STARVOX COMMUNICATIONS, INC. WARRANT TO PURCHASE SERIES A PREFERRED STOCK
Exhibit 10.16
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
STARVOX COMMUNICATIONS, INC.
WARRANT TO PURCHASE SERIES A PREFERRED STOCK
| No. PCW-001 | August 5, 2005 |
Void After AUGUST 5, 2008
This Certifies That, for value received, Sand Hill Finance, LLC, or its assigns (the
“Holder”), is entitled to subscribe for and purchase from Starvox Communications, Inc., a
California corporation, with its principal office at 0000 Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx
00000 (the “Company”) the Exercise Shares at the Exercise Price (each subject to adjustment as
provided herein).
1. Definitions. As used herein, the following terms shall have the
following respective meanings:
(a) “Exercise Period” shall mean the period commencing with the date hereof and ending three
years later, unless sooner terminated as provided below.
(b) “Exercise Price” shall mean $0.525 per Exercise Share subject to adjustment pursuant to
Sections 5 and 7 below.
(c) “Exercise Shares” shall mean one hundred fifty thousand (150,000) shares of the Company’s
Series A Preferred Stock issuable upon exercise of this Warrant.
2. Exercise of Warrant. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by delivery of the following
to the Company at its address set forth above (or at such other address as it may designate by
notice in writing to the Holder):
(a) An executed Notice of Exercise in the form attached hereto;
(b) Payment of the Exercise Price either (i) in cash or by check, or (ii) by cancellation of
indebtedness; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate or certificates for
the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with
the Holder, if the Holder so designates, shall be issued and delivered to the Holder within a
reasonable time after the rights represented by this Warrant shall have been so exercised. In the
event that this Warrant is being exercised for less than all of the then-current number of Exercise
Shares purchasable hereunder, the Company shall, concurrently with the issuance by the Company of
the number of Exercise Shares for which this Warrant is then being exercised, issue a new Warrant
exercisable for the remaining number of Exercise Shares purchasable hereunder.
The person in whose name any certificate or certificates for Exercise Shares are to be issued
upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on
the date on which this Warrant was surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such certificate or certificates, except that, if the date
of such surrender and payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the close of business on
the next succeeding date on which the stock transfer books are open.
2.1 Net Exercise. Notwithstanding any provisions herein to the contrary, if the fair market
value of one Exercise Share is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a
number of Exercise Shares computed using the following formula:
| X = | Y (A-B)
|
| Where X = | the number of Exercise Shares to be issued to the Holder | |||
| Y = | the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, that portion of the Warrant being canceled (at the date of such calculation) | |||
| A = | the fair market value of one Exercise Share (at the date of such calculation) | |||
| B = | Exercise Price (as adjusted to the date of such calculation) |
For purposes of the above calculation, the fair market value of one Exercise Share shall be
determined by the Company’s Board of Directors in good faith; provided, however, that in the event
that this Warrant is exercised pursuant to this Section 2.1 in connection with the Company’s
initial public offering of its Common Stock, the fair market value per share shall be the product
of (i) the per share offering price to the public of the Company’s initial public offering, and
(ii) the number of shares of Common Stock into which each Exercise Share is convertible at the time
of such exercise.
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3. Covenants of the Company.
3.1 Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise
Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further covenants and agrees
that the Company will at all times during the Exercise Period, have authorized and reserved, free
from preemptive rights, a sufficient number of shares of the series of equity securities comprising
the Exercise Shares to provide for the exercise of the rights represented by this Warrant. If at
any time during the Exercise Period the number of authorized but unissued shares of such series of
the Company’s equity securities shall not be sufficient to permit exercise of this Warrant, the
Company will take such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of such series of the Company’s equity securities to
such number of shares as shall be sufficient for such purposes.
4. Representations of Holder.
4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants that it
is acquiring the Warrant and the Exercise Shares solely for its account for investment and not with
a view to or for sale or distribution of said Warrant or Exercise Shares or any part thereof. The
Holder also represents that the entire legal and beneficial interests of the Warrant and Exercise
Shares the Holder is acquiring is being acquired for, and will be held for, its account only.
4.2 Securities Are Not Registered.
(a) The Holder understands that the Warrant and the Exercise Shares have not been registered
under the Securities Act of 1933, as amended (the “Act’) on the basis that no distribution or
public offering of the stock of the Company is to be effected. The Holder realizes that the basis
for the exemption may not be present if, notwithstanding its representations, the Holder has a
present intention of acquiring the securities for a fixed or determinable period in the future,
selling (in connection with a distribution or otherwise), granting any participation in, or
otherwise distributing the securities. The Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such registration is
available. The Holder recognizes that the Company has no obligation to register the Warrant or the
Exercise Shares of the Company, or to comply with any exemption from such registration.
(c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant
to Rule 144 adopted under the Act unless certain conditions are met, including, among other things,
the existence of a public market for the shares, the availability of certain current public
information about the Company, the resale following the required holding period under Rule 144 and
the number of shares being sold during any three month period not exceeding specified limitations.
Holder is aware that the conditions for resale set forth in Rule 144 have not been
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satisfied and that the Company presently has no plans to satisfy these conditions in the
foreseeable future.
4.3 Disposition of Warrant and Exercise Shares.
(a) The Holder further agrees not to make any disposition of all or any part of the Warrant or
Exercise Shares in any event unless and until:
(i) The Company shall have received a letter secured by the Holder from the Securities and
Exchange Commission stating that no action will be recommended to the Commission with respect to
the proposed disposition;
(ii) There is then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with said registration statement; or
(iii) The Holder shall have notified the Company of the proposed disposition and shall have
furnished the Company with a detailed statement of the circumstances surrounding the proposed
disposition, and if reasonably requested by the Company, the Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the
effect that such disposition will not require registration of such Warrant or Exercise Shares under
the Act or any applicable state securities laws. The Company agrees that it will not require an
opinion of counsel with respect to transactions under Rule 144 of the Securities Act of 1933, as
amended, except in unusual circumstances.
(b) The Holder understands and agrees that all certificates evidencing the shares to be issued
to the Holder may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT’). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
4.4 Accredited Investor Status. The Holder is an “accredited investor” as defined in
Regulation D promulgated under the Act.
5. Adjustment of Exercise Price and Number of Exercise Shares.
5.1 Changes in Securities. In the event of changes in the series of equity securities of the
Company comprising the Exercise Shares by reason of stock dividends, splits, recapitalizations,
reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations,
or the like, the number and class of Exercise Shares available under the Warrant in the aggregate
and the Exercise Price shall be correspondingly adjusted to give the Holder of the Warrant, on
exercise for the same aggregate Exercise Price, the total number, class, and kind
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of shares as the Holder would have owned had the Warrant been exercised prior to the event and
had the Holder continued to hold such shares until after the event requiring adjustment; provided,
however, that such adjustment shall not be made with respect to, and this Warrant shall terminate
if not exercised prior to, the events set forth in Section 7 below. For purposes of this Section 5
and Section 7, the “Aggregate Exercise Price” shall mean the aggregate Exercise Price payable in
connection with the exercise in full of this Warrant. The form of this Warrant need not be changed
because of any adjustment in the number of Exercise Shares subject to this Warrant.
5.2 Automatic Conversion. Upon the automatic conversion of all outstanding shares of the
series of equity securities comprising the Exercise Shares, this Warrant shall become exercisable
for that number of shares of Common Stock of the Company into which the Exercise Shares would then
be convertible, so long as such shares, if this Warrant had been exercised prior to such offering,
would have been converted into shares of the Company’s Common Stock pursuant to the Company’s
Certificate of Incorporation. In such case, all references to “Exercise Shares” shall mean shares
of the Company’s Common Stock issuable upon exercise of this Warrant, as appropriate.
6. Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares
(including fractions) to be issued upon exercise of this Warrant shall be aggregated for purposes
of determining whether the exercise would result in the issuance of any fractional share. If,
after aggregation, the exercise would result in the issuance of a fractional share, the Company
shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then current fair market
value of one Exercise Share by such fraction.
7. Early Termination. In the event of, at any time during the Exercise
Period, an initial public offering of securities of the Company registered under the Act, or an
Acquisition or Asset Transfer (each as defined in the Company’s Articles of Incorporation in effect
as of the date hereof), the Company shall provide to the Holder twenty (20) days advance written
notice of such public offering, Acquisition or Asset Transfer, and this Warrant shall terminate
unless exercised immediately prior to the date such public offering is closed or the closing of
such Acquisition or Asset Transfer.
8. Market Stand-Off Agreement. Holder shall not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any Common Stock (or Exercise Shares or other
securities) of the Company held by Holder, for a period of time specified by the managing
underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of a
registration statement of the Company filed under the Act. Holder agrees to execute and deliver
such other agreements as may be reasonably requested by the Company and/or the managing
underwriter(s) which are consistent with the foregoing or which are necessary to give further
effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to such Common Stock (or other securities) until the end of such period.
The underwriters of the Company’s stock are intended third party beneficiaries of this Section 8
and
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shall have the right, power and authority to enforce the provisions hereof as though they were
a party hereto.
9. No Stockholder Rights. This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a stockholder of the Company.
10. Transfer of Warrant. Subject to applicable laws and the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all rights hereunder arc
transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant
and the form of assignment attached hereto to any transferee designated by Holder. The transferee
shall sign an investment letter in form and substance satisfactory to the Company.
11. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it
may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation
of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be
at any time enforceable by anyone.
12. Amendment. Any term of this Warrant may be amended or waived with the
written consent of the Company and the Holder.
13. Notices, etc. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt.
14. Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
15. Governing Law. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by and construed under the laws of the State of California as applied
to agreements among California residents, made and to be performed entirely within the State of
California without giving effect to conflicts of laws principles.
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In Witness Whereof, the Company has caused this Warrant to be executed by its duly
authorized officer as of August 5, 2006.
| Starvox Communications, Inc. | ||||||
| By: | /s/ Xxxxxxx X. Xxxx
|
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| Name: Xxxxxxx X. Xxxx Title: Chief Executive Officer Address: 0000 Xxxxxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 |
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[Signature Page]
NOTICE OF EXERCISE
TO: Starvox Communications, Inc.
(1) o
The undersigned hereby elects to purchase shares of Series A Preferred
Stock (the “Exercise Shares”) of Starvox Communications, Inc. (the “Company”) pursuant to the terms
of the attached Warrant, and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
o
The undersigned hereby elects to purchase shares of Series A Preferred Stock
(the “Exercise Shares”) of Starvox Communications, Inc. (the “Company”) pursuant to the terms of
the net exercise provisions set forth in Section 2.1 of the attached Warrant, and shall tender
payment of all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said Exercise Shares in the name
of the undersigned or in such other name as is specified below:
(Name)
(Address)
(3) The undersigned represents that (i) the aforesaid Exercise Shares are being acquired for
the account of the undersigned for investment and not with a view to, or for resale in connection
with, the distribution thereof and that the undersigned has no present intention of distributing or
reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is
experienced in making investments of this type and has such knowledge and background in financial
and business matters that the undersigned is capable of evaluating the merits and risks of this
investment and protecting the undersigned’s own interests; (iv) the undersigned understands that
Exercise Shares issuable upon exercise of this Warrant have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from
the registration provisions of the Securities Act, which exemption depends upon, among other
things, the bona fide nature of the investment intent as expressed herein, and, because such
securities have not been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such registration is
available; (v) the undersigned is aware that the aforesaid Exercise Shares may not be sold pursuant
to Rule 144 adopted under the Securities Act unless certain conditions are met and until the
undersigned has held the shares for the number of years prescribed by Rule 144, that among the
conditions for use of the Rule is the availability of current information to the public about the
Company and the Company has not made such information available and has no present plans to do so;
and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid
shares of Exercise Shares unless
1.
and until there is then in effect a registration statement under the Securities Act covering
such proposed disposition and such disposition is made in accordance with said registration
statement, or, if reasonably requested by the Company, the undersigned has provided the Company
with an opinion of counsel satisfactory to the Company, stating that such registration is not
required.
2.
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this
form to purchase shares.)
and supply required information. Do not use this
form to purchase shares.)
For Value Received, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
Name: |
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Address: |
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Dated: , 20___
Holder’s Signature: |
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Holder’s Address:
|
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NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations
and those acting in a fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.
3.
