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: GRIC Communications, Inc., a California corporation
Number of Shares: 20,000 (subject to the provisions set forth below)
Class of Stock: Series D Preferred private placement.
Initial Exercise Price: The price given at the Series D private placement
financing.
Issue Date: December 31, 1998
Expiration Date: December 31, 2003
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
series 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.
For purposes of determining the foregoing, Holder shall be entitled to
purchase 20,000 Shares upon the execution of this Warrant. Notwithstanding
the foregoing or anything to the contrary provided herein, in the event the
Company closes its Series D private placement financing on or before
March 20, 1999, Holder shall only be entitled to purchase 5,000 Shares under
this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by
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
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 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 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 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, 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.
In the event of an Acquisition, as part of such Acquisition lawful provision
shall be made so that there shall thereafter be deliverable upon the exercise
of this Warrant or any portion thereof (in lieu of or in addition to the
number of Shares theretofore deliverable, as appropriate), and without
payment of any additional consideration, the number of shares of stock or
other securities or property to which the holder of the number of Shares
which would otherwise have been deliverable upon the exercise of this Warrant
or any portion thereof at the time of such Acquisition would have been
entitled to receive in such Acquisition. This Section 1.7 shall apply to
successive Acquisitions and to the stock or securities of any other
corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to Holder for Shares in
connection with any transaction described in this Section 1.7 is in a form
other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by Company's Board of
Directors.
1.7.2. ASSUMPTION OF WARRANT. Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or
pays a dividend on its common stock (or the Shares if the Shares are
securities other than common stock) payable in common stock, or other
securities, subdivides the outstanding common stock into a greater amount of
common stock, or, if the Shares are securities other than common stock,
subdivides the Shares in a transaction that increases the amount of common
stock into which the Shares are convertible, 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 Xxxxxx would have
been entitled had Xxxxxx 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 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 are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares, the Warrant Price shall be proportionately increased.
2.4 WEIGHTED AVERAGE ANTIDILUTION ADJUSTMENT. If at any time or
from time to time after the date of this Warrant the Company issues or sells
additional shares of Preferred Stock (as defined in the Company's Articles of
Incorporation) otherwise than (1) in connection with an Acquisition as
provided in Section 1.7; (2) splits or combinations as provided in section
2.1; and (3) reclassifications as provided in section 2.2 or (4) any
liquidation or dissolution for an effective price (as hereinafter defined)
that is less than Warrant Price in effect immediately
prior to such issue or sale, then, and in each such case, the Warrant Price
shall be reduced, as of the close of business on the date of such issue or
sale, by multiplying it by a fraction (the "APPLICABLE FRACTION"):
(i) The numerator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding (as hereinafter defined)
immediately prior to such issue or sale of additional shares of Preferred
Stock plus (B) the quotient obtained by dividing the Aggregate Consideration
Received (as hereinafter defined) by the Company for the total number of
additional shares of Preferred Stock so issued or sold (or deemed so issued
and sold) by the Warrant Price in effect immediately prior to such issue or
sale; and
(ii) The denominator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding immediately prior to such
issue or sale plus (B) the number of additional shares of Preferred Stock so
issued or sold (or deemed so issued and sold);
and the total number of Warrant Shares shall be increased as of the close of
business on the date of such issue or sale, by multiplying it by a fraction
equal to the reciprocal of the Applicable Fraction.
(b) CERTAIN DEFINITIONS. For the purpose of making
any adjustment required under this Section 2.4:
(i) The "AGGREGATE CONSIDERATION RECEIVED" by
the Company for any issue or sale (or deemed issue or sale) of securities
shall (A) to the extent it consists of cash, be computed at the gross amount
of cash received by the Company before deduction of any underwriting or
similar commissions, compensation or concessions paid or allowed by the
Company in connection with such issue or sale and without deduction of any
expenses payable by the Company; (B) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined
in good faith by the Board; and (C) if additional shares of Preferred Stock
are issued or sold together with other stock or securities or other assets of
the Company for a consideration which covers both, be computed as the portion
of the consideration so received that may be reasonably determined in good
faith by the Board to be allocable to such additional shares of Preferred
Stock.
(iii) "COMMON STOCK EQUIVALENTS OUTSTANDING"
shall mean the number of shares of Common Stock that is equal to the sum of
(A) all shares of Common Stock of the Company that are outstanding at the
time in question, plus (B) all shares of Common Stock of the Company issuable
upon conversion of all shares of Preferred Stock or other Convertible
Securities that are outstanding at the time in question, plus (C) all shares
of Common Stock of the Company that are issuable upon the exercise of Rights
or Options that are outstanding at the time in question assuming the full
conversion or exchange into Common Stock of all such Rights or Options that
are Rights or Options to purchase or acquire Convertible Securities into or
for Common Stock.
(iv) "CONVERTIBLE SECURITIES" shall mean stock
or other securities convertible into or exchangeable for shares of Common
Stock.
(v) The "EFFECTIVE PRICE" of any issuance of
additional shares of Preferred Stock shall mean the quotient determined by
dividing the total number of additional shares of Preferred Stock issued or
sold by the Company under this Section 2.4, into the Aggregate Consideration
Received, or deemed to have been received, by the Company under this
Section 2.4, for the issue of such additional shares of Preferred Stock; and
(vi) "RIGHTS OR OPTIONS" shall mean warrants,
options or other rights to purchase or acquire shares of Common Stock or
Convertible Securities.
2.5 NO IMPAIRMENT. The Company shall not, by amendment of its
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. If the Company takes any action affecting the Shares or
its common stock other than as described above that adversely affects
Holder's rights under this Warrant, the Warrant Price shall be adjusted
downward and the number of Shares issuable upon exercise of this Warrant
shall be adjusted upward in such a manner that the aggregate Warrant Price of
this Warrant is unchanged.
2.6 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 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.
2.7 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 (i) the price per share at which the
Shares were last issued in an arms-length transaction in which at least
$500,000 of the Shares were sold and (ii) 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.
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; (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
20 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 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); 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 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 notices or other written communications
to the shareholders of the Company, (b) within ninety (90) 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) such other financial statements required under
and in accordance with any loan
documents between Holder and the Company (or if there are no such
requirements [or if the subject loan(s) no longer are outstanding]), then
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. Within
sixty (60) days after the execution and delivery of this Warrant, Company
shall use its best efforts to cause Holder to become a party to the Third
Amended and Restated Registration Rights Agreement, dated as of December 24,
1997, as amended after December 24, 1997, by and among Company and the
shareholders of Company named therein, attached hereto as EXHIBIT "A".
("Rights Agreement") and Holder shall be deemed a "Securityholder" and a
"Holder", as defined in the Rights Agreement, for purposes of the Rights
Agreement and shall be entitled to all the rights, and be subject to all the
obligations, of a Holder under the Rights Agreement, the Shares shall be
deemed "Series D Preferred Stock", as defined in the Rights Agreement, and
the Common Stock issuable upon conversion of the Shares shall be deemed
"Registrable Securities", as defined in the Rights Agreement, for purposes of
the Rights Agreement. Such actions shall be effected by Company executing and
delivering to Holder a fully-executed Amendment to Rights Agreement
substantially in the form of EXHIBIT "B" hereto.
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.
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:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF
SUCH SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR HOLDER,
REASONABLY SATISFACTORY TO COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
ARTICLE 4 OF THE WARRANT UNDER WHICH THIS SECURITY WAS ISSUED.
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant
and 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 reasonable 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
4.3 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) at any time to Silicon
Valley Bancshares or The Silicon Valley Bank Foundation, 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
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 (and in such event Holder shall not
transfer the Shares issuable upon exercise of this Warrant) to any person who
directly competes with the Company.
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.
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.
"COMPANY"
GRIC Communications, Inc.
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name: Xxxx Xxxxxxx, President and COO
--------------------------------
(Print)
Chairman of the Board, President or Vice
President
By: /s/ Xxxxx X. Xxxxxxxxx
Vice President, General Counsel
and Secretary
GRIC Communications, Inc.
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
--------------------------------
(Print)
Chief Financial Officer, Secretary,
Assistant Treasurer or Assistant Secretary
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares of
the Common/Preferred Series _____ [Strike one] Stock of GRIC Communications,
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/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.]
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.
(Signature)
(Date)
EXHIBIT A
Third Amended and Restated Registration Rights Agreement
[Copy Attached]
EXHIBIT B
Amendment No. 2 to Third Amended and Restated Registration Rights Agreement
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: GRIC Communications, Inc.
LOAN OFFICER: Xxxx Xxx
DATE: January 28, 1999
Loan Fee $2,500.00
TOTAL FEE DUE $2,500.00
------------- ---------
---------
( ) A check for the total amount is attached.
(X) Debit DDA #3300024990 for the total amount.
Borrower:
/s/ Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
---------------------------------- Vice President, General Counsel
(Authorized Signer) and Secretary
GRIC Communications, Inc.
Silicon:
/s/ Xxxx Xxx 1/28/99
----------------------------------
Silicon Valley Bank (Date)
Account Officer's Signature
