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Exhibit 4.3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
GADZOOX NETWORKS, INC.
AGREEMENT AND WARRANT TO PURCHASE COMMON STOCK
EFFECTIVE DATE: MAY 25, 2001
Void After: May 25, 2004
This Agreement and Warrant to Purchase Common Stock (this "Agreement" or
"Warrant") certifies that, for value received, Shoreline Pacific Equity Ltd., a
California corporation (the "Holder") is entitled, subject to the terms set
forth below, to purchase from Gadzoox Networks, Inc., a Delaware corporation
(the "Company"), 168,000 shares of the Common Stock of the Company, upon
surrender hereof, at the principal office of the Company referred to below, with
the subscription form attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
determination and adjustment as provided below.
1. NUMBER OF SHARES. This Warrant may be exercised, in whole or in part,
for 168,000 shares of Common Stock of the Company (the "Warrant Shares").
2. EXERCISE PRICE. The per share purchase price of the Common Stock (the
"Exercise Price") for which this Warrant may be exercised shall be $4.14 per
share.
3. EXERCISE OF WARRANT.
3.1 Time of Exercise. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, at any time and
from time to time on or before May 25, 2004; provided, however, that this
Warrant shall terminate upon the earlier to occur of the following (each, a
"Change of Control Event") (i) a merger or consolidation of the Company with or
into any other corporation or corporations in which the stockholders of the
Company immediately prior to the consummation of such transaction shall own less
than fifty percent (50%) of the voting securities of the surviving corporation
or (ii) a sale of all or substantially all of the assets of the Company (the
"Term"). The Company shall give each Holder written notice of an impending
Change of
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Control Event not later than ten (10) business days prior to the closing of such
Change of Control Event which notice shall describe the material terms and
conditions of the transaction. The exercise shall be effected by (a) the
surrender of this Warrant at the principal office of the Company as set forth in
Section 14.5 (or such other office or agency of the Company as may be designated
by notice in writing to the Holder at the address of such Holder appearing on
the books of the Company), (b) delivery of the Notice of Exercise attached
hereto as Exhibit A and (c) except as otherwise provided in paragraph 4.1
hereof, payment of the Exercise Price in cash or by check acceptable to the
Company.
3.2 Effect of Exercise. This Warrant (or the portion thereof
exercised) shall be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As promptly as practicable on
or after such date, the Company, at its expense, shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise and, unless this Warrant shall
have expired, a new warrant representing the number of warrants represented by
the surrendered Warrant, if any, that shall not have been exercised shall also
be delivered to the Holder.
4. RIGHT TO CONVERT WARRANT.
4.1 Conversion Right. In lieu of the payment set forth in paragraph
3.1(c) above, the Holder shall have the right to convert this Warrant ( the
"Conversion Right") at any time during the Term into shares of Common Stock as
provided for in this Section 4. Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of any
Exercise Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the aggregate Exercise Price for
the Warrant Shares to be converted in effect immediately prior to the exercise
of the Conversion Right from the aggregate Fair Market Value, as defined below,
for the Warrant Shares to be converted immediately prior to the exercise of the
Conversion Right) by (y) the Fair Market Value of one share of the Warrant
Shares immediately prior to the exercise of the Conversion Right.
4.2 Exercise of the Conversion Right. Such exercise shall be effected
by (a) the surrender of this Warrant at the principal office of the Company as
set forth in Section 14.5 (or such other office or agency of the Company as may
be designated by notice in writing to the Holder at the address of such Holder
appearing on the books of the Company) and (b) delivery of the Notice of
Conversion attached hereto as Exhibit B at the office of the Company.
4.3 Effect of Conversion. This Warrant shall be deemed to have been
converted immediately prior to the close of business on the date of its
surrender for conversion as provided above, and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the holder of record of such shares as of the close of business
on such date. As promptly as practicable on or after such date, but not later
than three (3) business days following the conversion of this Warrant pursuant
to Section 4.2 hereof, the Company, at its expense, shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such conversion.
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4.4 Value. The Fair Market Value of one Warrant Share as of a
particular date (the "Determination Date") shall mean the Fair Market Value of
one share of the Company's Common Stock as of such Determination Date. The Fair
Market Value of a share of Common Stock as of a Determination Date shall mean:
(a) If the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System or the NASDAQ SmallCap Market, then
the average of the high and the low prices of the Company's Common Stock for
five trading days before the Determination Date.
(b) If the Company's Common Stock is not traded on an exchange,
the NASDAQ National Market System or the NASDAQ SmallCap Market, but is traded
in the over-the-counter market, then the mean of the closing bid and asked
prices reported for the business day immediately preceding the Determination
Date.
(c) Otherwise, as determined in good faith by the Company's Board
of Directors upon a review of relevant factors.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction computed to the nearest whole cent.
6. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant shall have been
exercised as provided herein.
7. TRANSFER OF WARRANT.
7.1 Register. The Company will maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Holder of this
Warrant may change his address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be delivered
or given by mail to the Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this Warrant is transferred on the
Warrant Register of the Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
7.2 Restricted Transferability of Warrant. The Holder shall not sell,
assign or otherwise transfer the Warrant or any part thereof or right thereunder
to any person or entity. Notwithstanding the foregoing, Shoreline Pacific Equity
Ltd. (the "Original Holder") may transfer
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this Warrant, in whole or in part, to one or more individual employees of the
Original Holder pursuant to the Original Holder's employee bonus plan; provided
however, that the Original Holder may not transfer this Warrant to more than ten
(10) employees and, provided further, that no transferee hereof may further
transfer this Warrant without the Company's prior written consent.
8. REPRESENTATIONS AND WARRANTIES OF THE HOLDER AND RESTRICTIONS ON
TRANSFER IMPOSED BY THE SECURITIES ACT AND CALIFORNIA LAW.
8.1 Representations and Warranties by the Holder. The Holder hereby
represents and warrants to the Company as follows:
(a) The Warrant and the Warrant Shares are being acquired for the
Holder's own account, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act or the laws of the State of California.
(b) Holder understands that the Warrant and the Warrant Shares
have not been registered under the Securities Act by reason of their issuance in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) thereof, that the Warrant and the
Warrant Shares must be held by the Holder indefinitely, and that the Holder must
therefore bear the economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration. The Company has committed to register the Warrant
Shares pursuant to a separate agreement.
(c) The Holder further understands that the sale of the
securities which are the subject of this Agreement has not been qualified with
the Commissioner of Corporations of the State of California and the issuance of
such securities or the payment or receipt of any part of the consideration
therefor prior to such qualification is unlawful unless an exemption from such
qualification is available. The rights of all parties to this Agreement are
expressly conditioned upon such qualification being obtained, or such exemption
being available.
(d) During the negotiation of the transactions contemplated
herein, the Holder and its representatives and legal counsel have been afforded
full and free access to corporate books, financial statements, records,
contracts, documents, and other information concerning the Company and to its
offices and facilities, have been afforded an opportunity to ask such questions
of the Company's officers, employees, agents, accountants and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities and other relevant matters as they have deemed necessary or
desirable, and have been given all such information as has been requested, in
order to evaluate the merits and risks of the prospective investments
contemplated herein.
(e) The Holder and its representatives have been solely
responsible for the Holder's own "due diligence" investigation of the Company
and the Company's management and business, for its own analysis of the merits
and risks of this investment, and for its own analysis of
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the fairness and desirability of the terms of the investment. In taking any
action or performing any role relative to the arranging of the proposed
investment, the Holder has acted solely in its own interest, and the Holder (or
any of its agents or employees) has not acted as an agent of the Company. The
Holder has such knowledge and experience in financial and business matters that
the Holder is capable of evaluating the merits and risks of the purchase of the
Warrant pursuant to the terms of this Agreement and of protecting the Holder's
interests in connection therewith.
(f) The Original Holder is an "accredited investor" as defined in
Rule 501 pursuant to the Securities Act.
9. RESERVATION AND AUTHORIZATION OF STOCK. The Company covenants that
during the term this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock and Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the exercise of this
Warrant and, from time to time, will take all steps necessary to amend its
Certificate of Incorporation to provide sufficient reserves of shares of Common
Stock issuable upon exercise of the Warrant. The Company further covenants that
all shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will be
validly issued, fully paid and non-assessable and free from all insurance or
transfer taxes, liens, and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or as otherwise
specified herein). The Company agrees that issuance of this Warrant shall
constitute full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock and any other securities of the Company
upon the exercise of this Warrant.
10. AMENDMENTS. Any term of this Warrant may be amended with the written
consent of the Company and the Holder.
11. LOST DOCUMENTS. Upon receipt by the Company of evidence and
indemnity satisfactory to it of the loss, theft, destruction or mutilation of,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver to the Holder, in lieu of this Warrant, a new Warrant of
the same series and of like tenor of this Warrant.
12. ADJUSTMENTS. The number of shares purchasable hereunder are subject
to adjustment from time to time as follows:
12.1 Reorganization, Reclassification, Merger or Conveyance. If any
capital reorganization or reclassification of the capital stock of the Company
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, or in the event the Company (or any such other corporation) merges with
or into another corporation or conveys all or substantially all of its assets to
another corporation, then, as a condition of such reorganization,
reclassification merger or conveyance, lawful and adequate provisions shall be
made whereby each holder of the Warrants, if then outstanding, shall thereafter
have the right to receive upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock of the Company
immediately theretofore receivable upon the exercise of such Warrant or
Warrants, such shares of stock, securities
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or assets (including cash) as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore so receivable, had such
reorganization, reclassification, merger or conveyance not taken place, and in
any such case appropriate provision shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
exercise rights.
12.2 Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination and the number of the securities as to which purchaser
rights under this Warrant exist shall be increased or decreased proportionately
in accordance with such split subdivision or combination.
12.3 Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive (the "Dividend Date"), without payment therefor, other or additional
stock or other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other securities or
property (other than cash) of the Company which such holder would be entitled to
receive had it been the holder of record of the securities receivable upon
exercise of any remaining portion of this Warrant on the Dividend Date.
12.4 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 12, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Secretary of the Company for filing in
the Company's records and to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of the Holder, furnish or cause to be furnished to the
Holder a like certificate setting forth: (i) such adjustments and readjustments;
(ii) the Exercise Price at the time in effect; and (iii) the number of shares
and the amount, if any, of other property that at the time would be received
upon the exercise of the Warrant. No such adjustment or change shall compel
immediate exercise of this Warrant or otherwise affect the Termination Date of
this Warrant. Irrespective of any adjustment or other changes made hereunder,
this Warrant (or any other warrant issued in exchange therefor) may continue to
express the same number and kind of Warrant Shares (except to the extent
exercised) and the same Exercise Price as are initially stated herein.
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12.5 No Impairment. The Company will not, by any 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, by amendment of its Certificate
of Incorporation or through reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
but will at all times in good faith assist in the carrying out of all the
provisions of this Section 12 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of this
Warrant against impairment.
13. [RESERVED.]
14. GENERAL PROVISIONS.
14.1 Governing Law. This Warrant shall be governed by and construed
under the laws of the State of California, excluding that body of law relating
to conflict of laws.
14.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
exercise of this Warrant.
14.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
14.4 Entire Agreement. This Agreement and the exhibits to this
Agreement constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
14.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent via facsimile,
overnight courier service or mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed or sent (a) if to the Holder, at
the address or facsimile number of the Holder set forth below such party's name
on the signature page hereto, or at such other address or number as the Holder
shall have furnished to the Company in writing, or (b) if to the Company, at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at such
other address or number as the Company shall have furnished to the Holder in
writing.
14.6 Separability. In case any provision of this Agreement shall be
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
14.7 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original, but all of which together shall
constitute one instrument.
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IN WITNESS WHEREOF, GADZOOX NETWORKS, INC., has caused the Warrant to be
executed by its officers thereunto duly authorized.
Dated: May 25, 2001
GADZOOX NETWORKS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
President and Chief Executive Officer
ACCEPTED:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chief Executive Officer
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Address:
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Facsimile:
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Warrant to Purchase Series B-1 Common Stock
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EXHIBIT A
NOTICE OF EXERCISE
TO: GADZOOX NETWORKS, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common
Stock of Gadzoox Networks, Inc. pursuant to the terms of the attached Agreement
and Warrant to Purchase Common Stock (the "Warrant"), and tenders herewith
payment of the Exercise Price for such shares in full at the price per share
provided in the Warrant.
(2) The undersigned hereby confirms and acknowledges that the
representations and warranties set forth in Section 8 of the Warrant remain true
and correct concerning the Holder as of the date hereof, that the shares of
Common Stock are being acquired solely for the account of the undersigned and
not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell, or otherwise dispose of any such shares of
Common Stock except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws or unless
pursuant to Rule 144 of such Act.
(3) 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:
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Print Name
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Signature
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Date
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EXHIBIT B
NOTICE OF CONVERSION
TO: GADZOOX NETWORKS, INC.
(1) The undersigned hereby elects to convert the attached Warrant into
________ shares of Common Stock of Gadzoox Networks, Inc. pursuant to the terms
of the attached Agreement and Warrant to Purchase Common Stock (the "Warrant").
(2) In converting such Warrant, the undersigned hereby confirms and
acknowledges that the representations and warranties set forth in Section 8 of
the Warrant remain true and correct concerning the Holder as of the date hereof,
that the shares of Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any such
shares of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws or unless pursuant to Rule 144 of such Act.
(3) 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:
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Print Name
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Signature
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Date
