Exhibit 10.14
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.
WARRANT TO PURCHASE STOCK
Corporation: InPhonic, Inc., a Delaware Corporation
Number of Shares: 75,758
Class of Stock: Common Stock
Initial Exercise Price: The Conversion Price of Series D-1 Preferred Stock, as
defined in, and as adjusted from time to time in
accordance with, the Seventh Amended and Restated
Certificate of Incorporation of InPhonic, Inc. (which
price, as of the date hereof, is $1.32 per share)
Issue Date: March 1, 2002
Expiration Date: March 1, 2009 (Subject to Section 4.1)
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the
receipt of which is hereby acknowledged, COMERICA BANK - CALIFORNIA, successor
by merger to Imperial Bank, or its assignee ("Holder") is entitled to purchase
the number of fully paid and nonassessable shares of the class of securities
(the "Shares") of the corporation (the "Company") at the initial exercise price
per Share (the "Warrant Price") all as set forth above and as adjusted pursuant
to Article 2 of this warrant, subject to the provisions and upon the terms and
conditions set forth in this warrant.
ARTICLE 1. EXERCISE.
1.1 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 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.
1.2 Conversion Right. In lieu of exercising this warrant as specified in
Section 1.1, 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 1.4.
1.3 Intentionally Omitted
1.4 Fair Market Value. If the Shares are traded regularly in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not regularly traded in
a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment.
1.
1.5 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.
1.6 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.
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.
1.7.1 "Acquisition." For the purpose of this warrant, "Acquisition"
means any sale, license (other than in the ordinary course of business), or
other disposition of all or substantially all of the assets (including
intellectual property) of the Company, or any reorganization, consolidation, or
merger of the Company where the holders of the Company's securities before the
transaction beneficially own less than 50% of the outstanding voting securities
of the surviving entity after the transaction.
1.7.2 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.
1.7.3 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 Holder shall have the option
either to (a) deem this warrant to have been automatically converted pursuant to
Section 1.2 and thereafter Holder shall participate in the Acquisition on the
same terms as other holders of the same class of securities of the Company; or
(b) require the Company to purchase this warrant for cash upon the closing of
the Acquisition for an amount per Share equal to three (3) times the Warrant
Price.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common 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.
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 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, exchange, substitution, or other event. 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
2.
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 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 provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.
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. If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a greater number of shares, the Warrant Price shall be
proportionately decreased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the number
of Shares issuable upon exercise of this warrant shall be subject to adjustment,
from time to time, in the manner set forth on Exhibit A.
2.5 No Impairment. The Company shall not, by amendment of its Certificate
of Incorporation 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 all the provisions of this Article 2 and in
taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment.
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.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of this
warrant is not greater than the fair market value of the Shares as of the date
of this warrant.
(b) All Shares which may be issued upon the exercise of the purchase
right represented by this warrant, and all securities, if any, issuable upon
conversion of the Shares, 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.
(c) The Company's capitalization table previously provided to Holder
is true and complete as of the Issue Date.
3.2 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; or (d)
to merge or consolidate with or into any other corporation, or sell, lease,
license (other than in the ordinary course of business), or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up, then, in
connection with each such event, the Company shall give Holder (1) at least 20
days prior written notice of the
3.
date on which a record will be taken for such dividend or distribution (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (a) above; and (2) in the case of the matters referred to in (b)
and (c) 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).
3.3 Information Rights. So long as the Holder holds this warrant and/or
any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all communiques to the shareholders of the Company, (b)
within one hundred twenty (120) days after the end of each fiscal year of the
Company, the annual audited financial statements of the Company certified by
independent public accountants of recognized standing and (c) within forty-five
(45) days after the end of each of the first three quarters of each fiscal year,
the Company's quarterly, unaudited financial statements.
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. THE COMPANY
AGREES THAT THE SHARES OR, IF THE SHARES ARE CONVERTIBLE INTO COMMON STOCK OF
THE COMPANY, SUCH COMMON STOCK, SHALL BE SUBJECT TO THE REGISTRATION RIGHTS SET
FORTH ON EXHIBIT B, IF ATTACHED.
ARTICLE 4. MISCELLANEOUS.
4.1 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; provided, however, that if the Company completes its initial public
offering within the three-year period immediately prior to the Expiration Date,
the Expiration Date shall automatically be extended until the third anniversary
of the effective date of the Company's initial public offering. If this warrant
has not been exercised prior to the Expiration Date, this warrant shall be
deemed to have been automatically exercised on the Expiration Date by "cashless"
conversion pursuant to Section 1.2.
4.2 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:
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 CORPORATION AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This warrant and the
Shares 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). 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.
4.4 Transfer Procedure. Subject to the provisions of Section 4.3, Holder
may transfer all or part of this warrant or the Shares issuable upon exercise of
this warrant (or the securities issuable, directly
4.
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); provided, however, that Holder may transfer all or part of this
warrant to its affiliates, including, without limitation, Comerica Incorporated,
at any time without notice to the Company, and such affiliate shall then be
entitled to all the rights of Holder under this warrant and any related
agreements, and the Company shall cooperate fully in ensuring that any stock
issued upon exercise of this warrant is issued in the name of the affiliate that
exercises the warrant. The terms and conditions of this warrant shall inure to
the benefit of, and be binding upon, the Company and the holders hereof and
their respective permitted successors and assigns. The Company shall have the
right to refuse to transfer any portion of this warrant to any person who
directly competes with the Company, unless the Company is filing financial
information with the SEC pursuant to the Securities Exchange Act of 1934.
4.5 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 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. All notices to the Holder shall be addressed as follows:
Comerica Bank - California
Attn: Warrant Administrator
Technology and Life Sciences Division
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
4.6 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.
4.7 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.
4.8 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.
4.9 Market Standoff. Holder hereby agrees that Holder shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect of as a
sale, any common stock (or other securities) of the Company held by Holder for a
period specified by the underwriters of common stock (or other securities) of
the Company not to exceed one hundred eighty (180) days following the effective
date of a registration statement of the Company filed under the Securities Act
of 1933, as amended; provided that:
(a) such agreement shall apply only to the Company's initial public
offering and any subsequent offering effective within one hundred eighty (180)
days after the Company's initial public offering; and
(b) all officers and directors of the Company and holders of at least
one percent (1%) of the Company's voting securities enter into similar
agreements.
Holder agrees to execute and deliver such other agreements as may be reasonably
requested by the Company or the underwriter which are consistent with the
foregoing or which are necessary to give further effect thereto.
5.
InPhonic, Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
____________________________________
Name: __________________________________
Title: _________________________________
By: /s/ Xxxxxxx Steel
____________________________________
Name: __________________________________
Title: _________________________________
Authorized signatories under Corporate Resolutions to Borrow or an authorized
signer(s) under a resolution covering warrants must sign the warrant.
6.
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______________
shares of the ______________ stock of InPhonic, Inc. pursuant to the terms of
the attached warrant, and tenders herewith payment of the purchase price of such
shares in full.
1. The undersigned hereby elects to convert the attached warrant
into shares in the manner specified in the warrant. This conversion is exercised
with respect to ______________ of the shares covered by the warrant.
[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:
Comerica Bank - California
Attn: Warrant Administrator
Technology and Life Sciences Division
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
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.
COMERICA BANK - CALIFORNIA or
Registered Assignee
________________________________
(Signature)
________________________________
(Date)
7.
EXHIBIT A
The Warrant Price shall adjust as and when the Conversion Price of
Series D-1 Preferred Stock adjusts pursuant to the Company's Seventh Amended and
Restated Certificate of Incorporation.
Upon each adjustment of the Warrant Price, the number of Shares
Issuable upon exercise of the Warrant shall be increased to equal the quotient
obtained by dividing (a) the product resulting from multiplying (i) the number
of Shares Issuable upon exercise of the Warrant and (ii) the Warrant Price, in
each case as in effect immediately before such adjustment, by (b) the adjusted
Warrant Price.
8.
EXHIBIT B
Registration Rights
The Shares (if common stock), or the common stock issuable upon
conversion of the Shares, shall be deemed "registrable securities" or otherwise
entitled to "piggy back" registration rights in accordance with the terms of the
following agreement (the "Agreement") between the Company and its investor(s):
InPhonic, Inc. Fourth Amended and Restated Investor Rights
Agreement dated January 30, 2002 by and among Company and the
Investors named therein.
____________________________________________________
The Company agrees that no amendments will be made to the Agreement
which would have an adverse impact on Holder's registration rights thereunder
without the consent of Holder. By acceptance of the Warrant to which this
Exhibit B is attached, Holder shall be deemed to be a party to the Agreement.
If no Agreement exists, then the Company and the Holder shall enter
into Holder's standard form of Registration Rights Agreement as in effect on the
Issue Date of the Warrant
9.
