EXHIBIT 10.57
THE ORIGINAL COMMON STOCK WARRANT WAS ISSUED BY THE COMPANY PURSUANT TO THE
LOAN AGREEMENT, DATED MAY 5, 1992, BETWEEN THE COMPANY AND THE PURCHASER, AS
DEFINED BELOW. THIS AMENDED AND RESTATED COMMON STOCK WARRANT HAS BEEN
ISSUED UPON SURRENDER OF THE EXISTING COMMON STOCK WARRANT PURSUANT TO THAT
CERTAIN STOCK PURCHASE AGREEMENT DATED AS OF JUNE 30, 1995.
Debtor Name: Wasatch Education Systems Corporation
Exhibit B-4 to Stock Purchase Agreement
Document defined as "Restated Warrant"
Originally Issued as of May 5, 1992, (1) Aggregate Price:
$325,000.52
(2) Warrant Price:
Restated as of the 30th day $1.31 ,
of June , 1995 subject to adjustment as
provided herein
(3) Number of Shares Currently
Subject to Warrant: 248,092,
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF,
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER
APPLICABLE SECURITIES LAWS ("STATE SECURITIES LAWS"), AND THIS WARRANT HAS
BEEN, AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE,
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE
MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES
ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID
REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH.
RESTATED COMMON STOCK WARRANT
This certifies that TECHNOLOGY FUNDING SECURED INVESTORS II, A CALIFORNIA
LIMITED PARTNERSHIP ("Purchaser"), whose principal executive office is
located at 0000 Xxxxxxx xx xxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, or any
party to whom this Warrant is assigned in compliance with the terms hereof
(Purchaser and any such assignee being hereinafter sometimes referenced as
"Holder"), is entitled to subscribe for and purchase, during the period
commencing at the issue date set forth above and ending at 5:00 p.m., San
Mateo, California, local time, on June 30, 2000, the number of shares of
fully paid and nonassessable Common Stock of WASATCH EDUCATION SYSTEMS
CORPORATION, a Utah corporation (the "Company"), that have an aggregate
purchase price equal to the Aggregate Price as defined below. The purchase
price of each such share shall be equal to the Warrant Price, as defined
below. This Warrant was issued to Purchaser pursuant to the Stock Purchase
Agreement (as defined below). Capitalized terms used and not otherwise
defined herein shall have the same meanings given such terms in the Stock
Purchase Agreement.
ARTICLE I
DEFINITIONS
1.1 "Additional Warrant Terms" shall mean the additional provisions set
forth on Exhibit "A". Any reference to a Section or Article of this Warrant
shall be deemed for all purposes hereof to additionally refer to the
corresponding Section or Article of the Additional Warrant Terms set forth on
Exhibit "A". In the case of any inconsistency, the terms set forth on
Exhibit "A" shall control over the terms in the main body of this Warrant
(this uniform part of the Warrant being referred to as the "Standard Warrant
Terms"). As to this particular Warrant, the Sections in the Standard Warrant
Terms which are affected or modified by the Additional Warrant Terms include,
but are not necessarily limited to, the following:
1.2, 1.11, 3.1
1.2 "Aggregate Price" shall mean the price set forth in or determined by the
Additional Warrant Terms attached as Exhibit "A" hereto.
1.3 "Common Stock Equivalents" means Convertible Securities and Rights.
1.4 "Convertible Securities" means any securities which are directly or
indirectly convertible into Common Stock.
1.5 "Dilution Sale" shall refer to circumstances where the Company issues or
sells shares of its Common Stock for a price per share less than the Warrant
Price as adjusted and then in effect, or issues or sells Common Stock
Equivalents in a manner described in Section 3.4 (in each case, other than:
(i) in a transaction or as the result of a transaction described in Sections
3.2, 3.3 or 3.5 hereof, (ii) Common Stock or Common Stock Equivalents issued
to any employee, officer, director, consultant or other individual performing
services for the Company pursuant to a stock option, stock purchase or other
equity incentive plan for employees or other persons performing services for
the Company and which plan is approved by the Board of Directors, or (iii)
upon exercise or conversion of Common Stock Equivalents outstanding on the
date of original issue of this Warrant).
1.6 "Effective Price" means the quotient obtained by dividing (i) Minimum
Consideration by (ii) Maximum Shares Upon Exercise.
1.7 "Stock Purchase Agreement" shall mean the Stock Purchase Agreement
between the Purchaser and the Company, dated as of the 30th day of June, 1995.
1.8 "Maximum Shares Upon Exercise" means the maximum number of shares of
Common Stock issuable under a Common Stock Equivalent upon complete exercise
and full conversion of all Rights and Convertible Securities represented
thereby, computed without regard to contingent adjustments to the number of
shares issuable upon such exercise and conversion (other than adjustments
caused solely by the passage of time which increase the number of shares
issuable upon exercise and conversion).
1.9 "Minimum Consideration" means the minimum aggregate consideration paid
or payable at any time for the purchase of the Common Stock Equivalents and
for complete exercise and full conversion of the Common Stock Equivalents,
computed without regard to contingent adjustments to exercise or conversion
price (other than adjustments caused solely by the passage of time which
reduce such minimum aggregate consideration).
1.10 "Rights" means any options, warrants, or rights to purchase Common
Stock or Convertible Securities.
1.11 "Warrant Price" shall mean the purchase price of each such share as set
forth in or determined by the Additional Warrant Terms on Exhibit "A" hereto,
as such amount may be adjusted from time to time pursuant to the terms hereof.
ARTICLE II
EXERCISE AND PAYMENT
Cash Exercise. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this Warrant at
the principal office of the Company, located at the address set forth on the
signature page hereof, accompanied by the form of Notice of Cash Exercise
attached hereto as Exhibit "B-1", and by the payment to the Company, by cash
or by certified, cashier's or other check acceptable to the Company, of an
amount equal to the aggregate Warrant Price of the shares being purchased.
2.2 Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive shares equal to the value of this
Warrant determined in the manner described below (or of any portion thereof
remaining unexercised) by surrender of this Warrant at the principal office
of the Company together with the form of Notice of Cashless Exercise attached
hereto as Exhibit "B-2", in which event the Company shall issue to Holder a
number of shares of the Company's Common Stock computed using the following
formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under
this Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation).
B = Warrant Price (as adjusted to the date of such
calculation).
2.3 Fair Market Value. For purposes of this Article II, fair market value
of one share of the Company's Common Stock shall mean:
(i) The average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary, the last reported sale price
of the Common Stock or the closing price quoted on the NASDAQ National Market
System ("NMS") or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of The Wall
Street Journal for the ten (10) trading days prior to the date of
determination of fair market value; or
(ii) If the Common Stock is not traded Over-The-Counter, on the NMS or on
an exchange, the per share fair market value of the Common Stock shall be as
determined by mutual agreement of the Company and the Holder; provided,
however that if such agreement cannot be reached within twenty (20) calendar
days, such value shall be determined by an independent appraiser appointed in
good faith by the Company's Board of Directors. The cost of such appraisal
shall be borne by the Company.
2.4 Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to Holder within a reasonable time and, unless
this Warrant has been fully exercised or has expired, a new Warrant
representing the remaining unexercised Aggregate Price shall also be issued
to Holder at such time.
2.5 Automatic Exercise. To the extent this Warrant is not previously
exercised, and if the fair market value of one share of the Company's Common
Stock is greater than the Warrant Price, as adjusted, this Warrant shall be
deemed automatically exercised in accordance with Section 2.2 hereof (even if
not surrendered) immediately before its expiration. For purposes of such
automatic exercise, the fair market value of one share of the Company's
Common Stock upon such expiration shall be the fair market value determined
pursuant to Section 2.3 above. To the extent this Warrant or any portion
thereof is deemed automatically exercised pursuant to this Section 2.5, the
Company agrees to notify Holder within a reasonable period of time of the
number of shares of the Company's Common Stock, if any, Holder is to receive
by reason of such automatic exercise.
2.6 Stock Fully Paid; Reservation of Shares. The Company covenants and
agrees that all securities which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof (excluding taxes based on the income of Holder). The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved for issuance a sufficient number of shares of
its Common Stock or other securities as would be required upon the full
exercise of the rights represented by this Warrant.
2.7 Fractional Shares. No fractional share of Common Stock will be issued in
connection with any exercise hereof; in lieu of a fractional share upon
complete exercise hereof, Holder may purchase a whole share by delivering
payment equal to the appropriate portion of the then effective Warrant Price.
ARTICLE III
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
3.1 Weighted Average Adjustment. If the Company issues or sells shares of
its Common Stock in a Dilution Sale:
3.1.1 Subject to Section 3.1.4 below, the Warrant Price shall be adjusted
to an amount equal to the quotient obtained by dividing (i) the sum of (a)
Aggregate Price, plus (b) the consideration received by the Company from all
sales subsequent to the original issue of this Warrant of (X) Common Stock
(excluding sales of Common Stock pursuant to stock option, stock purchase or
other equity incentive plans for employees or other persons performing
services for the Company if such plan is approved by the Board of Directors),
(Y) Common Stock Equivalents sold in Dilution Sales, plus (Z) Convertible
Securities as provided in Section 3.1.2, by (ii) a number equal to the sum of
(a) Aggregate Price divided by the initial Warrant Price as adjusted for
stock splits, combinations of shares and stock dividends as set forth in
Sections 3.3 and 3.5 but not as previously adjusted by Section 3.1 or 3.4,
plus (b) the sum of (X) number of shares of Common Stock issued subsequent
to the original issue of this Warrant (excluding sales of Common Stock
pursuant to stock option, stock purchase or other equity incentive plans for
employees or other persons performing services for the Company if such plan
is approved by the Board of Directors), (Y) the Maximum Shares Upon Exercise
of Common Stock Equivalents sold in Dilution Sales subsequent to the original
issue of this Warrant, plus (Z) the Maximum Shares Upon Exercise of
Convertible Securities which are not debt securities issued subsequent to
the original issue of this Warrant (as provided in Section 3.1.2), in all
cases adjusted for stock splits, combinations of shares and stock dividends
occurring after the date of issue of the relevant security.
3.1.2 For purposes of Section 3.1.1, the sale of Convertible Securities
which are not debt securities, if such sale is not a Dilution Sale, shall be
treated as the sale of a number of shares of Common Stock equal to the
Maximum Shares Upon Exercise relating to such Convertible Securities at a
consideration equal to the product of (i) the Effective Price and (ii) the
Maximum Shares Upon Exercise. Debt securities not sold in Dilution Sales
shall be excluded from calculations under Section 3.1.1.
3.1.3 If a sale occurs prior to the date the Warrant Price is fixed under
the Additional Warrant Terms, and such sale would be a Dilution Sale based on
such initial price, then the Warrant Price when determined shall be adjusted
as set forth herein to reflect all such Dilution Sales. This Section 3.1.3
applies if the Warrant Price is not fixed and is therefore subject to
adjustment by the Additional Warrant Terms, i.e., in the event the Additional
Warrant Terms specify adjustment to the Warrant Price separate and apart
from that provided by these Standard Warrant Terms. In the event the Warrant
Price is initially fixed by the Additional Warrant Terms, this Section 3.1.3
shall not be applicable.
3.1.4 Under no circumstances shall the Warrant Price be increased as a
result of Sections 3.1, 3.4.1 or 3.4.2.
3.2 Reclassification, Consolidation or Merger. In case of: (i) any
reclassification or change of outstanding securities issuable upon exercise
of this Warrant; (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result in any
reclassification, change or exchange of outstanding securities issuable upon
exercise of this Warrant); or (iii) any sale or transfer to another
corporation of all, or substantially all, of the property of the Company,
then, and in each such event, the Company or such successor or purchasing
corporation, as the case may be, shall execute a new Warrant of like form,
tenor and effect and which will provide that Holder shall have the right to
exercise such new Warrant and purchase upon such exercise, in lieu of each
share of Common Stock theretofore issuable upon exercise of this Warrant,
the kind and amount of securities, money and property receivable upon such
reclassification, change, consolidation, merger, sale or transfer by a holder
of one share of Common Stock issuable upon exercise of this Warrant had this
Warrant been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or transfer. Such new Warrant shall be as nearly
equivalent in all substantive respects as practicable to this Warrant, and
the adjustments provided in this Article III and the provisions of this
Section 3.2 shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.
3.3 Subdivision or Combination of Shares. If the Company shall at any time
while this Warrant remains outstanding and less than fully exercised: (i)
divide its Common Stock, the Warrant Price shall be proportionately reduced;
or (ii) shall combine shares of its Common Stock, the Warrant Price shall be
proportionately increased.
3.4 Issue or Sale of Common Stock Equivalents.
3.4.1 The issue or sale of Common Stock Equivalents (excluding Common
Stock and Common Stock Equivalents issued pursuant to any stock option, stock
purchase or other equity incentive plan for employees or other persons
performing services for the Company and which plan is approved by the Board
of Directors) for an Effective Price less than the Warrant Price, as adjusted
and as then in effect, shall be a Dilution Sale and the Warrant Price shall
be adjusted as set forth in Section 3.1 hereof, provided that for the
purposes of such adjustments: (i) the consideration received for such
Dilution Sale shall be the Minimum Consideration received in such sale; and
(ii) the number of shares issued in the present Dilution Sale shall be the
Maximum Shares Upon Exercise for such Common Stock Equivalents.
3.4.2 In the event a Dilution Sale or other sale of Common Stock
Equivalents has occurred during the term hereof and a contingent event not
considered in the computation of Minimum Consideration or Maximum Shares Upon
Exercise occurs, which if considered at the time of the Dilution Sale or at
the time of another sale of Common Stock or Common Stock Equivalents would
have had the effect of reducing the Warrant Price, the Warrant Price shall be
retroactively adjusted to reflect such contingent event and additional shares
of Common Stock or other securities as required hereunder shall be issued to
Holder, if it previously exercised all or any part of its rights hereunder,
to reflect the additional shares to which Holder would have been entitled had
the retroactively adjusted Warrant Price been in effect on the date of
exercise of such rights.
3.4.3 If the Company has issued Common Stock Equivalents subsequent to the
date of original issue of this Warrant, and any of said Common Stock
Equivalents subsequently expire without being converted or exercised, by
reason of lapse of time or otherwise and (except payment of the principal,
interest and a reasonable prepayment premium or the redemption price and a
reasonable redemption premium in the case of a convertible note or preferred
stock voluntarily paid or redeemed by the Company, respectively) without
payment of any kind or nature to, or for the direct or indirect benefit of,
any present or prior holder of the Common Stock Equivalents by any party in
connection with such Common Stock Equivalents, then, and in such event, the
Warrant Price shall be recalculated and adjusted in accordance with Section 3
hereof as if such Common Stock Equivalents had never been issued by taking
into account all events which would have been Dilution Sales if such Common
Stock Equivalents are disregarded; provided, however, that this Section 3.4.3
shall not have any effect on any exercise of this Warrant prior to the
expiration date of such expired Common Stock Equivalents.
3.4.4 An amendment to the terms and conditions of a Common Stock
Equivalent (e.g., an amendment to the Company's Articles or Certificate of
Incorporation) which has the effect of reducing the Effective Price of such
Common Stock Equivalent shall be treated for purposes of Section 3 of this
Warrant as the sale of new Common Stock Equivalents for the consideration
previously received upon sale of such Common Stock Equivalent prior to such
amendment. Such new sale shall be deemed to have occurred on the effective
date of such amendment. Concurrent with such date for purposes of Section 3
of this Warrant, the Common Stock Equivalents to be amended which are issued
and outstanding immediately prior to such amendment shall be deemed to be
terminated without exercise or conversion and the Warrant Price shall be
adjusted pursuant to Section 3.4.3. Such adjustment to the Warrant Price
pursuant to Section 3.4.3 shall be made before the adjustment to the Warrant
Price required under this Section 3.4.4.
3.5 Stock Dividends. If the Company, at any time while this Warrant is
outstanding and unexpired, shall pay a dividend payable in, or make any other
distribution to holders of, Common Stock or Common Stock Equivalents (except
any distribution described in Sections 3.2 and 3.3 hereof) then the Warrant
Price shall be adjusted to that price determined by multiplying the Warrant
Price then in effect by a fraction, the numerator of which shall be the sum
of (i) the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (ii) the Maximum Shares Upon
Exercise of all Common Stock Equivalents outstanding immediately prior to
such dividend or distribution, and the denominator of which shall be the sum
of (i) the total number of shares of Common Stock outstanding immediately
after such dividend or distribution and (ii) the Maximum Shares Upon Exercise
of the total Common Stock Equivalents outstanding after such dividend or
distribution.
3.6 Dilution in Case of Other Stock or Securities. In case any securities,
other than Common Stock of the Company, shall at the time be receivable by
Holder upon the exercise of this Warrant, and in case any additional shares
of such securities or any securities convertible into or exchangeable for
such securities shall be issued or sold for a consideration per share such as
to dilute the purchase rights evidenced by this Warrant, then and in each
such case the Warrant Price and the number of shares purchasable hereunder
shall be adjusted substantially in the manner provided in this Section 3, so
as to protect Holder against the effect of such dilution.
3.7 Expenses Deducted. For purposes of this Section 3, upon any issuance or
sale of any Common Stock, Common Stock Equivalents, or other securities, the
consideration received therefor shall be deemed to be the amount received by
the Company (after deducting underwriting or similar commissions,
compensation or concessions paid or allowed by the Company in connection with
such issue or sale, to the extent that the aggregate of all such commissions
and expenses exceed 15% of the consideration received by the Company).
3.8 Determination of Value of Non-Cash Consideration. Upon any issuance or
sale for a consideration other than cash, or a consideration part of which is
other than cash, of any shares of Common Stock, Common Stock Equivalents, or
other securities, the amount of the consideration other than cash received by
the Company shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Company. In case
any Common Stock or Common Stock Equivalents shall be issued or sold together
with other securities or assets of the Company for a consideration which
covers both, the consideration for the issue or sale of such Common Stock or
Common Stock Equivalents shall be deemed to be the portion of such
consideration allocated thereto in good faith by the Board of Directors of
the Company.
3.9 Other Action Affecting Common Stock. If the Company takes any action
affecting its Common Stock after the date hereof, other than an action
described in any of Sections 3.1 through 3.6 hereof inclusive, which would
have an adverse effect upon Holder's rights hereunder, the Warrant Price
shall be adjusted downward and the number of shares purchasable hereunder
adjusted upward in such manner and at such time as the Board of Directors of
the Company shall in good faith determine to be equitable under the
circumstances.
3.10 Time of Adjustments to the Warrant Price. All adjustments to the
Warrant Price and the number of shares purchasable hereunder, unless
otherwise specified herein, shall be effective as of the earlier of:
(i) the date of issue of the security causing the adjustment;
(ii) the date of sale of the security causing the adjustment;
(iii) the effective date of a division or combination of shares;
(iv) the record date of any action of holders of any class of the
Company's capital stock taken for the purpose of entitling shareholders to
receive a distribution or dividend payable in Common Stock or Common Stock
Equivalents, provided that such division, combination, distribution or
dividend actually occurs.
If the Company shall issue Common Stock Equivalents with different Effective
Prices and such Common Stock Equivalents would under this Section 3.10
require adjustments to the Warrant Price on the same day, then the Warrant
Price and the number of shares purchasable hereunder shall be adjusted
seriatim for each type of Common Stock Equivalent with a different Effective
Price, adjusting the Warrant Price and the number of shares purchasable
hereunder first for the Common Stock Equivalent with the highest Effective
Price, followed by the adjustment for the Common Stock Equivalent with the
next highest Effective Price and so on until all adjustments to the Warrant
Price and the number of shares purchasable hereunder have been made.
3.11 Notice of Adjustments in Warrant Price. On the occurrence of each
adjustment and readjustment of the Warrant Price (and number of shares
purchasable hereunder), the Company, at its expense, shall promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant
and shall cause to be prepared and furnished to Holder a Certificate
(executed by the Company's President or Chief Financial Officer) setting
forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based, including: (i) the
consideration received or to be received by the Company for any additional
shares of Common Stock or Common Stock Equivalents issued or sold or deemed
to have been issued or sold; (ii) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (iii) the adjusted Warrant Price.
As a part of the annual audit performed by the Company's independent certified
public accountants, the Company shall cause such accountants to review and
verify the calculations contained in any Certificate specified above, which
verification shall be confirmed in writing to the Holder by the accounting
firm (unless such verification is waived by Holder at or after the time of
receipt of such Certificate of adjustment from the Company). The Company
shall, upon the written request at any time of Holder, furnish or cause to be
furnished to Holder a like Certificate setting forth: (i) all such adjustments
and readjustments to date; (ii) the Warrant Price at that time in effect; and
(iii) the number of shares which at the time would be received upon exercise.
All certificates and verifications provided to Holder in accordance with
this Section shall be mailed or otherwise sent in accordance with Section 6.8
of this Warrant.
3.12 Duration of Adjusted Warrant Price. Following each adjustment of the
Warrant Price, such adjusted Warrant Price shall remain in effect until a
further adjustment of the Warrant Price.
3.13 Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price pursuant to this Article III, the number of shares of Common Stock
purchasable hereunder shall be adjusted to the nearest whole share, to the
number obtained by dividing the Aggregate Price by the Warrant Price as
adjusted.
ARTICLE IV
TRANSFER, EXCHANGE AND LOSS
4.1 Transfer. This Warrant is transferable on the books of the Company at
its principal office by the registered Holder hereof upon surrender of this
Warrant properly endorsed, subject to compliance with federal and state
securities laws. The Company shall issue and deliver to the transferee a new
Warrant or Warrants representing the Warrants so transferred. Upon any
partial transfer, the Company will issue and deliver to Holder a new Warrant
or Warrants with respect to the Warrants not so transferred. Notwithstanding
the foregoing, Holder shall not be entitled to transfer a number of shares or
an interest in this Warrant representing less than five percent (5%) of the
aggregate shares initially covered by this Warrant (as presently constituted,
with appropriate adjustment being made in the event of stock splits,
combinations, reorganizations and the like occurring after the issue date
hereof). Holder shall not have any right to transfer any portion of this
Warrant to any direct competitor of the Company. Any transferee shall be
subject to the same restrictions on transfer with respect to this Warrant as
the Purchaser.
4.1 Securities Laws. In connection with the issuance to Purchaser of this
Warrant, Purchaser agrees to execute an investment intent letter in such form
as reasonably requested by the Company and its counsel and as may be required
to comply with federal and applicable state securities laws. Upon any
issuance of shares of Common Stock upon exercise of this Warrant, it shall
be the Company's responsibility to comply with the requirements of: (1) the
1933 Securities Act; (2) the Securities Exchange Act of 1934, as amended; (3)
any applicable listing requirements of any national securities exchange; (4)
any state securities regulation or "Blue Sky" laws; and (5) requirements
under any other law or regulation applicable to the issuance or transfer of
such shares. If required by the Company, in connection with each issuance of
shares of Common Stock upon exercise of this Warrant, the Holder will give:
(i) assurances in writing, satisfactory to the Company, that such shares are
not being purchased with a view to the distribution thereof in violation of
applicable laws, (ii) sufficient information, in writing, to enable the
Company to rely on exemptions from the registration or qualification
requirements of applicable laws, if available, with respect to such exercise,
and (iii) its cooperation to the Company in connection with such compliance.
4.3 Exchange. This Warrant is exchangeable at the principal office of the
Company for Warrants which represent, in the aggregate, the Aggregate Price
hereof; each new Warrant to represent the right to purchase such portion of
the Aggregate Price as Holder shall designate at the time of such exchange.
Each new Warrant shall be identical in form and content to this Warrant,
except for appropriate changes in the number of shares of Common Stock
covered thereby, the Aggregate Price of such shares, the percentage stated in
Section 4.1 above, and any other changes which are necessary in order to
prevent the Warrant exchange from changing the respective rights and
obligations of the Company and the Holder as they existed immediately prior
to such exchange.
4.4 Loss or Mutilation. Upon receipt by the Company of evidence satisfactory
to it of the ownership of, and the loss, theft, destruction or mutilation of,
this Warrant and (in the case of loss, theft, or destruction) of indemnity
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant.
ARTICLE V
HOLDER RIGHTS
5.1 No Shareholder Rights Until Exercise. No Holder hereof, solely by
virtue hereof, shall be entitled to any rights as a shareholder of the
Company. Holder shall have all rights of a shareholder with respect to
securities purchased upon exercise hereof as provided in Article II hereof.
5.1 Right to Participate in Dilution Sales. In the event the Company
proposes to issue or sell shares of its Common Stock or Common Stock
Equivalents in a Dilution Sale, the Company shall give Holder written notice
of such proposed Dilution Sale (which shall include a description of the
securities proposed to be issued, the price, and the general terms upon which
the Company proposes to issue the same) and shall offer to sell to Holder
that quantity of such securities which will enable Holder to maintain its pro
rata equity interest in the Company. Holder's pro rata equity interest in
the Company, for purposes of this right of participation, shall be calculated
based upon the ratio the number of shares of Common Stock held by such Holder
bears to all shares of Common Stock then issued and outstanding, in each
instance calculated assuming complete exercise of all options, warrants
(including this Warrant) or other rights to purchase Common Stock and the
conversion of all securities convertible into Common Stock. Holder shall
have ten (10) days from receipt of such notice to agree to purchase all or
any part of the securities so offered by delivery of written notice thereof
to the Company stating the quantity of securities to be purchased. Any
purchase of securities by the Holder shall be made at the price and upon the
same terms as specified in the Company's notice; provided, however, that the
purchase price for any such securities purchased by Holder hereunder shall
by payable either in cash or, at Holder's option, by offsetting any amounts
due Holder in inverse order of maturity pursuant to the Note. The Company
shall have ninety (90) days after it provides written notice of a Dilution
Sale to Holder (whether or not Holder has yet provided notice of its intent
to purchase the securities so offered) to sell such securities at a price and
upon general terms no more favorable than those specified in the Company's
notice. If the Company has not sold such securities within such ninety (90)
day period, the Company shall not thereafter issue or sell any such securities
, without first offering such securities to Holder in the manner provided
above. The rights of Holder under this Section 5.2 shall not apply to
securities issued pursuant to the Company's initial offering and sale of
securities as part of a firmly underwritten public offering registered under
the 1933 Securities Act and the rights of Holder under this Section 5.2
shall terminate upon the closing of such initial public offering.
5.3 Registration Rights Under 1933 Securities Act. Holder shall be entitled
to the registration rights contained in the Registration Rights Agreement.
The rights to cause the Company to register securities granted Holder
hereunder may not be assigned or transferred except in connection with an
assignment or transfer of all or any part of this Warrant pursuant to Article
IV above, or the assignment or transfer of securities purchased upon exercise
hereof, subject in each case to restrictions set forth in the Registration
Rights Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Governmental Approvals. The Company will from time to time take all
action which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and
securities acts filings under federal and state laws, which may be or become
requisite in connection with the issuance, sale, and delivery of this Warrant
, and the issuance, sale and delivery of the Common Stock or other securities
or property issuable or deliverable upon exercise of this Warrant.
6.2 GOVERNING LAWS. IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT
AS SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF
THIS WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND
ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO. NOTWITHSTANDING
THE FOREGOING, IF THE COMPANY IS ORGANIZED UNDER THE LAWS OF A STATE OTHER
THAN CALIFORNIA, THE CORPORATION LAWS OF THAT STATE SHALL GOVERN THE
PROCEDURAL AND SUBSTANTIVE MATTERS PERTAINING TO THE DUE AUTHORIZATION,
ISSUANCE, DELIVERY AND EXERCISE OF THIS WARRANT AND OF THE CAPITAL STOCK UPON
EXERCISE HEREOF (INCLUDING ANY CAPITAL STOCK ISSUABLE UPON CONVERSION OF ANY
CONVERTIBLE SECURITY ISSUABLE UPON EXERCISE HEREOF). EXCEPT AS SET FORTH
BELOW, THE PARTIES HEREBY AGREE THAT ANY SUIT TO ENFORCE ANY PROVISION OF
THIS WARRANT ARISING OUT OF OR BASED UPON THIS WARRANT OR THE BUSINESS
RELATIONSHIP BETWEEN ANY OF THE PARTIES HERETO SHALL BE BROUGHT IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR THE SUPERIOR
OR MUNICIPAL COURT IN AND FOR THE COUNTY OF SAN MATEO, CALIFORNIA, U.S.A.
EACH PARTY HEREBY AGREES THAT SUCH COURTS SHALL HAVE IN PERSONAM JURISDICTION
AND VENUE WITH RESPECT TO SUCH PARTY, AND EACH PARTY HEREBY SUBMITS TO THE IN
PERSONAM JURISDICTION AND VENUE OF SUCH COURTS. IN ADDITION TO THE FOREGOING
JURISDICTION, HOLDER, AT ITS SOLE OPTION, MAY COMMENCE ANY SUCH SUIT IN ANY
JURISDICTION IN WHICH THE COMPANY HAS A BUSINESS OFFICE OR IS INCORPORATED.
6.3 Binding Upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms, provisions,
and agreements contained herein shall be binding upon, and inure to the
benefit of the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
6.4 Severability. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Warrant and the application of such
provisions to other persons or circumstances shall be interpreted so as best
to reasonably effect the intent of the parties hereto. The parties further
agree to replace any such void or unenforceable provisions of this Warrant
with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or
unenforceable provisions.
6.5 Default, Amendment and Waivers. This Warrant may be amended upon the
written consent of the Company and those Persons holding in the aggregate the
right to purchase a majority of the number of unexercised shares covered by
the Warrant initially issued by the Company pursuant to the Stock Purchase
Agreement. The waiver by a party of any breach hereof for default in payment
of any amount due hereunder or default in the performance hereof shall not be
deemed to constitute a waiver of any other default or any succeeding breach
or default. The failure to cure any breach of any term of this Warrant
within ten (10) days of written notice thereof shall constitute an event of
default under this Warrant.
6.6 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.7 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Warrant, the prevailing party shall be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses
and fees on any appeal). The prevailing party shall be the party entitled to
recover its costs of suit, regardless of whether such suit proceeds to final
judgment. A party not entitled to recover its costs shall not be entitled to
recover attorneys' fees. No sum for attorneys' fees shall be counted in
calculating the amount of a judgment for purposes of determining if a party
is entitled to recover costs or attorneys' fees.
6.8 Notices. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Warrant, each such
communication shall be in writing and shall be effective only if it is
delivered by personal service or mailed, United States certified mail,
postage prepaid, return receipt requested, addressed as follows:
Company: Address as set forth on signature page.
Holder : c/o Technology Funding Inc.
2000 Alameda de las Pulgas, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Contracts Administration
Such communications shall be effective when they are received by the
addressee thereof; but if sent by certified mail in the manner set forth
above, they shall be effective three (3) business days after being deposited
in the United States mail. Any party may change its address for such
communications by giving notice thereof to the other party in conformity with
this Section.
6.9 Time. Time is of the essence of this Warrant.
6.10 Construction of Agreement. A reference in this Warrant to any Section
shall include a reference to every Section the number of which begins with
the number of the Section to which reference is specifically made (e.g., a
reference to Section 3 shall include a reference to Sections 3.10 and 3.11).
Additionally, any reference to a Section or Article shall be deemed to
additionally refer to and incorporate the corresponding Section or Article
set forth in the Additional Warrant Terms attached as Exhibit "A", if any,
and, in the case of any inconsistency, the terms set forth on Exhibit "A"
shall control over the terms of the Standard Warrant Terms. The titles and
headings herein are for reference purposes only and shall not in any manner
affect the interpretation of this Warrant.
6.11 No Endorsement. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the fairness
of investment in the Company or purchase of the Common Stock hereunder and
that no federal or state securities administrator has recommended or endorsed
the offering of securities by the Company hereunder.
6.12 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
6.13 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the
intents and purposes of this Warrant.
DEBTOR:
WASATCH EDUCATION SYSTEMS CORPORATION,
a Utah corporation
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
By: /s/ Xxxxxxx Xxxxxx
Title: President & CEO
Name of Counsel to Lender Name of Counsel to Debtor
Tomlinson, Zisko, Morosoli & Maser Fenwick & West
200 Page Mill Road, Second Floor Two Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Debtor Name: WASATCH EDUCATION SYSTEMS CORPORATION
Exhibit: A to Restated Warrant (B-4)
Document defined as "Additional Warrant Terms"
EXHIBIT "A" TO AMENDED AND RESTATED COMMON STOCK WARRANT
"ADDITIONAL WARRANT TERMS"
The provisions set forth in this Exhibit "A" constitute the Additional
Warrant Terms under the Warrant. To the extent of any inconsistency between
the provisions below and the provisions in the main body of the Warrant
(referred to as the "Standard Warrant Terms"), the provisions below shall
control in that the Additional Warrant Terms have been specifically drafted
for this Warrant and have been agreed by Purchaser and the Company to be
applicable to this Warrant. The parties acknowledge and agree (the Company,
by its execution of this Exhibit "A", and Purchaser by its acceptance of this
Warrant under the Stock Purchase Agreement) that the terms contained in this
Exhibit "A" shall supersede any contrary or otherwise inconsistent provisions
in the Standard Warrant Terms. As to the terms of any other Debt Instrument
mentioned or described herein, any conflict or inconsistency of any
description or summary herein with the terms of any other Debt Instrument
shall be resolved in favor of such other Debt Instrument, whose terms and
conditions shall control over any description contained herein.
These Additional Warrant Terms constitute Exhibit "A" attached to the
Amended and Restated Common Stock Warrant dated as of the 30th day of June,
1995, issued to TECHNOLOGY FUNDING SECURED INVESTORS II, A CALIFORNIA LIMITED
PARTNERSHIP ("Purchaser") (Purchaser and any party to whom the Warrant may be
assigned in accordance with the Warrant being referred to as "Holder"), by
WASATCH EDUCATION SYSTEMS CORPORATION, A UTAH CORPORATION having its
principal place of business at 0000 Xxxxx 000 Xxxx, Xxxxx 000, Xxxx Xxxx Xxxx
, Xxxx 00000 ("Company").
DEFINITIONS
A. New Definitions. The following terms shall, for all purposes of the
Warrant, have the meanings given below:
None.
B. Supplemental Definitions. The definitions in Article I of the Warrant
are modified, expanded and clarified as follows:
1.2 Aggregate Price. The Aggregate Price shall be Three Hundred Twenty-
Five Thousand Dollars and Fifty-Two Cents ($325,000.52).
1.11 Warrant Price. The Warrant Price hereunder shall be Fifty Cents
($1.31) per share of Common Stock issuable under this Warrant (subject to
adjustment under Article III hereof).
ARTICLE III.
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES
PURCHASABLE AND WARRANT PRICE
Section 3.1 is hereby amended as follows:
Notwithstanding anything contained in Section 3.1 of the Warrant to the
contrary, each and every time that the Company issues or sells shares of its
Common Stock or Common Stock Equivalents in a Dilution Sale subject to
Section 3.1.4 of the Warrant, the Warrant Price shall be reduced to an amount
equal to the price per share of Common Stock or Common Stock Equivalents
received by the Company in such Dilution Sale. The price per share of Common
Stock or Common Stock Equivalents received in a Dilution Sale shall be
calculated by dividing the Total Consideration received in the Dilution Sale
by the Total Shares issued in the Dilution Sale.
IN WITNESS WHEREOF, the Company has executed and delivered these Additional
Warrant Terms (Exhibit "A" to Warrant) as of the 30th day of June, 1995.
COMPANY:
WASATCH EDUCATION SYSTEMS CORPORATION,
a Utah corporation
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
By: /s/ Xxxxxxx Xxxxxx
Title: President & CEO
Name of Counsel to Lender Name of Counsel to Debtor
Tomlinson, Zisko, Morosoli & Maser Fenwick & West
200 Page Mill Road, Second Floor Two Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000 Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Exhibit B-1
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
, 199
Wasatch Education Systems Corporation Aggregate Price
0000 Xxxxx 000 Xxxx, Xxxxx 000 of Warrant
Xxxx Xxxx Xxxx, Xxxx 00000 Before Exercise: $
Aggregate Price
Attention: Being Exercised: $
Warrant Price: $
per share
Number of Shares of
Common Stock to
be Issued Under
this Notice:
Remainder Aggregate
Price (if any)
After Issuance: $
CASH EXERCISE
Gentlemen:
The undersigned registered Holder of the Common Stock Warrant delivered
herewith ("Warrant"), hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of WASATCH EDUCATION SYSTEMS
CORPORATION, a Utah corporation, as provided below. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given in the
Warrant. The portion of the Aggregate Price (as defined in the Warrant) to
be applied toward the purchase of Common Stock pursuant to this Notice of
Exercise is $ , thereby leaving a remainder Aggregate Price (if
any) equal to $ . Such exercise shall be pursuant to the cash
exercise provisions of Section 2.1 of the Warrant. Therefore, Holder makes
payment with this Notice of Exercise by way of check payable to the Company
in the amount of $ . Such check is payment in full under the
Warrant for shares of Common Stock based upon the Warrant
Price of $ per share, as currently in effect under the Warrant.
Holder requests that the certificates for the purchased shares of Common
Stock be issued in the name of and delivered to "Technology Funding Secured
Investors II, a California Limited Partnership", 0000 Xxxxxxx xx xxx Xxxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000. To the extent the foregoing exercise is for
less than the full Aggregate Price, a Replacement Warrant representing the
remainder of the Aggregate Price and otherwise of like form, tenor and effect
should be delivered to Holder along with the share certificates evidencing
the Common Stock issued in response to this Notice of Exercise.
TECHNOLOGY FUNDING FUNDING PARTNERS I, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
By: Technology Funding Inc.,
Managing General Partner
By:
Vice President
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond to
the name of the Holder as typed on Warrant.
Exhibit B-2
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
, 199
Wasatch Education Systems Corporation Aggregate Price
0000 Xxxxx 000 Xxxx, Xxxxx 000 of Warrant
Xxxx Xxxx Xxxx, Xxxx 00000 Before Exercise: $
Aggregate Price
Attention: Being Exercised: $
Warrant Price: $
per share
Number of Shares of
Common Stock to
be Issued Under
this Notice:
Remainder Aggregate
Price (if any)
After Issuance: $
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered Holder of the Common Stock Warrant delivered
herewith ("Warrant", hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of WASATCH EDUCATION SYSTEMS
CORPORATION, a Utah corporation, as provided below. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings given in the
Warrant. The portion of the Aggregate Price (as defined in the Warrant) to
be applied toward the purchase of Common Stock pursuant to this Notice of
Exercise is $ , thereby leaving a remainder Aggregate Price (if
any) equal to $ . Such exercise shall be pursuant to the net
issue exercise provisions of Section 2.2 of the Warrant; therefore, Holder
makes no payment with this Notice of Exercise. The number of shares to be
issued pursuant to this exercise shall be determined by reference to the
formula in Section 2.2 of the Warrant which requires the use of the current
per share fair market value of the Company's Common Stock. The current fair
market value of one share of the Company's Common Stock shall be determined
in the manner provided in Section 2.3, which amount has been determined or
agreed to by Holder and the Company to be $ , which figure is
acceptable to Holder for calculations of the number of shares of Common Stock
issuable pursuant to this Notice of Exercise [SPECIFY ANY ALTERNATIVE
ARRANGEMENTS TO THE FOREGOING, IF NECESSARY OR APPLICABLE]. Holder requests
that the certificates for the purchased shares of Common Stock be issued in
the name of and delivered to "Technology Funding Secured Investors II, a
California Limited Partnership", 0000 Xxxxxxx xx xxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000. To the extent the foregoing exercise is for less than the
full Aggregate Price of the Warrant, a replacement Warrant representing the
remainder of the Aggregate Price (and otherwise of like form, tenor and
effect) shall be delivered to Holder along with the share certificate
evidencing the Common Stock issued in response to this Notice of Exercise.
TECHNOLOGY FUNDING FUNDING PARTNERS I, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
By: Technology Funding Inc.,
Managing General Partner
By:
Vice President
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond to
the name of the Holder as typed on Warrant.
