EXHIBIT 10.38
NO. CSW-2
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE 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
EXCEPT PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE COMMON STOCK
Company: Handspring, Inc., a Delaware Corporation
Number of Shares: 9,000,000
Class of Stock: Common Stock
Initial Exercise Price: $1.09 per share
Issue Date: January 29, 2003
Expiration Date: January 29, 2008
This Warrant certifies that, for good and valuable consideration, M-F
Downtown Sunnyvale, LLC (the "HOLDER") is entitled to purchase from the
corporation named above (the "COMPANY"), from the Issue Date until 5:00 p.m.
Pacific time, on the Expiration Date, the number of fully paid and nonassessable
shares of the class of stock (the "SHARES") of the Company at the Initial
Exercise Price per Share (the "WARRANT PRICE"), all as set forth above and as
adjusted pursuant to Section 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.
1. EXERCISE.
1.1 METHOD OF EXERCISE. The Holder may exercise this
Warrant by delivering a duly executed Notice of Exercise in substantially the
form attached as Exhibit A to the principal office of the Company. Unless the
Holder is exercising the election set forth in Section 1.2, this Warrant may be
exercised in whole or in part and the Holder shall also deliver to the Company
(i) a check for the aggregate Warrant Price for the Shares being purchased or
(ii) with respect to, and only with respect to, an exercise of this Warrant by
either (a) M-F Downtown Sunnyvale, LLC, or (b) a Holder who holds a warrant
which, before any exercises, originally entitled the Holder to purchase 500,000
Shares or more, that number of fully-paid, nonassessable shares of the Company's
Common Stock, owned free and clear of all liens, claims, encumbrances or
security interests, the aggregate fair market value of which is equal to the
aggregate Warrant Price for the Shares being purchased. The per share fair
market value for shares being delivered pursuant to clause (ii) in the preceding
sentence shall be the average closing price per share of the Company's Common
Stock quoted on the Nasdaq National Market, or on any exchange on which the
Common Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the five (5) trading days prior to the
date the Notice of Election is made pursuant to this Section 1.1; if there does
not exist a public market
for the Company's Common Stock at the time of such exercise, the per share
fair market value shall be as determined by the Company's Board of Directors in
good faith.
1.2 NET EXERCISE ELECTION. The Holder may elect to
exercise all or a portion of this Warrant, without the payment by the Holder of
any additional consideration, by the surrender of this Warrant or such portion
of this Warrant to the Company, with the net exercise election selected in the
Notice of Exercise attached hereto as Exhibit A duly executed by the Holder,
into up to the number of Shares that is obtained under the following formula:
X = Y (A-B)
-------
A
Where: X = the number of Shares to be issued to the Holder pursuant to this
Section 1.1.
Y = the number of Warrant Shares as to which this Warrant is then
being net exercised.
A = the fair market value of one Share shall be the closing
price per share of the Company's Common Stock quoted on the Nasdaq
National Market, or on any exchange on which the Common Stock is
listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the five (5) trading days
prior to the date the net exercise election is made pursuant to
this Section 1.1; if there does not exist a public market for the
Company's Common Stock at the time of such exercise, the fair
market value of one Share shall be as determined by the Company's
Board of Directors in good faith.
B = the Warrant Price.
1.3 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly
after Holder exercises this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised and has not expired, this Warrant shall automatically be reduced by
the number of Shares issued and remain exercisable for such remaining Shares not
so acquired, and all other terms of the Warrant shall otherwise remain in full
force and effect as so adjusted. Upon final exercise of this Warrant for any
such remaining number of Shares, this Warrant shall be surrendered by the Holder
to the Company for cancellation.
1.4 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 loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of this
Warrant, a new warrant of like tenor.
1.5 SALE, MERGER, CONSOLIDATION OR LIQUIDATION OF THE
COMPANY.
1.5.1 Acquisition. For the purpose of this
Warrant, "ACQUISITION" means (a) any sale or exchange of the capital stock by
the stockholders of the Company in one
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transaction or series of related transactions where securities representing more
than 60% of the outstanding voting power of the Company are acquired by a person
or entity or group of related persons or entities; or (b) any reorganization,
consolidation, merger or similar transaction or series of related transactions
(each, a "COMBINATION TRANSACTION") in which the Company is a constituent
corporation or is a party if, as a result of such Combination Transaction, the
voting securities of the Company that are outstanding immediately prior to the
consummation of such Combination Transaction do not represent, or are not
converted into or exchanged for, securities of the surviving corporation of such
Combination Transaction (or such surviving corporation's parent corporation if
the surviving corporation is owned by the parent corporation) that, immediately
after the consummation of such Combination Transaction, possess at least fifty
percent (50%) of the total voting power of all securities of such surviving
corporation (or its parent corporation, if applicable) that are outstanding
immediately after the consummation of such Combination Transaction; or (c) a
sale of all or substantially all of the assets of the Company, that is followed
by the distribution of the proceeds to the Company's stockholders.
1.5.2 Assumption of Warrant. Upon the closing of
(a) any Combination Transaction that is not an Acquisition or (b) any
Acquisition where the consideration for the Acquisition to be received by the
Company's stockholders consists solely of stock or other securities of the
acquirer or any entity affiliated with the acquirer, the successor entity shall
assume the obligations of this Warrant, and this Warrant shall be exercisable
for the same securities or other consideration 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 such Combination Transaction
or Acquisition and subsequent closing thereof. The Warrant Price shall be
adjusted accordingly. Holder may exercise or cancel the Warrant prior to any
assumption of the Warrant under this Section 1.5.2.
1.5.3 Termination of Warrant. In the case of (a)
an Acquisition where the consideration for the Acquisition to be received by the
Company's stockholders in return for their capital stock of the Company consists
of cash or a combination of cash and securities and/or other property or (b) the
proposed liquidation and dissolution of the Company, the Company shall give
Holder at least twenty (20) days advance written notice of such event (the
"COMPANY NOTICE"), which notice shall include the Company's best estimate of the
per Share price receivable upon the occurrence of the event set forth in (a) or
(b) above and the proposed date upon which such event is expected to occur. If
M-F Downtown Sunnyvale, LLC or any of its lenders hold the Warrant, then the
Company shall deliver the Company Notice to such holding party or parties at
least thirty (30) days in advance. During such notice period, Holder may
exercise this Warrant in accordance with its terms, and may make such exercise
contingent upon the happening of such event and/or the existence of a minimum
value of the Shares receivable upon exercise as provided on Holder's exercise
notice; provided that such minimum value shall be no greater than the per share
price set forth in the Company Notice. Subject to prior exercise as provided in
the preceding sentence, this Warrant will terminate at 5:00 p.m. Pacific time on
the day prior to the date such event is expected to occur as set forth in the
Company Notice; provided that (a) the Company Notice of the proposed event is
actually received by the Holder, as evidenced by a return receipt of certified
mail delivery, a certificate of delivery by hand delivery or written
verification of delivery from the overnight courier, and (b) the event actually
occurs.
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2. ADJUSTMENTS TO THE SHARES.
2.1 COMMON STOCK DIVIDENDS, SPLITS, ETC. If the Company
declares or pays a dividend on the outstanding shares of the Company's Common
Stock payable in shares of the Company's Common Stock or subdivides or combines
the outstanding shares of the Company's Common Stock, then upon exercise of this
Warrant, the Holder shall receive, without cost to the Holder, the total number
of shares of Common Stock to which the Holder would have been entitled had the
Holder owned the Shares of record as of the date the dividend, subdivision or
combination occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise of
this Warrant (other than an Acquisition or a stock dividend, split, combination
or other distribution), the Holder shall be entitled to receive, upon exercise
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, exchange, substitution or other event.
The Company or its successor shall promptly issue to the Holder a new Warrant
for such new securities or other property. The new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 2 including, without limitation,
appropriate adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise of the new Warrant.
2.3 ADJUSTMENTS OF WARRANT PRICE. 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.
If the outstanding Shares are divided by reclassification or otherwise, into a
greater number of shares, the Warrant Price shall be proportionately decreased.
2.4 ADJUSTMENT IS CUMULATIVE. The provisions of this
Section 2 shall similarly apply to successive stock dividends, stock splits or
combinations, reclassifications, exchanges, substitutions, or other events.
2.5 FRACTIONAL SHARES. No fractional Shares shall be
issuable upon exercise 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 of the Warrant, the Company shall eliminate such
fractional Share interest by paying Holder an amount by check computed by
multiplying the fractional interest by the fair market value of a full Share.
2.6 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment
of the Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting 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.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Holder that all Shares which may be issued upon
the exercise of the purchase right represented by this Warrant shall, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable, and
free of any liens and encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws.
3.2 REGISTRATION RIGHTS.
3.2.1 Certain Definitions. For purposes of this
Section 3.2:
(a) Registration. The terms "REGISTER,"
"REGISTERED" and "REGISTRATION" refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the declaration or ordering of
effectiveness of such registration statement.
(b) Registrable Securities. The term
"REGISTRABLE SECURITIES" means (i) the Shares that are issuable to the Holder
upon exercise of the Warrant, and (ii) any shares of the Company's Common Stock
that may be issued as a dividend or other distribution (including shares of the
Company's Common Stock issued in a subdivision and split of the Company's
outstanding Common Stock) with respect to, or in exchange for, or in replacement
of, shares of the Company's Common Stock described in clauses (i) or (ii) of
this Section 3.2.1(b); excluding in all cases, however, from the definition of
"Registrable Securities" any such shares of the Company's Common Stock that are:
(w) registered under the Securities Act other than pursuant to a registration
statement filed pursuant to this Warrant; (x) transferred by a person in a
transaction in which rights under this Warrant with respect to such shares of
the Company's Common Stock are not assigned in accordance with the terms of this
Warrant; (y) sold pursuant to a registration statement filed pursuant to this
Warrant; or (z) sold pursuant to Rule 144 promulgated under the Securities Act
or otherwise sold to the public. Only shares of the Company's Common Stock shall
be Registrable Securities. Except as provided in clause (ii) of the first
sentence of this Section 3.2.1(b), without limitation, the term "Registrable
Securities" does not include any shares of the Company's Common Stock that were
not issued in connection with the exercise of this Warrant.
(c) Form S-3. The term "FORM S-3" means
a registration statement filed under Form S-3 under the Securities Act, as such
is in effect at the Issue Date, or any successor form of registration statement
under the Securities Act subsequently adopted by the Securities and Exchange
Commission (the "SEC") which permits inclusion or incorporation of a substantial
amount of information by reference to other documents filed by the Company with
the SEC.
(d) Rule 415. The term "RULE 415" means
Rule 415 promulgated under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the SEC.
3.2.2 Form S-3 Shelf Registration.
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(a) Filing and Registration Period.
Subject to the terms and conditions of this Warrant, no later than four months
after the Issue Date, or as soon as practicable thereafter, in the case such
filing is delayed by circumstances beyond the Company's control, and consistent
with the requirements of applicable law, the Company shall prepare and file with
the SEC a registration statement on Form S-3 for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the then outstanding
Registrable Securities (the "SHELF REGISTRATION"). The Company shall use
commercially reasonable efforts to have such Shelf Registration declared
effective no later than six months after the Issue Date and to keep the Shelf
Registration continuously effective under the Securities Act for a continuous
period of time (such period of time being hereinafter called the "REGISTRATION
PERIOD") commencing on the date the Shelf Registration is declared effective
under the Securities Act by the SEC and ending on the date that is the second
anniversary of the Issue Date; provided, that such Registration Period shall be
extended until Rule 144(k) promulgated under the Securities Act (as such Rule
may be amended from time to time, or any similar or successor rule or regulation
hereafter adopted by the SEC) is available for the sale of Registrable
Securities that are issued pursuant to a net exercise of this Warrant under
Section 1.2 prior to the second anniversary of the Issue Date; provided, that in
no event shall such Registration Period exceed the date that is the fourth
anniversary of the Issue Date. The Company shall have no duty or obligation to
keep the Shelf Registration effective after the expiration of the Registration
Period.
(b) Supplements and Amendments. During
the Registration Period, the Company shall supplement and amend the Shelf
Registration, if, as and when required by the Securities Act, the rules and
regulations promulgated thereunder or the rules, regulations or instructions
applicable to Form S-3.
(c) Manner of Sales. Any sale of
Registrable Securities pursuant to a Shelf Registration under this Section 3.2.2
may only be made in accordance with the method or methods of distribution of
such Registrable Securities that are described in the registration statement for
the Shelf Registration, based on information provided by the Selling Holders
under Section 3.2.7 and permitted by such form of registration statement. Any
sale of Registrable Securities pursuant to a Shelf Registration under this
Section 3.2.2 must be made in compliance with applicable prospectus delivery
requirements.
(d) No Underwritings. No sale of
Registrable Securities under any Shelf Registration effected pursuant to this
Section 3.2.2 may be effected pursuant to any underwritten offering without the
Company's prior written consent, which may be withheld in its sole and absolute
discretion.
(e) Restrictions on Sale. Holder
acknowledges and agrees that (i) no sale of Registrable Securities under any
Shelf Registration effected pursuant to this Section 3.2.2 may be effected
during the period beginning fifteen (15) days before the completion of each of
the Company's fiscal quarters through the second trading day after the press
release announcing the Company's results for that quarter; (ii) that any sale of
Registrable Securities under any Shelf Registration effected pursuant to this
Section 3.2.2 must be pre-cleared with the Company's General Counsel in order to
ensure that there is no material undisclosed corporate information that could
render such Shelf Registration inaccurate; (iii) Holder (together with any
Permitted Transferees (as defined in Section 4.3.2)) may not sell or
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otherwise transfer any shares of the Company's Common Stock, whether under any
Shelf Registration or otherwise, during the six month period following the Issue
Date; and (iv) beginning on the date that is six months and one day after the
Issue Date, Holder may sell (A) any amount of shares of the Company's Common
Stock if Holder (x) holds fewer than 1,000,000 shares of the Company's Common
Stock (and has held fewer than 1,000,000 shares for at least five consecutive
trading days) or (y) sells such shares in a private placement transaction (that
is, in a transaction that is not to the public) in which the transferees agree
to be bound by the same resale restrictions set forth in this Section 3.2.2(e);
and (B) to the public, whether under any Shelf Registration Statement, Rule 144
or otherwise, no more than 200,000 shares of the Company's Common Stock on any
single day and no more than 500,000 shares during any five consecutive trading
day period if Holder holds 1,000,000 shares or more of the Company's Common
Stock (or has held 1,000,000 shares or more at any time during the last five
trading days). Notwithstanding anything to the contrary in this subparagraph
(e), (x) the terms and conditions set forth in this subparagraph (e) shall apply
to, and only to, the aggregate of the Registrable Securities and the securities
issued in connection with the other warrant (No. CSW-1) issued by the Company to
M-F Downtown Sunnyvale, LLC on the Issue Date and (y) the restrictions described
in clauses (iii) and (iv) above shall not be applicable from and after any
Acquisition.
3.2.3 Limitations. Notwithstanding the provisions
of Section 3.2.2 above, the Company shall not be obligated to effect any
registration, qualification or compliance of Registrable Securities pursuant to
Section 3.2.2 of this Warrant, and the Holder shall not be entitled to sell
Registrable Securities pursuant to any registration statement filed under
Section 3.2.2 of this Warrant, as applicable:
(a) if Form S-3 is not then available
for such offering by the Holder provided, that if such form is not available,
the Company shall use commercially reasonable efforts to become eligible to use
such form and the Registration Period shall be extended for such period of time
that such form is not available, but only if all of Holder's Registrable
Securities may not be resold in a three month period pursuant to Rule 144;
(b) if the Company shall furnish to the
Holder a certificate signed by an officer of the Company stating that, in the
good faith judgment of such officer, it would be detrimental to the Company and
its stockholders for sales under the Registration Statement to occur at such
time, due, for example, to the existence of a material development or potential
material development involving the Company, which the Company would be obligated
to disclose in the prospectus contained in the Shelf Registration, which
disclosure would, in the good faith judgment of such officer, be premature or
otherwise inadvisable at such time or would have a material adverse affect upon
the Company and its stockholders, in which event the Company will have the right
to suspend the use of the Registration Statement for a period of not more than
sixty days pursuant to this Section 3.2.3(b), provided that in the event that
the Registration Statement is suspended by the Company pursuant to this Section
3.2.3(b), then the Company shall extend the Registration Period hereunder by the
number of days that the Registration Statement was suspended;
(c) if the Company's Common Stock
ceases to be publicly traded;
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(d) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service of
process in such jurisdiction; or
(e) if the SEC refuses to declare such
registration effective due to the participation of any particular Holder in such
registration (unless such Holder withdraws all such Holder's Registrable
Securities from such registration statement); or if the manner in which any
Registrable Securities are disposed of pursuant to the Shelf Registration is not
included within the plan of distribution set forth in the prospectus for the
Shelf Registration.
3.2.4 Shares Otherwise Eligible for Resale.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to effect or continue to keep effective any such registration,
registration statement, qualification or compliance with respect to the
Registrable Securities held by any particular Holder:
(a) if all of the Registrable
Securities then held by such Holder may be resold by such Holder within a three
month period without registration under the Securities Act pursuant to the
provisions of Rule 144 promulgated under the Securities Act (or successor
provisions), or otherwise; or
(b) after expiration or termination of
the Registration Period.
3.2.5 Expenses. The Company shall pay all expenses
incurred in connection with any registration effected by the Company pursuant to
this Warrant (excluding brokers' discounts and commissions), including, without
limitation, all filing, registration and qualification, printers', legal
(including, the reasonable fees and expenses of one counsel for all Holders as a
group) and accounting fees.
3.2.6 Obligations of Company. Subject to Sections
3.2.2, 3.2.3 and 3.2.4 above, when required to effect the registration of any
Registrable Securities under the terms of this Warrant, the Company will, as
expeditiously as reasonably possible:
(a) furnish to each of the Holders such
number of copies of the prospectus for the Shelf Registration, including a
preliminary prospectus (and amendments or supplements thereto), in conformity
with the requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them;
(b) notify each Holder of Registrable
Securities promptly and, if requested by such Holder, confirm such notification
in writing promptly (i) when the registration statement has become effective and
when any post-effective amendments and supplements thereto become effective,
(ii) of any request by the SEC or any state securities authority for any
post-effective amendments or supplements to a registration statement that has
become effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a registration
statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
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initiation or threatening of any proceeding for such purpose, and (v) of any
determination by the Company that a post-effective amendment to a registration
statement would be appropriate;
(c) use all reasonable efforts to (i)
register and qualify the securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions in the United
States as will be reasonably requested by the Holders; provided that the Company
will not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such state or jurisdiction; and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities,
including the National Association of Securities Dealers as may be necessary by
virtue of the business and operations of the Company; provided that the Company
will not be required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph (c),
(B) subject itself to taxation in any jurisdiction, or (C) consent to general
service of process in any such jurisdiction except as may be required by the
Securities Act;
(d) use its commercially reasonable
efforts to cause all such Registrable Securities to be listed on the Nasdaq
National Market and each securities exchange on which similar securities issued
by the Company are then listed; and
(e) upon the request of any Holder,
promptly provide the name, address and other contact information regarding the
Company's transfer agent for the Registrable Securities and the CUSIP number for
the Registrable Securities.
3.2.7 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 3.2 that any selling Holders will furnish to the Company such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition and plan of distribution of such Registrable
Securities as shall be required to timely effect the registration of their
Registrable Securities.
3.2.8 Delay of Registration. No Holder will have
any right to obtain or seek an injunction restraining or otherwise delaying any
registration that is the subject of this Warrant as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Warrant.
3.2.9 Indemnification.
(a) By the Company. To the extent
permitted by law, the Company will indemnify, defend and hold harmless each
Holder and its directors, officers and each person, if any, who controls Holder
with the meaning of the Securities Act, against any losses, claims, damages, or
liabilities (joint or several) to which such Holder may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") or other U.S. federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively, a "VIOLATION"):
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(i) any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement filed by the Company pursuant to this Warrant pursuant to which
Registrable Securities are sold, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged
omission to state in such registration statement, preliminary prospectus or
final prospectus or any amendments or supplements thereto, a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any Violation or alleged
Violation by the Company of the Securities Act, the Exchange Act, any U.S.
federal or state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any U.S. federal or state securities law in
connection with the offering of Registrable Securities covered by such
registration statement;
provided, however, that the indemnity agreement contained in this Section
3.2.9(a) shall not apply to (A) any losses, claims, damages or liabilities (or
actions in respect thereto) insofar as such Violation occurs in reliance upon
and in conformity with information furnished by any Holder for use in connection
with such registration; (B) amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the written
consent of the Company (which consent shall not be unreasonably withheld); or
(C) any losses, claims, damages or liabilities (or actions in respect thereto)
insofar as such Violation results from Holder's failure to comply with the terms
and conditions of Sections 3.2.2(c) or (e).
(b) By the Holder. To the extent
permitted by law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each Person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation (i) occurs in
reliance upon and in conformity with information furnished by such Holder for
use in connection with such registration or (ii) results from Holder's failure
to comply with the terms and conditions of Sections 3.2.2(c) or (e). Each
selling Holder's liability pursuant to this Section 3.2.9(b) shall be limited
to an amount equal to the net proceeds received by such selling Holder pursuant
to sales under the registration statement.
(c) Notice. Promptly after receipt by
an indemnified party under this Section 3.2.9 of notice of the commencement of
any action (including any governmental action) against such indemnified party,
such indemnified party will, if a claim for indemnification or contribution in
respect thereof is to be made against any indemnifying party under this Section
3.2.9, deliver to the indemnifying party a written notice of the commencement
thereof and, if the indemnifying party is the Company, the Company shall have
the right and obligation to control the defense of such action, and if the
Company fails to defend such action it
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shall indemnify and promptly reimburse the selling Holders for any reasonable
attorneys' fees and other expenses reasonably incurred by them in connection
with investigating or defending such action; provided, however, that: (i) the
Company shall also have the right, at its option, to assume and control the
defense of any action with respect to which the Company or any person entitled
to be indemnified by the selling Holders under Section 3.2.9(b) is entitled to
indemnification from the selling Holders; (ii) the indemnified party or parties
shall have the right to participate at its own expense in the defense of such
action and (but only to the extent agreed in writing with the Company and any
other indemnifying party similarly noticed) to assume the defense thereof with
counsel mutually satisfactory to the parties; and (iii) an indemnified party
shall have the right to retain its own counsel, with the fees and expenses of
such counsel to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to an actual or potential conflict of interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure of an indemnified party to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to the ability of the indemnifying party to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 3.2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party otherwise than under
this Section 3.2.9.
(d) Defect Eliminated in Final
Prospectus. The foregoing indemnity agreements of the Company and the Holders
are subject to the condition that, insofar as they relate to any Violation made
in a preliminary prospectus but eliminated or remedied in the amended or
supplemented prospectus on file with the SEC and effective at the time the sale
of Registrable Securities under such registration statement occurs (the
"AMENDED PROSPECTUS"), such indemnity agreement shall not inure to the benefit
of any person if a copy of the Amended Prospectus was furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage in the action giving rise to indemnity claims under
this Section 3.2.9, at or prior to the time such action is required by the
Securities Act.
(e) Survival. The obligations of the
Company and any Holders under this Section 3.2.9 shall survive the completion
of any offering of Registrable Securities in a registration statement pursuant
to this Warrant, and otherwise.
3.2.10 Duration and Termination of Company's
Obligations. The Company will have no obligations pursuant to Section 3.2.2 of
this Warrant to maintain or continue to keep effective any registration or
registration statement pursuant hereto: (a) after the expiration or termination
of the Registration Period; (b) with respect to a particular Holder if, in the
opinion of counsel to the Company, all such Registrable Securities proposed to
be sold by such Holder may be sold in a three (3) month period without
registration under the Securities Act pursuant to Rule 144 promulgated under
the Securities Act or otherwise; or (c) if all Registrable Securities have been
registered and sold pursuant to a registration effected pursuant to this
Warrant and/or have been transferred in transactions in which registration
rights hereunder have not been assigned in accordance with this Warrant.
11
3.3 RULE 144 CLEARANCE. During the term of the Warrant,
the Company agrees that it will promptly clear with its transfer agent, at the
Company's expense, any sale of Registrable Securities made pursuant to Rule 144;
provided that such sale is made in compliance with Rule 144 and customary
documentation regarding said compliance is delivered to the Company by the
Holder.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDER.
4.1 REPRESENTATIONS. The Holder hereby represents and
warrants to the Company as follows: The Holder is a sophisticated investor
having such knowledge and experience in business and investment matters that the
Holder is capable of protecting the Holder's own interests in connection with
the acquisition, exercise or disposition of this Warrant. The Holder is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act. The Holder is aware that this Warrant and the Shares are being,
or will be, issued to the Holder in reliance upon the Holder's representation in
this Section 4 and that such securities are restricted securities that cannot be
publicly sold except in certain prescribed situations. The Holder is aware of
the provisions of Rule 144 promulgated under the Securities Act and of the
conditions under which sales may be made thereunder. The Holder has received
such information about the Company as the Holder deems reasonable, has had the
opportunity to ask questions and receive answers from the Company with respect
to its business, assets, prospects and financial condition and has verified any
answers the Holder has received from the Company with independent third parties
to the extent the Holder deems necessary. The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the Shares to be issued
upon exercise hereof thereof are being acquired solely for the Holder's own
account and not as a nominee for any other party, and for investment, and that
the Holder will not offer, sell or otherwise dispose of this Warrant or any
Shares to be issued upon exercise hereof thereof except under circumstances that
will not result in a violation of the Act or any state securities laws.
4.2 LEGENDS. This Warrant and the Shares shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR LAW EXCEPT PURSUANT TO
RULE 144 AND ANY STATE EXEMPTION FROM REGISTRATION OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 RESTRICTIONS ON TRANSFER.
4.3.1 Transfer Restrictions. Subject to the
provisions of Section 4.3.3, (i) the Holder may transfer all or part of this
Warrant to, and only to, a Permitted Transferee (as defined below) by giving the
Company a written notice of the portion of the Warrant to be
12
transferred, such notice 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 to the Holder for any remaining
portion of the Warrant, if applicable); provided, however, that prior to any
such transfer, each such proposed Permitted Transferee must agree to be subject
to the rights and obligations of the Holder pursuant to this Warrant and to the
terms and conditions of this Warrant, including those set forth in Section
4.3.2. Any transfer effected without such agreement by the Permitted Transferee
to which such transfer was made shall be voidable at the Company's sole and
absolute discretion. If transferring a part of this Warrant, such transfer must
be in the amount of a warrant to purchase 500,000 Shares or more except to the
extent that a smaller number of shares may be included in a warrant in
connection with a transfer by M-F Downtown Sunnyvale, LLC to its members in
connection with a transfer pursuant to Section 4.3.2(b) and/or (c) below.
4.3.2 Permitted Transferees. "PERMITTED
TRANSFEREE" shall mean (a) each of M-F Downtown Sunnyvale, LLC's lenders, (b)
each of the members of M-F Downtown Sunnyvale, LLC, (c) any liquidating trust or
escrow created for the purpose of holding the Warrant on behalf of the members
of M-F Downtown Sunnyvale, LLC, and (d) other transferees of M-F Downtown
Sunnyvale, LLC. No Permitted Transferee may transfer all or part of this Warrant
except (i) one who is a Permitted Transferee pursuant to clause (a) and/or
clause (d) above and (ii) such warrant to be transferred is for a minimum of
500,000 Shares.
4.3.3 Compliance with Securities Laws on Transfer.
This Warrant and the Shares issuable upon exercise of this Warrant 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 and the
Company's transfer agent, as reasonably requested by the Company and the
Company's transfer agent).
5. GENERAL PROVISIONS.
5.1 NOTICES. Any and all notices required or permitted
to be given to a party pursuant to the provisions of this Warrant will be in
writing and will be effective and deemed to provide such party sufficient notice
under this Warrant on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) at the time of transmission by
facsimile, addressed to the other party at its facsimile number specified herein
(or hereafter modified by subsequent notice to the parties hereto), with
confirmation of receipt made by both telephone and printed confirmation sheet
verifying successful transmission of the facsimile; (iii) one (1) business day
after deposit with an express overnight courier for United States deliveries, or
two (2) business days after such deposit for deliveries outside of the United
States, with proof of delivery from the courier requested; or (iv) three (3)
business days after deposit in the United States mail by certified mail (return
receipt requested) for United States deliveries.
All notices for delivery outside the United States will be
sent by facsimile or by express courier. All notices not delivered personally or
by facsimile will be sent with postage and/or other charges prepaid and properly
addressed to the party to be notified at the address or facsimile number set
forth below the signature lines to this Warrant, or at such other address or
facsimile number as such other party may designate by one of the indicated means
of notice
13
herein to the other parties hereto. Notices to the Company will be
marked "Attention: General Counsel". Notices by facsimile shall be machine
verified as received.
5.2 ATTORNEYS FEES. In the event of any dispute between
the parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.
5.3 GOVERNING LAW. This Warrant will be governed by and
construed in accordance with the laws of the State of California,without giving
effect to that body of laws pertaining to conflict of laws.
5.4 FURTHER ASSURANCES. The parties agree to execute such
further documents and instruments and to take such further actions as may be
reasonably necessary to carry out the purposes and intent of this Warrant.
5.5 TITLES AND HEADINGS. The titles, captions and
headings of this Warrant are included for ease of reference only and will be
disregarded in interpreting or construing this Warrant. Unless otherwise
specifically stated, all references herein to "sections" and "exhibits" will
mean "sections" and "exhibits" to this Warrant.
5.6 SEVERABILITY. If any provision of this Warrant is
determined by any court or arbitrator of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such provision will be enforced to the
maximum extent possible given the intent of the parties hereto. If such clause
or provision cannot be so enforced, such provision shall be stricken from this
Warrant and the remainder of this Warrant shall be enforced as if such invalid,
illegal or unenforceable clause or provision had (to the extent not enforceable)
never been contained in this Warrant. Notwithstanding the forgoing, if the value
of this Warrant based upon the substantial benefit of the bargain for any party
is materially impaired, which determination as made by the presiding court or
arbitrator of competent jurisdiction shall be binding, then both parties agree
to substitute such provision(s) through good faith negotiations.
5.7 COUNTERPARTS. This Warrant may be executed in any
number of counterparts, each of which when so executed and delivered will be
deemed an original, and all of which together shall constitute one and the same
agreement.
5.8 FACSIMILE SIGNATURES. This Warrant may be executed
and delivered by facsimile and upon such delivery the facsimile signature will
be deemed to have the same effect as if the original signature had been
delivered to the other party. The original signature copy shall be delivered to
the other party by express overnight delivery. The failure to deliver the
original signature copy and/or the nonreceipt of the original signature copy
shall have no effect upon the binding and enforceable nature of this Warrant.
5.9 AMENDMENT AND WAIVERS. This Warrant may be amended
only by a written agreement executed by each of the parties hereto. No amendment
of or waiver of, or modification of any obligation under this Warrant will be
enforceable unless set forth in a writing signed by the party against which
enforcement is sought. Any amendment effected in accordance with this section
will be binding upon all parties hereto and each of their respective
14
successors and assigns. No delay or failure to require performance of any
provision of this Warrant shall constitute a waiver of that provision as to
that or any other instance. No waiver granted under this Warrant as to any one
provision herein shall constitute a subsequent waiver of such provision or of
any other provision herein, nor shall it constitute the waiver of any
performance other than the actual performance specifically waived.
5.10 ENTIRE AGREEMENT. This Warrant and the documents
referred to herein constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Warrant, and supersede all
prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
NO. CSW-2
WARRANT HOLDER: COMPANY:
M-F DOWNTOWN SUNNYVALE, LLC HANDSPRING, INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
__________________________________ __________________________________
Address: c/o Mozart Devel. Company Address: 000 Xxxxxxxx Xxxxxx
_____________________________ _____________________________
0000 Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxx, XX 00000
______________________________________ ______________________________________
Xxxx Xxxx, XX 00000
______________________________________ ______________________________________
Attention to: Xx. Xxxx Xxxxxx Attention to: Xxxxx Xxxxxxxx, CEO
Xxxxx Xxxx, VP, General
Counsel
________________________ ________________________
Facsimile: (000) 000-0000 Facsimile: 000-000-0000
________________________ ________________________
[SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK]
NO. CSW-2
EXHIBIT A
NOTICE OF EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
1. The undersigned hereby elects to purchase ____________________
shares of the ____________________ Common Stock (the "SHARES") of Handspring,
Inc. a Delaware corporation, pursuant to the terms of the attached Warrant to
Purchase Stock with an Issue Date of ____________________ (the "WARRANT"), as
follows:
(Initial applicable method:)
____ a. The undersigned tenders herewith payment of the
total purchase price of such Shares in full, pursuant
to a check or wire transfer, in the amount of
$__________.
____ b. This exercise _____ is _____ is not contingent upon
the closing of the Acquisition or other event
specified in the Company Notice to Holder in
accordance with Section 1.5 of the Warrant received
by Holder on ________________ and _____ is _____ is
not contingent upon a sale price or fair market value
for the Company's Common Stock in the Acquisition or
other event of no less than the lesser of (a)
$__________ per share or (b) the per share price set
forth in the Company Notice.
____ c. The undersigned hereby elects to exercise the
Warrant by the net exercise election pursuant to
Section 1.1 of the Warrant. This election is
exercised with respect to __________ shares of Common
Stock covered by the Warrant resulting in a net total
of __________ Shares being issued to the undersigned.
2. Please issue a certificate or certificates representing said
Shares in the name of the undersigned. 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 and hereby repeats the
representations and warranties of the undersigned that are set forth in Section
4.1 of the attached Warrant.
____________________________________
(Printed Name of Holder)
____________________________________
____________________________________
____________________________________
Address:
____________________________________
(Signature of Holder)
