WARRANT TO PURCHASE PREFERRED STOCK
Exhibit 10.18
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 OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
Issuer:
|
REPLY!, INC., a California corporation | |
Number of Shares:
|
105,711 Shares | |
Class of Stock:
|
Series B Preferred Stock, $0.0 par value | |
Exercise Price:
|
$0.00 per Share | |
Issue Date:
|
January 20, 2009 | |
Expiration Date:
|
The earlier to occur of (i) the seventh anniversary of the Issue Date, (ii) at the closing of the first public offering of the Company’s Common Stock under terms and conditions that require automatic conversion of the Series B Preferred Stock into Common Stock, or (iii), an Acquisition, as defined in and pursuant to the terms and conditions set forth in Section 2(e)(ii). |
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and
valuable consideration, including the execution and delivery of that certain Amendment No. 1 dated
as of January 20, 2009 to Master Security Agreement and Promissory Note No. 1 dated as of September
12, 2007 (the “Amended Loan”), this Warrant is issued to ATEL VENTURES, INC., in its capacity as
Trustee for its assignee affiliated funds identified in that certain Amendment and Restatement of
Inter-Company Trust Agreement for Warrants dated as of February 1, 2006 and deemed effective as of
July 20, 2004, (“Holder”) by REPLY!, INC, a California corporation (the “Company”).
1. ISSUANCE.
Subject to the terms and conditions hereinafter set forth, the Holder is entitled upon
surrender of this Warrant and the duly executed subscription form annexed hereto as Appendix 1, at
the office of the Company, 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, XX 00000, or such other
office as the Company shall notify the Holder of in writing, to purchase from the Company 105,711
shares of fully paid and non-assessable shares (the “Shares”) of the Company’s Series B Preferred
Stock, $.00 par value per share (“Preferred Stock”), at a purchase price per Share of $0.00 (the
“Exercise Price”). This Warrant may be exercised in whole or in part at any time and from time to
time until 5:00 PM, Pacific time, on the Expiration Date set forth above, and shall be void
thereafter. Until such time as this Warrant is exercised in full or expires, the Exercise Price and
the Shares are subject to adjustment from time to time as hereinafter provided.
2. EXERCISE
(a) Method of Exercise. Holder may exercise this Warrant by delivering this Warrant
together with a duly executed Notice of Exercise in substantially the form attached as Appendix
1 hereto to the principal office of the Company.
(b) Fair Market Value.
(i) If shares of Common Stock are traded on a nationally recognized securities exchange or
over the counter market, the fair market value of one Share shall be the average closing price of a
share of Common Stock over the five day trading period immediately preceding the date of Holder’s
Notice of Exercise to the Company (or such lesser number of trading days as the stock has been
publicly traded). Notwithstanding the foregoing, in the event the Warrant is exercised in
connection with the Company’s initial public offering of Common Stock, the fair market value per
share shall be the product of (i) the per share offering price to the public of the Company’s
initial public offering, and (ii) the number of Shares of Common Stock into which each share of
Preferred Stock is convertible at the time of exercise.
(ii) If shares of Common Stock are not traded on a nationally recognized securities exchange
or over the counter market, the Board of Directors of the Company shall determine the fair market
value of a share of Common Stock in its reasonable good faith judgment. The foregoing
notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with
such determination, then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment banking firm is
greater than that determined by the Board of Directors by five percent (5%) or more, then all fees
and expenses of such investment banking firm shall be paid by the Company. In all other
circumstances, such fees and expenses shall be paid by Holder. The determination of any such
investment banking firm shall be conclusive in any event.
(c) 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, a new Warrant representing the right to
purchase the Shares not so acquired.
(d) 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.
(e) Treatment on Sale, Merger, or Consolidation of the Company.
(i) “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale,
transfer, exclusive license, or other disposition of all or substantially all of the assets of the
Company, or any acquisition, reorganization, consolidation or merger of the Company where the
holders of the Company’s outstanding voting equity securities immediately prior to the transaction
beneficially own less than 50.01% of the outstanding voting equity securities of the surviving or
successor entity immediately following the transaction.
(ii) Treatment of Warrant. Upon the closing of any Acquisition, if the Fair Market
Value of one Share (or other security issuable upon the exercise hereof) as determined in
accordance with Section 2(b) above is greater than the Exercise Price in effect on such date, then
this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to
Section 2(a) above as to all Shares (or such other securities) for which it shall not previously
have been exercised, and the Company shall promptly deliver a certificate representing the Shares
(or such other securities) issued upon such exercise to the Holder.
(f) Conversion or Redemption of Series B Preferred Stock. Should all of the Company’s
Series B Preferred Stock be, or if outstanding would be, at any time prior to the expiration of the
Warrant or any portion thereof, redeemed or converted into shares of the Company’s Common Stock in
accordance with Section 5 of the Charter, then this Warrant shall become immediately exercisable
prior to such event for that number of shares of the Common Stock that would have been received if
this Warrant had been exercised in full and the Series B Preferred Stock received thereupon had
been simultaneously converted immediately prior to such event, and the Exercise Price shall
immediately be adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise Price
of the maximum number of shares of Series B Preferred Stock for which this Warrant was exercisable
immediately prior to such conversion or redemption, by (y) the number of shares of Common Stock for
which this Warrant is exercisable immediately after such conversion or redemption. For purposes of
the forgoing, the “Charter” shall mean the Second Amended and Restated Articles of Incorporation as
amended and /or restated and effective immediately prior to the redemption or conversion of all of
the Company’s Series B Preferred Stock.
3. ADJUSTMENTS.
(a) Stock
Dividends, Splits, Etc. If the Company declares or pays a dividend on the
outstanding shares of Preferred Stock, payable in Common Stock or other securities, or subdivides
the outstanding Preferred Stock into a greater amount of Preferred Stock, 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. If the outstanding Preferred Stock
is subdivided into a greater number of shares, the number of Shares shall be proportionately
increased.
(b) 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, 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 Holder a new Warrant for such new securities or other property. The new Warrant
shall provide for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3 including, without limitation, adjustments to the
Exercise Price and to the number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 3(b) shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.
(c) Adjustments for Combinations, Etc. If the outstanding shares of Preferred Stock
are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the
number of Shares shall be proportionately decreased.
(d) No Impairment. The Company shall not, by amendment of its Articles of
Incorporation or by-laws, or through a 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
Section 3 and in taking all such action as may be necessary or appropriate to protect Holder’s
rights under this Article against impairment.
(e) 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 this
Warrant, the Company shall eliminate such fractional Share interest by paying Holder an amount
computed by multiplying such fractional interest by the Fair Market Value (determined in accordance
with Section 2(c) above) of one Share.
(f) Certificate as to Adjustments. Upon each adjustment of the Exercise Price, number
of Shares or class of security for which this Warrant is exercisable, 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 Exercise
Price, number of Shares class of security for which this Warrant is exercisable in effect upon the
date thereof and the series of adjustments leading to such Exercise Price, number of Shares and
class of security.
(g) Issuance of Additional Shares. In the event that the Company shall issue shares of
its capital stock at a price less than the Exercise Price after the date hereof, the price at which
the Shares may be converted into the Company’s Common Stock shall be subject to the same
adjustment, if any, to the price at which the Company’s Series B Preferred Stock may be converted
into the Company’s Common Stock provided in the Company’s Charter. The
Company shall give Holder the same notice which the holders of Series B Preferred Stock are
entitled to receive in connection with any dilutive issuance in accordance with the terms of the
Company’s Articles of Incorporation, as amended.
4. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) Representations and Warranties. The Company hereby represents and warrants to
Holder as follows:
(i) All Shares which may be issued upon the due exercise of this Warrant shall, upon issuance,
be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or under applicable federal
and state securities laws.
(ii) The authorized capital stock of the Company consists of 45,741,045 shares, consisting of
40,000,000 shares of Common Stock, and 5,948,724 shares of preferred stock, $0.00 par value per
share, of which 3,865,368 shares have been designated Series A Convertible Preferred Stock and
2,083,356 shares have been designated Series B Convertible Preferred Stock. Appendix 2 sets
forth all of the outstanding shares of common stock and preferred stock and outstanding options,
warrants, convertible securities, convertible debentures, and rights to acquire, subscribe for,
and/or purchase any Common Stock, preferred stock and/or other capital stock of the Company or any
securities or debentures convertible into or exchangeable for Common Stock, preferred stock and/or
other capital stock of the Company.
(iii) The Company covenants that it shall at all times cause to be reserved and kept available
out of its authorized and unissued shares such number of shares of its Preferred Stock and other
securities as will be sufficient to permit the exercise in full of this Warrant and the conversion
or exchange of such Preferred Stock into or for such other securities.
(iv) The execution and delivery by the Company of this Warrant and the performance of all
obligations of the Company hereunder, including the issuance to Holder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate action on the part
of the Company, and the Amended Loan and this Warrant are not inconsistent with the Company’s
Charter or By-laws, do not contravene any law or governmental rule, regulation or order applicable
to it, do not and will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument to which it is a party or by which it is bound,
and the Amended Loan and this Warrant Agreement constitute legal, valid and binding agreements of
the Company, enforceable in accordance with their respective terms.
(v) No consent or approval of, giving of notice to, registration with, or taking of any other
action in respect of any state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its obligations under this
Warrant, except for the filing of notices pursuant to Regulation D under the 1933 Act and any
filing required by applicable state securities law, which filings will be effective by the time
required thereby.
(b) Notice of Certain Events. If the Company proposes at any time 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; the Company shall give
Holder (1) at least 15 days prior written notice of the date on which such proposed transaction
will occur. With respect to all other events affecting Holder’s rights under the Warrant, the
Company shall deliver to Holder all notices which Holder is obligated to give the stockholders of
Company’s Series B Preferred stock.
(c) Information Rights. So long as Holder holds this Warrant and/or any of the Shares, the
Company shall deliver to Holder all financial information which Holder is obligated to give the
stockholders of Company’s Series B Preferred stock.
(d) Registration Under Securities Act of 1933, as amended. The Shares shall have
certain registration rights as set forth in that certain Amended and Restated Investor Rights
Agreement dated as of March 19, 2007 among the Company, Holder and the other parties named therein
of even date herewith. The Company agrees to amend the Investor Rights Agreement to make Holder a
party thereto concurrently with issuance of this Warrant. The Company represents and warrants to
Holder that the Company’s execution, delivery and performance of such Investors Rights Agreement
(a) has been duly authorized by all necessary corporate action of the Company’s Board of Directors
and shareholders, (b) does not and will not violate the Company’s Articles of Incorporation or
By-laws, each as amended, (c) does not and will not violate or cause a breach or default (or an
event which with the passage of time or the giving of notice or both, would constitute a breach or
default) under any agreement, instrument, mortgage, deed of trust or other arrangement to which the
Company is a party or to or by which it or any of its assets is subject or bound, and (d) does not
require the approval, consent or waiver of or by any shareholder, registration rights holder or
other third party which approval, consent or waiver has not been obtained as of the date of
issuance of this Warrant.
5. MISCELLANEOUS.
(a) Automatic Exercise upon Expiration. This Warrant shall automatically be deemed on
and as of such date to be exercised pursuant to Section 2(a) above as to all Shares (or such other
securities) for which it shall not previously have been exercised, and the Company shall promptly
deliver a certificate representing the Shares (or such other securities) issued upon exercise to
the Holder.
(b) Legends. This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon exercise, if any) 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, 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.
(c) Compliance with Securities Laws on Transfer. This Warrant and the Shares (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). The Company shall not require Holder to provide an opinion
of counsel if the transfer is to an affiliate of Holder or if (a) there is no material question as
to the availability of current information as referenced in Rule 144(c), (b) Holder represents that
it has complied with Rule 144(d) and (e) in reasonable detail, (c) the selling broker represents
that it has complied with Rule 144(f), and (d) the Company is provided with a copy of Holder’s
notice of proposed sale.
(d) Transfer Procedure. Subject to the provisions of Section 5(c), Holder may transfer
all or part of this Warrant and/or the Shares issuable upon exercise of this Warrant (or the
securities issuable, directly or indirectly, upon conversion of the Shares, if any) at any time to
any affiliate of Holder, or to any other transferee 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 re-issuance to the transferee(s)
(and Holder if applicable).
(e) Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or sent by electronic
facsimile transmission, express overnight courier service, or mailed by first-class registered or
certified mail, postage prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time to time, but in all
cases, unless instructed in writing otherwise, the Company shall deliver a copy of all notices to
Holder at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx XX 00000, Attention: Associate
General Counsel.
(f) Waiver. 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.
(g) Remedies. In the event of any default hereunder, the non-defaulting party may
proceed to protect and enforce its rights either by suit in equity and/or by action at law,
including but not limited to an action for damages as a result of any such default, and/or an
action for specific performance for any default where Holder will not have an adequate remedy at
law and where damages will not be readily ascertainable. The Company expressly agrees that it shall
not oppose an application by the Holder or any other person entitled to the benefit of this Warrant
requiring specific performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Warrant.
(h) 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.
(i) Governing Law. This Warrant shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to its principles regarding conflicts of
law.
(j) Adjustment in Underlying Preferred Stock Price and Exercise Price. Company agrees
that if it issues any series of preferred stock for an issuance price less than $3.279 per share,
the Company shall issue to Holder an additional Warrant for 105,711 shares of Series B Preferred
Stock at an Exercise Price of $0.00 per Warrant Share.
IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Preferred Stock to be
executed by its duly authorized representative as of the date first above written.
| COMPANY REPLY!, INC. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | CEO | |||
| HOLDER ATEL VENTURES, INC., as Trustee |
||||
| By: | /s/ Xxxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxxx X. Xxxxxx | |||
| Title: | Executive Vice President | |||
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______ shares of the
_____________ stock of
_____________ pursuant to Section 2(a) of the attached Warrant, and tenders herewith payment of
the Exercise Price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into Shares in the manner
specified in Section 2(b) of the attached Warrant. This conversion is exercised with respect to
________ of shares of the ____________
Stock of _____________.
[Strike paragraph 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:
| (Name) | ||||
| (Address) |
3. The undersigned represents 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.
(Date)
|
(Signature) |
APPENDIX 2
CAPITALIZATION
Outstanding Capital Stock:
Outstanding options, warrants, convertible securities, convertible debentures, and rights to
acquire, subscribe for, and/or purchase any Common Stock, preferred stock and/or other capital
stock of the Company or any securities or debentures convertible into or exchangeable for Common
Stock, preferred stock and/or other capital stock of the Company:
