EXHIBIT 4.3
DSET CORPORATION
WARRANT AGREEMENT
DATED AS OF SEPTEMBER 13, 1996
WARRANT AGREEMENT dated as of the 13th day of September, 1996, between DSET
Corporation, a New Jersey corporation (the "Company"), and the entities listed
on Schedule 1 attached hereto (collectively, together with transferees permitted
herein, the "Holders").
The Company proposes to issue to the Holders warrants (the "Warrants") at a
purchase price per Warrant Share (as hereinafter defined) of Three and 27/100
Dollars ($3.27) to purchase an initial total of 123,554 shares (the "Warrant
Shares") of the Company's Common Stock, $.01 par value per share (the "Common
Stock"), subject to modification as herein provided.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. Issuance of Warrants; Form of Warrants. The Company has issued and is
delivering to each Holder a Warrant to purchase the initial number of shares of
Common Stock as shown on Schedule 1 attached hereto. The text of the Warrants
and of the election to purchase shares to be attached thereto shall be
substantially in the form of Exhibit A hereto. The Warrants will be executed on
behalf of the Company by the manual or facsimile signature of the Chief
Executive Officer or Vice President of the Company, under its corporate seal
affixed or in facsimile, attested by the Secretary or an Assistant Secretary of
the Company. Terms used as defined terms herein and not otherwise defined shall
have the meanings set forth in the Purchase Agreement.
2. Registration. The Warrants, together with any additional Warrants
which may be issued upon partial exercise, replacement or transfer of the
original Warrants, shall be numbered and shall be registered in a Warrant
Register as they are issued. The Company shall be entitled to treat the
registered Holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person other
than the record holder.
The Warrants may be transferred, subject to the provisions of Section 9.
Any Warrant to be transferred may be transferred or endorsed to another party by
giving notice thereof to the Company at its principal office and, if a new
Warrant is requested in connection with such transfer, by surrender thereof for
cancellation, endorsed or accompanied by a written instrument of transfer, in
form satisfactory to the Company, duly executed by the Holder thereof in person
or by its duly authorized representative, or by its agent or attorney-in-fact
duly appointed in writing. Upon receipt thereof, the Company will issue and
deliver, in the name of the transferee or transferees, a new Warrant on like
terms.
4. Term of Warrants; Exercise of Warrants.
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(a) Each Warrant entitles the registered Holder to purchase from the
Company shares of Common Stock at a purchase price per share of Three and 27/100
Dollars ($3.27), subject to adjustment as herein provided (the "Exercise
Price"), at any time, on and after the date hereof and on or before 5:00 p.m.
Eastern Standard Time on September 13, 2006 (the "Expiration Date"). Except as
described in this Section 4(a), the Warrants shall not be exercisable prior to
September 13, 1998. Thereafter, each Warrant shall be exercisable with respect
to the following percentages of the Warrant Shares covered thereby:
CUMULATIVE
PERCENTAGE OF WARRANT PERCENTAGE OF WARRANT
SHARES AS TO WHICH FIRST SHARES AS TO WHICH
EXERCISE DATE EXERCISABLE WARRANT EXERCISABLE
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On or after September 13, 1998, but
prior to September 13, 1999: 50% 50%
On or after September 13, 1999, but
prior to September 13, 2000: 25% 75%
On or after September 13, 2000:
25% 100%
In the event of (i) consummation of a public offering of securities of the
Company pursuant to a registration statement filed under the Securities Act of
1933, as amended, (ii) the sale of all or substantially all of the assets of the
Company, (iii) the sale of voting securities of the Company, or the merger or
consolidation of the Company, if following such sale, merger or consolidation
those persons who held 100% of the voting securities of the Company do not have
a majority of the shares of voting stock of the Company or the surviving or
resulting entity, or (iv) the dissolution or winding up of the Company (such
events described in clauses (i)-(iv) to be referred to herein as a "Liquidation
Event"), the exercisability of the Warrants shall be accelerated, so that the
Warrants shall be exercisable in full immediately preceding such Liquidation
Event; provided, however that the Warrants shall be accelerated only to the
extent that the stock options to purchase 240,000 shares of common stock of the
Company granted to X. Xxxxxx Shia in September 1996 are accelerated. The Company
agrees to give the holders of the Warrants 15 days prior notice of any proposed
Liquidation Event. The holder of a Warrant may exercise his Warrant conditioned
on the consummation of a Liquidity Event.
(b) The initial Exercise Price and the number of Warrant Shares shall
be adjusted as provided in Section 5 hereof.
(c) Subject to the provisions of this Agreement, the registered
Holder of each Warrant shall have the right, which may be exercised in whole or
in part to the extent the
Warrant is then exercisable, to purchase from the Company (and the Company shall
issue and sell to such registered Holder of the Warrant) the number of fully
paid and non-assessable shares of Common Stock evidenced by the Warrant, upon
surrender to the Company, or its duly authorized agent, of the Warrant, with the
form of election to purchase attached thereto duly completed and signed, and
upon payment to the Company of the Exercise Price in full as described in
Section 4(e).
(d) Upon surrender of the Warrant and payment of the Exercise Price
as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the registered Holder of the
Warrant and (subject to receipt of evidence of compliance with the Act in
accordance with the provisions of Section 9 of this Agreement) in such name or
names as such registered Holder may designate, a certificate or certificates for
the number of shares of stock so purchased upon the exercise of the Warrant.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such shares as of the date of the surrender of the Warrant and
payment of the Exercise Price as aforesaid. If, at the date of surrender of a
Warrant and payment of such Exercise Price, the transfer books for the Common
Stock, shall be closed, the certificates for the shares in respect of which the
Warrant is then exercised shall be issuable as of the date on which such books
shall next be opened (whether before, on or after the Expiration Date) and until
such date the Company shall be under no duty to deliver any certificate for such
shares; provided, however, that the transfer books shall not be closed at any
one time for a period longer than forty-eight (48) hours unless otherwise
required by law.
(e) A holder of a Warrant may, at its option, exercise such Warrant
by (i) paying the Exercise Price in cash, (ii) by delivering to the Company
shares of capital stock of the Company with a fair market value (as determined
in good faith by the Board of Directors of the Company without any attribution
of a minority ownership or illiquidity discount) equal to the Exercise Price of
the Warrant Shares as to which the Warrant is being exercised, or (iii) by
canceling the Warrant with respect to that number of Warrant Shares as have a
fair market value (as determined above) which, when multiplied by the fair
market value per share (as so determined) less the Exercise Price per share,
equals the Exercise Price of the Warrant Shares as to which the Warrant is being
exercised equal to the product of the number of Warrant Shares for which the
Warrant is being exercised times the Exercise Price.
5. Adjustment to Exercise Price. In order to prevent dilution of the
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rights granted under the Warrant, the Exercise Price will be subject to
adjustment from time to time pursuant to this Section 5. In the event of a stock
split, stock dividend or other form of recapitalization affecting the Common
Stock, the number of Warrant Shares and the Exercise Price shall be adjusted so
as to provide the holder of a Warrant with the same benefit he or it enjoyed
immediately preceding such split, dividend or other form of recapitalization.
6. Mutilated or Missing Warrant. If a Warrant is mutilated, lost, stolen
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or destroyed, the Company shall issue and deliver in lieu of and substitution
for the Warrant so mutilated, lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest; but only upon receipt of
evidence reasonably satisfactory to the Company of such mutilation, loss, theft
or destruction of such Warrant and indemnity or other security, if requested,
also reasonably satisfactory to the Company. An applicant for a substitute
Warrant shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.
7. Reservation of Preferred Stock, etc. The Company shall at all times
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reserve as long as the Warrants remain outstanding, out of the authorized and
unissued shares of Common Stock, a number of shares sufficient to provide for
the exercise of the rights of purchase represented by each Warrant. Subject to
the provisions of this Agreement, the Warrant, when surrendered on the exercise
of the rights thereby evidenced, shall be canceled, and the form of election to
purchase attached to such canceled Warrant, as completed and signed by the
registered Holder thereof, shall constitute sufficient evidence of the number of
shares of stock which have been issued upon the exercise of the Warrant.
Subsequent to the Expiration Date, no shares of stock need be reserved in
respect of the Warrants.
8. Fractional Interests. The Company shall issue fractions of shares of
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Common Stock on the exercise of any Warrant to the extent required.
9. Absence of Registration. Neither the Warrants nor the shares of
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Common Stock issuable upon exercise of the Warrants have been registered under
the Act. Each Holder represents and warrants to the Company that it will not
dispose of the Warrant or such shares except to an affiliate or pursuant to (i)
a registration statement filed under the Act or (ii) an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such registration is
not required under the Act.
10. Certificates to Bear Legends. The Warrants and the shares of Common
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Stock issuable upon exercise of the Warrants shall be subject to a stop transfer
order and the certificate or certificates therefor shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE PLEDGED, HYPOTHECATED, TRANSFERRED, OFFERED FOR SALE OR SOLD EXCEPT
PURSUANT TO A REGISTRATION UNDER SAID ACT AND LAWS OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER SAID ACT AND LAWS.
11. Notices. Any Notice pursuant to this Agreement to be given or made
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by the registered Holders of the Warrants to the Company shall be sufficiently
given or made if delivered by hand, transmitted by telex or telecopy or sent by
first-class mail, postage prepaid, addressed as follows:
DSET Corporation
0000 Xx. 00 Xxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Chief Executive Officer
Notices or demand authorized by this Agreement to be given or made by the
Company to the registered Holder of any Warrant shall be sufficiently given or
made (except as otherwise provided in this Agreement) if delivered by hand,
transmitted by telex or telecopy or sent by first-class mail, postage prepaid,
to the address shown on Schedule 1, or to such other address of each Holder or
subsequent Holders as shown on the Warrant Register.
12. Binding Effect; Survival. This Agreement shall survive the exercise
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of the Warrant and shall be binding upon the Company and its successors and
assigns and shall be binding upon and inure to the benefit of each Holder of the
Warrants and each holder of shares of Preferred Stock issued upon exercise of
the Warrants.
13. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New Jersey or, if different, the laws
of such other jurisdiction as may be applicable to the issuance of the Warrants.
14. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
DSET CORPORATION
By:____________________________
Name:
Title:
SUMMIT VENTURES IV, L.P.
By: Summit Partners IV, L.P.
General Partner
By: Stamps, Xxxxxxx & Co., IV
General Partner
By:____________________________
General Partner
SUMMIT INVESTORS II, L.P.
By:____________________________
Authorized Signatory
SCHEDULE 1
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DSET CORPORATION
List of Holders
Initial Number of
Shares to be Issued on
Name and Address of Purchaser Exercise of Warrants
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Summit Ventures IV, L.P. 118,328
Suite 2800
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Summit Investors II, L.P. 5,226
Suite 2800 -------
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
TOTAL: 123,554
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EXHIBIT A
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WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE PLEDGED, HYPOTHECATED, TRANSFERRED, OFFERED FOR SALE OR SOLD EXCEPT
PURSUANT TO A REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS OR AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND LAWS.
THE TRANSFER OR EXCHANGE OF THIS WARRANT MUST BE REGISTERED IN ACCORDANCE WITH
THE WARRANT AGREEMENT REFERRED TO HEREIN.
NO.____ Initial
Number of Shares
Subject to Purchase
Upon Exercise of
Warrant:____
DSET CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received, [name of Holder], or its
registered assigns, is the owner of a Warrant which entitles the owner thereof
to purchase at any time on and after the date hereof and on or before 5:00 p.m.
Eastern Standard Time on September 13, 2006 (the "Expiration Date"), [initial
number of shares] fully paid and nonassessable shares of the Common Stock, $.01
par value per share (the "Common Stock"), of DSET Corporation, a New Jersey
corporation (the "Company"), at the initial purchase price per share of $3.27
(the "Exercise Price"). The number of shares issuable upon exercise of the
Warrant and the Exercise Price are subject to adjustment as provided in the
Warrant Agreement described herein. The Warrant shall be exercisable upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. This Warrant may be exercised in whole or in part,
subject to the terms of this Warrant Agreement (as hereinafter defined) but
after exercise this Warrant shall be canceled as to any remaining shares as to
which it has not been exercised and a new Warrant Certificate for any remaining
shares shall be issued.
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of a Warrant Agreement dated as
of September 13, 1996 (the "Warrant Agreement") among the Company and the
original holder hereof, which Warrant Agreement is hereby incorporated herein by
reference and made a part hereof and to which Warrant Agreement
reference is hereby made for a full description of the rights, limitation of
rights, obligations, duties and immunities hereunder of the Company and the
holder of this Warrant Certificate. Terms used as defined terms herein and not
otherwise defined shall have the meanings set forth in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the principal office of the
Company.
Subject to the terms of the Warrant Agreement, this Warrant
Certificate, upon surrender at the principal office of the Company, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and date evidencing Warrants entitling the holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled such holder to
purchase.
To the extent required, fractional shares of Common Stock will be
issued upon the exercise of any Warrant evidenced hereby, as provided in the
Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock for any purpose, nor
shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance or otherwise), or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise, until
the Warrant evidenced by this Warrant Certificate shall have been exercised and
the Common Stock purchasable upon the exercise thereof shall have become
deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Company's Common Stock are
closed for any purpose, the Company shall not be required to make delivery of
certificates for shares purchasable upon such exercise until the date of the
reopening of said transfer books.
IN WITNESS WHEREOF, DSET Corporation has caused the signature (or
facsimile signature) of its Chairman and Chief Executive Officer and Secretary
to be printed hereon and its corporate seal (or facsimile) to be printed hereon.
DSET CORPORATION
By:______________________________
Attest:
______________________________
Secretary
FORM OF ELECTION TO PURCHASE
To be executed if holder desires to exercise the Warrant Certificate.
TO DSET CORPORATION:
The undersigned hereby irrevocably elects to exercise the Warrant
represented by this Warrant Certificate to purchase ____ shares of Common Stock
of DSET Corporation issuable upon the exercise of such Warrant and requests that
certificates of such shares be issued in the name of:
______________________________
Name
______________________________
Address
______________________________
Federal Identification Number
