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EXHIBIT 10.2
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS, AND HAVE BEEN TAKEN FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN EXEMPTION TO
SUCH ACT.
PS-_______ Void after
June 30, 2004
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
of
FAIRBANKS SYSTEMS GROUP, d/b/a @BACKUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA
THIS CERTIFIES THAT, for value received, _____________________________,
together with its successors and assigns (the "Holder"), is entitled to
subscribe for and purchase shares of Common Stock issued by Fairbanks Systems
Group, a California corporation doing business as @Backup, Inc. (the "Company"),
subject to the following terms and conditions:
1. Convertible Promissory Note and Warrant Purchase Agreement. This
Warrant to Purchase Shares of Common Stock (the "Warrant") is one of a series of
warrants issued pursuant to that certain Convertible Promissory Note and Warrant
Purchase Agreement dated June ___, 1999 (the "Purchase Agreement") by and among
the Company, the Holder and the other holders of warrants and convertible
promissory notes listed on Exhibit A to the Purchase Agreement. Pursuant to the
Purchase Agreement, the Company also issued the Holder that certain Convertible
Promissory Note dated June ___, 1999 (the "Note").
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2. Exercise of Warrant. The terms and conditions upon which this Warrant
may be exercised, and the Common Stock covered hereby may be purchased, are as
follows:
2.1 Term. Subject to the terms hereof, this Warrant may be
exercised (the "Exercise Date"), in whole or in part, at any time after the date
hereof and in no event later than the earlier of (a) the close of business on
June 30, 2004, (b)(i) the closing of the acquisition of the Company by another
entity by means of a transaction or series of related transactions or (ii) the
closing of the sale of all or substantially all of the assets of the Company,
unless the Company's shareholders of record prior to such acquisition or sale
shall hold at least fifty percent (50%) of the voting power of the acquiring or
surviving entity immediately after such acquisition or sale, or (c) the initial
underwritten public offering of the Company's common stock (the "Common Stock")
(the "Exercise Period"). At least ten (10) days prior to the occurrence of an
event specified in (b) or (c) of this Section 2.1, the Company shall send to the
Holder notice of such event and that the Holder's rights under this Warrant
shall terminate upon the occurrence of such event; provided, that if the Company
sends such notice less than ten (10) days prior to the occurrence of such event,
the Holder's right to exercise this Warrant shall be extended for a period of
ten (10) days after the date of the notice, after which time the Holder's rights
under this Warrant shall terminate.
2.2 Number of Shares. This Warrant may be exercised for that
number of shares of Common Stock equal to the following:
X = A x 15%
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B
Where: X = the shares of Common Stock to be delivered to the Holder.
A = the principal amount of the loan the Holder advances to
the Company pursuant to the Purchase Agreement.
B = the Purchase Price (as defined below) for the Common Stock.
2.3 Purchase Price. The per share purchase price of the Common
Stock to be issued upon exercise of this Warrant shall be $0.15. The Purchase
Price and the number of shares of Common Stock for which the Warrant is
exercisable shall be subject to adjustment as provided herein.
2.4 Method of Exercise. The exercise of the purchase rights
evidenced by this Warrant shall be effected by (a) the surrender of the Warrant,
together with a duly executed copy of the form of a subscription attached
hereto, to the Company at its principal offices and (b) the delivery of the
Purchase Price by check or bank draft payable to the Company or by wire transfer
to the Company's account for the number of shares for which the purchase rights
hereunder are being exercised or any other form of consideration approved by the
Company's Board of Directors. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided herein
or at such later date as may be specified in the executed form of subscription,
and at such time the person or persons in whose name or names any certificate or
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certificates for shares of the Common Stock shall be issuable upon such exercise
as provided herein shall be deemed to have become the holder or holders of
record thereof.
3. Net Issuance.
3.1 Right to Convert. In addition to and without limiting the
rights of the Holder under the terms of this Warrant, if the fair market value
of a share of Common Stock is greater than the Warrant Price, in lieu of
exercising this Warrant for cash the Holder shall have the right to convert this
Warrant or any portion thereof (the "Conversion Right") into shares of Common
Stock equal to the value of this Warrant or the portion thereof being canceled
as provided in this Section 2 at any time or from time to time during the
Exercise Period. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to the Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the Holder (without payment by the Holder
of any exercise price or any cash or other consideration) that number of shares
of fully paid and nonassessable Common Stock computed using the following
formula:
X = Y (A - B)
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A
Where X = the number of shares of Common Stock to be delivered to the
holder
Y = the number of Converted Warrant Shares
A = the fair market value of one share of the Company's Common
Stock on the Conversion Date (as defined below)
B = the per share Purchase Price of the Warrant (as adjusted to
the Conversion Date)
The Conversion Right may only be exercised with respect to a whole number of
shares subject to the Warrant. No fractional shares shall be issuable upon
exercise of the Conversion Right, and if the number of shares to be issued
determined in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the Holder an amount in cash equal to the fair
market value of the resulting fractional share on the Conversion Date (as
defined below). Shares issued pursuant to the Conversion Right shall be treated
as if they were issued upon the exercise of the Warrant.
3.2 Method of Exercise. The Conversion Right may be exercised by
the Holder by the surrender of the Warrant at the principal office of the
Company together with a written statement specifying that the Holder thereby
intends to exercise the Conversion Right and indicating the total number of
shares under the Warrant that the Holder is exercising through the Conversion
Right. Such conversion shall be effective upon receipt by the Company of the
Warrant together with the aforesaid written statement, or on such later date as
is specified therein (the "Conversion Date"). Certificates for the shares
issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to
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the Warrant, shall be issued as of the Conversion Date and shall be delivered to
the Holder promptly following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this
Section 2, fair market value of a share of Common Stock on the Conversion Date
shall mean:
(i) If traded on a stock exchange, the fair market
value of the Common Stock shall be deemed to be
the average of the closing selling prices of the
Common Stock on the stock exchange determined by
the Board to be the primary market for the
Common Stock over the ten (10) trading day
period (or such shorter period immediately
following the closing of an initial public
offering) ending on the date prior to the
Conversion Date, as such prices are officially
quoted in the composite tape of transactions on
such exchange;
(ii) If traded over-the-counter, the fair market
value of the Common Stock shall be deemed to be
the average of the closing bid prices (or, if
such information is available, the closing
selling prices) of the Common Stock over the ten
(10) trading day period (or such shorter period
immediately following the closing of an initial
public offering) ending on the date prior to the
Conversion Date, as such prices are reported by
the National Association of Securities Dealers
through its NASDAQ system, any successor system
or any exchange on which it is listed, whichever
is applicable; or
(iii) If there is no public market for the Common
Stock, then the fair market value shall be
determined by mutual agreement of the holder of
the Warrant and the Company, and if the holder
and the Company are unable to so agree, by an
investment banker of national reputation
selected by the Company and reasonably
acceptable to the holder of the Warrant.
4. Limit on Rights of the Holder upon Exercise. The Holder acknowledges
and agrees that upon the exercise of this Warrant in full or in part, the
following provisions shall apply to the rights of the Holder as a holder of
Common Stock.
4.1 Market Stand-Off Agreement. During the period of duration
(not to exceed 180 days) specified by the Company and an underwriter of Common
Stock or other securities of the Company, following the effective date of a
registration statement of the Company filed under the Act, the Holder shall not,
to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to transferees or donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that (a) this
Section 4.1 shall be applicable only to the first such registration statement of
the Company pursuant to which Common Stock (or other securities) of the
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Company are to be sold on its behalf to the public in an underwritten offering,
and (b) all officers and directors of the Company and all other persons with
registration rights holding at least one percent of the Company's capital stock
(on a fully diluted basis) enter into similar agreements. In order to enforce
the foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Common Stock of the Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
5. Adjustments to Conversion Price. The number of shares of Common Stock
(or any shares of stock or other securities which may be) issuable upon the
exercise of this Warrant and the Purchase Price hereunder shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
5.1 Dividends, Distributions, Stock Splits or Combinations. If
the Company shall at any time or from time to time after the date hereof make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of common or preferred stock (as the case may be), then and in each such
event the Purchase Price hereunder then in effect shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price hereunder then in effect by a fraction: (a) the numerator of which shall
be the total number of shares of Common Stock (assuming the conversion of all
outstanding securities of the Company that are convertible into Common Stock and
the exercise of all options to purchase Common Stock or securities that are
convertible into Common Stock) issued and outstanding immediately prior to the
time of issuance or the close of business on such record date; and (b) the
denominator of which shall be the total number of shares of Common Stock
(assuming the conversion of all outstanding securities of the Company that are
convertible into Common Stock and the exercise of all options to purchase Common
Stock or securities that are convertible into Common Stock) issued and
outstanding immediately after the time of issuance or the close of business on
such record date. If the Company shall at any time subdivide the outstanding
shares of Common Stock, or if the Company shall at any time combine the
outstanding shares of Common Stock, then the exercise price hereunder
immediately shall be decreased proportionally (in the case of a subdivision) or
increased proportionally (in the case of a combination). Any such adjustment
shall become effective at the close of business on the date the subdivision or
combination becomes effective.
5.2 Reclassification or Reorganization. If the Common Stock (or
any shares of stock or other securities which may be) issuable upon the exercise
of this Warrant shall be changed into the same or different number of shares of
any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend provided for in Section 5.1 above, or a reorganization,
merger, consolidation or sale of assets provided for in Section 5.3 below), then
and in each such event the Holder shall be entitled to receive upon the exercise
of this Warrant the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification or other change,
to which a holder of the number of shares of Common Stock (or any shares of
stock or other securities which may be) issuable upon the exercise of this
Warrant would have received if this Warrant had been exercised immediately prior
to such reorganization, reclassification or other change, all subject to further
adjustment as provided herein.
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5.3 Merger, Consolidation or Sale of Assets. If at any time or
from time to time there shall be a capital reorganization of the Common Stock
(other than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 5) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's assets and properties to any other person or entity, then
as a part of such reorganization, merger, consolidation or sale, provision shall
be made so that the Holder shall thereafter be entitled to receive upon the
exercise of this Warrant, the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting from such
reorganization, merger, consolidation or sale, to which a holder of the number
of shares of Common Stock (or any shares of stock or other securities which may
be) issuable upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such reorganization, merger,
consolidation or sale.
5.4 Notice of Adjustments and Record Dates. The Company shall
promptly notify the Holder in writing of each adjustment or readjustment of the
exercise price hereunder and the number of shares of Common Stock (or any shares
of stock or other securities which may be) issuable upon the exercise of this
Warrant. Such notice shall state the adjustment or readjustment and show in
reasonable detail the facts on which that adjustment or readjustment is based.
In the event of any taking by the Company of a record of the holders of Common
Stock for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, the Company shall notify the Holder
in writing of such record date at least twenty (20) days prior to the date
specified therein.
5.5 No Impairment. The Company shall not avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in the
carrying out of all the provisions of this Warrant. Without limiting the
generality of the foregoing, the Company (a) shall at all times reserve and keep
available a number of its authorized shares of Common Stock, free from all
preemptive rights therein, which shall be sufficient to permit the exercise of
this Warrant and (b) shall take all such action as may be necessary or
appropriate in order that all shares of Common Stock as may be issued pursuant
to the exercise of this Warrant shall, upon issuance, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.
6. Replacement of Warrants. On receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense shall execute and deliver to the Holder, in lieu thereof, a new Warrant
of like tenor.
7. Investment Intent. Unless a current registration statement under the
Securities Act of 1933, as amended, shall be in effect with respect to the
securities to be issued upon exercise of this Warrant, the Holder, by accepting
this Warrant, covenants and agrees that, at the time of exercise hereof, and at
the time of any proposed transfer of any securities acquired upon exercise
hereof, the Holder shall deliver to the Company a written statement that the
securities acquired by the Holder upon exercise hereof are for the own account
of the Holder for
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investment and are not acquired with a view to, or for sale in connection with,
any distribution thereof (or any portion thereof) and with no present intention
(at any such time) of offering or distributing such securities (or any portion
thereof).
8. No Rights or Liability as a Shareholder. This Warrant does not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provisions hereof, in the absence of affirmative action by
the Holder to purchase Common Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder as a
shareholder of the Company.
9. Miscellaneous.
9.1 Transfer of Warrant. This Warrant shall not be transferable
or assignable in any manner and no interest shall be pledged or otherwise
encumbered by Holder without the express written consent of the Company, and any
such attempted disposition of this Warrant or any portion hereof shall be of no
force or effect.
9.2 Titles and Subtitles. The titles and subtitles used in this
Warrant are for convenience only and are not to be considered in construing or
interpreting this Warrant.
9.3 Notices. Any notice required or permitted under this Warrant
shall be given in writing and in accordance with Section 6.3 of the Purchase
Agreement (for purposes of which, the term "Investor" shall mean Holder
hereunder), except as otherwise expressly provided in this Warrant.
9.4 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be entitled.
9.5 Amendments and Waivers. Any term of this Warrant may be
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of
Warrants representing together the right to purchase at least fifty-one percent
(51%) of all of the Common Stock of the Company subject to purchase pursuant to
all of the Warrants and in accordance with the Purchase Agreement. Any amendment
or waiver effected in accordance with this Section 8.5 shall be binding upon the
Holder of this Warrant (and of any securities into which this Warrant is
convertible), each future holder of all such securities, and the Company.
9.6 Severability. If one or more provisions of this Warrant are
held to be unenforceable under applicable law, such provision shall be excluded
from this Warrant and the balance of the Warrant shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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9.7 Governing Law. This Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without giving effect to its conflicts of laws principles.
9.8 Counterparts. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Date: June ___, 1999 FAIRBANKS SYSTEMS GROUP, a California
corporation doing business as @Backup, Inc.
By:
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Xxxx Xxxxxx, Chief Executive Officer
ACKNOWLEDGED AND AGREED:
By:
-----------------------------------
Name:
---------------------------------
Its:
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[SIGNATURE PAGE TO COMMON STOCK WARRANT]
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SCHEDULE a
WARRANT
INVESTOR NAME SHARES
---------------------------------------- ---------
Enterprise Partners III, L.P. 434,447
Enterprise Partners III Associates, L.P. 37,778
Alta California Partners, L. P. 343,213
Alta Embarcadero Partners, L.L.C. 9,617
Security Pacific Finance, Ltd. 70,566
Xxxxxx Investment Holdings, Ltd. 47,044
Windward Ventures, L.P. 57,335
Xxxx Xxxxxx 42,193
Total: 1,042,193
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Schedule A
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SCHEDULE 2
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To: FAIRBANKS SYSTEMS GROUP, d/b/a @BACKUP, INC.
The undersigned, the holder of the Warrant attached hereto, hereby
irrevocably elects to exercise the purchase rights represented by such Warrant
for, and to purchase thereunder, ___________* shares of Common Stock of
FAIRBANKS SYSTEMS GROUP, d/b/a @BACKUP, INC., and herewith makes payment of
$___________ therefore, and requests that the certificates for such shares be
issued in the name of, and delivered to __________________ whose address is
________________________________________.
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(Signature must conform in all respects to name
of the Holder as specified on the face of the
Warrant)
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(Print Name)
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(Address)
Dated:
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*Insert here the number of shares as to which the Warrant is being exercised.
Schedule 2
