PREFERRED STOCK PURCHASE WARRANT
Exhibit 10.17
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR
TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.
Warrant No.
|
Number of Shares: a maximum of 499,535 Series E Preferred Stock Subject to determination as set for the below |
SUCCESS ACQUISITION CORPORATION
Effective as of June 7, 2006
Void after June 7, 2013
1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to
Lighthouse Capital Partners V, L.P. by Success Acquisition Corporation, a
Delaware corporation (hereinafter with its successors called the “Company”).
2. Purchase Price; Number of Shares.
(a) The registered holder of this Warrant (the “Holder”), is entitled upon surrender of this
Warrant with the subscription form annexed hereto duly executed, at the principal office of the
Company, to purchase from the Company, at a price per share of $4.80446 (the “Purchase Price”), up
to a maximum of 499,535 fully paid and nonassessable shares of the Company’s Series E Preferred
Stock, $0.001 par value (the “Preferred Stock”). Commencing on the date hereof, 333,023 (the
“Exercise Quantity”) of shares of Preferred Stock are immediately available for purchase hereunder.
(b) On the Funding Date, the Exercise Quantity shall automatically be increased by such
additional number of shares as is equal to (A) 4.0% of the amount of Aggregate Advances funded
under the Loan Agreement, if any, divided by (B) the Purchase Price.
In addition to other terms which may be defined herein, the following terms, as used in this
Warrant, shall have the following meanings:
| (i) | “Aggregate Advances” means the aggregate original dollar amount of Advances made under the Loan Agreement, whether such Advances are outstanding or prepaid, at the time of any scheduled adjustment to the Exercise Quantity. | ||
| (ii) | “Loan Agreement” means that certain Loan and Security Agreement No. 5271 dated June 7, 2006 between the Company and Lighthouse Capital Partners V, L.P. |
Any term not defined herein shall have the meaning as set forth in the Loan Agreement.
Until such time as this Warrant is exercised in full or expires, the Purchase Price and the
securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter
provided. The person or persons in whose name or names any certificate representing shares of
Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the
shares represented thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall be closed.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by
the surrender by the Holder to the Company of any promissory notes or other obligations issued by
the Company, with all such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued interest to the date of
surrender, or (iii) by any combination of the foregoing.
4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and nonassessable shares of
Preferred Stock as is computed using the following formula:
| Y(A-B) | ||||||||
| X | = | ——— | ||||||
| A |
| where: X | = | the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4. | ||||
| Y | = | the number of shares of Preferred Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4. | ||||
| A | = | the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4. | ||||
| B | = | the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4. |
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“Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of
the Company’s common stock, $0.001 par value (the “Common Stock”) if the Preferred Stock has been
automatically converted into Common Stock) as of the date that the net issue election is made (the
“Determination Date”) shall mean:
(i) If the net issue election is made in connection with and contingent upon the closing of
the sale of the Company’s Common Stock to the public in a public offering pursuant to a
Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration
Statement relating to such Public Offering (“Registration Statement”) has been declared effective
by the Securities and Exchange Commission, then the initial “Price to Public” specified in the
final prospectus with respect to such offering multiplied by the number of shares of Common Stock
into which each share of Preferred Stock is then convertible.
(ii) If the net issue election is not made in connection with and contingent upon a Public
Offering, then as follows:
(a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of
the Common Stock shall be deemed to be the average of the closing or last reported sale prices of
the Common Stock on such exchange or market over the five day period ending five trading days prior
to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be
such fair market value of the Common Stock multiplied by the number of shares of Common Stock into
which each share of Preferred Stock is then convertible;
(b) If otherwise traded in an over-the-counter market, the fair market value of the Common
Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five
day period ending five trading days prior to the Determination Date, and the fair market value of
the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by
the number of shares of Common Stock into which each share of Preferred Stock is then convertible;
and
(c) If there is no public market for the Common Stock, then fair market value shall be
determined in good faith by the Company’s Board of Directors.
5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled
to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number
of shares in respect of which this Warrant shall not have been exercised.
6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued
upon any exercise of this Warrant. If, upon exercise of this Warrant in its entirety, the Holder
would, except as provided in this Section 6, be entitled to receive a fractional share of Preferred
Stock, then the Company shall issue the next higher number of full shares of Preferred Stock,
issuing a full share with respect to such fractional share.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at the close of business on
June 7, 2013, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing,
this Warrant shall automatically be deemed to be exercised in full pursuant to the
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provisions of Section 4 hereof, without any further action on behalf of the Holder,
immediately prior to the time this Warrant would otherwise expire pursuant to the preceding
sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and
after the date hereof reserve and keep available such number of its authorized shares of Preferred
Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to
permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common
Stock of all shares of Preferred Stock receivable upon such exercise. The Company further
covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon
issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the
Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional
shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of
shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately increased in the case
of a combination.
10. Adjustments for Diluting Issuances. The other antidilution rights applicable to the
Preferred Stock and the Common Stock of the Company are set forth in the Sixth Amended and Restated
Certificate of Incorporation, as amended from time to time (the “Certificate”), a true and complete
copy in its current form which is attached hereto as Exhibit A. Such rights shall not be restated,
amended or modified in any manner which affects the Holder differently than the holders of Series E
Preferred without such Holder’s prior written consent. The Company shall promptly provide the
Holder hereof with any restatement, amendment or modification to the Certificate promptly after the
same has been made.
11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any
Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful
provisions shall be made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to
purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full,
the kind and amount of shares of stock and other securities and property receivable upon such
Reorganization by a holder of the number of shares of Preferred Stock which might have been
purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder to the end that the
provisions hereof (including without limitation, provisions for the adjustment of the Purchase
Price and the number of shares issuable hereunder and the provisions relating to the net issue
election) shall thereafter be applicable in relation to any shares of stock or other securities and
property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the
term “Reorganization” shall include without limitation any reclassification, capital reorganization
or change of the Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of
the Company into, another corporation or other business
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organization (other than a merger in which the Company is the surviving corporation and which
does not result in any reclassification or change of the outstanding Preferred Stock), or any sale
or conveyance to another corporation or other business organization of all or substantially all of
the assets of the Company.
12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided,
the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial
officer setting forth the Purchase Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
13. Notices of Record Date, Etc. In the event of:
(a) any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any
shares of stock of any class or any other securities or property, or to receive any other right;
(b) any reclassification of the capital stock of the Company, capital reorganization of the
Company, consolidation or merger involving the Company, or sale or conveyance of all or
substantially all of its assets; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then in each such event the Company will provide or cause to be provided to the Holder a written
notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date
specified in such notice on which any such action is to be taken.
14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the
Company and accepted by each Holder on the basis of the following representations, warranties and
covenants made by the Company:
(a) The Company has all necessary authority to issue, execute and deliver this Warrant and to
perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and
delivered by the Company and is the valid and binding obligation of the Company, enforceable in
accordance with its terms.
(b) The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable.
(c) The issuance, execution and delivery of this Warrant do not, and the issuance of the
shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof
will not, (i) violate or contravene the Company’s Certificate or by-laws, or any law, statute,
regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result
in a breach or default under any contract, agreement or instrument to which
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the Company is a party or by which the Company or any of its assets are bound or (iii) require
the consent or approval of or the filing of any notice or registration with any person or entity.
(d) As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this
Warrant or any shares of Common Stock issued upon conversion of such shares of Preferred Stock are,
issued and outstanding, the Company will provide to the Holder the financial and other information
described in that certain Loan and Security Agreement No. 5271 between the Company and Lighthouse
Capital Partners V, L.P. dated as of June 7, 2006.
(e) So long as this Warrant has not terminated, Holder shall be entitled to receive such
financial and other information as the Holder would be entitled to receive under the Stock Purchase
Agreement applicable to the Preferred Stock if Holder were a holder of that number of shares
issuable upon full exercise of this Warrant.
(f) As of the date hereof, the authorized capital stock of the Company consists of (i)
50,400,000 shares of Common Stock, of which 5,353,660 shares are issued and outstanding and 499,535
shares are reserved for issuance upon the exercise of this Warrant with respect to Common Stock and
the conversion of the Preferred Stock into Common Stock if this Warrant is exercised with respect
to Preferred Stock, (ii) 10,650,000 shares of Series A Preferred Stock, all of which are issued and
outstanding shares, (iii) 7,751,935 shares of Series B Preferred Stock, all of which are issued and
outstanding shares, (iv) 4,416,961 shares of Series C Preferred Stock, all of which are issued and
outstanding shares, (v) 4,523,683 shares of Series D Preferred Stock, all of which are issued and
outstanding shares and (vi) 5,800,000 shares of Series E Preferred Stock, of which 5,203,500 are
issued and outstanding shares. Attached hereto as Exhibit B is a capitalization table summarizing
the capitalization of the Company. Upon request, but in no event more often than once per calendar
quarter, the Company will provide Holder with a current capitalization table indicating changes, if
any, to the number of outstanding shares of common stock and preferred stock.
15. Registration Rights. The Company grants to the Holder all the rights of a “Holder” and an
“Investor” under the Company’s Fourth Amended and Restated Investor Rights Agreement dated as of
May 19, 2006 (the “Rights Agreement”), including, without limitation, the registration rights
contained therein, and agrees to amend the Rights Agreement so that (i) the shares of Common Stock
issuable upon conversion of the shares of Preferred Stock issuable upon exercise of this Warrant
shall be “Registrable Securities,” and (ii) the Holder shall be a “Holder” and an “Investor” for
all purposes of such Rights Agreement.
16. Amendment. The terms of this Warrant may be amended, modified or waived only with the
written consent of the Holder.
17. Representations and Covenants of the Holder. This Warrant has been entered into by the
Company in reliance upon the following representations and covenants of the Holder, which by its
execution hereof the Holder hereby confirms:
(a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable
upon exercise of the Holder’s rights contained herein will be acquired for investment and not with
a view to the sale or distribution of any part thereof, and the Holder
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has no present intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.
(b) Accredited Investor. Holder is an “accredited investor” within the meaning of the
Securities and Exchange Rule 501 of Regulation D, as presently in effect.
(c) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise
of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under
applicable state securities laws on the ground that the issuance contemplated by this Warrant will
be exempt from the registration and qualifications requirements thereof, and (ii) that the
Company’s reliance on such exemption is predicated on the representations set forth in this Section
17.
(d) Financial Risk. The Holder has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment and has the ability
to bear the economic risks of its investment.
18. Notices, Transfers, Etc.
(a) Any notice or written communication required or permitted to be given to the Holder may be
given by certified mail or delivered to the Holder at the address most recently provided by the
Holder to the Company.
(b) Subject to compliance with applicable federal and state securities laws, this Warrant may
be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon
surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly
executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company,
together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a
portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall
issue to such Holder a new warrant covering the number of shares in respect of which this Warrant
shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall
issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and
substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of
any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence
reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.
19. No Impairment. The Company will not, by amendment of its Certificate or through any
reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance of performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder.
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20. Governing Law. The provisions and terms of this Warrant shall be governed by and
construed in accordance with the internal laws of the State of California without giving effect to
its principles regarding conflicts of laws.
21. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and
assigns and shall inure to the benefit of the Holder’s successors, legal representatives and
permitted assigns.
22. Business Days. If the last or appointed day for the taking of any action required or the
expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in
California, then such action may be taken or right may be exercised on the next succeeding day
which is not a Saturday or Sunday or such a legal holiday.
23. Qualifying Public Offering. If the Company shall effect a firm commitment underwritten
public offering of shares of Common Stock which results in the conversion of the Preferred Stock
into Common Stock pursuant to the Company’s Certificate in effect immediately prior to such
offering, then, effective upon such conversion, this Warrant shall change from the right to
purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder
shall thereupon have the right to purchase, at a total price equal to that payable upon the
exercise of this Warrant in full, the number of shares of Common Stock which would have been
receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock
immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock,
and in such event appropriate provisions shall be made with respect to the rights and interest of
the Holder to the end that the provisions hereof (including, without limitation, the provisions for
the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this
Warrant and the provisions relating to the net issue election) shall thereafter be applicable to
any shares of Common Stock deliverable upon the exercise hereof.
24. Value. The Company and Holder agree that the value of this Warrant on the date of grant
is $100.
| Success Acquisition Corporation |
||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | Assistant Secretary | |||
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Subscription
To:
Date:
The undersigned hereby subscribes for shares of Preferred Stock covered by this
Warrant. The undersigned hereby represents and warrants that the representations set forth in
Section 17 of this Warrant are true and correct as of the date of this Subscription. The
certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise
indicated below:
Signature
Name for Registration
Mailing Address
Net Issue Election Notice
To:
|
Date: |
The undersigned hereby elects under Section 4 to surrender the right to purchase shares of
Preferred Stock pursuant to this Warrant. The undersigned hereby represents and warrants that the
representations set forth in Section 17 of this Warrant are true and correct as of the date of this
Subscription. The certificate(s) for such shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below:
Signature
Name for Registration
Mailing Address
Assignment
For value received
hereby sells, assigns and transfers unto
Dated:
Signature
Name for Registration
In the Presence of:
