, promptly after such
determination has been made and shall specify the legal analysis supporting any
such conclusion. Notwithstanding the foregoing, the restrictions imposed by
Section 3.2(b) and (c) shall not apply if this Warrant or such shares, as the
case may be, may, in the opinion of counsel for Holder or the Shareholder, as
the case may be, reasonably satisfactory to Company, be offered, sold or
otherwise disposed of in accordance with Rule 144. Each certificate
representing this Warrant or the shares thus transferred (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions
on transferability in order to insure compliance with the Securities Act,
unless in the aforesaid reasonably satisfactory opinion of counsel for Holder
or the Shareholder, as the case may be, such legend is not necessary in order
to insure compliance with the Securities Act. Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions.
(d) WARRANT TRANSFER PROCEDURE; TRANSFER RESTRICTION.
Transfer of this Warrant to a third party, following compliance with the
preceding subsections of this Section 3.2, shall be effected by execution of the
Assignment Form attached hereto as EXHIBIT "C", and surrender for registration
of transfer of this Warrant at the Principal Executive Office, together
6
with funds sufficient to pay any applicable transfer tax. Upon receipt of
the duly executed Assignment Form and the necessary transfer tax funds, if
any, Company, at its expense, shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Warrants representing
the right to purchase a like aggregate number of shares of Common Stock.
NOTWITHSTANDING ANYTHING IN THIS WARRANT TO THE CONTRARY, NEITHER THIS
WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY BE ASSIGNED OR TRANSFERRED TO ANY DIRECT COMPETITOR OF THE COMPANY UNLESS
THE COMPANY FIRST CONSENTS THERETO IN WRITING.
(e) TERMINATION OF RESTRICTIONS. The restrictions imposed
under this Section 3.2 upon the transferability of the Warrant and upon the
transferability of the shares of Common Stock acquired upon the exercise of this
Warrant (other than the restriction in the last sentence of Section 3.2(d))
shall cease when (i) a registration statement covering all shares of Common
Stock issued or issuable upon conversion of the Common Stock becomes effective
under the Securities Act, (ii) Company is presented with an opinion of counsel
reasonably satisfactory to Company that such restrictions are no longer required
in order to insure compliance with the Securities Act or with a Commission
"no-action" letter stating that future transfers of such securities by the
transferor or the contemplated transferee would be exempt from registration
under the Securities Act, or (iii) such securities may be transferred in
accordance with Rule 144(k). When such restrictions terminate, Company shall,
or shall instruct its transfer agent to, promptly, and without expense to Holder
or the Shareholder, as the case may be, issue new securities in the name of
Holder and/or the Shareholder, as the case may be, not bearing the legends
required under subsection (b) of this Section 3.2. In addition, new securities
shall be issued without such legends if such legends may be properly removed
under the terms of Rule 144(k).
3.3. EXCHANGE. At Holder's option, this Warrant may be exchanged
for other Warrants representing the right to purchase a like aggregate number of
shares of Common Stock upon surrender of this Warrant at the Principal Executive
Office. Whenever this Warrant is so surrendered to Company at the Principal
Executive Office for exchange, Company shall execute and deliver the Warrants
which Xxxxxx is entitled to receive. All Warrants issued upon any registration
of transfer or exchange of Warrants shall be the valid obligations of Company,
evidencing the same rights, and entitled to the same benefits, and subject to
the same restrictions, as the Warrants surrendered upon such registration of
transfer or exchange. No service charge shall be made for any exchange of this
Warrant.
3.4. REPLACEMENT. Upon receipt of evidence reasonably satisfactory
to Company of the loss, theft, destruction or mutilation of this Warrant and
(i) in the case of any such loss theft or destruction, upon delivery of
indemnity reasonably satisfactory to Company in form and amount, or (ii) in the
case of any such mutilation, upon surrender of such Warrant for cancellation at
the Principal Executive Office, Company, at its expense, shall execute and
deliver, in lieu thereof, a new Warrant.
7
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1. REORGANIZATION, RECLASSIFICATION OR RECAPITALIZATION OF
COMPANY. In case of (1) a capital reorganization, reclassification or
recapitalization of Company's capital stock (other than in the cases referred to
in of Section 4.3 hereof), (2) Company's consolidation or merger with or into
another corporation in which Company is not the surviving entity, or a reverse
triangular merger in which Company is the surviving entity but the shares of
Company's capital stock outstanding immediately prior to the merger are
converted, by virtue of the merger, into other property, whether in the form of
securities, cash or otherwise, or (3) the sale or transfer of Company's property
as an entirety or substantially as an entirety (collectively, a "Corporate
Transaction"), then, as part of such Corporate Transaction, lawful provision
shall be made so that there shall thereafter be deliverable upon the exercise of
this Warrant or any portion thereof (in lieu of or in addition to the number of
shares of Common Stock theretofore deliverable, as appropriate), and without
payment of any additional consideration, the number of shares of stock or other
securities or property to which the holder of the number of shares of Common
Stock which would otherwise have been deliverable upon the exercise of this
Warrant or any portion thereof at the time of such Corporate Transaction would
have been entitled to receive in such Corporate Transaction. This Section 4.1
shall apply to successive reorganizations, reclassifications, recapitalizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to Holder for shares of Common
Stock in connection with any transaction described in this Section 4.1 is in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by Company's Board of Directors.
4.2. SPLITS AND COMBINATIONS. If Company at any time subdivides any
of its outstanding shares of Common Stock into a greater number of shares, the
Warrant Price in effect immediately prior to such subdivision shall be
proportionately reduced, and, conversely if the outstanding shares of Common
Stock are combined into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased. Upon
any adjustment of the Warrant Price under this Section 4.2, the number of shares
of Common Stock issuable upon exercise of this Warrant shall equal the number of
shares determined by dividing (i) the aggregate Warrant Price payable for the
purchase of all shares issuable upon exercise of this Warrant immediately prior
to such adjustment by (ii) the Warrant Price per share in effect immediately
after such adjustment.
4.3. RECLASSIFICATIONS. If Company changes any of the securities as
to which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant 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 that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Warrant Price
therefor shall be appropriately adjusted.
8
No adjustment shall be made pursuant to this Section 4.4 upon any conversion
described in Section 4.1 hereof.
4.4. DIVIDENDS AND DISTRIBUTIONS. If Company declares a dividend or
other distribution on the Common Stock or if a dividend or other distribution on
the Common Stock occurs pursuant to the Articles of Incorporation (other than a
cash dividend or distribution), then, as part of such dividend or distribution,
lawful provision shall be made so that there shall thereafter be deliverable
upon the exercise of this Warrant or any portion thereof, in addition to the
number of shares of Common Stock receivable thereupon and without payment of any
additional consideration, the amount of the dividend or other distribution to
which the holder of the number of shares of Common Stock obtained upon exercise
hereof would have been entitled to receive had the exercise occurred as of the
record date for such dividend or distribution.
4.5. LIQUIDATION; DISSOLUTION. If Company shall dissolve, liquidate
or wind up its affairs, Holder shall have the right, but not the obligation, to
exercise this Warrant effective as of the date of such dissolution, liquidation
or winding up. If any such dissolution, liquidation or winding up results in
any cash distribution to Holder in excess of the aggregate Warrant Price for the
shares of Common Stock for which this Warrant is exercised, then Holder may, at
its option, exercise this Warrant without making payment of such aggregate
Warrant Price and, in such case, Company shall, upon distribution to Holder,
consider such aggregate Warrant Price to have been paid in full, and in making
such settlement to Holder, shall deduct an amount equal to such aggregate
Warrant Price from the amount payable to Holder.
4.6. WEIGHTED AVERAGE ANTIDILUTION ADJUSTMENT. If at any time or
from time to time after the date of this Warrant the Company issues or sells
"Additional Shares of Common Stock" for an Effective Price (as hereinafter
defined) that is less than the Warrant Price in effect immediately prior to such
issue or sale, then, and in each such case, the Warrant Price shall be reduced,
as of the close of business on the date of such issue or sale, by multiplying it
by a fraction (the "APPLICABLE FRACTION"):
(i) The numerator of which shall be the sum of (A) the number of
Common Stock Equivalents Outstanding (as hereinafter defined) immediately prior
to such issue or sale of additional shares of Common Stock or Common Stock
Equivalents plus (B) the quotient obtained by dividing the Aggregate
Consideration Received (as hereinafter defined) by the Company for the total
number of additional shares of Common Stock or Common Stock Equivalents so
issued or sold (or deemed so issued and sold) by the Warrant Price in effect
immediately prior to such issue or sale; and
(ii) The denominator of which shall be the sum of (A) the number of
Common Stock Equivalents Outstanding immediately prior to such issue or sale
plus (B) the number of additional shares of Common Stock or Common Stock
Equivalents so issued or sold (or deemed so issued and sold);
9
and the total number of Warrant Shares shall be increased as of the close of
business on the date of such issue or sale, by multiplying it by a fraction
equal to the reciprocal of the Applicable Fraction.
(b) CERTAIN DEFINITIONS. For the purpose of making any
adjustment required under this Section 4.6:
(i) The "AGGREGATE CONSIDERATION RECEIVED" by the
Company for any issue or sale (or deemed issue or sale) of securities shall (A)
to the extent it consists of cash, be computed at the gross amount of cash
received by the Company before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale and without deduction of any expenses payable
by the Company; (B) to the extent it consists of property other than cash, be
computed at the fair value of that property as determined in good faith by the
Board; and (C) if additional shares of Common Stock or Common Stock Equivalents
are issued or sold together with other stock or securities or other assets of
the Company for a consideration which covers both, be computed as the portion of
the consideration so received that may be reasonably determined in good faith by
the Board to be allocable to such additional shares of Common Stock or Common
Stock Equivalents. In the case of the issuance of (x) options to purchase or
rights to subscribe for Common Stock, (y) securities by their terms convertible
into or exchangeable for Common Stock or (z) options to purchase rights to
subscribe for such convertible or exchangeable securities:
a. the shares of Common Stock deliverable
upon exercise of such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such options or rights
were issued and for a consideration equal to the consideration (determined in
the manner provided in subdivisions (A), (B) and (C) above), if any, received by
the Company upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights for the Common Stock covered
thereby;
b. the shares of Common Stock deliverable
upon conversion of or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration received by the Company for any such securities and related
options or rights (excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to be received by
the Company upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (A), (B) and (C) above);
c. on any change in the exercise price of
Common Stock deliverable upon exercise of any such options or rights or
conversions of or exchanges for such securities, other than a change resulting
from the antidilution provisions thereof, the applicable Warrant Price shall
forthwith be readjusted to such Warrant Price as would have
10
resulted had the adjustment made upon the issuance of such options, rights or
securities not converted prior to such change (or options or rights related
to such securities not converted prior to such change) been made upon the
basis of such change; PROVIDED, HOWEVER, that such readjustment shall not
result in a Warrant Price that is greater than the original Warrant Price; and
d. on the expiration of all such options or
rights, the termination of all such rights to convert or exchange or the
expiration of all options or rights related to such convertible or exchangeable
securities in each case having been issued by the Company for the same
consideration (as determined pursuant to subdivision (A), (B) and (C) above),
the applicable Warrant Price shall forthwith be readjusted to such Warrant Price
as would have resulted had the adjustment made upon the issuance of such
options, rights, securities or options or rights related to such securities not
been made.
(ii) "ADDITIONAL SHARES OF COMMON STOCK" shall mean
all Common Stock or Common Stock Equivalents issued by the Company otherwise
than (1) in connection with a Corporate Transaction of the Company as provided
in section 4.1; (2) in connection with splits or combinations as provided in
section 4.2; and (3) in connection with reclassifications as provided in section
4.3, (4) in connection with any liquidation or dissolution as provided in
section 4.5; (5) in connection with any acquisition of another corporation or
entity by the Company by consolidation, merger, purchase of all or substantially
all of the assets, or other reorganization in which the Company acquires, in a
single transaction or series of related transactions, all or substantially all
of the assets of such other corporation or entity or fifty percent (50%) or more
of the voting power of such other corporation or entity or fifty percent (50%)
or more of the equity ownership of such other entity; (6) to employees,
officers, consultants, or directors of the Company pursuant to employee benefit
plans, arrangements or agreements approved by the Board of Directors (whether by
issuance of shares or grant of options, warrants or rights therefor); or (7) to
banks or equipment lessors in connection with credit or equipment financing
arrangements (including by grant of warrants or issuance of stock upon exercise
thereof or upon conversion of stock issued upon exercise thereof) in each case
as approved by the Board of Directors; (8) Common Stock issued or issuable upon
conversion of shares of Preferred Stock from time to time outstanding (including
shares of Common Stock issued or issuable as a result of antidilution provisions
in the Company's Articles of Incorporation, as from time to time amended);
(iii) "COMMON STOCK EQUIVALENTS" shall mean shares of
shares of Common Stock, shares of Common Stock of the Company issuable upon
conversion of all shares of Preferred Stock or other Convertible Securities,
shares of Common Stock of the Company that are issuable upon the exercise of
Rights or Options.
(iv) "COMMON STOCK EQUIVALENTS OUTSTANDING" shall mean
the number of shares of Common Stock that is equal to the sum of (A) all shares
of Common Stock of the Company that are outstanding at the time in question,
plus (B) all shares of Common Stock of the Company issuable upon conversion of
all shares of Preferred Stock or other
11
Convertible Securities that are outstanding at the time in question, plus (C)
all shares of Common Stock of the Company that are issuable upon the exercise
of Rights or Options that are outstanding at the time in question assuming
the full conversion or exchange into Common Stock of all such Rights or
Options that are Rights or Options to purchase or acquire Convertible
Securities into or for Common Stock.
(iv) "CONVERTIBLE SECURITIES" shall mean stock or
other securities convertible into or exchangeable for shares of Common Stock.
(v) The "EFFECTIVE PRICE" of any issuance of
additional shares of Preferred Stock shall mean the quotient determined by
dividing the total number of additional shares of Common Stock or Common Stock
Equivalents issued or sold by the Company under this Section 4.6, into the
Aggregate Consideration Received, or deemed to have been received, by the
Company under this Section 4.6, for the issue of such additional shares of
Common Stock or Common Stock Equivalents; and
(vi) "RIGHTS OR OPTIONS" shall mean warrants, options
or other rights to purchase or acquire shares of Common Stock or Convertible
Securities.
4.7. CERTIFICATES AND NOTICES.
(a) ADJUSTMENT CERTIFICATES. Upon any adjustment of the
Warrant Price and/or the number of shares of Common Stock purchasable upon
exercise of this Warrant, a certificate, signed by (i) Company's President and
Chief Financial Officer, or (ii) any independent firm of certified public
accountants of recognized national standing Company selects at its own expense,
setting forth in reasonable detail the events requiring the adjustment and the
method by which such adjustment was calculated, shall be mailed to Holder and
shall specify the adjusted Exercise Price and the number of shares of Common
Stock purchasable upon exercise of the Warrant after giving effect to the
adjustment.
(b) EXTRAORDINARY CORPORATE EVENTS. If Company, after the
date hereof, proposes to effect (i) any transaction described in Sections 4.1,
4.2 or 4.3 hereof, (ii) a liquidation, dissolution or winding up of Company
described in Section 4.5 hereof, or (iii) any payment of a dividend or
distribution with respect to Common Stock or Common Stock, then, in each such
case, Company shall mail to Holder a notice describing such proposed action and
specifying the date on which Company's books shall close, or a record shall be
taken, for determining the holders of Common Stock, as appropriate, entitled to
participate in such action, or the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up shall take place or commence, as the case may be, and
the date as of which it is expected that holders of Common Stock of record shall
be entitled to receive securities and/or other property deliverable upon such
action, if any such date is to be fixed. Such notice shall be mailed to Holder
at least fifteen (15) days prior to the record date for such action in the case
of any action described in clause (i) or clause (iii) above, and in the case of
any action described in clause (ii) above, at least fifteen (15) days prior to
the date on which
12
the action described is to take place and at least fifteen (15) days prior to
the record date for determining holders of Common Stock entitled to receive
securities and/or other property in connection with such action.
4.8. NO IMPAIRMENT. Company shall not, by amendment of the Articles
of Incorporation or through any reorganization, recapitalization, 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 hereunder by Company, but shall at
all times in good faith assist in the carrying out of all the provisions of this
Article IV and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of Holder against impairment.
4.9. APPLICATION. Except as otherwise provided herein, all sections
of this Article IV are intended to operate independently of one another. If an
event occurs that requires the application of more than one section, all
applicable sections shall be given independent effect.
ARTICLE V
REGISTRATION RIGHTS
5.1 Concurrent with the execution and delivery of this Warrant,
Company shall use its best efforts to cause Holder, within 60 days of the date
of this Warrant, to become a party to the Rights Agreement and Holder shall be
deemed a 'Securityholder" and a "Holder", as defined in the Rights Agreement,
for purposes of the Rights Agreement and shall be entitled to all the rights,
and be subject to all the obligations, of a Holder under the Rights Agreement,
the Warrant Shares shall be deemed "Registrable Securities", as defined in the
Rights Agreement, for purposes of the Rights Agreement. Such actions shall be
effected by Company executing and delivering to Holder a fully-executed
Amendment to Rights Agreement substantially in the form of EXHIBIT "E" hereto
("AMENDMENT"). Other than as expressly set forth in the Rights Agreement, the
Company has not granted or promised to grant to any party any registration
rights on terms more favorable than those Holder will have under the Rights
Agreement by virtue of the Amendment.
ARTICLE VI
COVENANTS AND REPRESENTATION
6.1. FINANCIAL INFORMATION. Company shall deliver to Holder:
(a) As soon as practicable after the end of each fiscal
year, and in any event within ninety (90) days thereafter, consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of income and cash flows of the Company and
its subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form
13
the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of national standing selected by
the Company; and
(b) As soon as practicable after the end of each calendar
quarter, and in any event within 45 days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of each calendar
quarter, and consolidated statements of income and cash flow for such period and
for the current fiscal year to date, together with a comparison of such
statements for the previous quarter and to the Company's operating plan then in
effect.
6.2 NON-FINANCIAL COVENANTS. Company covenants that:
(a) AUTHORIZED SHARES. Company will at all times have
authorized and reserved for the purpose of issue or transfer upon exercise of
the rights evidenced by this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.
(b) PROPER ISSUANCE. Company, at its expense, will take all
such action as may be necessary to assure that the Common Stock issuable upon
the exercise of this Warrant may be so issued without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which any capital stock of Company may be listed. Such action may
include, but not be limited to, causing such shares to be duly registered or
approved or listed on relevant domestic securities exchanges; and
(c) FULLY PAID SHARES. Company will take all actions
necessary or appropriate to validly and legally issue fully paid and
non-assessable shares of Common Stock upon exercise of this Warrant. All such
shares will be free from all taxes, liens and charges with respect to the
issuance thereof, other than any stock transfer taxes in respect to any transfer
occurring contemporaneously with such issuance.
6.3 CAPITALIZATION REPRESENTATION. Attached as Annex "X" is a table
setting forth the capitalization of the Company as of September 30, 1998, as
defined therein.
ARTICLE VII
PARTICIPATION RIGHTS
7.1 GENERAL. Subject to the provisions of Section 7.5, AOL shall
have the participation right to purchase AOL's Pro Rata Share (as defined
below), of all (or any part) of any "New Securities" (as defined in Section 7.2)
that the Company may from time to time issue after the date of this Agreement.
AOL's "PRO RATA SHARE" for purposes of this participation right shall mean,
that percentage figure which, at the time of delivery by the Company of the
Purchase Notice (as hereinafter defined), expresses the ratio that (x) the
number of outstanding shares of
14
Common Stock issued or issuable to AOL bears to (y) a number of shares of
Common Stock of the Company equal to the sum of (i) the total number of
shares of Common Stock of the Company then outstanding plus (ii) the total
number of shares of Common Stock of the Company into which all then
outstanding shares of Preferred Stock of the Company are then convertible
plus (iii) the number of shares of Common Stock of the Company then issuable
upon exercise of any then outstanding options and warrants or reserved for
future issuance or grants under stock purchase and stock option plans of the
Company.
7.2 NEW SECURITIES. "NEW SECURITIES" shall mean any Common Stock
or Preferred Stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; PROVIDED, HOWEVER, that
the term "New Securities" DOES NOT INCLUDE:
(i) shares of the Company's Common Stock (and/or options or
warrants therefor) issued to employees, officers, directors, contractors,
advisors or consultants (each an "EMPLOYEE PARTICIPANT") of the Company pursuant
to employee benefit plans, arrangements or agreements approved by the Board of
Directors of the Company.
(ii) any securities issuable upon conversion of or with
respect to any then outstanding shares of Preferred Stock;
(iii) any securities constituting or issuable upon exercise of
any options, warrants or rights to purchase any securities of the Company
outstanding on the date of this Agreement (as well as upon exercise of the
warrant to be granted to Silicon Valley Bank in November 1998) ("WARRANT
SECURITIES") and any securities issuable upon the conversion of any Warrant
Securities;
(iv) shares of the Company's Common Stock or Preferred Stock
issued in connection with any stock split or stock dividend;
(v) securities offered by the Company to the public pursuant
to a registration statement filed under the Securities Act;
(vi) shares of the Company's Common Stock or Preferred Stock
(and/or options or warrants therefor) issued or issuable after the date of this
Agreement to banks or equipment lessors pursuant to credit or equipment
financing arrangements (each a "SERVICE PROVIDER") in each case, approved by
the Company's Board of Directors. Each such issuance of Common Stock or
Preferred Stock to a Service Provider, excluding any Warrant Securities or
securities issuable upon conversion of Warrant Securities, shall be referred to
as an "EXCLUDED SERVICE PROVIDER ISSUANCE"; or
(vii) securities issued pursuant to the acquisition of another
corporation or entity by the Company by consolidation, merger, purchase of all
or substantially all of the assets, or other reorganization in which the Company
acquires, in a single transaction or series of
15
related transactions, all or substantially all of the assets of such other
corporation or entity or fifty percent (50%) or more of the voting power of
such other corporation or entity or fifty percent (50%) or more of the equity
ownership of such other entity.
7.3 PROCEDURES. In the event that the Company proposes to
undertake an issuance of New Securities, it shall give to AOL written notice of
its intention to issue New Securities (the "NOTICE"), describing the type of New
Securities and the price and the general terms upon which the Company proposes
to issue such New Securities. AOL shall have thirty (30) days from the date
of mailing of any such Notice to deliver a written agreement to the Company to
purchase AOL's Pro Rata Share of such New Securities for the price and upon the
general terms specified in the Notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased (not to
exceed AOL's Pro Rata Share). If AOL fails to deliver such written agreement
to the Company within such thirty (30) day period to purchase AOL's full Pro
Rata Share of an offering of New Securities, then AOL shall forfeit the right
hereunder to purchase that part of AOL's Pro Rata Share of such New Securities
that AOL did not so agree to purchase. If AOL elects to participate, the sale of
New Securities shall be made on a business day, as designated by the Company.
7.4 FAILURE TO EXERCISE. In the event that AOL fails to exercise
in full the participation right within said thirty (30) day period, then the
Company shall have ninety (90) days thereafter to sell the New Securities with
respect to which AOL's rights of first refusal hereunder were not exercised, at
a price and upon general terms not materially more favorable to the purchasers
thereof than specified in the Company's Notice to AOL. In the event that the
Company has not issued and sold the New Securities within such ninety (90) day
period, then the Company shall not thereafter issue or sell any New Securities
without again first offering such New Securities to AOL pursuant to this Section
7.
7.5. AOL CATCH-UP RIGHTS.
(a) NO PRO-RATA SHARE OF NEW SECURITIES. Notwithstanding any
other provision of this Agreement, AOL shall not have any right to acquire any
of the New Securities issued in any Excluded Service Provider Issuance, but
AOL's rights to acquire additional securities as a result of such issuance
shall be governed exclusively by the provisions of this Section 7.5.
(b) CATCH-UP RIGHT IN NEXT ROUND FINANCINGS. AOL shall have
the participation right to purchase up to AOL's Catch-Up Share (as defined
below) of Securities Equivalents (as defined below) issued in a Next Round
Financing (as defined below), with respect to any Excluded Service Provider
Issuance which occurs after the date of this Agreement, as herein provided. As
used in this Section 7.5, the following terms have the following definitions:
(i) "AOL'S CATCH-UP SHARE" means, regardless of the
number
16
of Next Round Financings involved, one but only one Common Stock Equivalent
for each Common Stock Equivalent of New Securities AOL would, but for the
prohibitions on acquisition of such New Securities in Section 7.5(a), have
had the right to acquire as AOL's Pro Rata Share of each Excluded Service
Provider Issuance under Section 7.1.
(ii) "SECURITIES EQUIVALENTS" means the number of
shares of Common Stock (A) actually issued in such issuance; plus (B) issuable
upon conversion of all shares of Preferred Stock or other Convertible Securities
so issued; plus (C) issuable upon the exercise of any options or warrants so
issued.
(iii) "NEXT ROUND FINANCING" means the sale by the
Company of Preferred Stock, any security initially convertible into Preferred
Stock, or any debt security convertible into either Preferred Stock or Common
Stock of the Company (but not of any other security of the Company) in one or a
series of related transactions occurring after the date of the Excluded Service
Provider Issuance.
(c) PROCEDURE. Subject to Section 7.5(d), if the Company
proposes to sell Preferred Stock in a Next Round Financing after the occurrence
of any Excluded Service Provider Issuance, it shall give to AOL written notice
(the "CATCH-UP NOTICE") of its intention to issue such Next Round Financing
securities, describing the price and the general terms upon which the Company
proposes to issue such Next Round Financing securities, at least thirty (30)
days before the anticipated initial closing of such sale. AOL shall have, in
addition to its rights under Section 7 as limited by Section 7.5(a), twenty (20)
days from the date of mailing of such Catch-Up Notice to deliver to the Company
a notice agreeing to purchase AOL's Catch-Up Share of such Next Round Financing
on such terms. If AOL fails to acquire any Catch-Up Shares in a Next Round
Financing which AOL then has the right to acquire in such financing pursuant to
this Section 7.5 then all Securities Equivalents which AOL had the right to
acquire but failed to acquire in such Next Round Financing shall be forfeited
and shall no longer be deemed Securities Equivalents subject to AOL's Catch-Up
Share under Section 7.5(b)(i) in any subsequent Next Round Financing.
7.6 TERMINATION. The participation rights in this Section 7 shall
terminate (i) immediately before the initial closing of the first underwritten
sale of Common Stock of the Company to the public pursuant to a registration
statement filed with, and declared effective by, the SEC under the Securities
Act, covering the offer and sale of Common Stock to the public; or (ii) upon
(A) the acquisition of all or substantially all the assets of the Company or (B)
an acquisition of the Company by another corporation or entity by consolidation,
merger or other reorganization in which the holders of the Company's outstanding
voting stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) or more of
the voting power of the corporation or other entity surviving such transaction
pursuant to this Section 7.
ARTICLE VIII
MISCELLANEOUS
17
8.1. CERTAIN EXPENSES. Company shall pay all expenses in connection
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issuance, sale and delivery of
the Warrant and the Warrant Shares.
8.2. ENFORCEMENT COSTS. If any party to this Warrant seeks to
enforce its rights hereunder by legal proceedings or otherwise, then the
non-prevailing party shall pay all reasonable costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys' fees.
8.3. NOTICES. Any notice, demand or delivery to be made pursuant to
this Warrant will be sufficiently given or made if sent by first class mail,
postage prepaid, addressed to (a) Holder and the Shareholders at their last
known addresses appearing on the books of Company maintained for such purpose or
(b) Company at its Principal Executive Office. Holder, the Shareholders and
Company may each designate a different address by notice to the other pursuant
to this section. A notice shall be deemed effective upon the earlier of (i)
receipt or (ii) the third day after mailing in accordance with the terms of this
Section 8.3.
8.4. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon
Company and any Person succeeding Company by merger, consolidation or
acquisition of all or substantially all of Company's assets, and all of the
obligations of Company with respect to the shares of Common Stock issuable upon
exercise of this Warrant, shall survive the exercise, expiration or termination
of this Warrant and all of the covenants and agreements of Company shall inure
to the benefit of Holder, each Shareholder and their respective permitted
successors and assigns.
8.5. MODIFICATION; SEVERABILITY. If, in any action before any court
or agency legally empowered to enforce any term, any term is found to be
unenforceable, then such term shall be deemed modified to the extent necessary
to make it enforceable by such court or agency. If any term is not curable as
set forth in this section, the unenforceability of such term shall not affect
the other provisions of this Warrant but this Warrant shall be construed as if
such unenforceable term had never been contained herein.
8.6. AMENDMENT. This Warrant may not be modified or amended except
by written agreement of Company and Holder.
8.7. HEADINGS. The headings of the Articles and Sections of this
Warrant are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
8.8. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of California, without
giving effect to conflicts of law principles.
18
IN WITNESS WHEREOF, Company has caused this Warrant to be executed by its
duly authorized officer as of the date first set forth above and AOL accepts the
terms of this Warrant.
GRIC COMMUNICATIONS, INC. ACCEPTED BY XXXXXX:
America Online, Inc.
Name of Holder:
------------------------
By: By:
----------------------------- ------------------------------------
Name: Name:
--------------------------- ----------------------------------
Title: Title:
-------------------------- ---------------------------------
[SIGNATURE PAGE TO WARRANT]
19
SCHEDULE OF EXHIBITS
EXHIBIT "A" - Notice of Exercise (Section 2.1)
EXHIBIT "B" - Investment Representation Certificate (Section 3.2(a))
EXHIBIT "C" - Assignment Form (Section 3.2(d))
EXHIBIT "D" - Rights Agreement (Article I)
EXHIBIT "E" - Amendment to Rights Agreement (Article V)
EXHIBIT "A"
NOTICE OF EXERCISE FORM
(To be executed only upon partial or full
exercise of the within Warrant)
To: GRIC Communications, Inc.
(1) The undersigned Holder hereby elects to purchase shares of
Common Stock of GRIC Communications, Inc. (the "WARRANT STOCK"), pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.
{(1) NET ISSUE ELECTION. The undersigned Holder elects to convert the
Warrant into such shares of Warrant Stock by net issue election pursuant to
Section 2.1 of the Warrant. This conversion is exercised with respect to
shares of Common Stock of GRIC Communications, Inc. (the "WARRANT STOCK")
covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY]}
(2) In exercising the Warrant, the undersigned Holder hereby confirms and
acknowledges that the representations and warranties set forth in Exhibit B to
the Warrant as they apply to the undersigned Holder are true and correct as of
this date.
(3) Please issue a certificate or certificates representing such shares of
Warrant Stock in the name or names specified below:
----------------------------------- -----------------------------------
(Name) (Name)
----------------------------------- -----------------------------------
(Address) (Address)
----------------------------------- -----------------------------------
(City, State, Zip Code) (City, State, Zip Code)
----------------------------------- -----------------------------------
(Federal Tax Identification Number) (Federal Tax Identification Number)
----------------------------------- -----------------------------------
(Date) (Signature of Holder)
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever. The
signature to this Notice of Exercise
must be guaranteed by a commercial bank or trust company in the
United States or a member firm of the New York Stock Exchange.
EXHIBIT "B"
INVESTMENT REPRESENTATION CERTIFICATE
Purchaser:
Company: GRIC COMMUNICATIONS, INC.
Security: Warrants to purchase Common Stock and/or Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"SECURITIES"), the undersigned (the "PURCHASER") represents to Company as
follows:
The Purchaser is aware of Company's business affairs and financial condition,
and has acquired sufficient information about Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser is purchasing
the Securities for its own account for investment purposes only and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "SECURITIES ACT");
The Purchaser understands that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefor, which exemption
depends upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein. In this connection, the Purchaser
understands that, in the view of the Securities and Exchange Commission ("SEC"),
the statutory basis for such exemption may be unavailable if the Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future;
The Purchaser further understands that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that Company is under no obligation to register the Securities. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased;
1
The Purchaser is aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about Company; (ii)
the resale occurring not less than one (1) year after the party has purchased
and paid for the securities to be sold; (iii) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934) and the amount of securities being sold during any three-month period not
exceeding the specified limitations stated therein;
The Purchaser further understands that at the time it wishes to sell the
Securities there may be no public market upon which to make such a sale, and
that, even if such a public market upon which to make such a sale then exists,
Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, the Purchaser may be precluded from selling
the Securities under Rule 144 even if the one (1) year minimum holding period
had been satisfied; and
The Purchaser further understands that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
2
The Purchaser represents that it is an "Accredited Investor" as such term is
defined in Rule 501 of the Securities Act.
Date: _________________, ______
PURCHASER:
______________________
3
EXHIBIT "C"
ASSIGNMENT FORM
(To be executed only upon the assignment of
the within Warrant)
FOR VALUE RECEIVED, the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfers unto ____________________________,
whose address is _____________________________________________ all of the
rights of the undersigned under the within Warrant, with respect to shares of
Common Stock of GRIC COMMUNICATIONS, INC. and, if such shares of Common Stock
shall not include all the shares of Common Stock issuable as provided in the
within Warrant, that a new Warrant of like tenor for the number of shares of
Common Stock of GRIC COMMUNICATIONS, INC. not being transferred hereunder be
issued in the name of and delivered to the undersigned, and does hereby
irrevocably constitute and appoint ______________________________________
attorney to register such transfer on the books of GRIC COMMUNICATIONS, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated: _____________________, ______
Signature Guaranteed
----------------------------
By:
--------------------------------
(Signature of Registered Holder)
Title:
---------------------------------
NOTICE: The signature to this Assignment must correspond with the name upon
the face of the within Warrant in every particular, without alteration
or enlargement or any change whatever. The signature to this Notice
of Assignment must be guaranteed by a commercial bank or trust company
in the United States or a member firm of the New York Stock Exchange.
