Contract
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WARRANT TO PURCHASE
STOCK
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Company:
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Energy
and Power Solutions, Inc., a California corporation
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Number
of Shares:
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142,000
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Class
of Stock:
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Series
B Preferred
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Warrant
Price:
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$1.72
per share
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Issue
Date:
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December
31, 2009
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Expiration
Date:
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The earlier of: (i) the 6th anniversary after the Issue Date or (ii)
two (2) years after the initial public offering of Company’s
stock
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Credit
Facility:
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This
Warrant is issued in connection with the Term Loan referenced in the Loan
and Security Agreement between Company and Silicon Valley Bank dated
December 31, 2009.
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THIS
WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK
(Silicon Valley Bank, together with any registered holder from time to time of
this Warrant or any holder of the shares issuable or issued upon exercise of
this Warrant, "Holder") is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the "Shares") of the Company at
the Warrant Price, all as set forth above and as adjusted pursuant to Article 2
of this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant.
ARTICLE
1. EXERCISE.
1.1 Method of Exercise.
Holder may exercise this Warrant by delivering a 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 Article 1.2, Holder shall also deliver to the Company a check, wire
transfer (to an account designated by the Company), or other form of payment
acceptable to the Company for the aggregate Warrant Price for the Shares being
purchased.
1.2 Conversion Right. In
lieu of exercising this Warrant as specified in Article 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
Article 1.3.
SVB
Warrant Form April 2006
-1-
1.3 Fair Market Value. If
the Company’s common stock is traded in a public market and the Shares are
common stock, the fair market value of each Share shall be the closing price of
a Share reported for the business day immediately before Holder delivers its
Notice of Exercise to the Company (or in the instance where the Warrant is
exercised immediately prior to the effectiveness of the Company’s initial public
offering, the “price to public” per share price specified in the final
prospectus relating to such offering). If the Company’s common stock is traded
in a public market and the Shares are preferred stock, the fair market value of
a Share shall be the closing price of a share of the Company’s common stock
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company (or, in the instance where the Warrant is exercised
immediately prior to the effectiveness of the Company’s initial public offering,
the initial “price to public” per share price specified in the final prospectus
relating to such offering), in both cases, multiplied by the number of shares of
the Company’s common stock into which a Share is convertible. If the Company’s
common stock is not traded in a public market, the Board of Directors of the
Company shall determine fair market value in its reasonable good faith
judgment.
1.4 Delivery of Certificate and
New Warrant. Promptly after Holder exercises or converts this Warrant
and, if applicable, the Company receives payment of the aggregate Warrant Price,
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.
1.5 Replacement of
Warrants. On receipt of evidence reasonably 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 shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor.
1.6 Treatment of Warrant Upon
Acquisition of Company.
1.6.1 "Acquisition".
For the purpose of this Warrant, "Acquisition" means any sale, 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.
1.6.2 Treatment of Warrant at
Acquisition.
A) Upon
the written request of the Company, Holder agrees that, in the event of an
Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a)
Holder shall exercise its conversion or purchase right under this Warrant and
such exercise will be deemed effective immediately prior to the consummation of
such Acquisition or (b) if Holder elects not to exercise the Warrant, this
Warrant will expire upon the consummation of such Acquisition. The Company shall
provide Holder with written notice of its request relating to the foregoing
(together with such reasonable information as Holder may request in connection
with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
SVB Warrant Form April 2006
-2-
B) Upon
the written request of the Company, Holder agrees that, in the event of an
Acquisition that is an “arms length” sale of all or substantially all of the
Company’s assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of the Company (a “True Asset Sale”), either (a) Holder shall
exercise its conversion or purchase right under this Warrant and such exercise
will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
will continue until the Expiration Date if the Company continues as a going
concern following the closing of any such True Asset Sale. The Company shall
provide Holder with written notice of its request relating to the foregoing
(together with such reasonable information as Holder may request in connection
with such contemplated Acquisition giving rise to such notice), which is to be
delivered to Holder not less than ten (10) days prior to the closing of the
proposed Acquisition.
C) Upon
the closing of any Acquisition other than those particularly described in
subsections (A) and (B) above, the 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
and/or number of Shares shall be adjusted accordingly.
As used
herein “Affiliate” shall mean
any person or entity that owns or controls directly or indirectly ten (10)
percent or more of the stock of Company, any person or entity that controls or
is controlled by or is under common control with such persons or entities, and
each of such person’s or entity’s officers, directors, joint venturers or
partners, as applicable.
ARTICLE
2. ADJUSTMENTS TO THE
SHARES.
2.1 Stock Dividends, Splits,
Etc. If the Company declares or pays a dividend on the Shares payable in
common stock, or other securities, 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 occurred. If the Company
subdivides the Shares by reclassification or otherwise into a greater number of
shares or takes any other action which increase the amount of stock into which
the Shares are convertible, the number of shares purchasable hereunder shall be
proportionately increased and the Warrant Price shall be proportionately
decreased. If the outstanding shares are combined or consolidated, by
reclassification or otherwise, into a lesser number of shares, the Warrant Price
shall be proportionately increased and the number of Shares shall be
proportionately decreased.
SVB Warrant Form April 2006
-3-
2.2 Reclassification, Exchange,
Combinations or Substitution. Upon any 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 Articles or Certificate (as applicable) of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holder an
amendment to this Warrant setting forth the number and kind of such new
securities or other property issuable upon exercise or conversion of this
Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable
upon exercise or conversion of this Warrant. The amendment to this 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
Article 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.
2.3 Adjustments for Diluting
Issuances. The Warrant Price and the number of Shares issuable upon
exercise of this Warrant or, if the Shares are preferred stock, the number of
shares of common stock issuable upon conversion of the Shares, shall be subject
to adjustment, from time to time in the manner set forth in the Company’s
Articles or Certificate of Incorporation as if the Shares were issued and
outstanding on and as of the date of any such required adjustment. The
provisions set forth for the Shares in the Company’s Articles or Certificate (as
applicable) of Incorporation relating to the above in effect as of the Issue
Date may not be amended, modified or waived, without the prior written consent
of Holder unless such amendment, modification or waiver affects the rights
associated with the Shares in the same manner as such amendment, modification or
waiver affects the rights associated with all other shares of the same series
and class as the Shares granted to Holder.
2.4 No Impairment. The
Company shall not, by amendment of its Articles or Certificate (as applicable)
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.
2.5 Fractional Shares. No
fractional Shares shall be issuable upon exercise or conversion of this 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 the amount computed by multiplying the fractional interest by the
fair market value of a full Share.
2.6 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the Company shall
promptly notify Holder in writing, and, at the Company’s expense, 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.
SVB Warrant Form April 2006
-4-
ARTICLE
3. REPRESENTATIONS AND
COVENANTS OF THE COMPANY.
3.1 Representations and
Warranties. The Company represents and warrants to Holder as
follows:
(a) The
initial Warrant Price referenced on the first page of this Warrant is not
greater than (i) the price per share at which the Shares were last issued in an
arms-length transaction in which at least $500,000 of the Shares were sold and
(ii) the fair market value of the Shares as of the date of this
Warrant.
(b) 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.
(c) The
Company’s capitalization table attached hereto as Schedule 1 is true
and complete as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time
(a) to
declare any dividend or distribution upon any of its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for sale any shares of the Company's capital stock (or other
securities convertible into such capital stock), other than (i) pursuant to the
Company's stock option or other compensatory plans, (ii) in connection with
commercial credit arrangements or equipment financings, or (iii) in connection
with strategic transactions for purposes other than capital raising; (c) to
effect any reclassification or recapitalization of any of its stock;
(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 10 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 common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (a) and (b) above; (2) in the case of the matters referred to in
(c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock 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. Company will also provide information requested by
Holder reasonably necessary to enable Holder to comply with Holder’s accounting
or reporting requirements.
SVB Warrant Form April 2006
-5-
3.3 Registration Under Securities Act of 1933, as amended. The
Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock, shall have certain “piggyback” and Form S-3
registration rights pursuant to and as set forth in the Company’s Investor
Rights Agreement or similar agreement. The provisions set forth in
the Company’s Investors’ Right Agreement or similar agreement relating to the
above in effect as of the Issue Date may not be amended, modified or waived
without the prior written consent of Holder unless such amendment, modification
or waiver affects the rights associated with the Shares in the same manner as
such amendment, modification, or waiver affects the rights associated with all
other shares of the same series and class as the Shares granted to
Holder.
3.4 No Shareholder
Rights. Except as provided in this Warrant, Holder will not have any
rights as a shareholder of the Company until the exercise of this
Warrant.
ARTICLE
4. REPRESENTATIONS,
WARRANTIES OF HOLDER. Holder represents and warrants to the Company as
follows:
4.1 Purchase for Own
Account. This Warrant and the securities to be acquired upon exercise of
this Warrant by Holder will be acquired for investment for Holder’s account, not
as a nominee or agent, and not with a view to the public resale or distribution
within the meaning of the Act. Holder also represents that Holder has not been
formed for the specific purpose of acquiring this Warrant or the
Shares.
4.2 Disclosure of
Information. Holder has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment
decision with respect to the acquisition of this Warrant and its underlying
securities. Holder further has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
this Warrant and its underlying securities and to obtain additional information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to Holder or to which Holder has access.
4.3 Investment
Experience. Holder understands that the purchase of this Warrant and its
underlying securities involves substantial risk. Holder has experience as an
investor in securities of companies in the development stage and acknowledges
that Holder can bear the economic risk of such Holder’s investment in this
Warrant and its underlying securities and has such knowledge and experience in
financial or business matters that Holder is capable of evaluating the merits
and risks of its investment in this Warrant and its underlying securities and/or
has a preexisting personal or business relationship with the Company and certain
of its officers, directors or controlling persons of a nature and duration that
enables Holder to be aware of the character, business acumen and financial
circumstances of such persons.
4.4 Accredited Investor
Status. Holder is an “accredited investor” within the meaning of
Regulation D promulgated under the Act.
4.5
The Act. Holder
understands that this Warrant and the Shares issuable upon exercise or
conversion hereof have not been registered under the Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of Holder’s investment intent as expressed herein. Holder
understands that this Warrant and the Shares issued upon any exercise or
conversion hereof must be held indefinitely unless subsequently registered under
the Act and qualified under applicable state securities laws, or unless
exemption from such registration and qualification are otherwise
available.
SVB Warrant Form April 2006
-6-
ARTICLE
5. MISCELLANEOUS.
5.1 Term . This Warrant
is exercisable in whole or in part at any time and from time to time on or
before the Expiration Date.
5.2 Legends. This Warrant
and the Shares (and the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.
5.3 Compliance with Securities
Laws on Transfer. This Warrant and the 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 Silicon Valley Bank (“Bank”) to provide an opinion of counsel if the
transfer is to Bank’s parent company, SVB Financial Group (formerly Silicon
Valley Bancshares), or any other affiliate of Bank. Additionally, the Company
shall also not require an opinion of counsel 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.
5.4 Transfer Procedure.
After receipt by Bank of the executed Warrant, Bank will transfer all of this
Warrant to SVB Financial Group by execution of an Assignment substantially in
the form of Appendix 2. Subject to the provisions of Article 5.3 and upon
providing the Company with written notice, SVB Financial Group and any
subsequent Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the Shares issuable directly or
indirectly, upon conversion of the Shares, if any) to any transferee, provided,
however, in connection with any such transfer, SVB Financial Group or any
subsequent Holder will give the Company notice of the portion of the Warrant
being transferred with the name, address and taxpayer identification number of
the transferee and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable). The
Company may refuse to transfer this Warrant or the Shares to any person who
directly competes with the Company, unless, in either case, the stock of the
Company is publicly traded.
SVB Warrant Form April 2006
-7-
5.5 Notices . All notices
and other communications from the Company to Holder, or vice versa, shall be
deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company or Holder, as the case may (or on the first business
day after transmission by facsimile) be, in writing by the Company or such
Holder from time to time. Effective upon receipt of the fully executed Warrant
and the initial transfer described in Article 5.4 above, all notices to Holder
shall be addressed as follows until the Company receives notice of a change of
address in connection with a transfer or otherwise:
SVB
Financial Group
Attn: Treasury Department
Attn: Treasury Department
0000
Xxxxxx Xxxxx, XX 000
Xxxxx
Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to
the Company shall be addressed as follows until Holder receives notice of a
change in address:
Energy
and Power Solutions, Inc.
Attn:
Xxxxx Xxxxxx
000
Xxxxxxxxx Xxxxxx, Xxxxx X000
Xxxxx
Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
5.6 Waiver. This Warrant
and any term hereof may be changed, waived, 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.
5.7 Attorneys’ Fees. In
the event of any dispute between the parties 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.
5.8 Automatic Conversion upon
Expiration. In the event that, upon the Expiration Date, the fair market
value of one Share (or other security issuable upon the exercise hereof) as
determined in accordance with Section 1.3 above is greater than the Warrant
Price in effect on such date, then this Warrant shall automatically be deemed on
and as of such date to be converted pursuant to Section 1.2 above as to all
Shares (or such other securities) for which it shall not previously have been
exercised or converted, and the Company shall promptly deliver a certificate
representing the Shares (or such other securities) issued upon such conversion
to Holder.
5.9 Counterparts. This
Warrant may be executed in counterparts, all of which together shall constitute
one and the same agreement.
SVB Warrant Form April 2006
-8-
5.10 Governing Law. This
Warrant shall be governed by and construed in accordance with the laws of
the State of California, without giving effect to its principles regarding
conflicts of law.
[Signature
page follows.]
SVB Warrant Form April 2006
-9-
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“COMPANY”
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Date:
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December 30, 2009 | ||
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ENERGY
AND POWER SOLUTIONS, INC.
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||||
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By:
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/s/ Xxx X. Xxxxxxxx |
By:
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/s/ Xxxxx Xxxxxx | |
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Name:
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Xxx X. Xxxxxxxx |
Name:
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Xxxxx Xxxxxx | |
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(Print)
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(Print)
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|||
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Title:
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President
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Title:
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Chief Financial Officer
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“HOLDER”
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||||
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SILICON
VALLEY BANK
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||||
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By:
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/s/ Xxxx Xxxxxxxxx | |||
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Name:
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Xxxx Xxxxxxxxx | |||
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(Print)
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||||
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Title:
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Vice President | |||
SVB Warrant Form April 2006
-10-
NOTICE OF
EXERCISE
1. Holder elects to purchase ___________ shares of the Common/Series
______
Preferred [strike one] Stock of __________________ pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in
full.
[or]
1. Holder
elects to convert the attached Warrant into Shares/cash [strike one] in the
manner specified in the Warrant. This conversion is exercised for _____________________
of the Shares covered by the Warrant.
[Strike
paragraph that does not apply.]
2. Please
issue a certificate or certificates representing the shares in the name
specified below:
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Holders
Name
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||
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(Address)
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3. By
its execution below and for the benefit of the Company, Holder hereby restates
each of the representations and warranties in Article 4 of the Warrant as the
date hereof.
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HOLDER:
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||
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By:
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||
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Name:
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||
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Title:
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||
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(Date):
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||
SVB Warrant Form April 0000
ASSIGNMENT
For value
received, Silicon Valley Bank hereby sells, assigns and transfers
unto
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Name:
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SVB
Financial Group
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Address:
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0000
Xxxxxx Xxxxx (XX-000)
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Xxxxx
Xxxxx, XX 00000
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||
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Tax
ID:
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00-0000000
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that
certain Warrant to Purchase Stock issued by Energy and Power Solutions,
Inc. (the
“Company”), on ____________, 2_____ (the “Warrant”) together with all
rights,
title and interest therein.
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SILICON
VALLEY BANK
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By:
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||
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Name:
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||
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Title:
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||
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Date:
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By its
execution below, and for the benefit of the Company, SVB Financial Group makes
each of the representations and warranties set forth in Article 4 of the Warrant
and agrees to all other provisions of the Warrant as of the date
hereof.
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SVB
FINANCIAL GROUP
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||
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By:
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||
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Name:
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||
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Title:
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