Exhibit 4.3
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Xxxxxxxxxxxxxx.xxx, Inc., a Delaware corporation
Number of Shares: As set forth below.
Class of Stock: As set forth below.
Initial Exercise Price: As set forth below.
Issue Date: September 21, 1999
Expiration Date: September 21, 2006
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase from Xxxxxxxxxxxxxx.xxx, Inc. (the "Company"), 50,000 fully
paid and nonassessable shares of Series A Preferred Stock, par value $.001 per
share (the "Shares") subject to adjustment pursuant to the terms and conditions
set forth in this Warrant. The initial exercise price per share of the Shares
pursuant to this Warrant (the "Warrant Price") shall be equal to the $0.9265
Subject to adjustment pursuant to the terms and conditions set forth in this
Warrant.
Prior to the occurrence of the closing pursuant to a certain Loan and
Security Agreement dated September 21, 1999 (the "Loan Agreement") evidencing a
certain Committed Revolving Line in the maximum amount of $1,000,000), (the
"Second Closing") the term Shares shall be defined as 10,000 fully paid and
nonassessable shares of Series A Preferred Stock, par value $.001 per share.
Provided the Second Closing occurs, from and after the Maturity Date, as
that term is defined in the Loan Agreement, for each thirty (30) day period
thereafter in which the Company shall not have paid in full all amounts owing
under, and otherwise fully performed all of its obligations under the Loan
Agreement, then upon the thirtieth (30th) day of each such period, the number of
Shares for which this Warrant shall be exercisable shall increase by 18,530
shares exercisable at the Warrant Price.
ARTICLE 1. EXERCISE
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1.1 Method of Exercise. Holder may exercise this Warrant by delivering a
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duly executed Notice of Exercise in substantially the form attached as Appendix
1 to the principal office of the Company. Unless Holder is exercising the
conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in
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Section 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.4.
1.3 Intentionally Omitted.
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1.4 Fair Market Value. If the Shares are traded in a public market, the
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fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment
banking firm is more than 110% of that determined by the Board of Directors,
then all fees and expenses of such investment banking firm shall be paid by the
Company. In all other circumstances, such fees and expenses shall be paid by
Holder.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
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exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably
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satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 Repurchase of Sale, Merger, or Consolidation of the Company
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1.7.1 "Acquisition". For the purpose of this Warrant, "Acquisition"
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means any sale, transfer, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where
the holders of the Company's securities before the transaction beneficially
own less than 50% of the outstanding voting securities of the surviving
entity after the transaction.
1.7.2 Assumption of Warrant. Upon the closing of any Acquisition the
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successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record
date for the Acquisition and subsequent closing. The Warrant Price shall
be adjusted accordingly.
1.7.3 Purchase Right. Notwithstanding the foregoing, at the election
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of Holder, the Company shall purchase the unexercised portion of this
Warrant for cash upon the closing of any Acquisition in which the
consideration is cash or cash equivalents, for an amount equal to (a) the
fair market value of any consideration that would have been received by
Holder in consideration of the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining
the shareholders entitled to participate in the proceeds of the
Acquisition, less (b) the aggregate Warrant Price of the Shares, but in no
event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
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2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
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dividend on the Shares, payable in Common Stock, or other securities, subdivides
the outstanding Common Stock into a greater amount of Common Stock, or, if the
Shares are securities other than Common Stock, subdivides the Shares in a
transaction that increases the amount of Common Stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
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reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to Common Stock pursuant to the terms of the Company's Certificate of
Incorporation upon the closing of a registered public offering of the Company's
Stock. The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price
and to the number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
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combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Dilutive Issuances. In the event of the issuance (a
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"Dilutive Issuance") by the Company, after the Issue Date of the Warrant, of
securities at a price per share less than the Warrant Price or securities which
are convertible into or exchangeable for Common Stock at a Common Stock per
share conversion price or exchange rate that is less than the Warrant Price in
effect at such date, then the number of shares of Common Stock issuable upon
conversion of the Shares shall be adjusted in accordance with those provisions
(the "Provisions") of the Company's Certificate of Incorporation which apply to
Dilutive Issuances as in effect on the Issue Date, as the same may be modified
or amended.
2.5 No Impairment. The Company shall not, by amendment of its Certificate
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of Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
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exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder an amount
computed by multiplying the fractional interest by the fair market value of a
full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant
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Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
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3.1 Representations and Warranties. The Company hereby represents and
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warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares,
shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state securities
laws.
(b) The authorized capital stock of the Company consists of 23,016,651
shares consisting of 16,000,000 shares of common stock, $.001 par value (the
"Common Stock"), 7,015,651 shares of Preferred Stock, $.001 par value of which
7,015,651 shares have been designated Series A Preferred Stock. Schedule 3.1(b)
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sets forth all of the outstanding shares of Common Stock and outstanding
options, warrants, convertible securities, convertible debentures, and rights to
acquire, subscribe for, and/or purchase any Common Stock and/or other capital
stock of the Company or any securities or debentures convertible into or
exchangeable for Common Stock and/or other capital stock of the Company.
(c) The initial Warrant Price is equal to the lowest issuance price per
share of Series A Preferred Stock issued by the Company.
(d) The Company covenants that it shall at all times cause to be reserved
and kept available out of its authorized and unissued shares such number of
Series A Preferred Stock and such shares of the Common Stock of the Company as
will be sufficient to permit the exercise in full of this Warrant.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
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declare any dividend or distribution upon any of its capital stock, whether in
cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of any of
its securities; (d) to merge or consolidate with or into any other corporation,
or sell, lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend , distribution, or subscription rights
(and specifying the date on which the holders of securities of the Company) or
for determining rights to vote, if any, in respect of the matters referred to in
(c) and (d) above; (2) in the case of the matters referred to in (c) and (d)
above at least 20 days prior written notice of the date when the same will take
place (and specifying the date on which the holders of securities of the Company
will be entitled to exchange their securities of the Company for securities or
other property deliverable upon the occurrence of such event); and (3) in the
case of the matter referred to in (e) above, the same notice as is given to the
holders of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant and/or
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any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing
and (c) such other financial statements required under and in accordance with
any loan documents between Holder and the Company or if there are no such
requirements (or if the subject loan(s) no longer are outstanding), then within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
3.4 Registration Under Securities Act of 1933, as amended. The Common
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Stock issuable upon conversion of the Shares shall be deemed "Registrable Common
Shares" and Holder shall be entitled to the registration rights pursuant to and
in accordance with that certain Registration Rights Agreement dated June 28,
1999 (the "Registration Rights Agreement"), by and among the Company and the
investors named therein. By acceptance of this Warrant, Holder shall be deemed a
party to the Registration Rights Agreement, unless Holder otherwise elects not
to become or to cease being a party thereto.
3.5 Stockholders' Agreement. The Company and Holder agree that upon the
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exercise of this Warrant, the Holder shall become a party to that certain
Stockholders' Agreement, dated June 28/th/, 1999 among the Company and the
Holders and Investors named therein, and Holder shall become subject to certain
provisions contained therein. For purposes of said Stockholders' Agreement, the
Holder shall be deemed a "Holder", and, in no event shall Holder become subject
to Sections 5 or 9, or any provision of the Stockholders' Agreement which may
supersede Section 4.4 of this Warrant.
ARTICLE 4. MISCELLANEOUS
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4.1 Term. This Warrant is exercisable, in whole or in part, at any time
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and from time to time on or before the Expiration Date set forth above. If the
Fair Market Value (as defined in Section 1.4) of the Shares for which this
Warrant is exercisable exceeds the Warrant Price on the Expiration Date, this
Warrant will automatically be exercised on its Expiration Date in accordance
with Section 1.2 of this Warrant.
4.2 Legends. This Warrant and the Shares (and the securities issuable,
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directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the
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Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.
4.4 Transfer Procedure. Subject to the provisions of Section 4.3 Holder
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may transfer all or part of this Warrant and/or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) at any time to Silicon Valley Bancshares
or The Silicon Valley Bank Foundation, or, to any other transferee by giving the
Company notice of the portion of the Warrant being transferred setting forth the
name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable), provided that this Warrant may not be transferred to
any entity that is not an affiliate of Holder (affiliate includes but is not
limited to Silicon Valley Bancshares or The Silicon Valley Bank Foundation)
without first giving the Company 30 days to purchase the Warrant on the same
terms as the proposed transferee. Other than to an affiliate, this Warrant may
not be transferred for less than 25% of the Shares, and this Warrant may not be
transferred to a competitor of the Company.
4.5 Notices. All notices and other communications from the Company to the
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Holder, or vice versa, shall be deemed delivered and effective when given
personally or sent by electronic facsimile transmission, express overnight
courier service, or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
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discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 Attorneys Fees. In the event of any dispute between the parties
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concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in
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accordance with the laws of The Commonwealth of Massachusetts, without giving
effect to its principles regarding conflicts of law.
ATTEST: "COMPANY"
XXXXXXXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxxxx By: /s/ Xxxx Xxxxxx
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Name: Xxx Xxxxxxxxx Name: Xxxx Xxxxxx
Title: President Title: Chairman
APPENDIX 1
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NOTICE OF EXERCISE
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1. The undersigned hereby elects to purchase _______ shares of the Series
A Preferred stock of Xxxxxxxxxxxxxx.xxx, Inc. pursuant to Section 1.1 of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares in the manner specified in Section 1.2 of the attached Warrant. This
conversion is exercised with respect to ____________ of shares of the Series A
Preferred Stock of Xxxxxxxxxxxxxx.xxx, Inc.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
______________________________
(Signature)
________________
(Date)
Schedule 3.1(b) - Capitalization
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Outstanding Capital Stock:
Outstanding options, warrants, convertible securities, convertible debentures,
and rights to acquire, subscribe for, and/or purchase any Common Stock and/or
other capital stock of the Company or any securities or debentures convertible
into or exchangeable for Common Stock and/or other capital stock of the Company: