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EXHIBIT 10.27
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS FOR SUCH LAWS AS MAY THEN BE IN EFFECT, OR AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
Company: First Virtual Corporation (the "Company"), and any
corporation that shall succeed to the obligations
of the Company under this Warrant.
Number of Shares: 125,000
Class of Stock: Common Stock
Expiration Date: March 1, 2003
Date of Grant: March 12, 1998
THIS CERTIFIES THAT, for value received, Xxxxxxxxx & Xxxxx Guaranty
Finance, LLC, a California limited liability company, or nominees, is entitled
to purchase the above number (as adjusted pursuant to Section 5 hereof) of fully
paid and nonassessable shares of the above Class of Stock of the Company at the
Initial Warrant Price above (as adjusted pursuant to Section 5 hereof), subject
to the provisions and upon the terms and conditions set forth herein.
1. Definitions.
As used herein, the following terms, unless the context otherwise
requires, shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations thereunder, as shall
be in effect at the time.
(b) "Common Stock" shall mean shares of the presently authorized
common stock of the Company and any stock into which such common stock may
hereafter by exchanged.
(c) "Holder" shall mean any person who shall at the time be the
holder of this Warrant.
(d) "Initial Warrant Price" shall mean the price at which Common
Stock is first sold in an underwritten public offering of the Company's
securities on a nationally recognized public stock exchange (an "IPO").
(e) "Shares" shall mean the shares of the Class of Stock that the
Holder is entitled to purchase upon exercise of this Warrant, as adjusted
pursuant to Section 5 hereof.
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(f) "Warrant Price" shall mean the Initial Warrant Price at which
this Warrant may be exercised, as adjusted pursuant to Section 5 hereof.
2.1. Term. The purchase right represented by this Warrant, is
exercisable, in whole or in part, on or before the Expiration Date.
3. Exercise of Warrant; Payment; Issuance of New Warrant
3.1. Subject to Section 2 hereof, the purchase rights represented
by this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Appendix A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States dollars, or by wire transfer to an account of
the Company, of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. In the event of any
exercise of the purchase right represented by this Section 3, certificates for
the Shares so purchased shall be delivered to the Holder within thirty (30) days
of receipt of such payment and, unless this Warrant has been fully exercised or
expired, a new Warrant (with the same Date of Grant as the Date of Grant hereof)
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder
within such thirty (30) day period.
3.2 The Company may require that such certificate or certificates
and any new Warrant contain on the face thereof a legend substantially as
follows:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or applicable state
securities laws and rules. No sale, offer to sell or transfer of the
securities represented by this certificate shall be made unless a
registration statement under such act, and applicable state securities
laws with respect to such securities is then in effect, or pursuant to
an exemption from such registration requirements for such laws is then
in effect, or an opinion of counsel reasonably satisfactory to Company
and its counsel that such registration is not required."
4. Exercise Price. The Warrant Price at which this Warrant may be
exercised shall be the Initial Warrant Price, as adjusted from time to time
pursuant to Section 5 hereof.
5. Adjustment of Number and Kind of Shares and Adjustment of Warrant
Price.
5.1 Certain Definitions. As used in this Section 5 the following
terms shall have the following respective meanings:
(a) Options: rights, options or warrants to subscribe for,
purchase or otherwise acquire shares of Common Stock or Convertible Securities.
(b) Convertible Securities: any evidence of indebtedness, shares
of stock or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
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5.2 Adjustments. 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 occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation or
Merger. In the case of any reclassification of the Common Stock, or any
reorganization, consolidation or merger of the Company with or into
another corporation (other than a merger or reorganization with respect
to which the Company is the continuing corporation and which does not
result in any reclassification of the Common Stock), the Company, or
such successor corporation, as the case may be, shall execute a new
warrant, providing that the Holder shall have the right to exercise such
new warrant and upon such exercise to receive, in lieu of each share of
the Class of Stock theretofore issuable upon exercise of this Warrant,
the number and kind of securities receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of the
same Class of Stock of the Company for each such share of such Class of
Stock. The aggregate Warrant Price of the new warrant shall be the
aggregate Warrant Price in effect immediately prior to the
reclassification, reorganization, consolidation or merger and the
Warrant Price per share shall be appropriately increased or decreased.
Such new warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 5 including, without limitation, adjustments to the Warrant
Price and to the number of shares issuable upon exercise of this
Warrant. The provisions of this subsection (a) shall similarly apply to
successive reclassification, reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired
shall split, subdivide or combine the Class of Stock for which this
Warrant is then exercisable, the Warrant Price shall be proportionately
decreased in the case of a split or subdivision or proportionately
increased in the case of a combination. Any adjustment under this
subsection (b) shall become effective when the split, subdivision or
combination becomes effective.
(c) Stock Dividends. If the Company at any time while this
Warrant remains outstanding and unexpired shall pay a dividend with
respect to the Class of Stock for which this Warrant is then
exercisable, payable in shares of that Class of Stock, Options, or
Convertible Securities, the Warrant Price shall be adjusted, from and
after the date of determination of the stockholders entitled to receive
such dividend or distributions, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of shares of that Class of Stock outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of shares of the same Class of Stock
outstanding immediately after such dividend or distribution (including
shares of that Class of Stock issuable upon exercise, conversion or
exchange of any Option or Convertible Securities issued as such dividend
or distribution). If the Options or Convertible Securities issued as
such dividend or distribution by their terms provide, with the passage
of time or otherwise, for any decrease in the consideration payable to
the Company, or any increase in the number of shares issuable upon
exercise, conversion or exchange thereof (by change of rate or
otherwise), the Warrant Price shall, upon any such decrease or increase
becoming effective, be reduced to reflect such decrease or increase as
if such decrease or increase became effective immediately prior to the
issuance of the Options or
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Convertible Securities as the dividend or distribution. Any adjustment
under this subsection (c) shall become effective on the record date.
(d) Notice. In the event the Company at any time or from time to
time after the issuance of this Warrant proposes to make, or fix a
record date for the determination of Holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then, the Company shall give
the Holder at least 20 days prior written notice of the date on which a
record shall be taken for such dividend or other distribution.
5.3 Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price pursuant to subsection 5.2 of this Article 5, the number of Shares
issuable upon exercise of this Warrant shall be adjusted to the product obtained
by multiplying the number of Shares issuable immediately prior to such
adjustment in the Warrant Price by a fraction (i) the numerator of which shall
be the Warrant Price immediately prior to such adjustment, and (ii) the
denominator of which shall be the Warrant Price immediately after such
adjustment.
6. Notice of Adjustments. Whenever the Warrant Price shall be adjusted
pursuant to Section 5 hereof, the Company shall issue a certificate signed by
its chief financial officer or chief executive officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Warrant
Price after giving effect to such adjustment and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the Holder.
7. Right to Convert Warrant Into Stock.
7.1 Certain Definition. As used in this Section 7, the following
term shall have the following meaning;
Conversion Price. The Conversion Price is determined as the
highest Fair Market Value for the three months prior to the date of any
conversion of the Warrant into Common Stock. For the purposes of this Section 7,
the Fair Market Value of the Company's Common Stock as of a particular date (the
"Determination Date") shall mean:
(a) if the Common Stock is publicly traded or quoted on
any exchange or over-the-counter market on which the Common Stock is
listed, whichever is applicable, as published in the Western Edition of
The Wall Street Journal, the average closing sale price during the five
consecutive trading days, or for such shorter period that the Common
Stock has been publicly traded, ending on the Determination Date,
provided that if no closing sale price is reported for one or more of
those five consecutive trading days, then the average between the ask
and bid prices of the Common Stock on such a day or days will be
substituted therefore.
(b) if the Common Stock is not traded in an
over-the-counter market or on an exchange, the highest fair market value
of a single share of the Class of Stock for which this Warrant is then
exercisable shall be as determined in good faith by the Company's Board
of Directors; provided, however, that if the Holder disputes in writing
the fair market value determined by the Board of Directors within
fifteen (15) days of being informed of such fair market value, the
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fair market value shall be determined by an independent appraiser,
appointed in good faith by the Company's Board of Directors.
(c) the Determination Date may not be the date on which
the Company's Common Stock is first sold to the public by the Company in
a firm commitment public offering under the Act.
7.2 Right to Convert. Subject to Section 2 hereof, in addition to
the rights granted under Section 3 of this Warrant, the Holder shall have the
right to require the Company to convert all or a portion of this Warrant (the
"Conversion Right") into shares of the Class of Stock for which the Warrant is
then exercisable, as provided in this Section 7. Upon exercise of the Conversion
Right, the Company shall deliver to the Holder (without payment by the Holder of
any Warrant Price) that number of shares of stock equal to the quotient obtained
by dividing (x) the value of this Warrant, or portion of this Warrant for which
the Conversion Right is elected, at the time of the Conversion Right is
exercised (determined by subtracting the aggregate Warrant Price for the Shares
being surrendered upon exercise of the Conversion Right immediately prior to the
exercise of the Conversion Right from the aggregate Conversion Price for such
Shares) by (y) the Conversion Price.
7.3 Method of Exercise. The Conversion Right may be exercised at
any time by the Holder by the surrender of this Warrant at the principal office
of the Company together with a written statement specifying that the Holder
thereby intends to exercise the Conversion Right. Certificates of the shares of
stock issuable upon exercise of the Conversion Right shall be delivered to the
Holder within thirty (30) days following the Company's receipt of this Warrant
together with the aforesaid written statement.
7.4 Automatic Conversion Prior to Expiration. To the extent this
Warrant is not previously exercised, and if the Conversion Price of one share of
the Class of Stock for which this Warrant is then exercisable is greater than
the Warrant Price per share on the expiration date, this Warrant shall be deemed
automatically exercised in accordance with Section 7.2 hereof (even if not
surrendered) immediately before its expiration. To the extent this Warrant or
any portion thereof is deemed automatically exercised pursuant to this Section
7.4, the Company agrees to notify Holder within a reasonable period of time of
the number of shares of the Class of Stock, if any, Holder is to receive by
reason of such automatic exercise. The Company shall issue to the Holder
certificates for the Shares issued upon such automatic conversion in accordance
with Section 7.3 above, although the Company may condition receipt of the
certificate upon surrender of the Warrant to the Company.
8. Transferability and Non-negotiability of Warrants and Shares. This
Warrant and the Shares issued upon exercise hereof may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, if reasonably requested by the Company).
Subject to the provisions of this Section 8, title to the Warrant may be
transferred in the same manner as a negotiable instrument transferable by
endorsement and delivery, except that, transfer of the title to the Warrant to
an entity not affiliated with the Holder may be transferred only with the prior
written consent of the Company.
9. Notices. The Company shall mail to the registered Holder of the
Warrant, at its last known post office address appearing on the books of the
Company, not less than twenty (20) days prior to the date on which (a) a record
will be taken for the purpose of determining the Holders of Common Stock
entitled to dividends or subscription rights, or
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(b) a record will be taken (or in lieu thereof, the transfer books will be
closed) for the purpose of determining the Holders of Common Stock entitled to
notice of and to vote at a meeting of stockholders at which any capital
reorganization, reclassification of shares of Common Stock, consolidation,
merger, dissolution, liquidation, winding up or sales of substantially all of
the Company's assets shall be considered and acted upon.
10. No Voting or Dividend Rights. Other than as specifically set forth
herein, nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof of the right to vote or to consent or to receive notice as a
stockholder of the Company or any other matters or any rights whatsoever as a
stockholder of the Company. No dividends or interest shall be payable or accrued
in respect of this Warrant or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised.
11. Miscellaneous. No fractional shares of the Shares shall be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Warrant
Price then in effect. The terms and provisions of this Warrant shall inure to
the benefit of, and be binding upon, the Company and the Holders hereof and
their respective successors and assigns. This Warrant shall be governed by and
construed under the laws of the State of California as applied to contracts
entered into between residents of the State of California to wholly performed in
the State of California. The representations, warranties and agreements herein
contained shall survive the exercise of the Warrant. References to the "holder
of" include the immediate Holder of shares purchased on the exercise of this
Warrant, and the word "Holder" shall include the plural thereof. The titles of
the section and the subscriptions of this Warrant are for convenience only and
are not to be considered in construing this Warrant. All pronouns used in the
Warrant shall be deemed to include masculine, feminine and neuter forms.
All shares of Common Stock or other securities issued upon the exercise
of this Warrant shall be validly issued, fully paid and nonassessable, and the
Company will pay all taxes in respect of the issuance thereof (other than any
income or capital gain taxes payable by the Holder, or any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the Holder).
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against whom enforcement of the same is sought.
13. Notices. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to such Holder at its
address as shown on the books of the Company or the Company at 0000 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxx Xxxxx, XX 00000, Attention: Chief Financial Officer or
such other address as either may from time to time provide to the other.
14. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Warrant are inserted for the
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California.
15. Lost Warrants. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft,
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destruction, or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
the Company, or in the case of such mutilation upon surrender and cancellation
of such Warrant, the Company, at its expense, will make and deliver a new
Warrant, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.
IN WITNESS WHEREOF, the Warrant has been duly executed by the undersigned, as of
the 12th day of March, 1998.
First Virtual Corporation
By:
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(Signature)
Name:
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(Printed)
Title:
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