Contract
Exhibit
4.1
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.
WARRANT
TO PURCHASE STOCK
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Company:
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Betawave
Corporation, a Nevada corporation
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Number
of Shares:
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600,000
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Class
of Stock:
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Common
Stock, par value $0.001 per share
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Warrant
Price:
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$0.20
per share
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Issue
Date:
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March
27, 2009
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Expiration
Date:
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The
5th anniversary after the Issue Date, subject to the applicable expiration
provisions of Section 1.6.2 below
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Credit
Facility:
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This
Warrant is issued in connection with that certain Loan and Security
Agreement between Company and Silicon Valley Bank, dated March 27, 2009.
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THIS
WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK
(Silicon Valley Bank, together with any registered holder from time to time of
this Warrant or any holder of the shares issuable or issued upon exercise of
this Warrant, "Holder")
is entitled to purchase the number of fully paid and nonassessable shares of
Common Stock, par value $0.001 per share, of the Company at the Warrant Price,
all as set forth above and as adjusted pursuant to Article 2 of this Warrant
(the "Shares"), subject
to the provisions and upon the terms and conditions set forth in this
Warrant.
ARTICLE
1. EXERCISE.
1.1 Method of
Exercise. Holder may exercise this Warrant by delivering the
original of this Warrant, together with a duly executed Notice of Exercise in
substantially the form attached as Appendix 1, to the principal office of the
Company. Unless Holder is exercising the conversion right set forth
in Article 1.2, Holder shall also deliver to the Company a check, wire transfer
(to an account designated by the Company), or other form of payment acceptable
to the Company for the aggregate Warrant Price for the Shares being
purchased.
1.2 Conversion
Right. In lieu of exercising this Warrant as specified in
Article 1.1, Holder may from time to time convert this Warrant, 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 to Article 1.3.
1.3 Fair Market
Value. If the Company’s common stock is traded in a public
market, the fair market value of each Share shall be the closing price of a
Share reported for the business day immediately before Holder delivers this
Warrant, together with its Notice of Exercise, to the Company. If the
Company’s common stock is traded in a public market, the fair market value of a
Share shall be the closing price of a share of the Company’s common stock
reported for the business day immediately
before
Holder delivers its Notice of Exercise to the Company. If the
Company’s common stock is not traded in a public market, the Board of Directors
of the Company shall determine fair market value in its reasonable good faith
judgment.
1.4 Delivery of Certificate and
New Warrant. Promptly after Holder exercises or converts this
Warrant and, if applicable, the Company receives payment of the aggregate
Warrant Price, 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, in substantially the same form as this Warrant,
representing the remaining Shares not so acquired.
1.5 Replacement of
Warrants. On receipt of evidence reasonably 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 on surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like
tenor.
1.6 Treatment of Warrant Upon
Acquisition of Company.
1.6.1 "Acquisition". For
the purpose of this Warrant, "Acquisition" 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
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.
1.6.2 Treatment of Warrant at
Acquisition.
(A) Upon
the written request of the Company, Holder agrees that, in the event of an
Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (b) if Holder elects not to exercise the
Warrant, this Warrant will expire upon the consummation of such
Acquisition. The Company shall provide Holder with written notice of
its request relating to the foregoing (together with such reasonable information
as Holder may request in connection with such contemplated Acquisition giving
rise to such notice), which is to be delivered to Holder not less than ten (10)
days prior to the closing of the proposed Acquisition.
(B) Upon
the written request of the Company, Holder agrees that, in the event of an
Acquisition that is an “arms length” sale of all or substantially all of the
Company’s assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of the Company (a “True Asset Sale”), either (a)
Holder shall exercise its conversion or purchase right under this Warrant and
such exercise will be deemed effective immediately prior to the consummation of
such Acquisition or (b) if Holder elects not to exercise the Warrant, this
Warrant will continue until the Expiration Date if the Company continues as a
going concern following the closing of any such True Asset Sale. The
Company shall provide Holder with written notice of its request relating to the
foregoing (together with such reasonable information as Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
(C) Upon
the written request of the Company, Holder agrees that, in the event of a stock
for stock Acquisition of the Company by a publicly traded acquirer if, on the
record date for the Acquisition, the fair market value of the Shares (or other
securities issuable upon exercise of this Warrant) is equal
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to or
greater than four (4) times the Warrant Price, Company may require the Warrant
to be deemed automatically exercised and the Holder shall participate in the
Acquisition as a holder of the Shares (or other securities issuable upon
exercise of the Warrant) on the same terms as other holders of the same class of
securities of the Company.
As used
herein “Affiliate” shall
mean any person or entity that owns or controls directly or indirectly ten
percent (10%) or more of the stock of Company, any person or entity that
controls or is controlled by or is under common control with such persons or
entities, and each of such person’s or entity’s officers, directors, joint
venturers or partners, as applicable.
ARTICLE
2. ADJUSTMENTS TO THE
SHARES.
2.1 Stock Dividends, Splits,
Etc. If the Company declares or pays a dividend on the Shares
payable in common stock, or other securities, 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
occurred. If the Company subdivides the Shares by reclassification or
otherwise into a greater number of shares, the number of shares purchasable
hereunder shall be proportionately increased and the Warrant Price shall be
proportionately decreased. If the outstanding shares are 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
shall be proportionately decreased.
2.2 Reclassification, Exchange,
Combinations or Substitution. 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. The Company or its successor shall promptly issue to Holder an
amendment to this Warrant setting forth the number and kind of such new
securities or other property issuable upon exercise or conversion of this
Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable
upon exercise or conversion of this Warrant. The amendment to this
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 Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 No
Impairment. The Company shall not, by amendment of its
Articles of 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.
2.4 Fractional
Shares. No fractional Shares shall be issuable upon exercise
or conversion of this Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a
full Share.
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2.5 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the
Company shall promptly notify Holder in writing, and, at the Company’s expense,
promptly compute such adjustment, and furnish Holder with a certificate of its
Chief Financial Officer setting forth such adjustment and the facts upon which
such adjustment is based. The Company shall, upon written request,
furnish Holder a certificate setting forth the Warrant Price in effect upon the
date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE
3. REPRESENTATIONS AND
COVENANTS OF THE COMPANY.
3.1 Representations and
Warranties. The Company represents and warrants to Holder as
follows:
(a) The
initial Warrant Price referenced on the first page of this Warrant is not
greater than the price per share at which the shares of the same class as the
Shares were last issued in an arms-length transaction in which at least $500,000
of the Shares were sold.
(b) All
Shares which may be issued upon the exercise of the purchase right represented
by this Warrant 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.
(c) The
Company’s capitalization table attached hereto as Schedule 1 is true
and complete as of the Issue Date.
3.2 Notice of Certain
Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon any of its stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to
offer for sale any shares of the Company's capital stock (or other securities
convertible into such capital stock), other than (i) pursuant to the Company's
stock option or other compensatory plans, (ii) in connection with commercial
credit arrangements or equipment financings, or (iii) in connection with
strategic transactions for purposes other than capital raising; (c) to effect
any reclassification or recapitalization of any of its 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
10 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 Holders of common stock will be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (a) and (b)
above; (2) in the case of the matters referred to in (c) and (d) above at least
10 days prior written notice of the date when the same will take place (and
specifying the date on which 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 Holders of such registration
rights. Company will also provide information requested by
Holder reasonably necessary to enable Holder to comply with Holder’s accounting
or reporting requirements.
3.3 No Shareholder
Rights. Except as provided in this Warrant, Holder will not
have any rights as a shareholder of the Company until the exercise of this
Warrant.
ARTICLE
4. REPRESENTATIONS, WARRANTIES
OF HOLDER. Holder represents and warrants to the Company as
follows:
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4.1 Purchase for Own
Account. This Warrant and the securities to be acquired upon
exercise of this Warrant by Holder will be acquired for investment for Holder’s
account, not as a nominee or agent, and not with a view to the public resale or
distribution within the meaning of the Act. Holder also represents
that Holder has not been formed for the specific purpose of acquiring this
Warrant or the Shares.
4.2 Disclosure of
Information. Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the acquisition of this Warrant and its
underlying securities. Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Holder or to which Holder has
access.
4.3 Investment
Experience. Holder understands that the purchase of this
Warrant and its underlying securities involves substantial
risk. Holder has experience as an investor in securities of companies
in the development stage and acknowledges that Holder can bear the economic risk
of such Holder’s investment in this Warrant and its underlying securities and
has such knowledge and experience in financial or business matters that Holder
is capable of evaluating the merits and risks of its investment in this Warrant
and its underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Holder to be aware of
the character, business acumen and financial circumstances of such
persons.
4.4 Accredited Investor
Status. Holder is an “accredited investor” within the meaning
of Regulation D promulgated under the Act.
4.5 The
Act. Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of Holder’s investment intent as
expressed herein. Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.
ARTICLE
5. MISCELLANEOUS.
5.1 Subject
to the applicable expiration provisions of Section 1.6.2, this Warrant is
exercisable in whole or in part at any time and from time to time on or before
the Expiration Date.
5.2 Legends. This
Warrant and the Shares shall be imprinted with a legend in substantially the
following form:
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 OF THIS WARRANT,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW
OR, IN
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THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
5.3 Compliance with Securities
Laws on Transfer. This Warrant and the Shares issuable upon
exercise of this Warrant 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 Silicon Valley Bank (“Bank”) to provide an opinion
of counsel if the transfer is to Bank’s parent company, SVB Financial Group
(formerly Silicon Valley Bancshares), or any other affiliate of
Bank. Additionally, the Company shall also not require Holder to
provide an opinion of counsel 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.
5.4 Transfer
Procedure. After receipt by Bank of the executed Warrant, Bank
will transfer all of this Warrant to SVB Financial Group by execution of an
Assignment substantially in the form of Appendix 2. Subject to the
provisions of Article 5.3 and upon providing the Company with written notice,
SVB Financial Group and any subsequent Holder may transfer all or part of this
Warrant or the Shares issuable upon exercise of this Warrant to any transferee,
provided, however, in connection with any such transfer, SVB Financial Group or
any subsequent Holder will give the Company notice of the portion of the Warrant
being transferred with the name, address and taxpayer identification number of
the transferee and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable).
5.5 Notices. All
notices and other communications from the Company to 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 Holder, as the case may (or on the
first business day after transmission by facsimile) be, in writing by the
Company or such Holder from time to time. Effective upon receipt of
the fully executed Warrant and the initial transfer described in Article 5.4
above, all notices to Holder shall be addressed as follows until the Company
receives notice of a change of address in connection with a transfer or
otherwise:
SVB
Financial Group
Attn:
Treasury Department
0000
Xxxxxx Xxxxx, XX 000
Xxxxx
Xxxxx, XX 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Notice to
the Company shall be addressed as follows until Holder receives notice of a
change in address:
Betawave
Corporation
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx,
President
Telephone:
000-000-0000
Facsimile: 000-000-0000
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5.6 Waiver. This
Warrant and any term hereof may be changed, waived, 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.
5.7 Attorneys’
Fees. In the event of any dispute between the parties
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.
5.8 Automatic Conversion upon
Expiration. Upon the Expiration Date, this Warrant shall
expire, unless the fair market value of one Share (or other security issuable
upon the exercise hereof) as determined in accordance with Section 1.3 above is
greater than the Warrant Price per Share in effect on such date, in which case
this Warrant shall automatically be deemed on and as of such date to be
converted pursuant to Section 1.2 above as to all Shares (or such other
securities) for which it shall not previously have been exercised or converted,
and the Company shall promptly deliver a certificate representing the Shares (or
such other securities) issued upon such conversion to Holder.
5.9 Counterparts. This
Warrant may be executed in counterparts, all of which together shall constitute
one and the same agreement.
5.10 Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
[Signature
page follows.]
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“COMPANY”
Betawave
Corporation
By:
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
(Print)
Title:
Chairman of the Board, President or Vice President
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Date: March
27, 2009
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
(Print)
Title:
Chief Financial Officer, Secretary, Assistant Treasurer or Assistant
Secretary
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“HOLDER”
SILICON
VALLEY BANK
By:
/s/ Xxxx Xxxxx
Name:
Xxxx Xxxxx
(Print)
Title:
Relationship Manager
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SCHEDULE
1
CAPITALIZATION
TABLE
APPENDIX
1
NOTICE OF
EXERCISE
1. Holder
elects to purchase ___________ shares of the Common Stock of Betawave
Corporation pursuant to the terms of the attached Warrant, and tenders payment
of the purchase price of the shares in full.
[or]
1. Holder
elects to convert the attached Warrant into Shares/cash [strike one] in the
manner specified in the Warrant. This conversion is exercised for
_____________________ of the Shares covered by the Warrant.
[Strike paragraph that does not
apply.]
2. Please
issue a certificate or certificates representing the shares in the name
specified below:
___________________________________________
Holders Name
___________________________________________
___________________________________________
(Address)
3. By
its execution below and for the benefit of the Company, Holder hereby restates
each of the representations and warranties in Article 4 of the Warrant as of the
date hereof.
HOLDER:
_________________________
By:__________________________
Name:________________________
Title:_________________________
(Date):_______________________
APPENDIX
2
ASSIGNMENT
For value
received, Silicon Valley Bank hereby sells, assigns and transfers
unto
Name:
SVB Financial Group
Address: 0000
Xxxxxx Xxxxx (XX-000)
Xxxxx Xxxxx, XX 00000
Tax
ID: 00-0000000
that
certain Warrant to Purchase Stock issued by Betawave Corporation (the
“Company”), on March 27, 2009 (the “Warrant”) together with all rights, title
and interest therein.
SILICON
VALLEY BANK
By:
___________________________________
Name:
_________________________________
Title:
_________________________________
Date:
______________________________
By its
execution below, and for the benefit of the Company, SVB Financial Group makes
each of the representations and warranties set forth in Article 4 of the Warrant
and agrees to all other provisions of the Warrant as of the date
hereof.
SVB
FINANCIAL GROUP
By:
___________________________________
Name:
_________________________________
Title:
_________________________________
