EXHIBIT 10.3
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE LAW, AND NO INTEREST HEREIN MAY BE SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT AN OPINION OF LEGAL COUNSEL FOR THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
Right to Purchase Fifty Thousand (50,000)
Shares of Common Stock of Public Online
Communications Corporation
No. 1
PUBLIC ONLINE COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE WARRANT
PUBLIC ONLINE COMMUNICATIONS CORPORATION, a California corporation (the
"Company"), hereby certifies that, for good and valuable consideration, receipt
of which is hereby acknowledged, XXXXXX XXXXXX (the "Purchaser"), or his
successors or registered assigns, is entitled, upon the terms and subject to the
conditions set forth below, to purchase from the Company at any time or from
time to time after the date hereof and before 5:00 p.m., Pacific Standard Time,
on the Expiration Date (as hereinafter defined), fifty thousand (50,000) fully
paid and nonassessable shares of Common Stock, no par value, of the Company, at
a purchase price of Sixty-Six Cents ($0.66) per share (the "Purchase Price").
The number and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Public Online
Communications Corporation and any corporation that shall succeed to or assume
the obligations of Public Online Communications Corporation hereunder.
(b) The term "Common Stock" includes (i) the Company's Common
Stock, as authorized on the date hereof and (ii) any other securities into which
or for which any the securities described in (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time shall be
entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock.
(d) The term "Expiration Date" refers to the earlier of (i)
the tenth anniversary of the date of this Warrant, and (ii) the closing of a
bona fide firm commitment underwritten public offering of shares of the
Company's Common Stock registered under the Securities Act of 1933, as amended
("IPO"), and (iii) the closing of the sale, acquisition or merger of the Company
in which the shareholders of the Company before the transaction own less than
51% of the voting stock of the surviving entity ("Acquisition"); provided,
however, that as to an Acquisition or an IPO, adequate notice, as provided in
Section 12 below, has been given.
1. EXERCISE OF WARRANT. This Warrant may be exercised, in
whole or in part, by the holder hereof by surrender of this Warrant, with the
form of subscription at the end hereof duly executed by such holder, to the
Company at its principal office, accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company, in the amount
obtained by multiplying the number of shares of Common Stock for which this
Warrant is being exercised by the Purchase Price then in effect.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein
to the contrary, in lieu of exercising this Warrant for cash, the holder thereof
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 a properly endorsed notice of
exercise and notice of such election in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the following
formula:
Y (A-B)
-------
X = A
Where X = the number of shares of Common Stock to be
issued to the holder of the Warrant,
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), and
B = the Warrant 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 as determined by the Company's Board of Directors in
good faith. Notwithstanding the
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foregoing, in the event the Warrant is exercised in connection with an IPO, the
fair market value per share of Common Stock shall be the per share offering
price to the public in the IPO.
3. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon
as practicable after the exercise of this Warrant, and in any event within ten
(10) days thereafter, the Company at its expense (including the payment by it of
any applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such exercise in such
denominations as may be requested by such holder, plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current fair market value of one full
share, as determined in good faith by the board of directors of the Company upon
review of relevant factors, together with any other stock or other securities
and property (including cash, where applicable) to which such holder is entitled
upon such exercise pursuant to Section 1 or 2 or otherwise. The Company agrees
that the shares so purchased shall be deemed to be issued to the holder hereof
as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been delivered to the Company and payment made for
such shares as aforesaid.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of stockholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities on
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable
solely out of earnings or earned surplus of the Company),
or
(c) other or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares
or similar corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5, then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1 or 2, shall be entitled to receive the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 4 which such holder
would hold on the date of such exercise if on the date hereof it had been the
holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 4 receivable by it
as aforesaid during such period.
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5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event that the
Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this subsection
5. The Holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1 or 2, be entitled to receive that number of shares of
Common Stock determined by multiplying the number of shares of Common Stock
which would be issuable on such exercise as of immediately prior to such
issuance by a fraction of which (i) the numerator is the Purchase Price in
effect immediately prior to such issuance and (ii) the denominator is the
Purchase Price in effect on the date of such exercise.
6. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF
WARRANTS. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant.
7. TRANSFER OF WARRANT. This Warrant may not be transferred or
assigned by the Purchaser without prior written consent of the Company;
provided, however, the consent of the Company shall not be required if the
Purchaser proposes to effect a transfer or assignment to an affiliate of the
Purchaser or, if the Purchaser is a partnership, to a partner of such partner of
such partnership and; provided, further, the consent of the Company shall not be
unreasonably withheld if the proposed transfer is effected in accordance with
applicable securities laws.
8. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. COMPLIANCE WITH SECURITIES LAWS. The Purchaser of this
Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of
Common Stock to be issued upon exercise hereof are being acquired solely for the
Purchaser's own account and not as a nominee for any other party, and for
investment, and that the Purchaser will not offer, sell or otherwise dispose of
this Warrant or any shares of Common Stock to be issued upon exercise hereof
except under circumstances that will not result in a violation of the Securities
Act of 1933, as amended (the "Act"), or any state securities laws. Upon exercise
of this Warrant, the Purchaser shall, if requested by the Company, confirm in
writing, in a form satisfactory to the
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Company, that the shares of Common Stock so purchased are being acquired solely
for the Purchaser's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
All shares of Common Stock issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to any
legend required by state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION
WITHOUT AN OPINION OF LEGAL COUNSEL FOR THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
10. "MARKET STAND-OFF" AGREEMENT. The holder hereby agrees
that in connection with an IPO, during the period of duration (not to exceed 180
days) specified in writing by the Company and its lead underwriter following the
effective date of the Company's registration statement filed under the
Securities Act of 1933, as amended, with respect to the IPO, the holder shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase, pledge or otherwise transfer or
dispose of (other than to donees who agree to be similarly bound) this Warrant
or any securities of the Company issued or issuable upon exercise hereof at any
time during such period except for any Common Stock included in the IPO
registration.
11. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company; provided that nothing herein shall be construed to
affect any rights a holder hereof may have under the Agreement. No provision of
this Warrant, in the absence of affirmative action by the holder hereof to
purchase Common Stock, and no mere enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such holder
for the Purchase Price or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
12. NOTICES. The Company shall provide the Purchaser at least
thirty (30) days notice prior to the consummation of an IPO or an Acquisition.
All notices and other communications from the Company to the registered holder
of this Warrant shall be mailed by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company in
writing by such holder or at the following address:
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13. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of California. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
Executed at San Diego, California as of November 13, 1996.
PUBLIC ONLINE COMMUNICATIONS
CORPORATION, a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, President
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FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: Public Online Communications Corporation
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
__________ shares of Common Stock of Public Online Communications Corporation
and requests that the certificates for such shares be issued in the name of, and
delivered to, ___________________________, whose address is ____________________
________________________________________________________.
The undersigned elects to make payment therefor by (check
one):
/ / Cash or check payable to the Company, as provided in
Section 1 of the Warrant.
/ / Net issue exercise, as provided in Section 2 of the
Warrant.
Dated: ___________________ ________________________________________
(Signature must conform to name of
holder as specified on the face of the
Warrant)
Address: ______________________________________
______________________________________
Tax I.D. No.: ______________________________________
--------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
____________________________________ the right represented by the within Warrant
to purchase shares of Common Stock of Public Online Communications Corporation
to which the within Warrant relates, and appoints ______________________________
Attorney to transfer such right on the books of Public Online Communications
Corporation, with full power of substitution in the premises.
Dated:__________________ ____________________________________
(Signature must conform to name of
holder as specified on the face of the
Warrant)
