EXHIBIT 10.53
WARRANT SUBSCRIPTION AGREEMENT
This Warrant Subscription Agreement (the "Agreement") is entered into as of
April 9, 1999 among ▇▇▇▇▇.▇▇▇, Inc. (formerly COMPS Infosystems, Inc.), a
Delaware corporation (the "Company"), Silicon Valley Bank (the "Purchaser"), and
the Shareholders listed on the signature pages attached hereto and any permitted
transferees of such Shareholder (collectively, the "Shareholders").
Recitals
A. Pursuant to that certain Loan and Security Agreement dated as of the
date hereof (as the same may from time to time be amended, modified,
supplemented or restated, the "Loan Agreement"), by and among the Company and
the Purchaser, the Purchaser has agreed to extend credit to the Company (the
"Credit").
B. Purchaser was induced by the Company to make the Credit available to
the Company, in part by the Company's and the Shareholders' agreement to enter
into this Agreement and to grant rights of co-sale to the Purchaser, as
contained herein.
C. In connection with the foregoing, the Company is selling to Purchaser a
Warrant to Purchase Stock (the "Warrant") to purchase up to 49,000 shares of the
Company's Series B Preferred Stock (the "Preferred Stock") at an initial
exercise price of $5.00 per share (the "Warrant Price") (the aggregate number of
shares for which the Warrant may be exercised collectively being referred to as
the "Warrant Shares"). The Warrant shall be substantially in the same form as
the Form of Warrant attached hereto as Exhibit A.
D. The Purchaser desires to subscribe for and purchase from the Company,
and the Company desires to sell to the Purchaser, the Warrant.
Agreement
In order to implement the foregoing and in consideration of the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser, the Company
and the Shareholders agree as follows:
1. Definitions.
The following terms shall have the meanings ascribed to such terms in the
Sections set forth below:
Term Section
Act 3.1
Agreement Recitals
Certificate 4.1(d)
Closing 2.2
Common Stock 4.1(d)
Company Recitals
Credit Recitals
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Investor Rights Agreement 2.4(b)
Loan Agreement Recitals
Exchange Act 4.3
Notice 7.1(a)
Options 4.1(e)
Piggyback Rights 5.1
Prohibited Transfer 7.3(a)
Purchaser Recitals
Put 6
Put Price 6.2
Qualified Financing 6.1
Refinancing 6.1
Regulated Purchaser 3.6
Rule 144 3.3(d)
SEC 4.3
Stock 7.1(a)
Shareholders Recitals
Transfer 3.1
Warrant Recitals
Warrant Shares Recitals
2. Subscription for, Purchase and Exercise of Warrant; Original Issue
Discount.
2.1 Purchase of Warrant. Subject to the terms and conditions
hereinafter set forth, the Purchaser hereby subscribes for and purchases, and
the Company hereby sells to the Purchaser, for good and valuable consideration,
the receipt of which is hereby acknowledged, the Warrant.
2.2 The Time and Place of the Closing. The Closing of the
transactions provided for in this Agreement (the "Closing") shall be held at
10:00 a.m., local time, on April 9, 1999 at the offices of ▇▇▇▇▇▇ Godward LLP,
Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and
place as the Purchaser and the Company shall agree.
2.3 Closing of the Purchase of the Warrant. At the Closing, the
Company will deliver to Purchaser the Warrant, which shall be issued in
Purchaser's name.
2.4 Conditions to the Obligations of the Purchaser and the Company
Hereunder. The obligations of the Purchaser and the Company hereunder shall be
subject to the following conditions:
(a) The representations and warranties made herein to the
Purchaser or the Company by the other respective party shall be true and correct
in all material respects at and as of the date of the Closing; and
(b) The Purchaser and the Company shall have entered into the
Amendment to Investor Rights Agreement ("Amendment") which Amendment shall amend
the Amended and Restated Investor Rights Agreement dated as of February 9, 1998,
by and among the Company and the holders of Company's securities whose names are
set forth on the signature page attached thereto
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(collectively with the Amendment, the "Investor Rights Agreement"), to add the
Purchaser as a party thereto.
2.5 Original Issue Discount. The Company and Purchaser hereby
acknowledge and agree that the Warrant is part of an investment unit within the
meaning of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended,
which investment unit includes all Credit Extensions (as defined in the Loan
Agreement) made pursuant to the Loan Agreement up to the maximum amount of the
Term Loan (as defined in the Loan Agreement). The Company and Purchaser agree
that the fair market value of the Warrant is less than the de minimis threshold
for reporting income and expense relating thereto on a current basis.
Therefore, the Company and Purchaser shall prepare their respective federal
income tax returns in a manner consistent with the foregoing agreement and,
pursuant to Treas. Reg. (S) 1.1273, the original issue discount on the Credit
Extensions shall be considered to be zero.
3. Purchaser's Representations, Warranties and Agreements. Purchaser
hereby represents, warrants and covenants to the Company as follows:
3.1 No Resales. The Purchaser is acquiring its Warrant for
investment solely for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof except in
compliance with the provisions of Rule 144A under the Securities Act of 1933, as
amended (the "Act"). The Purchaser agrees and acknowledges that it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of (referred to hereinafter as a "Transfer") its Warrant
Shares unless (i) such Transfer is pursuant to an effective registration
statement under the Act and complies with all applicable state securities laws,
or (ii) counsel for the Purchaser (which counsel shall be reasonably acceptable
to the Company) shall have furnished the Company with an opinion, reasonably
satisfactory in form and substance to the Company, to the effect that no such
registration is required because of the availability of an exemption from
registration under the Act and that the Transfer is exempt from all applicable
state securities laws except that no such opinion shall be required (y) in
connection with a Transfer by Purchaser to any affiliate of Purchaser or (z) in
connection with a Transfer where the transferee simultaneously becomes a lender
under the Loan Agreement and makes the representations and warranties contained
in this Section 3. No Transfer of the Warrant or the Warrant Shares in
violation of this Agreement shall be made or recorded on the books of the
Company, and any such Transfer shall be void and of no effect.
3.2 Legends. The Warrant, and the Warrant Shares issuable in respect
thereof, shall each bear legends in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (A) SUCH TRANSFER IS PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR (B) THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE PURCHASER THAT SUCH TRANSFER IS
EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT, THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS."
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A CERTAIN WARRANT SUBSCRIPTION AGREEMENT DATED AS OF
APRIL 9, 1999, BY AND BETWEEN THE WARRANT PURCHASER, THE COMPANY AND
CERTAIN PURCHASERS OF STOCK AND WARRANTS OF THE COMPANY (THE "WARRANT
SUBSCRIPTION AGREEMENT"). COPIES OF THE WARRANT SUBSCRIPTION AGREEMENT MAY
BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
3.3 Warrant and Warrant Shares Unregistered. Purchaser acknowledges
with respect to Purchaser's Warrant and Warrant Shares that Purchaser has been
advised that:
(a) Neither the Warrant nor the Warrant Shares have been
registered under the Act or qualified under the applicable securities laws of
any state;
(b) Except as contemplated by Sections 6, 7 and 8 hereof, the
Warrant and the Warrant Shares must be held indefinitely and the Purchaser must
continue to bear the economic risk of the investment in the Warrant and the
Warrant Shares unless they are subsequently registered under the Act and
qualified under applicable state securities laws or an exemption from such
registration or qualification is available;
(c) it is not anticipated that there will be any public market
for the Warrant or the Warrant Shares;
(d) Rule 144 promulgated under the Act ("Rule 144") is not
presently available with respect to the sales of any securities of the Company,
and the Company has made no covenant to make Rule 144 available (except as
provided in Section 4.3 hereof);
(e) when and if the Warrant or the Warrant Shares may be
disposed of without registration in reliance on Rule 144, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
Rule 144;
(f) if the Rule 144 exemption is not available, public sale
without registration will require compliance with Regulation A promulgated under
the Act or some other exemption under the Act and compliance with applicable
state securities laws;
(g) a restrictive legend in the form heretofore set forth shall
be placed on each of the Warrant and the Warrant Shares; and
(h) a notation shall be made in the appropriate records of the
Company indicating that the Warrant and the Warrant Shares are subject to
restrictions on transfer and, if the Company should at some time in the future
engage the services of a transfer agent, appropriate transfer restrictions will
be issued to such transfer agent with respect to the Warrant.
3.4 Compliance With Rule 144. If the Warrant or the related Warrant
Shares are disposed of in accordance with Rule 144 under the Act, the Purchaser
shall deliver to the Company at or prior to the time of such disposition an
executed copy of Form 144 (if required by Rule 144) and such other documentation
as the Company may reasonably require in connection with such sale.
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3.5 Additional Representations. The Purchaser further represents and
warrants to Company that:
(a) it has been given the opportunity to obtain any information
or documents and to ask questions and receive answers about such documents, the
Company and the business and prospects of the Company which it deems necessary
to evaluate the merits and risks related to its investment in its Warrant;
(b) its financial condition is such that it can afford to bear
the economic risk of holding its unregistered Warrant and Warrant Shares for an
indefinite period of time and has adequate means of providing for its current
needs and contingencies;
(c) it can afford to suffer a complete loss of its investment in
the Warrant and Warrant Shares;
(d) all information which it has provided to the Company
concerning itself and its financial position is correct and complete as of the
date of this Agreement and, if there should be any material change in such
information prior to the Closing, the Purchaser will immediately furnish such
revised or corrected information to the Company;
(e) it understands and is cognizant of all risk factors related
to the purchase of the Warrant and Warrant Shares;
(f) it is an "Accredited Investor" as that term is defined in
Rule 501(a) of Regulation D promulgated under the Act;
(g) its knowledge and experience in financial and business
matters are such that it is capable of evaluating the merits and risks of its
purchase of the Warrant and Warrant Shares as contemplated by this Agreement;
(h) either (i) it has a pre-existing personal or business
relationship with the Company or any of its officers, directors or controlling
persons, or (ii) by reason of its business or financial experience or the
business or financial experience of its professional advisors who are
unaffiliated with, and who are not compensated by, the Company or any affiliate
of the Company, it has the capacity to protect its own interests in connection
with the investment in the Warrant and the Warrant Shares;
(i) it is an "excluded purchaser," as defined in Section
260.102.13 of the Corporate Securities Rules of the California Corporation
Commissioner, for purposes of Section 25102(f) of the California Corporate
Securities Law of 1968, as amended; and
(j) this Agreement has been executed and delivered by Purchaser
and is its valid and binding obligation, enforceable against Purchaser in
accordance with its terms, except for (i) the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally, and (ii) limitations
imposed by federal or state law or equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions of this
Agreement and upon the availability of injunctive relief or other equitable
remedies.
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3.6 No Controlling Influence. In the event and so long as the
Warrant or the related Warrant Shares are held by Purchaser or any of its
affiliates or any person or entity to which Purchaser or any of its affiliates
shall have transferred the Warrant or the related Warrant Shares (any such
person or entity, a "Regulated Purchaser"), such Regulated Purchaser will
neither:
(a) Exercise or attempt to exercise, directly or indirectly, a
controlling influence over the management or policies of the Company; nor
(b) Notwithstanding any other provision of this Agreement,
exercise the Warrant to the extent such exercise would result in such Regulated
Purchaser and its affiliates holding, directly or indirectly, in excess of 4.99%
of any class of the outstanding voting stock of the Company, except in
connection with (i) a widely dispersed public offering of the Warrant Shares,
(ii) a sale of the related Warrant Shares into the secondary market pursuant to
the transaction and volume limitations of Rule 144 (irrespective of holding
periods), or (iii) a private placement or sale, including pursuant to Rule 144A
under the Act, so long as the transferee and its affiliates do not collectively
acquire from Purchaser more than 2% of the voting stock of the Company pursuant
to such transfer.
3.7 Voting. Purchaser covenants that for so long as Purchaser owns
the Warrant Shares or any common stock issuable upon conversion of the Warrant
Shares, it shall not, to the extent that is entitled under any statute, rule,
regulation and/or the Certificate or the Company's Bylaws, exercise any voting,
consent or other approval rights, whether by written consent or otherwise,
arising from Purchaser's ownership of the Warrant Shares or any common stock
issuable upon conversion of the Warrant Shares, which it obtains through the
exercise of the Warrant.
4. Representations, Warranties and Agreements.
4.1 The Company's Representations and Warranties. The Company
represents and warrants, as of the date hereof, that:
(a) Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; has all requisite power and authority to own or lease
and operate its properties and to carry on its business as now conducted and as
proposed to be conducted after the funds are advanced under the Credit; and is
duly qualified or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which it owns or leases property or in which
the conduct of its business requires it to so qualify or be licensed, except for
such jurisdictions where the failure to so qualify or be licensed would not have
a material adverse effect on the business or financial condition of the Company.
(b) Authority. The Company has all requisite power and authority
to enter into and perform all of its obligations under this Agreement, to issue
the Warrant and the Warrant Shares and to carry out the transactions
contemplated hereby.
(c) Due Authorization. The Company has taken all corporate
actions necessary to authorize it to enter into and perform its obligations
under this Agreement, to issue the Warrant and the Warrant Shares and to
consummate the transactions contemplated hereby. This Agreement is the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except for (i) the effect upon this Agreement of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (ii) limitations
imposed by equitable principles or principles of public policy upon the specific
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enforceability of any of the remedies, covenants or other provisions of this
Agreement and upon the availability of injunctive relief or other equitable
remedies.
(d) Capitalization of Company. The Company's capital stock is
divided into common stock ("Common Stock") and preferred stock. The authorized
capital stock of the Company consists of 4,368,200 shares of Series A Preferred
Stock, of which, immediately after the Closing Date, 4,270,336 shares are issued
or outstanding, 731,800 shares of Series B Preferred Stock, of which,
immediately after the Closing Date, 637,790 shares are issued or outstanding,
and 22,500,000 shares of Class A Common Stock, of which, immediately after the
Closing Date, 4,811,189 shares will be outstanding on a fully diluted basis, and
2,500,000 shares of Class B Common Stock, of which, immediately after the
Closing Date, 3,422,983 shares will be outstanding on a fully diluted basis (in
each case taking into account all outstanding warrants, options and other rights
to purchase the Common Stock and Preferred Stock). When the Warrant to be
purchased by the Purchaser hereunder has been delivered as provided herein, the
Warrant Shares (i) together with all outstanding shares of Common Stock,
Preferred Stock and shares of Common Stock issuable upon exercise of all
outstanding Options (as defined below) of the Company will not exceed the number
of shares that have been authorized by the Company's Restated Certificate of
Incorporation ("Certificate"), (ii) will have been duly authorized to be issued
by the Company's board of directors, (iii) will, upon payment therefor in
accordance with the terms of the Warrant, be duly and validly issued, fully paid
and nonassessable and (iv) will have been reserved for issuance pursuant to the
terms of the Warrant.
(e) No Other Rights or Obligations to Purchase Stock of Company.
Except for the Put granted to the Purchaser pursuant to Section 6, the right of
first refusal granted to the Purchaser pursuant to Section 8.5, the registration
rights set forth in the Investor Rights Agreement and the options and rights
granted as fully described on Schedule 4.1(e), (i) there are no outstanding
subscriptions, warrants, options, calls, preemptive rights, commitments or
rights of first refusal of any character (collectively, "Options") relating to
or entitling any person to purchase or otherwise acquire any capital stock of
the Company, (ii) there are no obligations or securities convertible into or
exchangeable or exercisable for shares of any capital stock of the Company or
any commitments of any character relating to or entitling any person to purchase
or otherwise acquire any such obligations or securities, (iii) the Company has
no obligation to repurchase any of its capital stock, and (iv) the Company has
not entered into any agreement to register its securities under the Act.
(f) No Adjustment of Other Shares on Issuance. Neither the
issuance nor the exercise of the Warrant will cause the rate at which any of the
Company's outstanding securities are ultimately convertible into Common Stock to
change, nor will such issuance or exercise invoke any "antidilution" feature of
any of the Company's outstanding securities or rights to purchase securities
except to the extent that the Warrant becomes exercisable to purchase Warrant
Shares at a Warrant Price of $1.17.
4.2 Shareholders' Representations and Warranties. Each of the
Shareholders represents and warrants that it or the party signing this Agreement
on its behalf has all requisite power and authority to enter into this Agreement
and that each Shareholder has the power and authority to perform all of its
obligations under this Agreement and to carry out the transactions contemplated
hereby.
4.3 Rule 144. The Company agrees that after it has filed a
registration statement pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to
any class of equity securities of the Company, it will use its best efforts to
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file in a timely manner all reports required to be filed by it pursuant to
the Exchange Act and, upon the request of Purchaser, will furnish Purchaser with
such reports so that the Purchaser may effect routine sales pursuant to Rule 144
and Rule 144A (if applicable) under the Act or any similar rule or regulations
hereafter adopted by the Securities and Exchange Commission (the "SEC").
4.4 Purchaser's Percentage Ownership. The Company hereby represents
and warrants that the initial 10,000 Warrant Shares in respect of the Warrant
currently represent that number of shares representing a seventy-six thousandths
of one percent (0.076%) interest in the Company's equity capital on a fully
diluted basis (after giving effect to the exercise of all options, warrants, and
convertible securities assuming all options authorized for grant, whether or not
granted, have been granted).
5. Registration Rights.
5.1 Purchaser's Registration Rights. The Purchaser shall have
registration rights relating to its Warrant and the applicable Warrant Shares
set forth in the Investor Rights Agreement. The Company represents and warrants
that such registration rights are, in all material respects, at least as
favorable to the Purchaser with respect to the right to include the Warrant
Shares in any registration of the Company's securities for the Company's own
account in connection with an offering of such stock to the public for cash,
other than registrations relating solely to employee benefit plans ("Piggyback
Rights"), as have been granted to any other person with respect to the Company's
securities. The registration rights shall automatically be amended to conform
to any Piggyback Rights granted to any future person that are more favorable to
such person than to the Purchaser at the time of grant.
5.2 Shareholders' Registration Rights. Each of the Shareholders
agrees that it shall not be entitled to exercise any registration rights in its
favor now existing or hereafter arising if such Shareholder shall have received
notice from Purchaser that an Event of Default has occurred under the Loan
Agreement and no waiver of such Event of Default shall have been made.
6. Purchaser's Put Option.
The Company and the Purchaser agree that under certain circumstances as
more fully set forth below, Purchaser may elect to sell to the Company its
Warrant Shares or any portion of its Warrant Shares, and the Company agrees to
buy such Warrant Shares or any portion thereof when properly tendered by the
Purchaser. Purchaser's option as herein set forth (the "Put") to demand that
the Company purchase, from time to time, the Warrant Shares or any portion
thereof then held by Purchaser is subject to the following terms and conditions:
6.1 Time of Exercise. The Put (i) shall become exercisable on the
earliest to occur of (a) the closing of a Qualified Financing, (b) after three
years after the Closing if a Qualified Financing has not occurred, (c) a
liquidation, dissolution or winding up of the Company, (d) the closing of an
acquisition, merger, exchange of securities, sale of all or substantially all of
the assets of the Company, reorganization in which the Company is not the
surviving entity or a stock issuance or "reverse merger" in which the Company is
the surviving entity but under which the holders of the Company's securities
prior to such stock issuance or reverse merger do not hold more than fifty (50%)
of the voting securities of the Company following such stock issuance or reverse
merger, (e) immediately prior to the closing of a Qualified Public Offering, (f)
upon payment in full of the Obligations (as defined in the Loan Agreement), (g)
the date of any Event of Default (as defined in the Loan Agreement) that results
in acceleration of all or any of the Obligations (as defined in the Loan
Agreement) due thereunder and (h)
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the date of any Refinancing and (ii) shall terminate on the earliest of (x) the
closing of a Qualified Public Offering, (y) the closing of an acquisition,
merger, exchange of securities, sale of all or substantially all of the assets
of the Company, reorganization in which the Company is not the surviving entity
or a stock issuance or "reverse merger" in which the Company is the surviving
entity but under which the holders of the Company's securities prior to such
stock issuance or reverse merger do not hold more than fifty (50%) of the voting
securities of the Company following such stock issuance or reverse merger;
provided, however, that the Purchaser shall have the right to exercise the
option granted pursuant to this section concurrently with such closing by
delivering written notice of their intention to so exercise at least ten (10)
days prior to the date of such closing; provided, further, that the Company
shall provide the Purchaser with not less than thirty (30) days written notice
of the closing of a transaction contemplated by this Section 6.1; or (z) the
liquidation of the Company. For purposes of this Agreement, (1) "Qualified
Financing" shall mean an equity or subordinated debt investment in the Company
in which the Company receives net proceeds in excess of Three Million Dollars
($3,000,000), (2) "Refinancing" shall mean any refinancing, by other than the
Purchaser pursuant to the Loan Agreement, whereby all obligations under the Term
Loan (as defined in the Loan Agreement) are repaid in full and the commitment
thereunder has terminated; provided, however, that a "Refinancing" shall not
include a refinancing of the Loan contemporaneous with the sale of the Company
or the sale of all or substantially all of the equity of the Company to other
than an affiliate of the Company, and (3) "Qualified Public Offering" shall mean
an underwritten public offering in which the Company receives gross proceeds of
not less than $10,000,000 at a purchase price per share of not less than $3.73
(as adjusted for stock splits, dividends, recapitalization and the like).
6.2 Put Price. Subject to Section 8.4, the price at which the Put
may be exercised (the "Put Price") shall be the greater of (i) the Warrant Price
(as defined in the Warrant) of the Warrant Shares for which the Put is being
exercised plus all accrued and unpaid dividends through the date of repurchase,
and (ii) the fair market value of the Warrant Shares for which the Put is being
exercised as agreed upon by the Company and the Purchaser.
6.3 Method of Exercise. To exercise the Put, any Purchaser shall
give written notice to the Company of its desire to so exercise and the Company
shall provide written notice to the Purchaser within twenty (20) business days
of receipt of the Purchaser's notice, setting forth the Company's calculation of
the Put Price pursuant to Section 6.2 and a proposed closing date, which shall
not be more than sixty (60) business days following such Company notice. Such
Purchaser shall then respond within twenty (20) business days of such Company
notice indicating whether it accepts the Company's calculation of the Put Price
or desires to submit the matter for appraisal in accordance with the provisions
of Section 6.4. If such Purchaser desires to accept the specified Put Price, it
shall tender to the Company, at the closing, the certificate representing its
Warrant Shares, duly endorsed in blank, free and clear of all liens, claims, and
encumbrances, and the Company shall pay at the closing the applicable purchase
price by cash or cash equivalent made payable to such Purchaser, and shall
issue to such Purchaser a new certificate of like tenor to the extent the Put
was not exercised with respect to all of such Purchaser's Warrant Shares.
6.4 Appraisal on Disagreement. If Purchaser and the Company do not
agree on the Put Price under the method of the calculation elected by Purchaser,
the Put Price shall be determined by appraisal. All appraisals shall be
undertaken by two appraisers, one selected by the Company and one selected by
the Purchaser. The fair market value shall be the fair market value arrived at
by those appraisers within sixty (60) days following the appointment of the last
appraiser to be appointed. In the event that the two appraisers cannot agree on
such fair market value within such a period of time, (i) if the appraisers'
valuations are within 10% of each other, the fair market value shall be the mean
of the
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two valuations and (ii) if the differences in the valuations are greater, the
appraisers shall elect a third appraiser who will calculate fair market value
independently, and, except as provided in the next sentence, the fair market
value of the Warrant Shares shall in each case be the average of the two fair
market values arrived at by the appraisers who are closest in amount. If one
appraiser's valuation is the mean of the other two valuations, the mean
valuation shall be the fair market value. In the event that the two original
appraisers cannot agree upon a third appraiser within thirty (30) days following
the end of the sixty (60) day period referred to above, then the third appraiser
shall be appointed by the American Arbitration Association upon the request of
either party. If, following the conclusion of any appraisal referred to above, a
Purchaser shall choose not to sell any or all of the Warrant Shares, then it
shall so notify the Company, within twenty (20) days following receipt of the
appraisal. If the Purchaser chooses not to sell any or all of the Warrant Shares
and after the initiation of the procedures outlined in Section 6.3, then its
rights hereunder shall terminate with respect to all such securities not offered
to the Company. The expenses of the appraiser chosen by the Company will be
borne by it, the expenses of the appraiser chosen by the Purchaser will be borne
by the Purchaser and the expenses of the third appraiser will be borne 50% of
the Company and 50% by the Purchaser.
7. Co-Sale Agreement.
7.1 Tag-Along Rights.
(a) If any Shareholder proposes to sell or transfer any shares
of Common Stock or Preferred Stock owned by such Shareholder ("Stock") in one or
more related transactions which will result in (i) the transfer of five percent
(5%) or more shares of Stock held by such Shareholder or (ii) the transferee of
such shares increasing its ownership from less than five percent (5%) to more
than five percent (5%) of the Common Stock of the Company then outstanding
(taking into account any Preferred Stock held by such transferee which is
convertible into Common Stock), then such Shareholder shall promptly give
written notice (the "Notice") to the Company and each Purchaser at least twenty
(20) days prior to the closing of such sale or transfer. The Notice shall
describe in reasonable detail the proposed sale or transfer including, without
limitation, the number of shares of Stock to be sold or transferred, the nature
of such sale or transfer, the consideration to be paid, and the name and address
of each prospective purchaser or transferee. In the event that the sale or
transfer is being made pursuant to the provisions of Section 7.2(a) or 7.2(b)
hereof, the Notice shall state under which paragraph the sale or transfer is
being made.
(b) Each Purchaser shall have the right, exercisable upon
written notice to such Shareholder within fifteen (15) days after receipt of the
Notice, to participate in such sale of Stock on the same terms and conditions.
To the extent that a Purchaser exercises such right of participation in
accordance with the terms and conditions set forth below, the number of shares
of Stock that the Shareholder may sell in the transaction shall be
correspondingly reduced.
(c) Each Purchaser may sell all or any part of that number of
shares of Stock equal to the product obtained by multiplying (i) the aggregate
number of shares of Common Stock and Preferred Stock (on a fully converted
basis) covered by the Notice by (ii) a fraction the numerator of which is the
number of shares of Common Stock and Preferred Stock (on a fully converted
basis) owned by the Purchaser at the time of the sale or transfer (including any
shares of Common Stock acquired by the Purchaser after receipt of the notice and
prior to the time of such sale or transfer) and the denominator of which is the
total number of shares of Common Stock and Preferred Stock (on a fully converted
basis) owned by the Shareholder and Purchaser at the time of the sale or
transfer (including
10
any shares of Common Stock acquired by Purchaser after receipt of the notice and
prior to the time of such sale or transfer).
(d) Purchaser shall effect its participation in the sale by
promptly delivering to such Shareholder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent the number of shares of stock which the Purchaser elects to sell.
(e) The stock certificate or certificates that a Purchaser
delivers to such Shareholder pursuant to Section 7.1(d) shall be transferred to
the prospective purchaser in consummation of the sale of the Stock pursuant to
the terms and conditions specified in the Notice, and such Shareholder shall
concurrently therewith remit to the Purchaser that portion of the sale proceeds
to which the Purchaser is entitled by reason of its participation in such sale.
To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares or other securities from the
Purchaser, such Shareholder shall not sell to such prospective purchaser or
purchasers any Stock unless and until, simultaneously with such sale, such
prospective purchaser or purchasers shall purchase such shares or other
securities from the Purchaser.
(f) The exercise or non-exercise of the rights of a Purchaser
hereunder to participate in one or more sales of Stock made by any Shareholder
shall not adversely affect its rights to participate in subsequent sales of
Stock subject to Section 7.1(a).
7.2 Exempt Transfers.
(a) Notwithstanding the foregoing, but subject to the notice
requirements of Section 7.1(a) above, the co-sale rights of a Purchaser shall
not apply to (i) any pledge of Stock made pursuant to a bona fide loan
transaction that creates a mere security interest, (ii) any transfer to the
ancestors, descendants or spouse, or to trusts for the benefit of such persons,
of a Shareholder; or (iii) any bona fide gift or charitable contribution;
provided that (A) such transferring Shareholder shall inform the Purchaser in
writing of such pledge, transfer or gift prior to effecting it and (B) the
pledgee, transferee or donee shall furnish the Purchaser with a written
agreement to be bound by and comply with all provisions of this Section 7. Such
transferred Stock shall remain "Stock" hereunder, and such pledgee, transferee
or donee shall be treated as a "Shareholder" for purposes of this Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 7.1
shall not apply to the sale or transfer of any Stock (i) to the public pursuant
to a registration statement filed with, and declared effective by, the SEC or
sales pursuant to Rule 144 under the Act or (ii) if prior to such sale or
transfer, the Shareholder (except for the Shareholders executing a signature
page to this Agreement) held less than ten percent (10%) of the Company's
outstanding shares.
7.3 Prohibited Transfers.
(a) In the event a Shareholder should sell any Stock in
contravention of the co-sale rights of the Purchaser under this Agreement (a
"Prohibited Transfer"), the Purchaser, in addition to such other remedies as may
be available at law, in equity or hereunder, shall have the put option provided
herein, and such Shareholder shall be bound by the applicable provisions of such
option.
(b) In the event of a Prohibited Transfer, the Purchaser shall
have the right to sell to the violating Shareholder the type and number of
shares of Stock equal to the number of shares the Purchaser would have been
entitled to transfer to the purchaser had the Prohibited Transfer been
11
effected pursuant to and in compliance with the terms hereof. The Purchaser
shall exercise such right and such sale shall be made on the following terms and
conditions:
(i) The price per share at which the shares are to be
sold to such Shareholder shall be equal to the price per share paid by the
purchaser to such Shareholder in the Prohibited Transfer. Such Shareholder shall
also reimburse the Purchaser for any and all fees and expenses, including legal
fees and expenses, incurred pursuant to the exercise or the attempted exercise
of the Purchaser's rights under Section 7.1 and under this Section 7.3.
(ii) Within 90 days after the later of the dates on which
the Purchaser (A) receives notice of the Prohibited Transfer or (B) otherwise
becomes aware of the Prohibited Transfer, the Purchaser shall, if exercising the
option created hereby, deliver to such Shareholder the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(iii) Such Shareholder shall, upon receipt of the
certificate or certificates for the shares to be sold by Purchaser pursuant to
this Section 7.3, pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 7.3(b)(i), in cash or by
other means acceptable to the Purchaser.
(iv) To the extent a Shareholder transfers Stock in
violation of Section 7.1 hereof and the Purchaser has not exercised or waived in
writing its rights to sell Stock pursuant to this Section 7.3(b), any such
transfer shall be void and the Company agrees it will not effect such a
transfer, nor will it treat any alleged transferee as the purchaser of such
shares without the written consent of the Purchaser.
7.4 Amendment. Notwithstanding anything else contained in this
Agreement, any provision of this Section 7 may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of (a) as to the
Company, only the Company, (b) as to the Purchaser, only the Purchaser, and (c)
as to the Shareholders, purchasers of a majority in interest of the Stock held
by the Shareholder on the date hereof, provided that any Shareholder may waive
any of such Shareholder's rights hereunder without obtaining the consent of such
majority. Any amendment or waiver effected in accordance with clauses (a), (b)
and (c) of this paragraph shall be binding upon Purchaser, its successors and
assigns, the Purchasers of the Warrant, the Company and the Shareholders.
7.5 Term. This Section 7 shall terminate upon the closing of a
Qualified Public Offering.
7.6 Ownership. Each Shareholder represents and warrants that such
Shareholder is the sole legal owner of the shares of stock subject to this
Section 7, subject to community property laws (where applicable), and that no
other person has any interest in such shares.
7.7 Drag-Along Obligation.
(a) If one or more Shareholders intend to make a Control
Transfer (as defined below) for consideration to any person or entity or group
of related persons or entities, upon notice to each Purchaser, the transferring
Shareholder(s) (for purposes of this Section 7.7, the "Dragging Shareholder")
may cause Purchaser to sell the Warrant and Warrant Shares owned by it as
provided in
12
this Section 7.7. The Dragging Shareholder will notify Purchaser in writing (the
"Drag-Along Notice") of such intended transfer and the exercise of its rights
hereunder at least ten (10) days prior to the proposed date for the consummation
of such transfer, which notice will contain all of the material terms of the
transfer, including, without limitation, the name and address of the prospective
purchaser(s), the type and number of shares of Stock to be sold, the purchase
price and other terms and conditions of payment (or the basis for determining
the purchase price and other terms and conditions). The maximum number of shares
of Stock which will be required to be sold under this Section 7.7 will be
determined as of the date of consummation of such sale or transfer and will
equal (i) if the Dragging Shareholder sells less than all of its shares in the
Control Transfer, (A) a fraction, the numerator of which is the total number of
shares of Common Stock and Preferred Stock owned by the Purchaser plus the
number of shares of stock issuable on exercise of Purchaser's Warrant and the
denominator of which is the sum of the total number of shares of Common Stock
and Preferred Stock owned by the Dragging Shareholders plus the total number of
shares of Common Stock and Preferred Stock owned by the Purchaser plus the
number of shares of stock issuable on exercise of the Warrant, multiplied by (B)
the total number of shares of Common Stock and Preferred Stock proposed to be
sold by the Dragging Shareholder, and (ii) if the Dragging Shareholder sells all
of its shares of Stock in the Control Transfer, all of the shares of Common
Stock and Preferred Stock owned by the Purchaser plus the number of shares of
Common Stock issuable on exercise of Purchaser's Warrant. All calculations under
the preceding sentence shall treat all Preferred Stock on a fully converted
basis. "Control Transfer" means a sale, exchange or other transfer by one or
more Shareholders pursuant to a private sale or other transaction or series of
transactions (other than pursuant to a registered public offering) of an
aggregate of more than 50% of the outstanding shares of the Company to any
person or entity.
(b) Any transfer by a Purchaser pursuant to this Section 7.7
will be on the same terms and conditions, and for the same consideration per
share, as the transfer by the Dragging Shareholder which is the subject matter
of the Drag-Along Notice.
(c) Notwithstanding the foregoing, no Shareholder may exercise
its drag-along rights under this Section 7.7 with respect to any outstanding
Warrant Shares in a transaction with an affiliate of such Shareholder unless the
purchase price for each Warrant Share is equal to that which could obtained in
an arms' length transaction.
8. Miscellaneous.
8.1 Certain Restrictions. Until the Warrant has been fully exercised
or has expired in accordance with its terms, the Company shall not:
(a) Except in respect of the rights described in Schedule
4.1(e), without the prior written consent of Purchaser, redeem, repurchase or
otherwise acquire for value (or pay into or set aside for a sinking fund for
such purpose), any equity securities of the Company except for those shares of
Common Stock of the Company repurchased from officers, directors or employees
under agreements providing for the purchase of such shares by the Company upon
the termination of employment by or service to the Company as a director,
officer or employee; or
(b) Without the prior written consent of each Purchaser, such
consent not to be unreasonably withheld, amend the Certificate if such amendment
would improve the rights, preferences or privileges of any class of shares of
the Company except as required by this Agreement.
13
8.2 No Change of Fiscal Year. Until the Warrant has been fully
exercised or has expired in accordance with its terms or the Put has been
exercised in full, the Company shall not change its fiscal year end from
December 31 without Purchaser's prior written consent, which consent shall not
unreasonably be withheld.
8.3 Financial Information. Until such time as the Company is
required to furnish annual reports to its shareholders pursuant to the Exchange
Act, the Company shall cause its quarterly and annual financial statements,
including any notes thereto (and, in the case of a fiscal year end, an auditors'
report by a firm of established national reputation), and all of the information
which the Company provides to its primary institutional lender from time to
time, to be mailed to the Purchaser within 30 days after the end of each month,
within 45 days after the end of each of its fiscal quarters, within 120 days
after the end of each of its fiscal years, respectively, and, until the Warrant
has been fully exercised or has expired in accordance with its terms, the
Company, within 30 days prior to the end of each of its fiscal years, shall
provide financial projections covering the period through at least the end of
the next fiscal year; provided, however, that the Company shall not be required
to supply any information to the Purchaser which duplicates information already
supplied to the Purchaser under other agreements. In addition, the Company
shall provide the Purchaser with all of the information which the Company
provides purchasers of shares of each class of stock as set forth in the
Certificate, as then in effect. The Company shall have met its obligation to
supply information to any co-participant or assign of the Purchaser hereunder by
supplying a copy of such information to the single largest Purchaser of the
Warrant. Purchaser shall have standard inspection rights until the Warrant has
been fully exercised or has expired in accordance with its terms.
8.4 Valuation of Publicly Traded Stock. Notwithstanding anything to
the contrary contained in Section 6, in the event of a Put pursuant to which a
Purchaser has elected a valuation of the Warrant Shares based on Fair Market
Value when the Common Stock of the Company is traded on a securities exchange or
actively traded over-the-counter, the price per share of the Warrant Shares
shall be determined on a fully converted basis according to trading in the
Common Stock as follows:
(a) if traded on a securities exchange, the per-share price
shall be deemed to be the average of the security's closing prices on such
exchange over the 30 day period ending three (3) days prior to the closing of
the Put; and
(b) if actively traded over-the-counter (at least 5,000 shares
per day on average over the 30-day period described below), the per-share price
shall be deemed to be the average of the security's closing bid or sale prices
(whichever is applicable) over the 30-day period ending three (3) days prior to
delivery of the initial notices delivered by the Purchaser and the Company under
Section 6.4.
8.5 Rights of First Refusal.
(a) Subsequent Offerings. The Purchaser shall have a right of
first refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 8.5(f) hereof. The Purchaser's pro rata share is equal to
the ratio of (A) the number of shares of the Common Stock of which such
Purchaser is deemed to be a Purchaser immediately prior to the issuance of such
the Equity Securities (which shall include, without limitation, all Common Stock
issued or issuable upon exercise of this Warrant in full and full conversion of
the Shares) to (B) the total number of shares of the Company's outstanding
Common Stock on a fully diluted basis (including all
14
shares of Common Stock issued or issuable upon exercise of this Warrant in full
and full conversion of the Shares) immediately prior to the issuance of the
Equity Securities. The term "Equity Securities" shall mean (i) any Common Stock,
Preferred Stock or other security of the Company, (ii) any security convertible,
with or without consideration, into any Common Stock, Preferred Stock or other
security (including any option to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant or
right.
(b) Exercise of Rights. If the Company proposes to issue any
Equity Securities, it shall give Purchaser written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Purchaser shall have fifteen
(15) days from the giving of such notice to agree to purchase its pro rata share
of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. If a Purchaser gives
the Company notice that it desires to purchase any of the Equity Securities
offered by the Company, payment for the Equity Securities shall be by check, or
wire transfer, against delivery of the Equity Securities, at the executive
offices of the Company within ten (10) days after giving the Company such
notice, or, if later, the closing date for the sale of such Equity Securities to
third parties. Notwithstanding the foregoing, the Company shall not be required
to offer or sell such Equity Securities to any Purchaser who would cause the
Company to be in violation of applicable federal securities laws by virtue of
such offer or sale.
(c) Issuance of Equity Securities to Other Persons. If the
Purchaser fails to exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which the Purchaser's rights were not exercised, at a price and upon general
terms and conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Purchaser pursuant to Section 8.5(b)
hereof. If the Company has not sold such Equity Securities within ninety (90)
days of the notice provided pursuant to Section 8.5(b), the Company shall not
thereafter issue or sell any Equity Securities, without first offering such
securities to the Purchaser in the manner provided above.
(d) Termination of Rights of First Refusal. The rights of first
refusal established by this Section 8.5 shall terminate upon the effective date
of the registration statement pertaining to a Qualified Public Offering.
(e) Transfer of Rights of First Refusal. The rights of first
refusal of the Purchaser under this Section 8.5 may be transferred to the same
parties and subject to the same restrictions, as any transfer of the Warrant.
(f) Excluded Securities. The rights of first refusal established
by this Section 8.5 shall have no application to any of the following Equity
Securities: (A) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
issued or to be issued to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary, pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors;
(B) stock issued pursuant to any rights or agreements outstanding as of the date
of this Warrant, options and warrants outstanding as of the date of this
Warrant; and stock issued pursuant to any such rights or agreements granted
after the date of this Warrant, provided that the rights of first refusal
established by this Section 8.5 applied with respect to the initial sale or
grant by the Company of such rights or agreements; (C) any Equity Securities
issued
15
pursuant to a merger, consolidation, acquisition or similar business
combination; (D) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company; (E) shares of Common
Stock issued upon conversion of the Shares; and (F) any Equity Securities issued
pursuant to any equipment leasing arrangement or bank financing.
8.6 State Securities Laws. The Company hereby agrees to comply with
all state securities or "blue sky" laws which might be applicable to the sale of
the Warrant.
8.7 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Purchaser, the Shareholders and the
Company and their respective heirs, legal representatives, successors and
assigns.
8.8 Amendment. This Agreement may be amended only by a written
instrument, signed by Purchaser, the Company, and Shareholders owning a majority
in interest of the Stock owned by the Shareholders, which specifically states
that it is amending this Agreement.
8.9 Applicable Law. The laws of the State of California shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be implied under principles of conflicts of
law.
8.10 Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the party to whom it is directed:
(a) If to the Company:
▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 619/▇▇▇-▇▇▇▇
with a copy to:
---------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ llp
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 619/▇▇▇-▇▇▇▇
If to the Purchaser:
Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mezzanine Finance, NC475
Fax: 408/▇▇▇-▇▇▇▇
16
with a copy to:
--------------
▇▇▇▇▇▇ Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to a Shareholder, at such Shareholder's address set forth
below such Shareholder's signature hereto; or, as to any party hereto, at such
other address as any party shall have specified by notice in writing to each
other party.
8.11 Expiration of Agreement. Except as otherwise set forth herein,
this Agreement (but not the Warrant) shall terminate and be of no further force
or effect with respect to any Warrant Shares which are sold by the Purchaser
pursuant to an effective registration statement filed by the Company pursuant to
the Registration Rights Agreement or in compliance with Rule 144. Except as
otherwise expressly provided herein, this Agreement shall terminate on the tenth
anniversary of this Agreement unless extended prior to that date.
8.12 Recapitalizations, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the Warrant, to any
and all shares of capital stock of the Company or any capital stock, limited
liability company membership interests, partnership units or any other security
evidencing ownership interests in any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution of any of the Warrant
Shares by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise and to any Warrant Shares.
8.13 Assignment. This Agreement and the rights and obligations of
the parties hereunder shall inure to the benefit of, and be binding upon, the
parties' respective successors, assigns and legal representatives.
Notwithstanding anything herein or in the Warrant to the contrary and without
regard to any limitations set forth herein or therein, the parties acknowledge
that the Purchaser may transfer all or any of its rights hereunder and under the
Warrant to any affiliate of the Purchaser (including, without limitation, the
officers, directors and employees of the Purchaser, or any partnership comprised
thereof or any corporation owned by any of them, the ancestors, descendants or
spouse, or to trusts for the benefit of such persons) and that for the purpose
of interpreting and enforcing this Agreement, all such assigns shall be
considered as one and the same person.
8.14 Integration. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement, the Warrant and the Investor Rights Agreement.
8.15 Personal Jurisdiction. The Company and the Purchaser hereby agree
that any legal action or proceeding with respect to this Agreement or any of the
agreements, documents or instruments delivered in connection herewith may be
brought in the courts of the State of California or of the United States of
America in any district in California as the Purchaser may elect, and, by
execution and delivery hereof, each of the Company and the Purchaser accepts and
consents to, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts and agrees that such
jurisdiction shall be exclusive, unless waived by the Purchaser in writing, with
respect to any action or proceeding brought by the Company against the
Purchaser. Nothing herein shall limit the right of the Purchaser to bring
proceedings against the Company in the courts of any other jurisdiction. The
17
Company waives, to the full extent permitted by law, any right to stay or to
dismiss any action or proceeding brought before said courts on the basis of
forum non conveniens.
8.16 Jury Waiver. Each of the Company and the Purchaser waives any
right to have a jury participate in resolving any dispute, whether sounding in
contract, tort, or otherwise, between the Company and the Purchaser arising out
of, connected with, related to or incidental to the relationship established
between them in connection with this agreement or any other instrument, document
or agreement executed or delivered in connection herewith or therewith or the
transactions related hereto or thereto.
8.17 Confidentiality. In handling any confidential information of the
Company, Purchaser shall exercise the same degree of care that it exercises
with respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Purchaser in connection with their
present or prospective business relations with the Company, (ii) to prospective
transferees or purchasers of any interest in the loans, provided that they have
entered into a comparable confidentiality agreement in favor of the Company and
have delivered a copy to the Company, (iii) as required by law, regulation, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Purchaser,
and (v) as Purchaser may deem appropriate in connection with the exercise of any
remedies hereunder. Confidential information hereunder shall not include
information that either: (a) is in the public domain or in the knowledge or
possession of Purchaser when disclosed to Bank, or becomes part of the public
domain after disclosure to Bank through no fault of Bank; or (b) is disclosed to
Purchaser by a third party, provided Purchaser does not have actual knowledge
that such third party is prohibited from disclosing such information.
18
In Witness Whereof, the Company, Purchaser and the Shareholders have
executed this Agreement as of the date first above written.
The Company: ▇▇▇▇▇.▇▇▇, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Printed Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Title: President and CEO
-----------------------------
The Purchaser: Silicon Valley Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Title: Vice President
-----------------------------
The Shareholders: (see attached page)
The Shareholders: Summit Ventures III, L.P.
By: Summit Partners III, L.P.,
its general partner
By: Stamps, ▇▇▇▇▇▇▇ & Co. III,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: General Partner
--------------------------------------
Summit Investors II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: General Partner
--------------------------------------
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Schedule 4.1(E)
LIST OF OPTIONS AND RIGHTS
Rights Related to Company Stock:
-------------------------------
The Company filed a Form S-1 Registration Statement on February 25, 1999 and
related amendment on April 5, 1999 in connection with the underwritten public
offering of 4,370,000 shares of the Company's Common Stock, which includes
570,000 shares of Common Stock that the underwriters have the option to purchase
to cover over-allotments, if any.
Certain registration rights, the right of first refusal, repurchase rights and
certain other rights are set forth in the Amended and Restated Investors Rights
Agreement by and among the Company and certain stockholders dated February 9,
1998.
Certain co-sale rights and the right of first refusal are set forth in the
Amended and Restated Right of First Refusal and Co-Sale Agreement by and among
the Company and certain purchasers dated February 9, 1998.
Outstanding Options to Purchase Class B Common Stock.
----------------------------------------------------
2,480,449 shares of Class B Common Stock are issuable upon the exercise of
outstanding options.
Outstanding Warrants to Purchase Class A Common Stock:
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37,329 shares of Class A Common Stock are issuable upon the exercise of an
outstanding warrant.
Outstanding Warrants to Purchase Class B Common Stock:
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899,034 shares of Class B Common Stock are issuable upon the exercise of
outstanding warrants;
Venture Lending & Leasing II, Inc., holds a warrant to purchase a number of
shares of the Company's Class B Common Stock with an aggregate initial exercise
price of $225,000 and a per share exercise price that is halfway between the
last ($1.8031) and the next round of equity financing. If there is no new
equity financing done prior to August 12, 2000, then the warrant exercise price
will equal $2.70 until the warrant expires.
[Schedule 4.1(e)]
Exhibit A
FORM OF WARRANT
[Exhibit A]