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EXHIBIT 10.23
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 437,500 SHARES
OF THE COMMON STOCK OF
SITESMITH, INC.
EFFECTIVE DATE: JULY 19, 2000
This certifies that HEIDRICK & STRUGGLES, INC. or its transferees or
assigns (each individually, the "HOLDER") for the agreed upon value of $1.00 and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, shall be entitled to purchase from SITESMITH, INC., a
DELAWARE corporation (the "COMPANY"), having its principal place of business at
3283 SCOTT BLVD., SANTA CLARA, CA 95054, a maximum of 437,500 fully paid and
nonassessable shares of the Company's Common Stock ("COMMON STOCK") for cash at
a price equal to$1.75 per share (the "EXERCISE PRICE") at any time, or from time
to time, up to and including 5:00 p.m. Pacific time on the Expiration Date, upon
the surrender to the Company at its principal place of business (or at such
other location as the Company may advise the Holder in writing) of this Warrant
properly endorsed, a Form of Subscription in substantially the form attached
hereto duly filled in and signed and, as applicable, upon payment in cash or by
check of the aggregate Exercise Price for the number of shares for which this
Warrant is being exercised determined in accordance with the provisions hereof,
or the surrender of the right to acquire the number of shares of Common Stock
determined in accordance with Section 1.2. The Exercise Price and the number of
shares of Common Stock purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant.
The Warrant is being issued pursuant to the Agreement between the
Company and the Holder dated as of February 25, 2000 (the "Purchase Agreement").
The Holder of this Warrant is subject to certain restrictions, and entitled to
certain rights as set forth in the Purchase Agreement. This Warrant is referred
to as the "Warrant" in the Purchase Agreement.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the holder
of record hereof for all or any part of the shares of Common Stock (but not for
a fraction of a share) which may be purchased hereunder. The Company agrees that
the shares of Common Stock purchased under this Warrant shall be and are deemed
to be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant, properly endorsed, the
completed and executed Form of Subscription and appropriate payment for such
shares shall have each been delivered to the Company at its principal place of
business. Certificates for the
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shares of Common Stock so purchased, together with any other securities or
property to which the Holder is entitled upon such exercise, shall be delivered
to the Holder by the Company at the Company's expense within a reasonable time
after the rights represented by this Warrant have been so exercised, and in any
event, within ten (10) business days of such exercise. In case of a purchase of
less than all the shares which may be purchased under this Warrant, the Company
shall cancel this Warrant and execute and deliver a new Warrant or Warrants of
like tenor for the balance of the shares purchasable under the Warrant
surrendered upon such purchase to the Holder hereof within a reasonable time.
Each stock certificate so delivered shall be in such denominations of Common
Stock as may be requested by the Holder hereof and shall be registered in the
name designated by such Holder.
1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant for cash, the Holder may elect a "Net Issue
Exercise" pursuant to which it will receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being exercised) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Form of Subscription and notice of such election in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the Warrant
is being exercised, the portion of the Warrant being
exercised (at the date of such exercise)
A = the fair market value of one share of the Company's
Common Stock (at the date of such exercise)
B = Exercise Price (as adjusted to the date of such
exercise).
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that where there is a public market for the Company's
Common Stock, the fair market value per share shall be the average of the
closing prices of the Company's Common Stock quoted on the Nasdaq National
Market (or similar system) or on any exchange on which the Common Stock is
listed, whichever is applicable, over the five (5) trading day period ending on
the trading day immediately preceding the day the Warrant is being exercised.
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2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities, when and as required to provide for
the exercise of the rights represented by this Warrant. The Company will take
all reasonable action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed; provided, however, that the Company shall
not be required to effect a registration under Federal or State securities laws
with respect to such exercise. The Company will not take any action which would
result in any adjustment of the Exercise Price (as set forth in Section 3
hereof) if the total number of shares of Common Stock issuable after such action
upon exercise of all outstanding warrants, together with all shares of Common
Stock then outstanding and all shares of Common Stock then issuable upon
exercise of all options and upon the conversion of all convertible securities
and other equity purchase rights then outstanding, would exceed the total number
of shares of Common Stock then authorized by the Company's Certificate of
Incorporation (the "Company Charter").
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
3.1 STOCK SPLITS AND DIVIDENDS. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Preferred Stock, the
Purchase Price in effect immediately prior to such subdivision or at the record
date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Purchase Price in effect immediately prior
to such combination shall, simultaneously with the effectiveness of such
combination, be proportionately increased. When any adjustment is required to be
made in the Purchase Price, the number of shares of Warrant Stock purchasable
upon the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of shares issuable upon the exercise
of this Warrant immediately prior to such adjustment, multiplied by the Purchase
Price in effect immediately prior to such adjustment, by (ii) the Purchase Price
in effect immediately after such adjustment.
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3.2 RECLASSIFICATION, ETC. In case there occurs any reclassification
or change of the outstanding securities of the Company or of any reorganization
of the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Registered Holder, upon the exercise hereof at any time after the consummation
of such reclassification, change, or reorganization shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise hereof prior to such consummation, the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior thereto, all subject to
further adjustment pursuant to the provisions of this Section 3.
3.3 ADJUSTMENT CERTIFICATE. When any adjustment is required to be
made in the Warrant Stock or the Purchase Price pursuant to this Section 3, the
Company shall promptly mail to the Registered Holder a certificate setting forth
(i) a brief statement of the facts requiring such adjustment, (ii) the Purchase
Price after such adjustment and (iii) the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable after such
adjustment.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. Prior to the termination of the Warrant, the
Company will at no time close its transfer books against the transfer of any
warrant or of any shares of Common Stock issued or issuable upon the exercise of
any warrant in any manner which interferes with the timely exercise of this
Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the COMPANY or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such Holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.
7. WARRANTS TRANSFERABLE. Each holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have NOT been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (i) an effective
registration statement under the Act as to this Warrant or such Warrant Stock
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and registration or qualification of this Warrant or such Warrant Stock under
any applicable U.S. federal or state securities law then in effect or (ii) an
opinion of counsel, satisfactory to the Company, that such registration and
qualification are not required, PROVIDED, HOWEVER, that the Holder shall be able
to transfer the Warrant and the Warrant Stock to affiliates, as defined under
the Securities Act. Each certificate or other instrument for Warrant Stock
issued upon the exercise of this Warrant shall bear a legend substantially to
the foregoing effect.
8. TERMINATION. Subject to Section 8.1, this Warrant (and the right to
purchase securities upon exercise hereof) shall terminate upon the earliest to
occur of the following (the "Expiration Date"): (a) the sale, conveyance or
disposal of all or substantially all of the Company's property or business or
the Company's merger into or consolidation with any other corporation (other
than a wholly-owned subsidiary of the Company) or any other transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, PROVIDED that this Section 8 shall
not apply to a merger effected exclusively for the purpose of changing the
domicile of the Company ("Change of Control"), (b) one year after
the closing of a firm commitment underwritten public offering pursuant to a
registration statement on Form S-1 under the Securities Act, or (c) July 19,
2007.
8.1 CHANGE OF CONTROL. This Warrant shall automatically be deemed to
be exercised in full pursuant to provisions of Section 1.2 hereof, without any
further action on behalf of the Holder, immediately prior to the effective time
of a Change in Control.
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this WARRANT and of the holder of
shares of Common Stock issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.
10. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(A) ARTICLES AND BYLAWS. The Company has made available to Holder
true, complete and correct copies of the Company Charter and Bylaws, as amended,
through the date hereof.
(B) DUE AUTHORITY. The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the shares of Common
Stock, have been duly authorized by all necessary corporate action on the part
of the Company, and the Warrant is not inconsistent with the Company Charter or
Bylaws and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.
(C) CONSENTS AND APPROVALS. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for any filing required by applicable
federal and state securities laws, which filing will be effective by the time
required thereby.
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(D) ISSUED SECURITIES. All issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. All outstanding shares of capital stock were issued in
full compliance with all federal and state securities laws.
(E) EXEMPT TRANSACTION. Subject to the accuracy of the Holders
representations in Section 10 hereof, the issuance of the Common Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the Securities Act, in reliance upon
Section 4(2) thereof, and (ii) the qualification requirements of the applicable
state securities laws.
(F) COMPLIANCE WITH RULE 144. At the written request of the Holder,
who proposes to sell Common Stock issuable upon the exercise of the Warrant in
compliance with Rule 144 promulgated by the Securities and Exchange Commission,
the Company shall furnish to the Holder, within thirty (30) days after receipt
of such request, a written statement confirming the Company's compliance with
the filing requirements of the Securities and Exchange Commission as set forth
in such Rule, as such Rule may be amended from time to time.
11. REPRESENTATIONS AND COVENANTS OF THE HOLDER.
This Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder:
(A) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be acquired
by the Holder will be acquired for investment for the Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Holder has not been
formed for the specific purpose of acquiring any of the Securities.
(B) KNOWLEDGE. The Holder is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
securities.
(C) RESTRICTED SECURITIES. The Holder understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Holder's representations as
expressed herein. The Holder understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Holder must hold the Securities indefinitely unless
they are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. The Holder acknowledges that the Company has no
obligation to register or qualify the Securities for resale. The Holder further
acknowledges that if an exemption from registration or qualification is
available, it may be
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conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Holder's control, and which the
Company is under no obligation and may not be able to satisfy.
(D) NO PUBLIC MARKET. The Holder understands that no public market
now exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Securities.
(E) LEGENDS. The Holder understands that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(I) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(II) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.
(F) ACCREDITED INVESTOR. The Holder is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Act.
12. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. NOTICES. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by an established overnight service provider (e.g., Federal
Express), or registered or certified mail, postage prepaid, to each such holder
at its address as shown on the books of the Company or to the Company at the
address indicated therefor in the first paragraph of this Warrant or such other
address as either may from time to time provide to the other in accordance with
this Section.
14. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof.
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15. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the STATE OF CALIFORNIA, without giving effect to
principles of conflicts of laws.
16. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
17. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized.
SITESMITH, INC.
a DELAWARE corporation
By: /S/ MARK SPAGNOLO
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Name:
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Title: CEO
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EXHIBIT A
SUBSCRIPTION FORM
Date: _________________, 200___
SiteSmith, Inc.
3283 Scott Blvd.
Santa Clara, CA 95054
Attn: President
Ladies and Gentlemen:
|_| The undersigned hereby elects to exercise the warrant issued to it by
______________ (the "COMPANY") and dated ___________ _____, ____ -___
(the "WARRANT") and to purchase thereunder
__________________________________ shares of the Common Stock of the
Company (the "SHARES") at a purchase price of
___________________________________________ Dollars ($__________) per
Share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the "EXERCISE
PRICE"). Pursuant to the terms of the Warrant the undersigned has
delivered the Exercise Price herewith in full in cash or by certified
check or wire transfer.
|_| The undersigned hereby elects to convert _______________________
percent (____%) of the value of the Warrant pursuant to the provisions
of Section 1.2 of the Warrant.
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:
Name:
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Address:
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Very truly yours,
By:
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Title:
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