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EXHIBIT 10.16
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Warrant No. 5 Number of Shares 63,560
DESKTALK SYSTEMS, INC.
Void after May 1, 2005
1. Issuance. This Warrant is issued to Geocapital IV, L.P. by DeskTalk
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Systems, Inc., a California corporation (hereinafter with its successors called
the "Company").
2. Purchase Price: Number of Shares. Subject to the terms and conditions
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hereinafter set forth, the registered holder of this Warrant (the "Holder"),
commencing on May 1, 1998 (the "Issue Date"), is entitled upon surrender of
this Warrant, with the subscription form annexed hereto duly executed, at the
office of the Company, 19401 South Vermont Avenue, Torrance, California 90502,
or such other office as the Company shall notify the Holder of in writing, to
purchase from the Company at a purchase price of $2.36 per share (the "Purchase
Price") up to an aggregate of 63,560 fully paid and nonassessable shares of
common stock, no par value, of the Company (the "Common Stock"). Until such time
as this Warrant is exercised in full or expires, the Purchase Price and the
number of shares of Common Stock issuable upon exercise of this Warrant are
subject to adjustment as hereinafter provided.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
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or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of
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other securities issued by the Company, with such securities being credited
against the Purchase Price in an amount equal to the fair market value thereof,
as determined in good faith by the Board of Directors of the Company (the
"Board"), or (iv) by any combination of the foregoing. The Board shall promptly
respond in writing to an inquiry by the Holder as to the fair market value of
any securities the Holder may wish to deliver to the Company pursuant to clause
(iii) above.
4. Net Issue Election. The Holder may elect to receive, without the
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payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Common Stock as
is computed using the following formula:
X = Y (A-B)
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A
where X = the number of shares to be issued to the Holder pursuant to this
Section 4.
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Common Stock, as
determined in good faith by the Board, as at the time the net issue
election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Common Stock.
5. Partial Exercise. This Warrant may be exercised in part at the
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discretion of the Holder, and the Holder shall be entitled to receive a new
warrant, which shall be dated as of the date of this Warrant, covering the
number of shares in respect of which this Warrant shall not have been exercised.
6. Issuance Date. The person or persons in whose name or names any
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certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
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7. Expiration Date: Automatic Exercise. This Warrant shall expire on May
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1, 2005 and shall be void thereafter. Notwithstanding the foregoing, this
Warrant shall automatically be deemed to be exercised in full pursuant to the
provisions of Section 4 hereof, without any further action on behalf of the
Holder, immediately prior to the time this Warrant would otherwise expire
pursuant to the preceding sentence.
8. Reserved Shares: Valid Issuance. The Company covenants that it will at
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all times from and after the date hereof reserve and keep available such number
of its authorized shares of Common Stock, free from all preemptive or similar
rights therein, as will be sufficient to permit the exercise of this Warrant in
full. The Company further covenants that such shares as may be issued pursuant
to the exercise of this Warrant will, upon issuance, be duly and validly issued,
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issuance thereof.
9. Dividends. If after the Issue Date the Company shall subdivide the
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Common Stock, by split-up or otherwise, or combine the Common Stock, or issue
additional shares of Common Stock in payment of a stock dividend on the Common
Stock, the number of shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination, and the
Purchase Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.
10. Mergers and Reclassifications. If after the Issue Date there shall be
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any reclassification, capital reorganization, or change of the Common Stock
(other than as a result of a subdivision, combination, or stock dividend
provided for in Section 9 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
outstanding Common Stock), or any sale or conveyance to another corporation or
other business organization of all or substantially all of the assets of the
Company, then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale, or conveyance, lawful provisions shall be made and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have the
right to purchase, at a total price not to exceed that payable upon the exercise
of this Warrant in full, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization,
change, consolidation, merger, sale, or conveyance by a holder of the number of
shares of Common Stock which might have been purchased by the Holder immediately
prior to such reclassification, reorganization, change, consolidation, merger,
sale, or conveyance, and in any such case appropriate provisions shall be made
with respect to the rights and interest of the Holder to the end that the
provisions hereof (including without limitation, provisions for the adjustment
of the Purchase Price and the number of shares issuable hereunder) shall
thereafter be applicable in relation to any shares of stock or other securities
and property thereafter deliverable upon exercise hereof.
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11. Adjustments for Issuances Below Purchase Price. In case the Company
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shall at any time or from time to time after the Issue Date issue or sell any
shares of Common Stock for a consideration per share less than the Purchase
Price in effect for this Warrant immediately prior to the time of such issue or
sale, or pay any dividend or make any other distribution upon the Common Stock
payable in cash, property, or securities of the Company other than Common Stock,
or in securities of a corporation other than the Company, then forthwith upon
such issue or sale, or upon the payment of such dividend or the making of such
other distribution, as the case may be, the Purchase Price shall (until another
such issue or sale, or dividend or other distribution) be reduced to a price
(calculated to the nearest cent) determined by dividing (i) an amount equal to
the sum of(X) the number of shares of Common Stock outstanding immediately prior
to such issue or sale or the payment of such dividend or the making of such
other distribution, multiplied by the Purchase Price in effect immediately prior
to such event plus (Y) the consideration, if any, received by the Company upon
such issue or sale minus (Z) the amount of such dividend or other distribution
in respect of Common Stock, by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale or dividend or other
distribution. Further, the number of shares purchasable hereunder shall be
increased to a number determined by dividing (i) the number of shares
purchasable hereunder immediately prior to such issue or sale or dividend or
other distribution, multiplied by the Purchase Price hereunder immediately prior
to such event, by (ii) the Purchase Price in effect immediately after the
foregoing adjustment. The provisions of this Section 11 shall not apply to (i)
shares issued in transactions to which Sections 9 or 10 of this Warrant apply;
(ii) shares of Common Stock (appropriately adjusted for subdivisions,
combinations, stock dividends, and the like) or rights to subscribe for or to
purchase shares of Common Stock or options for the purchase of shares of Common
Stock (appropriately adjusted for subdivisions, combinations, stock dividends,
and the like) offered, granted, or issued to employees, officers, directors, or
consultants of the Company in connection with their service to the Company, plus
such number of shares of Common Stock (as so adjusted) which are repurchased by
the Company from such persons after the Issue Date pursuant to contractual
rights held by the Company and at repurchase prices not exceeding the respective
original purchase prices paid by such persons to the Company therefor.
For the purpose of this Section 11, the following provisions shall
also be applicable:
A. In case the Company shall in any manner offer any rights to subscribe
for or to purchase shares of Common Stock, or grant any options for the
purchase of shares of Common Stock, at a price less than the Purchase Price
in effect immediately prior to the time of the offering of such rights or
the granting of such options, as the case may be, all shares of Common Stock
which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed to be
issued or sold as of the date of the offering of such rights or the granting
of such options, as the case may be, and the minimum aggregate consideration
named in such rights or options for the Common Stock covered thereby, plus
the consideration received by the Company for such rights or options, shall
be deemed to be the consideration actually received by the Company
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(as of the date of the offering of such rights or the granting of such
options, as the case may be) for the issue or sale of such shares.
B. In case the Company shall in any manner issue or sell any shares of
any class or obligations directly or indirectly convertible into or
exchangeable for shares of Common Stock and the price per share for which
Common Stock is deliverable upon such conversion or exchange (determined by
dividing (i) the total minimum amount received or receivable by the Company
in consideration of the issue or sale of such convertible or exchangeable
shares or obligations, plus the total minimum amount of premiums, if any,
payable to the Company upon conversion or exchange, by (ii) the total
number of shares of Common Stock necessary to effect the conversion or
exchange of all such convertible or exchangeable shares or obligations)
shall be less than the Purchase Price in effect immediately prior to the
time of such issue or sale, then such issue or sale shall be deemed to be
an issue or sale (as of the date of issue or sale of such convertible or
exchangeable shares or obligations) of the total maximum number of shares
of Common Stock necessary to effect the conversion or exchange of all such
convertible or exchangeable shares or obligations, and the total minimum
amount received or receivable by the Company in consideration of the issue
or sale of such convertible or exchangeable shares or obligations, plus the
total minimum amount of premiums, if any, payable to the Company upon
exchange or conversion, shall be deemed to be the consideration actually
received (as of the date of the issue or sale of such convertible or
exchangeable shares or obligations) for the issue or sale of such Common
Stock.
C. In the case of any dividend or other distribution on the Common
Stock of the Company payable in property, securities of the Company other
than Common Stock or securities of a corporation other than the Company,
such dividend or other distribution shall be deemed to have been paid or
made at a value equal to the fair value of the property or securities so
distributed. Any dividend or distribution referred to in this Subsection C
shall be deemed to have been paid or made on the day following the date
fixed for the determination of stockholders entitled to receive such
dividend or distribution.
D. In determining the amount of consideration received by the Company
for Common Stock, securities convertible thereinto, or exchangeable
therefor, or rights or options for the purchase thereof, no deduction shall
be made for expenses or underwriting discounts or commissions paid by the
Company. The Board shall determine in good faith the fair value of the
amount of consideration other than money received by the Company upon the
issue by it of any of its securities. The Board shall also determine in
good faith the fair value of any dividend or other distribution made upon
Common Stock payable in property, securities of the Company other than
Common Stock or securities of a corporation other than the Company. The
Board shall, in case any Common Stock, securities convertible thereinto or
exchangeable therefor, or rights or options for the purchase thereof are
issued with other stock, securities or assets of the Company, determine in
good faith what part of the consideration received therefor is applicable
to the issue of the Common
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Stock, securities convertible thereinto or exchangeable therefor, or rights
or options for the purchase thereof.
E. If there shall be any change in (i) the minimum aggregate
consideration named in the rights or options referred to in Subsection A
above, (ii) the consideration received by the Company for such rights or
options, (iii) the price per share for which Common Stock is deliverable
upon the conversion or exchange of the convertible or exchangeable shares
or obligations referred to in Subsection B above, (iv) the number of shares
which may be subscribed for or purchased pursuant to the rights or options
referred to in Subsection A above, or (v) the rate at which the convertible
or exchangeable shares or obligations referred to in Subsection B above are
convertible into or exchangeable for Common Stock, then the Purchase Price
in effect at the time of such event shall be readjusted to the Purchase
Price which would have been in effect at such time had such rights,
options, or convertible or exchangeable shares or obligations still
outstanding provided for such changed consideration, price per share,
number of shares, or rate of conversion or exchange, as the case may be, at
the time initially offered, granted, issued or sold, but only if as a
result of such adjustment the Purchase Price then in effect hereunder is
thereby reduced.
12. Fractional Shares. In no event shall any fractional share of Common
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Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section 12,
be entitled to receive a fractional share of Common Stock, then the Company
shall issue the next higher number of full shares of Common Stock, issuing a
full share with respect to such fractional share.
13. Certificate of Adjustment. Whenever the Purchase Price is adjusted,
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as herein provided, the Company shall promptly deliver to the Holder a
certificate setting forth the Purchase Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
14. Notices of Record Date, Etc. In the event of:
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(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets,
or
(c) any voluntary or involuntary dissolution, liquidation, or winding-up
of the Company,
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then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation, or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least twenty
(20) days prior to the date specified in such notice on which any such action is
to be taken.
15. Amendment. The terms of this Warrant may be amended, modified, or
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waived only with the written consent of the Company and the holders of Warrants
representing at least two-thirds of the total number of shares of Common Stock
then issuable upon the exercise of this Warrant or any new warrants issued to
replace this Warrant. No such amendment, modification or waiver shall be
effective as to this Warrant unless the terms of such amendment, modification or
waiver shall apply with the same force and effect to all of the other Warrants
then outstanding.
16. Transfers: Warrant Register: Etc,
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A. Subject to compliance with applicable federal and state securities
laws and receipt of an opinion satisfactory to the Company, this Warrant may
be transferred by the Holder with respect to any or all of the shares
purchasable hereunder. Upon surrender of this Warrant to the Company and
receipt of an opinion satisfactory to the Company, together with the
assignment hereof properly endorsed, for transfer of this Warrant as an
entirety by the Holder, the Company shall issue a new warrant of the same
denomination to the assignee. Upon surrender of this Warrant to the Company,
together with the assignment hereof properly endorsed, by the Holder for
transfer with respect to a portion of the shares of Common Stock purchasable
hereunder, the Company shall issue a new warrant to the assignee
(collectively with the Holder, the "Holders"), in such denomination as shall
be requested by the Holder hereof, and shall issue to such Holder a new
warrant covering the number of shares in respect of which this Warrant shall
not have been transferred (such new warrant, in combination with the Warrant,
hereinafter referred to as the "Warrants"). Holders of the Warrants shall be
entitled to the same rights and privileges as the Holder of this Warrant.
B. The Company will maintain a register containing the names and
addresses of the Holders of the Warrants. The Holders may change their
addresses 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 Holders may be given by certified mail or
delivered to the Holders at their respective addresses as shown on the
warrant register.
C. In case this Warrant shall be mutilated, lost, stolen, or destroyed,
the Company shall issue a new warrant of like tenor and denomination and
deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated
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Warrant, or (ii) in lieu of any Warrant lost, stolen, or destroyed, upon
receipt of evidence reasonably satisfactory to the Company of the loss,
theft, or destruction of such Warrant (including a reasonably detailed
affidavit with respect to the circumstances of any loss, theft, or
destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that, so long as the original holder remains the
registered holder of this Warrant, no indemnity shall be required other than
its written agreement to indemnify the Company against any loss arising from
the issuance of such new warrant.
17. Registration Rights. The Amended and Restated Registration Rights
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Agreement dated April 18, 1997 between the Company and the Holder and the other
parties thereto shall be amended to include the common stock issuable upon
exercise of this Warrant in the definition of Registrable Securities contained
in Section 1.2.
18. No Impairment. The Company will not, by amendment of its Articles of
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Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
19. Governing Law. The provisions and terms of this Warrant shall be
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governed by and construed in accordance with the internal laws of the State of
California.
20. Successors and Assigns. This Warrant shall be binding upon the
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Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives, and permitted assigns.
21. Business Days. If the last or appointed day for the taking of any
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action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
Dated: May 1, 1998 DESKTALK SYSTEMS, INC.
(Corporate Seal) By: /s/ David Kaufman
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Name: David Kaufman
ATTEST: Title: President
By: /s/ Paul Madick
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Name: Paul Madick
Title: Corporate Secretary
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SUBSCRIPTION
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To: _______________________ Date: __________________
The undersigned hereby subscribes for _________ shares of Common Stock
covered by this Warrant. The certificate(s) for such shares shall be issued in
the name of the undersigned or as otherwise indicated below:
________________________
Signature
________________________
Name for Registration
________________________
Mailing Address
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NET ISSUE ELECTION NOTICE
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To:_______________________ Date: ______________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase shares of Common Stock pursuant to this Warrant. The certificate(s) for
the shares issuable upon such net issue election shall be issued in the name of
the undersigned or as otherwise indicated below.
___________________________
Signature
__________________________
Name for Registration
__________________________
Mailing Address
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