EXHIBIT 10.22
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWSBruce BowerFinancial Printing GroupTHIS
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: Zhone Technologies, Inc.
Number of Shares: 100,000
Class of Stock: Common Stock
Initial Exercise Price: $4.00
Issue Date: January 20, 2000
Expiration Date: January 19, 2010 (subject to Section 1.7)
THIS WARRANT CERTIFIES THAT, in consideration of a cash payment by BNP Leasing
Corporation, receipt of which is hereby acknowledged by Zhone Technologies, Inc.
(the "Company"), City of Oakland ("Holder") is entitled to purchase one hundred
thousand (100,000) of fully paid and nonassessable shares of the Common Stock
(the "Shares") of the Company at the initial exercise price of Four Dollars
($4.00) per Share (the "Warrant Price") 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
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delivering 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
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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 that portion of the Warrant being exercised 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. No Rights of Stockholder. This Warrant does not entitle Holder
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to any voting or other rights as a stockholder of the Company prior to the
exercise hereof.
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1.4. Fair Market Value. If the Shares are traded in a public market,
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the fair market value of the Shares shall be the average of 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 traded in
a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment.
1.5. Delivery of Certificate and New Warrant. Promptly after Holder
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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 shall be delivered to Holder.
1.6. Replacement of Warrants. On receipt of evidence reasonably
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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, or 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. For
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the purpose of this Warrant, "Acquisition" means any sale, license, or other
disposition of all or substantially all of the assets 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.
Upon the closing of any Acquisition, this Warrant shall terminate; provided that
the Company shall provide the holder at least twenty one (21) days advance
written notice of any Acquisition, and the Holder may condition the exercise of
this Warrant upon, and require that this Warrant be exercised simultaneously
with, the consummation of such Acquisition, and the Holder in that event shall
have all of the rights and benefits of a stockholder in the Company.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1. Stock Dividends, Splits, Etc. If the Company declares or pays a
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dividend on its common stock payable in common stock or other securities, or
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
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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
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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 Articles of Incorporation upon the
closing of a registered public offering of the Company's common stock. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide 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
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are combined or consolidated, by reclassification or otherwise, into a lesser
number of shares, the Warrant Price shall be proportionately increased.
2.4. No Impairment. The Company shall not, by amendment of its
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Articles 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 of 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.
2.5. Fractional Shares. No fractional Shares shall be issuable upon
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exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder amount 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
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Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
or other officers of the corporation 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
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and warrants to the Holder that 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, in the
Company's Articles of Incorporation or Bylaws, or under applicable federal and
state securities laws. The Company shall at all times reserve a sufficient
number of Shares and of shares of
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common stock for issuance upon Holder's exercise of its rights hereunder and
conversion of the Shares.
3.2. Notice of Certain Events. If the Company proposes at any time
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(a) to declare any dividend or distribution upon its common stock, whether in
cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of common
stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least twenty-one (21) days prior written notice of the date
on which a record will be taken for such dividend, distribution, or subscription
rights (and specifying the date on which the holders of common stock will be
entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; (2) in the case of the matters
referred to in (c) and (d) above at least twenty-one (21) days prior written
notice of the date when the same will take place (and specifying the date on
which the holders of common stock will be entitled to exchange their common
stock for securities or other property deliverable upon the occurrence of such
event); and (3) in the case of the matter referred to in (e) above, the same
notice as is given to the holders of such registration rights.
3.3 "Market Stand-Off" Agreement. Holder hereby agrees that, during
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the period of duration (not to exceed one hundred eighty (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 Securities Act, it 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, pledge or otherwise transfer or dispose of (other than to
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) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) such agreement shall not be required unless all executive
officers, directors and holders of one percent (1%) or more of the outstanding
capital stock of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Shares of Holder (and the shares of
securities of every other person subject to the foregoing restriction) until the
end of such period.
ARTICLE 4. MISCELLANEOUS.
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4.1. Term. This Warrant is exercisable, in whole or in part, at any
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time and from time to time on or before the Expiration Date set forth above.
4.2. Legends. This Warrant and the Shares (and the securities
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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
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the Shares issuable upon exercise 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, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.
4.4. Transfer Procedure. Subject to the provisions of Section 4.2
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and 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 or
indirectly, upon conversion of the Shares, if any) by giving the Company notice
of the portion of the Warrant being transferred setting forth the name, address
and taxpayer identification number of the transferee and surrendering this
Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable). Unless the Company is filing financial information with the SEC
pursuant to the Securities Exchange Act of 1934, the Company shall have the
right to refuse to transfer any portion of this Warrant to any person who
directly competes with the Company.
4.5. Notices. All notices and other communications from the Company
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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.
4.6. Waiver. This Warrant and any term hereof may be changed,
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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.
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4.7. Attorneys Fees. In the event of any dispute between the parties
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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
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in accordance with the laws of the State of California without giving effect to
its principles regarding conflicts of law.
ZHONE TECHNOLOGIES, INC.
By /s/ Xxxxx Xxxxxx
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Name Xxxxx Xxxxxx
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(Print)
Title Corp. Controller
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APPENDIX 1
NOTICE OF EXERCISE
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1. The undersigned hereby elects to purchase _____________ shares of the
Common Stock of Zhone Technologies, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This
conversion is exercised with respect to _____________________ of the Shares
covered by the Warrant.
[Strike paragraph that does not apply.]
3. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name as is specified below:
___________________________________
___________________________________
___________________________________
4. 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.
By:______________________________________
Its:_____________________________________
Date:____________________________________
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