EXHIBIT 10.17
Exhibit C to the Purchase Agreement
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE TRANSFERRED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AMENDED.
No. C-___ Dated: August __, 1998
ART TECHNOLOGY GROUP, INC.
COMMON STOCK
PURCHASE WARRANT
(VESTING)
THIS IS TO CERTIFY THAT, for value received, ____________________ (the
"INITIAL WARRANT HOLDER"), and its registered successors and permitted assigns
are entitled, subject to the terms and conditions set forth below, to purchase
from ART TECHNOLOGY GROUP, INC., a Delaware corporation (the "CORPORATION"), at
any time or from time to time on and after the date hereof and prior to 5:00
P.M., Boston, Massachusetts time, on the Expiration Date (as defined in Section
1 below), all or any portion of the Vested Warrant Shares (as defined in Section
1), at a purchase price per share equal to the Exercise Price (as defined in
Section 1 below). The number and character of the Warrant Shares and the
Exercise Price are subject to adjustment as provided herein.
This Common Stock Purchase Warrant (this "WARRANT") is one of the
Common Stock Purchase Warrants evidencing the right to purchase shares of the
Common Stock, issued by the Corporation to the Purchasers, as defined in and
pursuant to the terms of that certain Series D Senior Participating Convertible
Preferred Stock Purchase Agreement, dated as of the date hereof (the "SERIES D
PURCHASE AGREEMENT").
1. DEFINITIONS. As used in this Warrant, the following terms shall have
the respective meanings set forth below or elsewhere in this Warrant as referred
to below:
"COMMON STOCK" shall mean shares of the Common Stock of the
Corporation, $.01 par value per share.
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"CORPORATION" shall mean Art Technology Group, Inc. and/or any Person
that shall succeed to, or assume the obligations hereunder of, Art Technology
Group, Inc.
"DERIVATIVE SECURITIES" shall mean (i) all shares of stock and other
securities that are, directly or indirectly, convertible into or exchangeable
for shares of Common Stock and (ii) all options, warrants and other rights to
acquire, directly or indirectly, shares of Common Stock or securities, directly
or indirectly, convertible into or exchangeable for shares of Common Stock.
"EXERCISE DATE" shall have the meaning set forth in Section 2.2 hereof.
"EXERCISE PRICE" shall mean the Initial Exercise Price, as adjusted
from time to time pursuant to the terms of this Warrant.
"EXPIRATION DATE" shall mean August __, 2008, unless terminated earlier
pursuant to the terms hereof.
"FAIR MARKET VALUE" shall mean (i) the last reported sale price per
share of Stock on the Nasdaq-NMS or any national securities exchange in which
such Stock is quoted or listed, as the case may be, on the date immediately
preceding the Exercise Date or, if no such sale price is reported on such date,
such price on the next preceding business day in which such price was reported,
or (ii) if such Stock is not quoted or listed on the Nasdaq-NMS or any national
securities exchange, the fair market value of a share of such Stock, as
determined in good faith by the Board of Directors of the Corporation and based
upon the fair market value of the Corporation as a whole, on a going concern
basis, using customary and appropriate valuation methods and the most recent
audited financial statements of the Corporation (unless the date of such audited
financial statements is more than six (6) months old, in which case another
audit shall be conducted at the expense of the Corporation and shall be used for
such purpose) and NOT taking into account any discount for minority ownership or
restrictions on transfer of the capital stock of the Corporation.
"HOLDER" shall mean, as applicable, (i) the Initial Warrant Holder,
(ii) any successor of the Initial Warrant Holder, or (iii) any other holder of
record of this Warrant or any portion thereof to whom this Warrant or any
portion thereof shall have been transferred in accordance with the provisions of
Section 9 hereof.
"INITIAL EXERCISE PRICE" shall mean an amount equal to $0.16 per share.
"INITIAL WARRANT HOLDER" shall have the meaning set forth in the first
paragraph of this Warrant.
"INITIAL WARRANT SHARES" shall mean _________ shares of Common Stock.
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"ISSUE DATE" shall mean August __, 1998.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PREFERRED STOCK" shall mean the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
all other capital stock of the Corporation having a preference on dissolution or
liquidation of the Corporation.
"QUALIFIED PUBLIC OFFERING" shall mean a public offering of shares of
Common Stock pursuant to an effective registration statement on Form S-1, or
successor form, of the Securities and Exchange Commission, pursuant to which the
per share price to the public is not less than $8.00 (such amount to be subject
to proportionate adjustment in the event of any stock dividend, stock split,
combination of shares, reorganization, recapitalization, reclassification or
other similar event occurring with respect to the Common Stock after the Issue
Date) and the gross proceeds to the Corporation are not less than $20,000,000.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration
Rights Agreement, dated as of the date hereof, by and among the Corporation,
Tudor Private Equity Fund, L.P., Raptor Global Fund Ltd., Raptor Global Fund
L.P. and the other persons listed therein.
"REGISTRABLE SECURITIES" shall have the meaning ascribed to it in the
Registration Rights Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES A PREFERRED STOCK" shall mean the Series A Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"SERIES B PREFERRED STOCK" shall mean the Series B Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"SERIES C PREFERRED STOCK" shall mean the Series C Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"SERIES D PREFERRED STOCK" shall mean Series D Senior Participating
Convertible Redeemable Preferred Stock of the Corporation, $.01 par value per
share.
"STOCK" shall mean (i) Common Stock, (ii) capital stock of the
Corporation (other than Common Stock) or of any other Person or any other
securities of the Corporation or
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of any other Person that the Holder is entitled to receive, or receives, upon
exercise of this Warrant, in lieu of or in addition to Common Stock, and/or
(iii) capital stock of the Corporation (other than Common Stock) or of any other
Person or any other securities of the Corporation or of any other Person that
may be issued in replacement of, substitution, exchange or redemption for, or
upon reclassification or conversion of, Common Stock or any other Stock, in each
case whether as a result of a reorganization, reclassification, merger,
consolidation or sale of substantially all of the assets of the Corporation.
"VESTED WARRANT SHARES" shall have the meaning set forth in Section 2.1
hereof.
"WARRANT" shall have the meaning set forth in the second paragraph of
this Warrant.
"WARRANT SHARES" shall mean, at any time, the Initial Warrant Shares
after giving effect to the number of shares of Stock previously purchased by the
Holder pursuant to any and all exercises of this Warrant prior to such time and
after giving effect to all adjustments with respect to the number of Warrant
Shares purchaseable hereunder as provided for herein, including, without
limitation, those set forth in Section 4 hereof, prior to such time.
2. EXERCISE OF WARRANT.
2.1 METHOD OF EXERCISE. Subject to and upon all of the terms and
conditions set forth in this Warrant, the Holder may exercise this Warrant, in
whole or in part with respect to any Vested Warrant Shares, at any time and from
time to time during the period commencing on the date hereof and ending at 5:00
p.m., Boston, Massachusetts time, on the Expiration Date, by presentation and
surrender of this Warrant to the Corporation at its principal office, together
with (a) a properly completed and duly executed subscription form, in the form
attached hereto, which subscription form shall specify the number of Warrant
Shares for which this Warrant is then being exercised, and (b) payment of the
aggregate Exercise Price payable hereunder in respect of the number of Warrant
Shares being purchased upon exercise of this Warrant. Payment of such aggregate
Exercise Price shall be made either (i) in cash or by money order, certified or
bank cashier's check or wire transfer (in each case in lawful currency of the
United States of America), (ii) by cancellation of indebtedness owing from the
Corporation to the Holder, (iii) by the Holder surrendering a number of Warrant
Shares having a Fair Market Value on the date of exercise equal to, greater than
(but only if by a fractional share) or less than (if surrendered pursuant to
(iv) below) the required aggregate Exercise Price, in which case the Holder
would receive the number of Warrant Shares to which it would otherwise be
entitled upon such exercise, less the surrendered shares, or (iv) any
combination of the methods described in the foregoing clauses (i), (ii) or
(iii).
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The Warrant Shares shall vest and, subject to the limitation
contained in the next paragraph, become exerciseable (the "VESTED WARRANT
SHARES") at a rate of five percent (5%) on each March 31, June 30, September 30
and December 31, until fully vested, commencing with September 30, 1998.
Notwithstanding the foregoing, this Warrant may not be
exercised prior to the fifth anniversary of the Issue Date unless (i) the
Corporation sells (whether by merger or consolidation) all or substantially all
of its assets or sells more than 50% of its voting capital stock prior to the
fifth anniversary of the Issue Date and the proceeds of such sale actually
received (net of any escrows or other holdbacks) by the holders of Series D
Preferred Stock in connection with such sale are not, on a per-share basis,
greater than three (3) times the original purchase price per share of Series D
Preferred Stock (subject to adjustment for stock splits, stock dividends, stock
combinations, capital reorganizations, reclassifications and the like), or (ii)
the Company completes a public offering of shares of the Corporation's Common
Stock pursuant to an effective registration statement on Form S-1, or successor
form, of the Securities and Exchange Commission.
2.2 EFFECTIVENESS OF EXERCISE; OWNERSHIP. Each exercise of this Warrant
by the Holder shall be deemed to have been effected immediately prior to the
close of business on the date upon which all of the requirements of Section 2.1
hereof with respect to such exercise shall have been complied with in full (each
such date, an "EXERCISE DATE"). On the applicable Exercise Date with respect to
any exercise of this Warrant by the Holder, the Corporation shall be deemed to
have issued to the Holder, and the Holder shall be deemed to have become the
holder of record and legal owner of, the number of Warrant Shares being
purchased upon such exercise of this Warrant, notwithstanding that the stock
transfer books of the Corporation shall then be closed or that certificates
representing such number of Warrant Shares being purchased shall not then be
actually delivered to the Holder.
2.3 DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant, and in any event within ten (10) days
thereafter, the Corporation, at its expense and in accordance with applicable
securities laws, will cause to be issued in the name of and delivered to the
Holder, or as the Holder may direct (subject in all cases, to the provisions of
Section 9 hereof), a certificate or certificates for the number of Warrant
Shares purchased by the Holder on such exercise, PLUS, in lieu of any fractional
share to which the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the Fair Market Value.
2.4 SHARES TO BE FULLY PAID AND NONASSESSABLE. All Warrant Shares
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable, free of all liens, taxes, charges and other encumbrances or
restrictions on sale (other than those set forth herein) and free and clear of
all preemptive rights.
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2.5 FRACTIONAL SHARES. No fractional shares of Stock or scrip
representing fractional shares of Stock shall be issued upon the exercise of
this Warrant. With respect to any fraction of a share of Stock called for upon
any exercise hereof, the Corporation shall make a cash payment to the Holder as
set forth in Section 2.3 hereof.
2.6 ISSUANCE OF NEW WARRANTS; CORPORATION ACKNOWLEDGMENT. Upon any
partial exercise of this Warrant, the Corporation, at its expense, will
forthwith and, in any event, within ten (10) days after such partial exercise
issue and deliver to the Holder a new warrant or warrants of like tenor,
registered in the name of the Holder, exercisable, in the aggregate, for the
balance of the Warrant Shares. Moreover, the Corporation shall, at the time of
any exercise of this Warrant, upon the request of the Holder, acknowledge in
writing its continuing obligation to afford to the Holder any rights to which
the Holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant; PROVIDED, HOWEVER, that if the Holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Corporation to afford to the Holder any such rights.
2.7 PAYMENT OF TAXES AND EXPENSES. The Corporation shall pay any
recording, filing, stamp or similar tax which may be payable in respect of any
transfer involved in the issuance of, and the preparation and delivery of
certificates (if applicable) representing, (i) any Warrant Shares purchased upon
exercise of this Warrant and/or (ii) new or replacement warrants in the Holder's
name or the name of any transferee of all or any portion of this Warrant.
3. REGISTRATION AND OTHER RIGHTS.
(a) REGISTRATION RIGHTS AGREEMENT. The Holder of this Warrant
shall have the right to cause the Corporation to register any and all Warrant
Shares under the Securities Act and under any blue sky or securities laws of any
jurisdictions within the United States, at the time and in the manner specified
and as provided for in the Registration Rights Agreement, and any and all
Warrant Shares shall be deemed to be Registrable Securities for all purposes of
the Registration Rights Agreement.
(b) SERIES D PURCHASE AGREEMENT; STOCKHOLDERS AGREEMENT.
Subject to Section 10.4 of this Warrant, for the purposes of the Series D
Purchase Agreement, and the Stockholders Agreement (as such term is defined in
the Series D Purchase Agreement), the shares of Common Stock issuable upon
exercise of this Warrant shall be included for the purposes of determining the
number of shares of Common Stock held by such Holder for all purposes of such
agreements.
(c) REDEMPTION. The Holder of this Warrant shall be entitled
to cause the Corporation to redeem this Warrant upon sixty (60) days written
notice to the Corporation (i) at any time after August __, 2003 or (ii) at any
time that such Holder also requests the Corporation to redeem any of such
Holder's shares of Series D
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Preferred Stock pursuant to the terms of the Series D Preferred Stock contained
in the Amended and Restated Certificate of Incorporation (the "CERTIFICATE OF
Designations"), upon the same terms and conditions applicable to redemption of
shares of Series D Preferred Stock pursuant to the Certificate of Designations;
PROVIDED, HOWEVER, that the Corporation shall redeem this Warrant for an amount
equal to the product of (a) the then current number of Warrant Shares,
MULTIPLIED BY (b) the excess of (i) the then current Fair Market Value of a
share of Common Stock of the Corporation, OVER (ii) the then current Exercise
Price.
4. ADJUSTMENTS.
4.1 ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
(a) In the event that, at any time and from time to time after
the Issue Date, the Corporation shall (A) issue any additional shares of Stock
as a dividend or distribution on its outstanding stock or options, warrants or
other rights to purchase, directly or indirectly, Stock as a dividend or
distribution on its outstanding stock or securities convertible, directly or
indirectly, into Stock as a dividend or distribution on its outstanding stock
(other than shares of Stock issued upon exchange, exercise or conversion of the
Preferred Stock or Purchased Securities (as defined in the Purchase Agreement)),
(B) subdivide its outstanding shares of Stock into a greater number of shares of
Stock or (C) combine its outstanding shares of Stock into a smaller number of
shares of Stock, then and in each such event, (x) the Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then current Exercise Price by a fraction, (i) the numerator of which shall be
the number of shares of Stock outstanding immediately prior to such event on a
fully-diluted basis, assuming exercise in full of all options, warrants or other
rights to purchase Stock, directly or indirectly, outstanding immediately prior
to such event and conversion into or exchange for Stock, directly or indirectly,
of all securities convertible into or exchangeable for Stock outstanding
immediately prior to such event, each in accordance with their terms, and (ii)
the denominator of which shall be the number of shares of Stock outstanding
immediately after such event on a fully-diluted basis, assuming exercise in full
of all options, warrants or other rights to purchase Stock, directly or
indirectly, outstanding immediately after such event and conversion into or
exchange for Stock, directly or indirectly, of all securities convertible into
or exchangeable for Stock outstanding immediately after such event, each in
accordance with their terms, and the product so obtained shall thereafter be the
Exercise Price then in effect, and (y) the number of Warrant Shares shall be
adjusted by increasing or decreasing, as the case may be, the number of shares
of Stock included within the Warrant Shares by the percentage increase or
decrease in the total number of shares of Stock outstanding immediately after
such event as compared to the total number of shares of Stock outstanding
immediately prior to such event and the result so obtained shall be the number
of Warrant Shares then in effect.
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(b) The Exercise Price and the number of Warrant Shares, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described in this Section 4.1
4.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER. In the
event that, at any time or from time to time after the Issue Date, the
Corporation shall (a) effect a reorganization, (b) consolidate with or merge
into any other Person, or (c) sell or transfer all or substantially all of its
properties or assets or more than 50% of the voting capital stock of the
Corporation (whether issued and outstanding, newly issued, from treasury, or any
combination thereof) to any other Person under any plan or arrangement
contemplating the reorganization, consolidation or merger, sale or transfer, or
dissolution of the Corporation, then, in each such case, the Holder, upon the
exercise of this Warrant as provided in Section 2 hereof at any time or from
time to time after the consummation of such reorganization, consolidation or
merger or the effective date of such dissolution (subject to the limitation
contained in Section 4.5, if applicable), as the case may be, shall receive, in
lieu of the Warrant Shares issuable on such exercise immediately prior to such
consummation or such effective date, as the case may be, the Stock and property
(including cash) to which the Holder would have been entitled upon the
consummation of such reorganization, consolidation or merger, or sale or
transfer, or in connection with such dissolution, as the case may be, if the
Holder had so exercised this Warrant immediately prior thereto (assuming the
payment by the Holder of the Exercise Price therefor as required hereby in a
form permitted hereby, which payment shall be included in the assets of the
Corporation for the purposes of determining the amount available for
distribution), all subject to successive adjustments thereafter from time to
time pursuant to, and in accordance with, the provisions of this Section 4.
4.3 ADJUSTMENTS FOR DILUTIVE ISSUANCES; PERFORMANCE MILESTONES;
RECLASSIFICATION
The number of Warrant Shares to which the Holder would otherwise be
entitled upon exercise of this Warrant, until and as adjusted from time to time
pursuant to this Section 4.3 or any other provision of this Warrant, shall be
equal to the product obtained by multiplying (y) the number of Warrant Shares
which such Holder is then entitled to purchase hereunder, BY (z) the Applicable
Conversion Rate (determined below).
Notwithstanding the foregoing, if the Corporation fails to employ a
Chief Operating Officer, with the intent to promote such Chief Operating Officer
to Chief Executive Officer, or a Chief Executive Officer, each of whom meet the
employment requirements set forth in the Series D Purchase Agreement, prior to
one (1) year after the Issue Date, then the number of Warrant Shares to which
the holder hereof shall be entitled upon exercise of this Warrant shall be equal
to the product obtained by multiplying (x) the number of Warrant Shares which
such Holder is then entitled to purchase hereunder BY (y) the Applicable
Conversion Rate (as determined below) BY (z) 1.25.
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The conversion rate in effect at any time (the "APPLICABLE CONVERSION
RATE") shall equal the quotient obtained by DIVIDING (A) $3.20 (subject to
proportionate adjustment for any stock dividend, stock split, combination of
shares, reorganization, recapitalization, reclassification or other similar
event occurring with respect to the Series D Preferred Stock after the Issue
Date), BY (B) the applicable conversion value then in effect (the "APPLICABLE
CONVERSION VALUE"), calculated as hereinafter provided. The Applicable
Conversion Value in effect as of the Issue Date, and until adjusted in
accordance with the provisions of this Section 4.3, shall be $3.20.
(a) DILUTIVE ISSUANCES.
(i) In the event that the Corporation issues or is deemed to
issue any additional shares of Common Stock at a Net Consideration Per Share (as
hereinafter defined) less than the Applicable Conversion Value in respect of the
Warrant Shares in effect immediately prior to such issuance or deemed issuance,
then and in each such case, such Applicable Conversion Value for the Warrant
Shares shall automatically and without further action be adjusted as follows:
(A) If such issuance and/or deemed issuance occurs on
or before the second anniversary of the Issue Date, then the Applicable
Conversion Value for the Warrant Shares will be adjusted to equal the
Net Consideration Per Share (as hereinafter defined) at which such
additional shares of Common Stock were issued and/or deemed issued.
(B) If such issuance and/or deemed issuance occurs
after the second anniversary of the Issue Date, then the Applicable
Conversion Value for the Warrant Shares will be adjusted to equal the
result of the following formula:
New Applicable Conversion Value = (P1 X Q1) + (P2 X Q2)
---------------------
(Q1 + Q2)
where:
P1 = the Applicable Conversion Value in effect immediately prior to such
issuance or deemed issuance of additional shares of Common Stock;
Q1 = the aggregate number of shares of Common Stock outstanding (including
shares of Common Stock issuable upon conversion of all outstanding shares of
Series D Preferred Stock and conversion, exchange and/or exercise of all
outstanding warrants, options and other convertible securities, each to the
extent then convertible, exchangeable and/or exercisable) immediately prior to
such issuance or deemed issuance of additional shares of Common Stock;
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P2 = the Net Consideration Per Share (as hereinafter defined) received by the
Corporation for the shares of Common Stock issued and/or deemed issued in
respect of such issuance of additional shares of Common Stock; and
Q2 = the number of shares of Common Stock issued and/or deemed issued in respect
of such issuance of additional shares of Common Stock.
The following shall not be deemed issuances of additional
shares of Common Stock for the purposes of this Section 4.3(a): the
Corporation's (A) issuance of shares of Common Stock upon conversion of shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock, (B) granting of stock options to directors,
officers, employees, or consultants of the Corporation pursuant to the
Corporation's 1996 Stock Option Plan or pursuant to any other employee benefit
plan approved by the Board of Directors of the Corporation, and the issuance of
shares of Common Stock upon exercise of any of the foregoing options, (c)
issuance of Common Stock upon the exercise of the Warrants (as defined in the
Series D Purchase Agreement), (d) issuance of up to 56,296 shares of Series C
Preferred Stock upon the exercise of warrants issued to Silicon Valley Bank, (e)
issuance of up to 425,532 shares of Series B Preferred Stock upon the exercise
of the Amended and Restated Warrant issued to SOFTBANK Ventures, Inc. (the
"SOFTBANK WARRANT"), and (f) warrants to purchase Common Stock issued to
commercial institutional senior lenders solely in connection with the
establishment of a working capital line of credit (and the issuance of Common
Stock upon exercise thereof) in an amount not to exceed 200,000 shares.
For purposes of this Section 4.3(a), if a part or all of the
consideration received by the Corporation in connection with the issuance or
deemed issuance of shares of Common Stock or the issuance or deemed issuance of
any of the securities described below in paragraph (ii) of this Section 4.3(a)
consists of property other than cash, such consideration shall be deemed to have
the same value as is recorded on the books of the Corporation with respect to
receipt of such property so long as such recorded value was determined
reasonably and in good faith and with due care by the Board of Directors of the
Corporation, and shall otherwise be deemed to have a value equal to its fair
market value.
(ii) For purposes of this Section 4.3(a), the issuance of any
Derivative Securities shall be deemed an issuance of shares of Common Stock with
respect to Section 4.3(a) if the Net Consideration Per Share (as defined below)
that may be received by the Corporation for such Common Stock is less than the
Applicable Conversion Value in effect immediately prior to the time of such
issuance, and except as hereinafter provided, an adjustment in the Applicable
Conversion Value shall be made upon each such issuance of Derivative Securities
in the manner provided in Section 4.3(a), as appropriate, as if such deemed
Common Stock were issued for such Net Consideration Per Share. No adjustment of
the Applicable Conversion Value shall be made under this Section 4.3(a) upon the
issuance of any additional shares of Common
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Stock that are issued upon the exercise, conversion, or exchange of any
Derivative Securities if any such adjustment was previously made upon the
issuance of such Derivative Securities. Any adjustment of the Applicable
Conversion Value with respect to this Section 4.3(a) shall be disregarded if,
as, and to the extent that the Derivative Securities that gave rise to such
adjustment expire or are canceled without having been exercised, so that the
Applicable Conversion Value effective immediately upon such cancellation or
expiration shall be equal to the Applicable Conversion Value that otherwise
would have been in effect immediately prior to the time of the issuance of the
expired or canceled Derivative Securities, with such additional adjustments as
subsequently would have been made to that Applicable Conversion Value had the
expired or canceled Derivative Securities not been issued. In the event that the
terms of any Derivative Securities previously issued by the Corporation are
changed (whether by their terms or for any other reason, including without
limitation, as a result of the effects of any anti-dilution adjustments
contained therein) so as to lower the Net Consideration Per Share payable with
respect thereto (whether or not the issuance of such Derivative Securities
originally gave rise to an adjustment of the Applicable Conversion Value), the
Applicable Conversion Value shall be recomputed as of the date of such change,
so that the Applicable Conversion Value effective immediately upon such change
shall be equal to the Applicable Conversion Value in effect at the time of the
issuance of the Derivative Securities subject to such change, adjusted for the
issuance thereof in accordance with the terms thereof after giving effect to
such change, and with such additional adjustments as subsequently would have
been made to that Applicable Conversion Value had the Derivative Securities been
issued on such changed terms. For purposes of this Section 4.3(a)(ii), the Net
Consideration Per Share that may be received by the Corporation shall be
determined as follows:
(A) "NET CONSIDERATION PER SHARE" shall mean the
amount equal to the total amount of consideration, if any, received by
the Corporation for the issuance of such Derivative Securities, plus
the minimum amount of additional consideration, if any, payable to the
Corporation upon exercise, conversion, and/or exchange thereof for
shares of Common Stock, divided by the maximum number of shares of
Common Stock that would be issued if all such Derivative Securities
were exercised or converted at such Net Consideration Per Share.
(B) The Net Consideration Per Share that may be
received by the Corporation shall be determined in each instance as of
the date of issuance of Derivative Securities without giving effect to
any possible future price adjustments or rate adjustments that may be
applicable with respect to such Derivative Securities and which are
contingent upon future events; PROVIDED, that in the case of an
adjustment to be made as a result of a change in terms of such
Derivative Securities, including such changes as may result from the
effects of any anti-dilution adjustments contained therein, the Net
Consideration Per Share shall be determined as of the date of such
change.
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(b) PERFORMANCE MILESTONES.
(i) END OF SEVEN FISCAL QUARTERS. If, on or as of the end of
the seven (7) fiscal quarters of the Corporation ending December 31, 1999, the
Corporation's (a) total cumulative revenues ("TOTAL REVENUES") are less than
$54,000,000 and/or (b) total cumulative product revenues (which, for this
purpose, shall be deemed to mean only those revenues derived from sales by the
Corporation of non-customized products (as distinct from services) as to which
the Corporation is not a reseller and which the buyer has not purchased for
inventory) ("TOTAL PRODUCT REVENUES") are less than $20,500,000 and/or (c) total
cumulative EBIT (as defined below) is less than $4,500,000, then the Applicable
Conversion Value that would otherwise be in effect with respect to the Warrant
Shares shall automatically and without further action be adjusted to a per share
amount that shall be equal to the quotient obtained by DIVIDING (i) the
applicable Assumed Corporation Value (as determined below) BY (ii) 14,085,848
(i.e., the total number of shares of Common Stock outstanding (on a
fully-diluted basis) as of the date of issuance of the Series D Preferred Stock
pursuant to the Series D Purchase Agreement immediately prior to the issuance of
the shares of Series D Preferred Stock (it being understood that if the quotient
obtained pursuant to the preceding formula is greater than the Applicable
Conversion Value in effect immediately prior to such adjustment, then no such
adjustment shall be made pursuant to this Section 4.3(a), which number shall
automatically and without further action be reduced to 13,525,100 upon the
termination or expiration of the SOFTBANK Warrant by its terms and provided that
the holder thereof has not exercised any portion of such SOFTBANK Warrant.
The "ASSUMED CORPORATION VALUE" shall be equal to the weighted
average of the Pre-Money Values set forth in the far left-hand column of the
table below that correspond to each of the Total Revenues, Total Product
Revenues and EBIT as set forth on the table below, with the Pre-Money Value that
corresponds to Total Revenues being weighted at 50% and the Pre-Money Values
that correspond to each of Total Product Revenues and EBIT being weighted each
at 25%. Notwithstanding the foregoing or anything to the contrary contained
herein, the Assumed Corporation Value shall be not less than $17,000,000 and not
greater than $43,000,000.
Each of the values in the table below are deemed to be further
sub-divided into increments as follows (in order to determine the corresponding
figures in the table below), such that: (a) each incremental one dollar ($1) of
Total Revenues shall equal an incremental one dollar ($1) of Pre-Money Value,
(b) each incremental one dollar ($1) of Total Product Revenues shall equal an
incremental two dollars ($2) of Pre-Money Value, and (c) each incremental one
dollar ($1) of EBIT shall equal an incremental ten dollars ($10) of Pre-Money
Value. For examples, (1) $41,347,628 in Total Revenues shall correspond to a
$30,347,628 Pre-Money Value, (2) $11,928,413 Total Product Revenues shall
correspond to a $25,856,826 Pre-Money Value and (3) $3,869,470 in EBIT shall
correspond to a $36,694,700 Pre-Money Value.
-13-
In comparing the Corporation's actual Total Revenues, actual
Total Product Revenues and actual EBIT to the figures in the table below, a
simple-rounding method to the nearest dollar shall be used in order to determine
the Total Revenues, Total Product Revenues and EBIT.
TABLE TO DETERMINE
ASSUMED CORPORATION VALUE
($ IN 000'S AND SUBJECT TO
FURTHER SUB-DIVISION AS DESCRIBED ABOVE)
PRE-MONEY VALUE TOTAL REVENUES TOTAL PRODUCT REVENUES EBIT
(shown in 1,000,000 (shown in 1,000,000 (shown in 100,000 increments (shown in 100,000
increments only) increments only) only) increments only)
----------------------------------------------------------------------------------------------------------------------------
$17,000 LESS THAN OR EQUAL TO $28,000 LESS THAN OR EQUAL TO $7,500 LESS THAN OR EQUAL TO $1,900
$18,000 $29,000 $8,000 $2,000
$19,000 $30,000 $8,500 $2,100
$20,000 $31,000 $9,000 $2,200
$21,000 $32,000 $9,500 $2,300
$22,000 $33,000 $10,000 $2,400
$23,000 $34,000 $10,500 $2,500
$24,000 $35,000 $11,000 $2,600
$25,000 $36,000 $11,500 $2,700
$26,000 $37,000 $12,000 $2,800
$27,000 $38,000 $12,500 $2,900
$28,000 $39,000 $13,000 $3,000
$29,000 $40,000 $13,500 $3,100
$30,000 $41,000 $14,000 $3,200
$31,000 $42,000 $14,500 $3,300
$32,000 $43,000 $15,000 $3,400
$33,000 $44,000 $15,500 $3,500
$34,000 $45,000 $16,000 $3,600
$35,000 $46,000 $16,500 $3,700
$36,000 $47,000 $17,000 $3,800
$37,000 $48,000 $17,500 $3,900
$38,000 $49,000 $18,000 $4,000
$39,000 $50,000 $18,500 $4,100
$40,000 $51,000 $19,000 $4,200
$41,000 $52,000 $19,500 $4,300
$42,000 $53,000 $20,000 $4,400
$43,000 GREATER THAN OR GREATER THAN OR GREATER THAN OR
EQUAL TO $54,000 EQUAL TO $20,500 EQUAL TO $4,500
-14-
Thus, for example, if as of December 31, 1999, the Corporation has
$47,894,322.38 in actual Total Revenues, $14,025,417.85 in actual Total Product
Revenues and $3,198,439.23 in actual EBIT, then (using simple rounding to the
nearest dollar) the corresponding figures from the table above are $47,894,322
in Total Revenues, $14,025,418 in Total Product Revenues and $3,198,439 in EBIT.
The calculation for the Assumed Corporation Value would be as follows:
EXAMPLE OF CALCULATION OF
ASSUMED CORPORATION VALUE
ACTUAL ROUNDED CORRESPONDING ASSUMED
RESULTS PRE-MONEY VALUE WEIGHT CORPORATION VALUE
---------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES $47,894,322 $36,894,322 50% $18,447,161
---------------------------------------------------------------------------------------------------------------------
TOTAL PRODUCT REVENUES $14,025,418 $30,050,836 25% $ 7,512,709
---------------------------------------------------------------------------------------------------------------------
EBIT $ 3,198,439 $29,984,390 25% $ 7,496,098
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSUMED
CORPORATION VALUE $33,455,968
---------------------------------------------------------------------------------------------------------------------
(ii) PRIOR TO END OF SEVEN FISCAL QUARTERS. In the event of
any public or private offering or other issuance of the Corporation's Common
Stock or Derivative Securities, the sale of the Corporation (whether by merger,
consolidation, sale of all or substantially all of the Corporation's assets or
sale of a majority of the outstanding voting capital stock, whether newly
issued, from treasury or issued and outstanding, or any combination thereof) or
a liquidation, dissolution or winding-up of the affairs of the Corporation at
any time prior to December 31, 1999, then the Applicable Conversion Value that
would otherwise be in effect with respect to the Warrant Shares shall be
adjusted to a per share amount that shall be equal to the quotient obtained by
dividing (i) the applicable Assumed Adjusted Corporation Value (as determined
below) by (ii) 14,085,848, which number shall automatically and without further
action be reduced to 13,525,100 upon the termination or expiration of the
SOFTBANK Warrant by its terms and provided that the holder thereof has not
exercised any portion of such SOFTBANK Warrant.
The "ASSUMED ADJUSTED CORPORATION VALUE" shall be determined
as follows: (i) first, the Corporation's actual Total Revenues, actual Total
Product Revenues and actual EBIT for the fiscal quarters completed prior to such
offering or other issuance, sale or liquidation, dissolution or winding-up,
shall be compared against the applicable cumulative quarterly projections for
Total Revenues, Total Product Revenues and EBIT set forth in the table below and
expressed as a percentage (e.g., if on December 1, 1998 the Corporation is sold
and, at that time, actual Total Revenues equal $8,000,000, then $8,000,000
compared against $6,400,000 (the applicable cumulative quarterly projection)
expressed as a percentage equals 125%); (ii) second, the
-15-
percentage as determined pursuant to the foregoing clause (i) for each of Total
Revenues, Total Product Revenues and EBIT shall be applied to the "baseline"
valuation as set forth in the second table below (e.g., with respect to Total
Revenues, 125% of $41,000,000 (the "baseline" for Total Revenue) equals
$51,250,000 (each, an "ADJUSTED BASELINE RESULT")); and (iii) third, the
Adjusted Baseline Results for each of Total Revenues, Total Product Revenues and
EBIT shall be used to calculate the Assumed Adjusted Corporation Value in
accordance with the second, third and fourth paragraphs and table of Section
4(g)(i)above.
TABLE OF
CUMULATIVE QUARTERLY PROJECTIONS
---------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 1998 FISCAL YEAR 1999
---------------------------------------- --------------------------------------------------------
Q2 Q3 Q4 Q1 Q2 Q3 Q4
---------------------------------------------------------------------------------------------------------------------
TOTAL
REVENUES 2,454,000 6,400,000 11,361,000 17,371,000 24,041,000 32,151,000 41,361,000
---------------------------------------------------------------------------------------------------------------------
PRODUCT
REVENUES 658,000 1,823,000 3,168,000 5,678,000 8,448,000 12,058,000 15,968,000
---------------------------------------------------------------------------------------------------------------------
EBIT (1,181,800) (2,166,750) (2,125,850) (1,135,850) 89,150 1,634,150 3,554,150
---------------------------------------------------------------------------------------------------------------------
R&D
EXPENSE 508,000 1,197,000 2,089,200 3,141,200 4,275,200 5,647,200 7,189,200
---------------------------------------------------------------------------------------------------------------------
"BASELINE" COMPARISON
TABLE
---------------------------------------------------------------------------------------------------------------------
PRE-MONEY VALUE TOTAL REVENUE TOTAL PRODUCT REVENUE EBIT
---------------------------------------------------------------------------------------------------------------------
$30,000,000 $41,000,000 $14,000,000 $3,200,000
---------------------------------------------------------------------------------------------------------------------
Notwithstanding anything contained herein to the contrary, in
no event shall the Assumed Adjusted Corporation Value be greater than
$30,000,000 unless, and only to the extent that, after any adjustment required
by this Section 4(g)(ii), (A) in the event of a sale of the Corporation, the
proceeds actually received (net of any escrows or other holdbacks) by the
holders of the Series D Preferred Stock in respect of shares of Series D
Preferred Stock in connection with such sale or liquidation, dissolution or
winding-up equals or exceeds three (3) times the original purchase price per
share of Series D Preferred Stock (subject to adjustment for stock splits, stock
dividends, stock combinations, capital reorganizations, reclassifications and
other similar events), or (B) in the event of a public or private offering or
other issuance, the price per share to the purchasers in such offering in
connection with such offering equals or exceeds three (3) times the original
purchase price per share of Series D Preferred Stock (subject to adjustment for
stock splits, stock dividends, stock combinations, capital reorganizations,
reclassifications and other similar events).
(iii) "EBIT" shall mean, for the relevant period, the net
income (or loss) of the Corporation, after excluding all extraordinary items of
income or loss from the
-16-
calculation thereof plus, to the extent deducted in the computation thereof, the
sum of (i) interest expense AND (ii) taxes for such period, LESS amounts
budgeted for research and development as set forth in the Table of Cumulative
Quarterly Projections above that have not been expensed in research and
development during the seven fiscal quarters ending December 31, 1999, PLUS the
amounts paid to Xxxx & Company for consulting services rendered to the
Corporation, if any, up to $100,000.
(c) ADJUSTMENT TO EXERCISE PRICE. In each such instance of an
adjustment to the Applicable Conversion Value pursuant to Section 4.3(a), (b) or
(c), the Exercise Price shall, simultaneously with the happening of each such
event, be adjusted by multiplying the then current Exercise Price by a fraction,
(A) the numerator of which shall be the number of Warrant Shares immediately
prior to such event, and (B) the denominator of which shall be the number of
Warrant Shares immediately after such event.
(d) ADJUSTMENTS FOR RECLASSIFICATIONS. If the Common Stock issuable
upon the conversion of this Warrant shall be changed into the same or a
different number of shares of any class(es) or series of stock, whether by
reclassification or otherwise (other than an adjustment under Section 4.1 or a
merger, consolidation, or sale of assets provided for under Section 4.2), then
and in each such event, the Holder hereof shall have the right thereafter to
convert each Warrant Share into the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, or other change
by holders of the number of shares of Common Stock into which such Warrant
Shares would have been convertible immediately prior to such reclassification,
or change, all subject to further adjustment as provided herein.
4.4 CONTINUATION OF TERMS. Upon any reorganization, reclassification,
sale, consolidation, merger or other transfer (and any liquidation, dissolution
or winding up of the Corporation following any such transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of Stock and property receivable
upon the exercise of this Warrant after the consummation of such reorganization,
reclassification, sale, consolidation, merger or other transfer or the effective
date of liquidation, dissolution or winding up of the Corporation following any
such transfer, as the case may be, and shall be binding upon the issuer of any
such Stock, including, in the case of any such transfer, the Person acquiring
all or substantially all of the properties or assets or more than 50% of the
voting capital stock of the Corporation (whether issued and outstanding, newly
issued or from treasury or any combination thereof), whether or not such Person
shall have expressly assumed the terms of this Warrant.
4.5 DISSOLUTION. Subject to Section 4.4 hereof, in the event of any
dissolution of the Corporation following the transfer of all or substantially
all of its properties or assets at any time after the Issue Date, the
Corporation shall retain for a period of at least ninety (90) days after the
effective date of such dissolution the Stock and property
-17-
(including cash, where applicable) receivable by the Holder pursuant to Section
4.2 hereof upon exercise of this Warrant at any time after the effective date of
such dissolution (assuming the payment by the Holder of the Exercise Price
therefor as required hereby in a form permitted hereby). If the Holder fails to
exercise this Warrant within the sixty (60) day period following the effective
date of such dissolution, then such Stock and property (including cash, where
applicable) shall be distributed PRO RATA to those Persons who were stockholders
of record of the Corporation on the effective date of such dissolution or as
otherwise required by law or the Certificate of Incorporation of the
Corporation.
5. OFFICER'S CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the number and kind of Warrant Shares, or
Property, issuable hereunder from time to time, or the Exercise Price, the
Corporation, at its expense, will promptly cause an officer of the Corporation
to compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing the facts upon which such adjustment or readjustment is based. The
Corporation will forthwith send a copy of each such certificate to the Holder in
accordance with Section 10.5 below.
6. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Corporation of a record of the holders of Stock
for the purpose of determining the holders thereof who are entitled to receive
any shares of Stock as a dividend or other distribution or pursuant to a stock
split, or
(b) any reorganization of the Corporation, or any sale or transfer, in
a single transaction or a series of related transactions, of all or
substantially all the assets of the Corporation to, or the consolidation or
merger of the Corporation with or into, any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Corporation, or
(d) any sale, in a single transaction or a series of related
transactions, of a majority of the Corporation's voting stock (whether newly
issued, or from treasury, or previously issued and then outstanding, or any
combination thereof),
then and in each such event the Corporation will mail or cause to be mailed to
the Holder a notice specifying (i) the date on which any such record is to be
taken for the purpose of such dividend, distribution or stock split, and stating
the amount and character of such dividend, distribution or stock split, or (ii)
the date on which any such reorganization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of any one or more classes of
Stock shall be entitled to exchange their shares of Stock for
-18-
securities or other property deliverable on such reorganization, transfer,
consolidation, merger, dissolution, liquidation or winding-up, or (iii) the date
on which any such sale of a majority of the Corporation's voting stock is to
take place and the material terms thereof , as the case may be. Such notice
shall be mailed at least fifteen (15) days prior to the date specified in such
notice on which any such action is to be taken.
7. EXCHANGE OF WARRANT. Subject to the provisions of Section 9 hereof
(if and to the extent applicable), this Warrant shall be exchangeable, upon the
surrender hereof by the Holder at the principal office of the Corporation, for
new warrants of like tenor, each registered in the name of the Holder or in the
name of such other Persons as the Holder may direct. Each of such new warrants
shall be exercisable for such number of Warrant Shares as the Holder shall
direct, PROVIDED that all of such new warrants shall represent, in the
aggregate, the right to purchase the same number of Warrant Shares and cash,
securities or other property, if any, which may be purchased by the Holder upon
exercise of this Warrant at the time of its surrender.
8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of a customary affidavit of the Holder and an indemnity
agreement or, in the case of any such mutilation, on surrender and cancellation
of this Warrant, the Corporation at its expense will execute and deliver, in
lieu thereof, a new warrant of like tenor.
9. TRANSFER PROVISIONS, ETC.
9.1 LEGENDS.
(a) Each certificate representing any Warrant Shares issued
upon exercise of this Warrant shall bear the following legend:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE TRANSFERRED ONLY PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED.
(b) Each certificate representing any shares of Stock issued
from time to time upon exercise of this Warrant shall also bear any legend
required under any applicable state securities or blue sky laws.
9.2 MECHANICS OF TRANSFER. Any transfer of all or any portion of this
Warrant, or of any interest therein, that is otherwise in compliance with
applicable law shall be effected by surrendering this Warrant to the Corporation
at its principal office, together with (i) a duly executed form of assignment,
in the form attached hereto, (ii) payment of
-19-
any applicable transfer taxes, if any. In the event of any such transfer of this
Warrant, in whole, the Corporation shall issue a new warrant of like tenor to
the transferee, representing the right to purchase the same number of Warrant
Shares, and cash, securities or other property, if any, which were purchasable
by the Holder upon exercise of this Warrant at the time of its transfer. In the
event of any such transfer of any portion of this Warrant, (i) the Corporation
shall issue a new warrant of like tenor to the transferee, representing the
right to purchase the same number of Warrant Shares, and cash, securities or
other property, if any, which were purchasable by the Holder upon exercise of
the transferred portion of this Warrant at the time of such transfer, and (ii)
the Corporation shall issue a new warrant of like tenor to the Holder,
representing the right to purchase the number of Warrant Shares, and cash,
securities or other property, if any, purchasable by the Holder upon exercise of
the portion of this Warrant not transferred to such transferee. Until this
Warrant or any portion thereof is transferred on the books of the Corporation,
the Corporation may treat the Holder as the absolute holder of this Warrant and
all right, title and interest therein for all purposes, notwithstanding any
notice to the contrary.
9.3. RESTRICTIONS ON TRANSFER. Subject to compliance with applicable
securities laws, this Warrant, and any portion hereof, and the Warrant Shares
may be transferred by the Holder in its sole discretion at any time and to any
Person, including without limitation transfers to Affiliates or Affiliated
Groups (as such terms are defined in the Series D Purchase Agreement), without
the consent of the Corporation.
10. GENERAL.
10.1 STATEMENT ON WARRANT. Irrespective of any adjustments in the
Exercise Price or the number or kind of Warrant Shares, this Warrant may
continue to express the same kind of Warrant Shares as are stated on the front
page hereof.
10.2 AUTHORIZED SHARES; RESERVATION OF SHARES FOR ISSUANCE. At all
times while this Warrant is outstanding, the Corporation shall maintain its
corporate authority to issue, and shall have authorized and reserved for
issuance upon exercise of this Warrant, such number of shares of Stock as shall
be sufficient to perform its obligations under this Warrant (after giving effect
to any and all adjustments to the number and kind of Warrant Shares purchasable
upon exercise of this Warrant).
10.3 NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities, sale or
other transfer of any of its assets or properties, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder hereunder against
impairment. Without limiting the generality of the foregoing, the Corporation
(a) will
-20-
not increase the par value of any shares of Stock receivable upon the exercise
of this Warrant above the amount payable therefor on such exercise, and (b) will
take all action that may be necessary or appropriate in order that the
Corporation may validly and legally issue fully paid and nonassessable shares of
Stock on the exercise of this Warrant.
10.4 NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote
or to receive dividends or to be deemed the holder of Stock that may at any time
be issuable upon exercise of this Warrant for any purpose whatsoever, nor shall
anything contained herein be construed to confer upon the Holder any of the
rights of a stockholder of the Corporation until the Holder shall have exercised
the Warrant and been issued Warrant Shares in accordance with the provisions
hereof.
10.5 NOTICES. All notices, demands, requests, certificates or other
communications under this Warrant shall be in writing and shall be either mailed
by certified mail, postage prepaid, in which case such notice, demand, request,
certificate or other communications shall be deemed to have been given three (3)
days after the date on which it is first deposited in the mails, or hand
delivered or sent by facsimile transmission, by tested or otherwise
authenticated telex or cable or by private expedited courier for overnight
delivery with signature required, in each such case, such notice, demand,
request, certificate or other communications being deemed to have been given
upon delivery or receipt, as the case may be:
(i) if to the Corporation, Art Technology Group, Inc., 000 Xxxxxxxxxx
Xxxxxx, Xxxxxx, XX 00000, Attention: President, or at such other address as the
Corporation may have furnished in writing to the Holder; and
(ii) if to the Holder, at the Holder's address appearing in the books
maintained by the Corporation.
10.6 AMENDMENT AND WAIVER. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Corporation and the Holder.
10.7 GOVERNING LAW. This Warrant shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Massachusetts.
-21-
10.8 COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Corporation shall bind its successors and assigns, whether so expressed
or not.
10.9 SEVERABILITY. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
10.10 CONSTRUCTION. The definitions of this Warrant shall apply equally
to both the singular and the plural forms of the terms defined. Wherever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The section and paragraph headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
10.11 REMEDIES. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Corporation agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Warrant or where any provision hereof is validly asserted as a defense,
the successful party to such action or proceeding shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed as an instrument under seal in its corporate name by one of its
officers thereunto duly authorized, all as of the day and year first above
written.
ART TECHNOLOGY GROUP, INC.
[Corporate Seal]
By:__________________________
Name:
Title:
FORM OF SUBSCRIPTION
(To be executed upon exercise of Warrant)
To: ART TECHNOLOGY GROUP, INC.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to exercise thereunder,
_______ shares of Common Stock, $.01 par value per share ("COMMON STOCK"), of
Art Technology Group, Inc., a Delaware corporation, and tenders herewith payment
of $__________, representing the aggregate purchase price for such shares based
on the price per share provided for in such Warrant. Such payment is being made
in accordance with [Section 2.1(i)] [Section 2.1(ii)] [Section 2.1(iii)] of the
attached Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations and deliver such
certificate or certificates to the person or persons listed below at their
respective addresses set forth below:
Dated:_________________________ _________________________________
---------------------------------
(Address)
If said number of shares of Common Stock shall not be all the shares of
Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to
be issued in the name of the undersigned for the balance remaining of such
shares of Common Stock less any fraction of a share of Common Stock paid in
cash.
Dated: ____________, 19__ ____________________________________
NOTE: The above signature should
correspond exactly with the name on
the face of the attached Warrant or
with the name of the assignee
appearing in the assignment form
below.
FORM OF ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, _____________________________________ hereby sells,
assigns and transfers unto _________________ the attached Warrant [__% of the
attached Warrant], together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________________ attorney
to transfer said Warrant [said percentage of said Warrant] on the books of Art
Technology Group, Inc., a Delaware corporation, with full power of substitution
in the premises.
If not all of the attached Warrant is to be so transferred, a new
Warrant is to be issued in the name of the undersigned for the balance of said
Warrant.
Dated: ____________, 19__ ____________________________________________
NOTE: The above signature should correspond
exactly with the name on the face of the
attached Warrant.
