THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
NIKU CORPORATION
WARRANT TO PURCHASE COMMON STOCK
No. __-_______ February 12, 2003
VOID AFTER FEBRUARY 12, 2008
THIS CERTIFIES THAT, for value received, ___________________________,
with its principal office at ___________________________, or permissible
assigns (the "Holder"), is entitled to subscribe for and purchase at the
Exercise Price (defined below) from Niku Corporation, a Delaware corporation,
with its principal office at 000 Xxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000
(the "Company"), ___________________________ shares of the Company's Common
Stock, par value $0.0001 per share, as provided herein (the "Common Stock").
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(a) "Exercise Period" shall mean the period commencing with the
date hereof and ending five years from the date hereof, unless sooner
terminated as provided below.
(b) "Exercise Price" shall mean $3.40 per Warrant Share, subject
to adjustment pursuant to Section 5 below.
(c) "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the Holder):
(a) an executed Notice of Exercise in the form attached hereto;
(b) payment of the Exercise Price (i) in cash or by check, (ii)
by cancellation of indebtedness or (iii) pursuant to Section 2.1 hereof; and
(c) this Warrant.
Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Warrant Shares so purchased, registered in
the name of the Holder or persons affiliated with the Holder, if the Holder so
designates, shall be issued and delivered to the Holder within a reasonable
time after the rights represented by this Warrant shall have been so
exercised.
The person in whose name any certificate or certificates for Warrant
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant
was surrendered and payment of the Exercise Price was made, irrespective of
the date of delivery of such certificate or certificates, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which
the stock transfer books are open.
2.1 Net Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant by payment of cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice of
Exercise, in which event the Company shall issue to the Holder a number of
shares of 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
the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of Common Stock
(at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the fair market value of one
share of Common Stock shall be determined by the Company's Board of Directors
in good faith; provided, however, that where there exists a public market for
the Common Stock at the time of such exercise, the fair market value per share
shall be the average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary or the last reported sale price
of the Common Stock or the closing price quoted on the Nasdaq SmallCap Market
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 five trading days prior to the date of determination of fair market value.
3. COVENANTS OF THE COMPANY.
3.1 Covenants as to Warrant Shares. The Company covenants and agrees
that all Warrant Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further covenants
and agrees that the Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
3.2 No Impairment. Except and to the extent as waived or consented to
by the Holder, the Company will not, by amendment of its Certificate of
Incorporation or through any 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 hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.
3.3 Notices of Record Date. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to the
Holder, at least ten days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.
4. REPRESENTATIONS OF HOLDER.
4.1 Acquisition of Warrant for Personal Account. The Holder
represents and warrants that it is acquiring the Warrant solely for its
account for investment and not with a view to or for sale or distribution of
said Warrant or any part thereof. The Holder also represents that the entire
legal and beneficial interests of the Warrant and Warrant Shares the Holder is
acquiring is being acquired for, and will be held for, its account only.
4.2 Securities Are Not Registered.
(a) The Holder understands that the Warrant and the Warrant
Shares have not been registered under the Securities Act of 1933, as amended
(the "Act") on the basis that no distribution or public offering of the stock
of the Company is to be effected. The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the
Holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
securities. The Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Warrant
Shares must be held indefinitely unless they are subsequently registered under
the Act or an exemption from such registration is available. The Holder
recognizes that the Company has no obligation to register the Warrant or the
Warrant Shares of the Company, or to comply with any exemption from such
registration.
(c) The Holder is aware that neither the Warrant nor the Warrant
Shares may be sold pursuant to Rule 144 promulgated under the Act unless
certain conditions are met, including, among other things, the existence of a
public market for the shares, the availability of certain current public
information about the Company, the resale following the required holding
period under Rule 144 and the number of shares being sold during any three
month period not exceeding specified limitations. Xxxxxx is aware that the
conditions for resale set forth in Rule 144 have not been satisfied and that
the Company presently has no plans to satisfy these conditions in the
foreseeable future.
4.3 Disposition of Warrant and Warrant Shares.
(a) The Holder further agrees not to sell, offer to sell,
transfer, assign, pledge or hypothecate the Warrant or any of the Warrant
Shares in any event unless:
(i) pursuant to an effective registration statement under
the Securities Act; or
(ii) the Holder provides the Company with an opinion of
counsel, in a form acceptable to the Company, to the effect that such sale,
offer to sell, transfer, assignment, pledge or hypothecation of the Warrant or
Warrant Shares may be made without registration under the Securities Act.
(b) The Holder understands and agrees that all certificates
evidencing the Warrant Shares to be issued to the Holder may bear the
following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
Notwithstanding the foregoing, any disposition pursuant to Section 4.2(a)(ii)
shall not prohibit a Holder from transferring the Warrant or Warrant Shares as
permitted by Section 4.3(a)(ii) without the presence of an effective
registration statement or an opinion of counsel.
(c) Any legend endorsed on the Warrant Shares pursuant to
Section 4.3(b) and the stop transfer instructions with respect to such Warrant
Shares shall be removed and the Company shall issue or cause to be issued a
certificate without such legend, if such legend may properly be removed under
the terms of Rule 144 promulgated under the Act or if such holder provides the
Company with an opinion of counsel for such holder, reasonably satisfactory to
legal counsel for the Company, to the effect that a sale, transfer or
assignment of such Warrant Shares may be made without registration.
5. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In the event of
changes in the outstanding Common Stock of the Company by reason of stock
dividends, stock splits, recapitalizations, reclassifications, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares available under the Warrant in the aggregate
and the Exercise Price shall be correspondingly adjusted to give the Holder of
the Warrant, on exercise for the same aggregate Exercise Price, the total
number, class, and kind of shares as the Holder would have owned had the
Warrant been exercised prior to the event and had the Holder continued to hold
such shares until after the event requiring adjustment; provided, however,
that such adjustment shall not be made with respect to, and this Warrant shall
terminate if not exercised prior to, the events set forth in Section 7 below.
The form of this Warrant need not be changed because of any adjustment in the
number of Warrant Shares subject to this Warrant.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto.
All Warrant Shares (including fractions) issuable upon exercise of this
Warrant may be aggregated for purposes of determining whether the exercise
would result in the issuance of any fractional share. If, after aggregation,
the exercise would result in the issuance of a fractional share, the Company
shall, in lieu of issuance of any fractional share, pay the Holder otherwise
entitled to such fraction a sum in cash equal to the product resulting from
multiplying the then current fair market value of an Exercise Share by such
fraction.
7. EARLY TERMINATION.
7.1 Termination Upon Purchase of Initial Shares. This Warrant shall
terminate upon the sale of any shares of Common Stock by the Holder to the
Company pursuant to Section 6.5 of the Common Stock and Warrant Purchase
Agreement, dated as of the date hereof, by and between the Company and the
Investors named therein (the "Purchase Agreement").
8. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of
the Company.
9. NO TRANSFER OF WARRANT. This Warrant may only be transferred or
assigned in whole or in part, subject to Section 4.3.
10. AMENDMENT AND WAIVER. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Investors holding a majority in
interest of the Warrants issued or issuable pursuant to the Purchase
Agreement. Each Holder acknowledges and agrees that the operation of this
Section 10 may adversely affect a Holder's interest herein without such
Xxxxxx's consent. No such amendment shall be effective to the extent any such
amendment affects any rights specifically granted to a particular Holder and
not to the other Holders.
11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, upon the making of an
affidavit of the fact that the person claiming the Warrant to be lost, stolen,
mutilated or destroyed and on such terms as to indemnity or otherwise as the
Company may reasonably impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
12. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares
of Common Stock issued upon the exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued
in the name of the Holder or in such name or names as may be directed by the
Holder, provided however that in the event certificates for shares of Common
Stock are to be issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by the Assignment
Form, attached hereto, duly executed by the Holder.
13. NOTICES, ETC. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then
on the next business day; (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or
(iv) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company at the address as set forth on the
signature page hereof, and to its counsel, Skadden, Arps, Slate, Xxxxxxx and
Xxxx LLP, at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx, Xxxxxxxxxx 00000,
facsimile number (000) 000-0000, attention: Xxxxxxx Xxxxx, and to Holder at
the address set forth on Schedule A to the Purchase Agreement or at such other
address as the Company or the Holder may designate by ten (10) days advance
written notice to the other.
14. TITLES AND SUBTITLES. The titles of the sections and subsections
of this Warrant are for convenience of reference only and are not to be
considered in construing this Warrant.
15. ACCEPTANCE. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.
16. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed in all respects by the laws of the
State of Delaware, without regard to conflicts of laws principles thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed by its duly authorized officer as of February 12, 2003.
NIKU CORPORATION
By:
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
NOTICE OF EXERCISE
TO: NIKU CORPORATION
(1) |_| The undersigned hereby elects to purchase ________ shares of
the Common Stock of Niku Corporation (the "Company") pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.
|_| The undersigned hereby elects to purchase ________ shares
of the Common Stock of Niku Corporation (the "Company") pursuant to the terms
of the net exercise provisions set forth in Section 2.1 of the attached Warrant.
(2) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-----------------------------------------
(Name)
-----------------------------------------
-----------------------------------------
-----------------------------------------
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(Address)
(3) The undersigned represents that: (i) the shares of Common Stock to be
purchased pursuant to this Notice of Exercise (the "Exercise Shares") are
being purchased for investment purposes for the undersigned's own account, not
as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the undersigned has no present intention of
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Exercise Shares;
(iii) the undersigned understands that none of the Exercise Shares are
registered under the Securities Act of 1933, as amended (the "Securities
Act"), on the ground that the issuance of the Exercise Shares is exempt from
registration, and that the Company's reliance on such exemption is predicated
on the undersigned's representations set forth herein; (iv) the undersigned
realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the undersigned has in mind merely
acquiring the Exercise Shares for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise, and the
undersigned has no such intention; (v) the undersigned is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision
regarding its investment in the Company; (vi) the undersigned is an
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act; (vii) the undersigned is experienced in evaluating and
investing in making investments of this type and acknowledges that the
undersigned is able to fend for himself, herself or itself, can bear the
economic risk of such investment, and has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating
the merits and risks of the investment in the Exercise Shares; (viii) if other
than an individual, the undersigned has not been organized for the purpose of
acquiring the Exercise Shares; (ix) the undersigned is aware that the Exercise
Shares may not be sold pursuant to Rule 144 promulgated under the Securities
Act unless certain conditions are met and until the undersigned has held the
shares for the number of years prescribed by Rule 144, that among the
conditions for use of Rule 144 is the availability of current information to
the public about the Company and the Company has not made such information
available and has no present plans to do so; and (x) the undersigned agrees
not to make any disposition of all or any part of the aforesaid shares of
Common Stock unless and until there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with said registration statement, or the
undersigned has provided the Company with an opinion of counsel satisfactory
to the Company, stating that such registration is not required.
--------------------------
(Date) (Signature)
--------------------------
(Print name)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this
form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
(Please Print)
Dated:_________________________________________________________________, 20_____
Holder's Signature: ___________________________________________________________
Holder's Address: ___________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or
any change whatever. Officers of corporations and those acting in a fiduciary
or other representative capacity should file proper evidence of authority to
assign the foregoing Warrant.
ASSIGNMENT HEREBY CONSENTED TO:
NIKU CORPORATION
By:
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Name:
Title:
Date:
