EXHIBIT 99.3
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES OR BLUE
SKY LAWS OF ANY STATE AND MAY NOT BE SOLD, OR OTHERWISE TRANSFERRED, IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER
ANY SUCH APPLICABLE STATE LAWS, OR IN VIOLATION OF THE RESTRICTION ON TRANSFER
CONTAINED IN SECTIONS 7.1 AND 7.2 OF THIS WARRANT.
WARRANT TO PURCHASE 1,375,000 SHARES
OF COMMON STOCK OF
SCIENTIFIC LEARNING CORPORATION
This certifies that WPV, INC., a Delaware corporation, and its
successors and assigns (collectively, the "Holder"), for value received, is
entitled to purchase from SCIENTIFIC LEARNING CORPORATION, a Delaware
corporation (the "Company"), having a place of business at 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, a maximum of 1,375,000 fully paid
and nonassessable shares of the Company's common stock, par value $0.001 per
share ("Common Stock") for cash at a price of $8.00 per share (the "Stock
Purchase Price") at any time or from time to time up to and including 5:00 p.m.
(Pacific time) on March 9, 2008 (the "Expiration Date"), upon satisfaction by
the Holder of the conditions set forth in Section 1.1 hereof. The Stock Purchase
Price and the number of shares purchasable hereunder are subject to adjustment
as provided in Section 3 of this Warrant.
This Warrant is made on the following terms and subject to the
following conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1. GENERAL. This Warrant is exercisable at the option of the Holder,
at any time or from time to time up to and including 5:00 p.m. (Pacific time) on
the Expiration Date, for all or any part of the shares of Common Stock (but not
for a fraction of a share) that may be purchased hereunder. The shares of Common
Stock purchased under this Warrant will be and are deemed to be issued to the
Holder as the record owner of such shares as of the close of business on the
date on which the following are delivered to the Company's principal office (or
such other location as the Company may advise the Holder in writing): (a) this
Warrant properly endorsed; (b) a completed, executed Form of Subscription, in a
form substantially equivalent to Exhibit A hereto and a completed, executed
letter of Investment Representations, in a form substantially equivalent to
Exhibit B hereto; and (c) if applicable, cash, a certified check, or delivery of
funds via wire transfer, in an amount equal to the aggregate exercise price for
the number of shares for which this Warrant is being exercised (determined as
the number of shares to be issued upon exercise multiplied by the Stock Purchase
Price) unless the Holder elects to conduct a net issue exercise pursuant to
Section 1.2 hereof. Certificates for the shares of Common Stock so purchased,
together with any other securities or property to which the Holder is entitled
upon such exercise, shall be delivered to the Holder by the Company at the
Company's expense within a reasonable time after the rights represented by this
Warrant have been so exercised. In case of a purchase of less than all the
shares that may be purchased under this Warrant, the Company
shall cancel this Warrant and execute and deliver a new Warrant or Warrants of
like tenor for the balance of the shares purchasable under the Warrant
surrendered upon such purchase to the Holder within a reasonable time. Each
stock certificate so delivered shall be in such denomination of Common Stock as
may be requested by the Holder and shall be registered in the name of the
Holder.
1.2. NET ISSUE EXERCISE. Notwithstanding anything otherwise to the contrary, if
the fair market value of one share of the Common Stock is greater than the Stock
Purchase Price (at the date of calculation as set forth below), in lieu of
payment by the Holder of cash for the shares of Common Stock to be purchased
upon an exercise of this Warrant, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by notice of such election to the Company and satisfaction only of the
conditions set forth in Sections 1.1(a) and 1.1(b) hereof, in which event the
Company will issue to the Holder a number of shares of Common Stock computed
using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be
issued to the Holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being canceled
(at the date of such calculation)
A = the fair market value of one share of the
Company's Common Stock (at the date of such
calculation)
B = Stock Purchase Price (as adjusted to the
date of such calculation)
For purposes of the above calculation, fair market value of one share of Common
Stock shall be the average of the bid and ask (or, if not available, the closing
price) of the Company's Common Stock on the Nasdaq National Market or such other
domestic market or exchange on which the shares of Common Stock are traded on
the day prior to the exercise of this Warrant, as reported in the Wall Street
Journal.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES.
All shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant shall, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable, free from all preemptive rights of
any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company shall at all times have authorized and
reserved, for the purpose of issue upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented
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by this Warrant. The Company shall take all such actions as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
domestic securities exchange upon which the Common Stock may be listed;
PROVIDED, HOWEVER, that the Company will not be required to effect a
registration under Federal or state securities laws with respect to such
exercise. The Company shall not take any action that would result in any
adjustment of the Stock Purchase Price if the total number of shares of Common
Stock issuable after such action upon exercise of all outstanding warrants,
together with all shares of Common Stock then issuable upon exercise of all
options and upon the conversion of all outstanding shares of Preferred Stock and
shares of Preferred Stock issuable upon the exercise of all outstanding options
and warrants, together with all shares of Common Stock then outstanding and all
shares of Common Stock then issuable upon exercise of all outstanding options,
would exceed the total number of shares of Common Stock then authorized by the
Company's Restated Certificate of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES.
The Stock Purchase Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3. Upon each
adjustment of the Stock Purchase Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Stock Purchase Price resulting from
such adjustment, the number of shares obtained by multiplying the Stock Purchase
Price in effect immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Stock Purchase Price resulting from such adjustment.
3.1. SUBDIVISION OR COMBINATION OF STOCK. If the Company at any time
subdivides its outstanding shares of Common Stock into a greater number of
shares, the Stock Purchase Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, if the outstanding shares of
Common Stock of the Company are combined into a smaller number of shares, the
Stock Purchase Price in effect immediately prior to such combination shall be
proportionately increased.
3.2. DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) receive or become entitled to receive, without
payment therefor:
(A) Common Stock or any shares of stock or other securities that
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution;
(B) any cash paid or payable otherwise than as a cash dividend; or
(C) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate
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rearrangement (other than shares of Common Stock issued as a stock split or
adjustments, which are covered by the terms of Section 3.1),
then, and in each such case, the Holder shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) that the Holder would
hold on the date of such exercise had it been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
3.3. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction, is effected in such a way that holders of Common Stock are entitled
to receive stock, securities, or other assets or property (an "Organic Change"),
then, as a condition of such Organic Change, lawful and adequate provisions
shall be made by the Company whereby the Holder shall thereafter have the right
to purchase and receive (in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby) such shares of stock, securities or other assets
or property as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of shares
of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the Stock
Purchase Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company shall not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) resulting from such consolidation or the corporation
purchasing such assets shall assume by written instrument delivered to the
Company and to the Holder the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase.
3.4. CERTAIN EVENTS. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder in accordance with such provisions,
then the Board of Directors of the Company shall make an adjustment in the
number and class of shares available under the Warrant, the Stock Purchase Price
or the application of such provisions, so as to give the Holder upon exercise of
the Warrant for the same aggregate Stock Purchase Price the total number, class
and kind of shares as it would have owned had the Warrant been exercised prior
to the event and had it continued to hold such shares until after the event
requiring adjustment.
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3.5. NOTICES OF CHANGE.
(A) Immediately upon any adjustment in the number or class of
shares subject to this Warrant or the Stock Purchase Price, the Company shall
give written notice thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such adjustment.
(B) The Company shall give written notice to the Holder at least
ten Business Days prior to the date on which the Company closes its books or
takes a record for determining rights to receive any dividends or distributions.
For purposes of this Warrant, "Business Day" shall mean any day (except Saturday
or Sunday) on which banks are scheduled to be open to conduct business in the
City of New York.
(C) The Company shall also give written notice to the Holder at
least twenty Business Days prior to the date on which an Organic Change is
scheduled to take place.
4. ISSUE TAX.
The issuance of certificates for shares of Common Stock upon the
exercise of the Warrant shall be made without charge to the Holder for any issue
tax (other than any applicable income taxes) in respect thereof; PROVIDED,
HOWEVER, that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the Holder.
5. CLOSING OF BOOKS.
The Company shall at no time close its transfer books against the
transfer of any warrant or of any shares of Common Stock issued or issuable upon
the exercise of any warrant in any manner that interferes with the timely
exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY.
Nothing contained in this Warrant shall be construed as conferring upon
the Holder solely in its capacity as holder of this Warrant the right to vote or
to consent or to receive notice as a stockholder of the Company on any matters
or any rights whatsoever as a stockholder of the Company prior to the purchase
by the Holder of shares of Common Stock pursuant to an exercise of this Warrant.
No dividends or interest shall be payable or accrued in respect of this Warrant
or the interest represented hereby or the shares purchasable hereunder until,
and only to the extent that, this Warrant is exercised. No provisions hereof, in
the absence of affirmative action by the Holder to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of the Holder for the Stock Purchase
Price or as a stockholder of the Company, whether such liability is asserted by
the Company or by its creditors.
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7. DISPOSITION.
7.1. UNREGISTERED SECURITY. Subject to compliance with applicable
federal and state securities laws and the transfer restriction set forth in
Section 7.2 of this Warrant, this Warrant and all rights hereunder are
transferable in whole or in part upon surrender of this Warrant properly
endorsed. Each holder of this Warrant acknowledges that this Warrant, and the
shares of Common Stock purchasable upon exercise of this Warrant (the "Warrant
Shares") have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), and agrees not to sell, pledge, distribute, offer for sale,
transfer or otherwise dispose of this Warrant and any Warrant Shares issued upon
its exercise until one of the following events shall have occurred:
(A) the Company shall have received an opinion of counsel, in form
and substance reasonably acceptable to the Company and its counsel, or other
evidence reasonably acceptable to the Company, stating that the contemplated
transfer is exempt from registration under the 1933 Act as then in effect, and
the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder. Within five Business Days after delivery to the
Company and its counsel of such opinion or evidence, the Company either shall
deliver to the proposed transferor a statement to the effect that such opinion
or evidence is not satisfactory in the reasonable opinion of its counsel (and
shall specify in detail the legal analysis supporting any such conclusion) or
shall authorize the Company's transfer agent to make the requested transfer; or
(B) the Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or
(C) the Warrant and any Warrant Shares, as applicable, are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective; or
(D) the Warrant and any Warrant Shares, as applicable, are
transferred pursuant to and in accordance with Rule 144 or Rule 144A promulgated
by the Commission under the 1933 Act accompanied, upon reasonable request, by an
opinion of counsel reasonably satisfactory to the Company that such transfer
complies with Rule 144 or 144A.
Each certificate or other instrument for Warrant Shares issued upon the
exercise. of this Warrant shall bear a legend substantially to the foregoing
effect.
7.2. TRANSFERS. To the extent the Holder transfers this Warrant in
part, the Holder shall either: (i) make such transfer to an affiliate (as such
term is defined in the rules promulgated under the Securities Exchange Act of
1934, as amended); or (ii) transfer at a minimum Warrants representing the right
to purchase 200,000 shares of Common Stock (appropriately adjusted for any stock
split, dividend, combination or other recapitalization). Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder
hereof, when this Warrant shall have been so endorsed, may be treated by the
Company, at the Company's option, and all other persons
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dealing with this Warrant, as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this Warrant, or to
the transfer hereof on the books of the Company any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
8. LOST WARRANTS.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company, at its expense, shall
make and deliver a new Warrant of like tenor to the Holder in lieu of the lost,
stolen, destroyed or mutilated Warrant.
9. FRACTIONAL SHARES.
No fractional shares shall be issued upon exercise of this Warrant. The
Company shall, in lieu of issuing any fractional share, pay the holder entitled
to such fraction a sum in cash equal to such fraction multiplied by the fair
market value of a share of Common Stock at the time of such exercise. For such
purposes, fair market value of one share of Common Stock shall be the average of
the bid and ask (or, if not available, the closing price) of the Company's
Common Stock on the Nasdaq National Market or such other domestic market or
exchange on which the shares of Common Stock are traded on the day prior to the
exercise of this Warrant as reported in the Wall Street Journal.
10. MISCELLANEOUS.
10.1. BINDING UPON SUCCESSORS. This Warrant shall inure to the benefit
of and be binding upon the respective successors and assigns of the Company and
the Holder. Nothing in this Warrant, express or implied, is intended to confer
upon any third party any rights, remedies, obligations or liabilities under or
by reason of this Warrant.
10.2. GOVERNING LAW. This Warrant shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents, made and to be performed entirely within the State of Delaware,
irrespective of any contrary result otherwise required under the conflict or
choice of law rules of Delaware.
10.3. NOTICES. Any notice required or permitted under this Warrant
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit with the United States Post Office, postage prepaid,
addressed to the Company at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000, or to the Holder at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other address as may be designated by ten Business Days'
advance written notice to the Company or the Holder, as applicable.
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10.4. MODIFICATION; WAIVER. No modification or waiver of any provision
of this Warrant or consent to departure therefrom shall be effective unless in
writing and approved by the Company and the Holder.
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[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer, thereunto duly authorized, this 9th day of March 2001.
SCIENTIFIC LEARNING CORPORATION
By: /s/ XXXX X. XXXXXXX
---------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
[SIGNATURE PAGE TO WARRANT TO PURCHASE 1,375,000 SHARES
OF COMMON STOCK OF SCIENTIFIC LEARNING CORPORATION]
EXHIBIT A
SUBSCRIPTION FORM
Date:______________________
Scientific Learning Corporation
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
Ladies and Gentlemen:
(PLEASE CHECK ONE)
|_| The undersigned hereby elects to exercise the warrant issued to it by
Scientific Learning Corporation (the "Company") and dated March 9, 2001
(the "Warrant") and to purchase thereunder _________________________ shares
of the Common Stock of the Company (the "Shares") at a purchase price of
_____________________ Dollars ($________) per Share or an aggregate
purchase price of ___________________________ Dollars ($_________) (the
"Purchase Price"). Pursuant to the terms of the Warrant the undersigned has
delivered the Purchase Price herewith in full in cash or by certified check
or wire transfer.
|_| The undersigned hereby elects to convert ____________________________
percent (____%) of the value of the Warrant pursuant to the provisions of
Section 1.2 of the Warrant allowing a "Net Issue Exercise" in exchange for
___________ shares of the Common Stock of the Company.
The undersigned also makes the representations set forth on the
attached Exhibit B of the Warrant.
Very truly yours,
WPV, INC.
By:___________________________________
Name:______________________________
Title: ____________________________
EXHIBIT B
INVESTMENT REPRESENTATIONS
THESE INVESTMENT REPRESENTATIONS MUST BE COMPLETED, SIGNED AND RETURNED TO
SCIENTIFIC LEARNING CORPORATION ALONG WITH THE SUBSCRIPTION FORM BEFORE THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT DATED MARCH 8, 2001 WILL BE
ISSUED.
Date: _________________
Scientific Learning Corporation
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
Ladies and Gentlemen:
The undersigned, WPV, Inc. ("Purchaser"), intends to acquire up to
_______ shares of the Common Stock (the "Common Stock") of Scientific Learning
Corporation (the "Company") from the Company pursuant to the exercise or
conversion of certain Warrants to purchase Common Stock held by Purchaser. The
Common Stock will be issued to Purchaser in a transaction not involving a public
offering and pursuant to an exemption from registration under the Securities Act
of 1933, as amended (the "1933 Act"), and applicable state securities laws. In
connection with such purchase and in order to comply with the exemptions from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
Purchaser is acquiring the Common Stock for its own account, to hold
for investment, and Purchaser will not make any sale, transfer or other
disposition of the Common Stock in violation of the 1933 Act or the General
Rules and Regulations promulgated thereunder by the Securities and Exchange
Commission (the "SEC") or in violation of any applicable state securities law.
Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter.
Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock. Purchaser further agrees that the Company may refuse to permit
Purchaser to sell, transfer or dispose of the Common Stock (except as permitted
under Rule 144) unless there is in effect a registration statement under the
1933 Act and any
applicable state securities laws covering such transfer, or unless Purchaser
furnishes an opinion of counsel reasonably satisfactory to counsel for the
Company, to the effect that such registration is not required.
Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. These shares
have been acquired for investment and may not be sold or
otherwise transferred in the absence of an effective
registration statement for these shares under the Securities
Act and applicable state securities laws, or an opinion of
counsel satisfactory to the Company that registration is not
required and that an applicable exemption is available."
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Common Stock with Purchaser's counsel.
Very truly yours,
WPV, INC.
By:___________________________
Name:______________________
Title:_____________________
