Exhibit 10.23
WARRANT TO PURCHASE STOCK
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 19331 AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
Corporation: ART TECHNOLOGY GROUP, INC.,
a Delaware corporation
Number of Shares: 46,296 shares
Class of Stock: Series C Convertible Preferred Stock, $.01 par
value per share ("Series C Preferred")
Initial Exercise Price: $1.62 per share
Issue Date: November 26, 1997
Expiration Date: November 25, 2002
THIS WARRANT CERTIFIES THAT, for value received, SILICON VALLEY BANK
("Holder") is entitled to purchase the above referenced number of fully paid and
nonassessable shares of the above referenced class of securities (the "Shares")
of the above referenced corporation (the "Company") at the above referenced
initial exercise price per Share, all as adjusted pursuant to Article 2 of this
Warrant (the "Warrant Price"), subject to the provisions and upon the terms and
conditions set forth of this Warrant
ARTICLE 1. TERM AND EXERCISE
1.1 TERM: NOTICE OF EXPIRATION. This Warrant is exercisable, in whole
or in part, at any time and from time to time on or before the Expiration Date
set forth above. The Company shall give Holder written notice of Holder's right
to exercise this Warrant in the form attached as Appendix 1 at least 30 days
before the Expiration Date. If the notice is not so given, the Expiration Date
shall automatically be extended until 30 days after the date the Company
delivers the notice to Holder.
1.2 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering
this Warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 2 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.3, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.
1.3 CONVERSION RIGHT. In lieu of exercising this Warrant as specified
in Section 1.2, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the
Shares or other securities otherwise issuable upon exercise of this Warrant
minus the aggregate Warrant Price of such Shares by (b) the fair market value of
one Share. The fair market value of the Shares shall be determined pursuant to
Section 1.5.
1.4 ALTERNATIVE STOCK APPRECIATION RIGHT. INTENTIONALLY OMITTED
1.5 FAIR MARKET VALUE. If the Shares are traded regularly in a public
market, the fair market value of the Shares shall be the last sale price or bid
price reported for the business day immediately before Holder delivers its
Notice of Exercise to the Company. If the Shares are not regularly traded, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment.
1.6 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired having the same terms set forth herein.
1.7 LOST OR DESTROYED WARRANT. If this Warrant is lost, stolen,
destroyed, or mutilated, the Company shall at the request of Holder and upon the
surrender of any remains of this Warrant execute and deliver to Holder a
replacement warrant in form identical to this Warrant. The replacement warrant
shall be an obligation of the Company enforceable by the Holder regardless of
whether the lost, stolen, destroyed, or mutilated warrant is enforceable by
anyone. This Warrant is not a negotiable instrument and is transferable only in
accordance with the provisions of Section 3.3.
1.8 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE COMPANY.
1.8.1 "ACQUISITION". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of substantially all
of the assets of the Company, or any reorganization, consolidation, or merger of
the Company where the Company is not the surviving corporation and the
securities issued with respect to the Company's securities outstanding
immediately before the transaction represent less than 50% of the beneficial
ownership of the new entity immediately after the transaction.
1.8.2 ASSUMPTION OF WARRANT. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly. The Company shall use reasonable efforts to cause the surviving
corporation to assume the obligations of this Warrant
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1.8.3 NONASSUMPTION. If upon the closing of any Acquisition
the successor entity does not assume the obligations of this Warrant and Holder
has not otherwise exercised this Warrant in full, then the unexercised portion
of this Warrant shall be deemed to have been automatically converted pursuant to
Section 1.3. The Board of Directors of the Company shall then reasonably and in
good faith calculate the pro rata amount of cash, property, and securities the
Holder would be entitled to receive if Holder had exercised the unexercised
portion of this Warrant in full for cash immediately before the record date for
determining the shareholders entitled to participate in the Acquisition (the
"Gross Proceeds"). The Company shall then distribute to Holder the amount of
such cash, property, and securities, in the same proportion as distributed to
the other shareholders of the Company, equal in value to the Gross Proceeds less
the aggregate Warrant Price of the unexercised portion of this Warrant, but not
less than zero.
1.8.4 PURCHASE RIGHT. Notwithstanding the foregoing, at the
election of Holder, the Company shall purchase the unexercised portion of this
Warrant for cash upon the closing of any Acquisition for an amount equal to (a)
the fair market value of any consideration that would have been received by
Holder in consideration of the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining the
shareholders entitled to participate in the proceeds of the Acquisition, less
(b) the aggregate Warrant Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a
dividend on its Series C Preferred, subdivides the Series C Preferred into a
greater amount of Series C Preferred, then upon exercise of this Warrant, for
each Share acquired, Holder shall receive, without cost to Holder, the total
number and kind of securities to which Holder would have been entitled had
Holder owned the Shares of record as of the date the dividend or subdivision
occurred.
2.2 RECLASSIFICATION, REORGANIZATION, CONSOLIDATION, OR MERGER. Subject
to Section 1.8, upon any reorganization, consolidation, merger, or other event
that results in a reclassification of the securities Issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, reorganization,
consolidation, or merger. Such an event shall include any automatic conversion
of the outstanding or issuable securities of the Company of the same class or
series as the Shares to common stock pursuant to the terms of the Company's
Certificate of Incorporation upon the closing of a registered public offering of
the Company's common stock. The Company or its successor shall promptly issue to
Holder a new warrant for such new securities or other property. The new Warrant
shall provide
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for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provision of this Section 2.11
shall similarly apply to successive reclassifications, reorganizations,
consolidations, and mergers.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 NO IMPAIRMENT. The Company shall not, by amendment of its Charter
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 in
taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment If the Company takes any action
affecting the Shares other than as described above that affects Holder's rights
under this Warrant, the Warrant Price and the number of Shares issuable upon
exercise of this Warrant shall be adjusted in such a manner that the rights of
Holder are substantially unchanged.
2.14 FRACTIONAL SHARES. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share, if a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder an amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.15 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant
Price, the company at its expense shall promptly compute such adjustment, cause
its independent public accountants to verify such computation, and furnish
Holder with a certificate stetting forth such adjustment and the facts upon
which such adjustment is based. The Company shall, upon written request, furnish
Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.
ARTICLE 3. MISCELLANEOUS.
3.1 LEGENDS. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
3.2 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the
Share issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.
3.3 TRANSFER PROCEDURE. Subject to the provision of Section 3.2, Holder
may transfer all or part of this Warrant or the Shares Issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the Warrant being transferred setting forth the name, address, and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder if applicable). Unless
the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this Warrant to any person who directly competes with
the Company.
3.4 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a)
to declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve, or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (i) at least 20 days' prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in
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respect of the matters referred to in (c) and (d) above; (ii) in the case of the
matters referred to in (c) and (d) above, at least 20 days' prior written notice
of the date when the same will take place (and specifying the date on which the
holders of common stock will be entitled to exchange their common stock for
securities or other property deliverable upon the occurrence of such event); and
(iii) in the case of the matter referred to in (e) above, the same notice as is
given to the holders of such registration rights.
3.5 SUBJECT TO WARRANT PURCHASE AGREEMENT. This Warrant is issued
pursuant to a Warrant Purchase Agreement between the Company and Holder. All of
the terms of Article 8 of the Warrant Purchase Agreement (miscellaneous
provisions) are incorporated in this Warrant by reference.
ART TECHNOLOGY GROUP, INC.
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, President
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Treasurer
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APPENDIX 1
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear:
This is to advise you that the Warrant issued to you as described below
will expire on ________________________, _____
Issuer: _______________________________
Issue Date: ________________________________
Class of Security Issuable: ________________________________
Exercise Price per Share: _______________________________
Number of Shares Issuable: _______________________________
Procedure for Exercise: _______________________________
Please contact [name of person at (phone number)] with any questions
you may have concerning exercise of the Warrant. This is your only notice of
pending expiration.
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(Name of Issuer)
By:
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Name:
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Title:
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APPENDIX 2
NOTICE OF EXERCISE OF WARRANT
1. The undersigned hereby elects to purchase ________ shares of Common/Series
______ Preferred [strike one] Stock of ___________________________-pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
or
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to ______________________--of the Shares covered by
the Warrant.
[Strike paragraph above that does not apply.]
2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name as is specified below:
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(Name)
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(Address)
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3. The undersigned represents that it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
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(Holder)
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(Signature)
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(Date)
