PogoTec, Inc. Group 2 Warrant Issuance Agreement
Exhibit 3.20
Group 2
This Warrant Issuance Agreement, dated as of June 14, 2017 (this “Agreement”) is entered into by and among PogoTec, Inc., a Delaware corporation (the “Company”), and the persons and entities delivering a signature page hereto and listed on the schedule of investors attached hereto as Schedule I (each an “Investor” and, collectively, the “Investors”).
RECITALS
1. The Company is entering into a financial arrangement with Square 1 Bank (or its designees) (“Square 1”) to provide debt for financing of the Company’s continued operations in the amount of up to $20,000,000 (including any refinancing in the future of the amounts extended by Square 1 Bank (or its designees)), the “Square 1 Loan”).
2. The Group 1 Investors have provided (x) irrevocable standby letters of credit in form and substance acceptable to Square 1 Bank or (y) loans made directly to the Company pursuant to a Note Purchase Agreement in an amount of approximately $6,000,000 to secure the Square 1 Loan.
3. The Group 2 Investors are providing (x) irrevocable standby letters of credit in form and substance acceptable to Square 1 Bank (the “Letters of Credit”) or (y) loans made directly to the Company pursuant to a Note Purchase Agreement (the “Loans”) in an amount of up to $10,000,000 to secure the Square 1 Loan.
4. In exchange for the Investors providing the Letters of Credit or the Loans, the Company has agreed to issue Warrants to the Group 2 Investors.
5. Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Warrant (as defined below) attached hereto as Attachment A.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:
1. The Warrants.
(a) Issuance of Warrants. At the Closing, the Company agrees to issue and sell to each Investor participating in such Closing, and, subject to all of the terms and conditions hereof, a warrant to purchase shares of Common Stock of the Company in the form of Attachment A hereto (each, a “Warrant” and, collectively, the “Warrants”) to purchase up to the Maximum Number of Shares.
(b) Closings. The closings of the transactions contemplated hereby (including without limitation the issuance of the Warrants) shall occur on a rolling basis upon each of the Group 2 Investor’s providing a Letter of Credit in form and substance acceptable to Square 1 Bank or a Loan, and other additional transaction documentation related to the Square 1 Loan, as approved by the Company in its sole discretion prior to June 5, 2017 or such later date as is approved by the Company (the “Closings”).
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2. Representations and Warranties of the Company. The Company represents and warrants to each Investor that:
(a) Due Incorporation, Qualification, etc. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation (or in the process of becoming qualified, licensed and in good standing) in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a material adverse effect on the Company.
(b) Authority. The execution, delivery and performance by the Company of each Transaction Document (as defined below) to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company; and (ii) have been duly authorized by all necessary actions on the part of the Company.
(c) Enforceability. Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not violate the Company’s certificate of incorporation or bylaws (“Charter Documents”).
(e) Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other individual or entity (a “Person”) (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Warrants executed by the Company and the performance and consummation of the transactions contemplated thereby.
3. Representations and Warranties of Investors. Each Investor, for that Investor alone, represents and warrants to the Company as of the applicable Closing Date as follows:
(a) Binding Obligation. Such Investor has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Each of this Agreement, and the Personal Guarantee issued by such Investor is a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.
(b) Securities Law Compliance. Such Investor has been advised that the Warrants and the underlying securities of each have not been registered under the Securities Act of 1933, as amended, (the “Securities Act”), or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Such Investor is aware that, except as may be set forth in other agreements with the Investor, the Company is under no obligation to effect any such registration with respect to the Warrants and the underlying securities of each or to file for or comply with any exemption from registration. Such Investor has not been formed solely for the purpose of making this investment and is purchasing the Warrants to be acquired by such Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Such Investor has such knowledge and experience in financial and business matters that such Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time. Such Investor is an accredited investor as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act.
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(c) Access to Information. Such Investor acknowledges that the Company has given such Investor access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by such Investor, and has made available to such Investor all documents and other information required for such Investor to make an informed decision with respect to the purchase of the Warrants.
(d) Representations and Warranties to Third Parties; Performance. Any representations and warranties made or to be made in connection with the transactions contemplated hereby (including without limitation to Square 1 Bank, any successor lender, and/or to the bank issuing the Investor’s Letter of Credit) shall be true and correct in all respects. Investor hereby covenants and agrees to perform in good faith and in all respects each obligation, and to observe each covenant of such Investor, arising under any Letter of Credit or under any agreement with Square 1 Bank or any successor Lender related to the transactions contemplated hereby.
(e) Maintenance of Letters of Credit. Such Investor shall take all actions necessary to maintain the effectiveness of such Investor Letter(s) of Credit through the Loan Termination Date. Without limiting the foregoing, such Investor shall notify the Company of any prospective occurrence or actual event of default (or similar provision) with respect to such Investor’s Letter(s) of Credit and shall take all actions necessary to correct any such event of default and/or immediately replace such Letter of Credit with a new Letter of Credit in form and substance that is acceptable to Square 1 Bank.
4. Conditions to Closing of the Investors. Each Investor’s obligations at the Closing in which such Investor has agreed to participate are subject to the fulfillment, on or prior to the applicable Closing Date, of all of the following conditions, any of which may be waived in whole or in part by Investors agreeing to participate in such Closing that represent a majority of the principal of the Guaranteed Obligation at such Closing:
(a) Representations and Warranties. The representations and warranties made by the Company in Section 2 hereof shall have been true and correct in all material respect when made, and shall be true and correct in all material respect on the applicable Closing Date.
(b) Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the applicable Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful issuance of the Warrants.
(c) Legal Requirements. At the applicable Closing, the sale and issuance by the Company, and the purchase by the Investors participating in such Closing, of the Warrants shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.
(d) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the applicable Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investors participating in such Closing.
(e) Transaction Documents. The Company shall have duly executed and delivered to the Investors participating in such Closing the following documents (which shall collectively be referred to herein as the “Transaction Documents”):
(i) This Agreement;
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(ii) The Security Agreement;
(iii) The Contribution, Indemnity, Intercreditor and Collateral Agency Agreement; and
(iv) Each Warrant to be issued hereunder at such Closing.
5. Conditions to Obligations of the Company. The Company’s obligation to issue and sell the Warrants at a Closing is subject to the fulfillment, on or prior to the applicable Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:
(a) Representations and Warranties. The representations and warranties made by the Investors participating in such Closing in Section 3 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.
(b) Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Warrants.
(c) Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Investors participating in such Closing, of the Warrants shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.
(d) Transaction Documents. The Investor shall have executed and delivered to the Company at the Closing each of the following documents:
(i) This Agreement;
(ii) The Security Agreement;
(iii) The Contribution, Indemnity, Intercreditor and Collateral Agency Agreement, and
(iv) Such other documents and agreements as may have been required by Square 1 Bank in connection with the Square 1 Loan.
(e) Purchase Price. Each Investor participating in such Closing shall have delivered the Personal Guarantee in a form acceptable to each such Investor’s respective institution issuing its letter of credit in the principal amount as set forth on Schedule I hereto.
(f) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Company.
6. Miscellaneous.
(a) Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and Investors holding a majority of the principal of the Guaranteed Obligation at such Closing; provided however that no consent is required for amendments to Schedule I to reflect additional Closings approved by the Company in accordance with the terms and conditions of this Agreement.
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(b) Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware or of any other state.
(c) Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.
(d) Successors and Assigns. The rights and obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
(e) Assignment by the Company. Except in connection with a Change of Control, the rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of each Investor. The term “Change of Control” shall mean (i) any consolidation or merger involving the Company pursuant to which the Company’s stockholders prior to such transaction own less than fifty percent (50%) of the voting securities of the surviving entity; or (ii) the sale of all or substantially all of the assets of the Company.
(f) Entire Agreement. The Transaction Documents constitute and contain the entire agreement among the Company and Investors and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof and thereof.
(g) Notices. All notices and other communications given or made hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, with a copy to be sent by United States first class mail, postage prepaid; (iii) five (5) days after being sent by registered or certified mail, return receipt required, postage prepaid; or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page or to such electronic mail address, facsimile number or address as subsequently modified by written notice given in according with this Section 6(h).
(h) Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
(i) WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUJBECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
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(j) Separability of Agreements; Severability of this Agreement. The Company’s agreement with each of the Investors is a separate agreement. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Investor whether arising by reason of the law of the respective Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(k) Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(SIGNATURE PAGE FOLLOWS)
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The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| PogoTec, Inc. | |
| a Delaware corporation | |
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| By: ▇▇▇▇▇ ▇. ▇▇▇▇ | |
| Its: Chief Financial Officer | |
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| INVESTOR: | |
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| INVESTOR: | |
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| Fly High Eyes, LLC | |
| By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President |
Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| INVESTOR: | |
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| ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Properties, LLC | |
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| Its: Manager Member |
Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
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Signature Page Group 2 Warrant Issuance Agreement
The parties have caused this Warrant Issuance Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| INVESTOR: | ||
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| Fly High Eyes, LLC | ||
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| Its: | M.D. | |
Signature Page Group 2 Warrant Issuance Agreement
SCHEDULE I
The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.
CONFIDENTIAL
Attachment A
Form of Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. THIS WARRANT MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, TRANSFER, PLEDGE OR HYPOTHECATION OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED HEREBY.
WARRANT TO PURCHASE SHARES
This Warrant is issued to the individual or entity identified in the signature page hereto (the “Investor”) by PogoTec, Inc., a Delaware corporation (the “Company”), pursuant to the terms of the Warrant Issuance Agreement dated June __, 2017, as amended (the “Warrant Issuance Agreement”).
1. Purchase of Shares. Subject to the terms and conditions hereinafter set forth, the holder of this Warrant is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company up to the number of fully paid and nonassessable Shares (as defined below) equal to the Maximum Number of Shares (as defined below). Upon exercise hereof, the Investor shall execute and deliver such documentation as is reasonably requested by the Company setting forth certain representations and warranties and customary restrictions on transfer.
2. Definitions.
a. Exercise Price. The exercise price for the Shares shall be $1.10 (such price, as adjusted from time to time pursuant to the terms hereof, is herein referred to as the “Exercise Price”).
b. Exercise Period. This Warrant shall be exercisable, in whole or in part, during the term commencing on the earlier of (x) the two year anniversary of the issuance of this Warrant or (y) a Change of Control of the Company and terminating in accordance with Section 15 hereof.
c. The Shares. The term “Shares” shall mean the Common Stock of the Company.
d. Maximum Number of Shares. The “Maximum Number of Shares” equals twenty percent (20%) of the quotient, the numerator of which is (x) the value of the Letters of Credit that the Holder hereof originally provided plus (y) the principal amount loaned to the Company pursuant to a Note Purchase Agreement of even date herewith and the denominator of which is $1.10, such calculation to be rounded down to the nearest whole number.
e. Change of Control. The term “Change of Control” shall mean (i) any consolidation or merger involving the Company pursuant to which the Company’s stockholders prior to such transaction own less than fifty percent (50%) of the voting securities of the surviving entity, (ii) the sale of all or substantially all of the assets of the Company, or (iii) any other event that constitutes a “Liquidation Event” as set forth in the Company’s Amended and Restated Certificate of Incorporation dated August 24, 2016, as amended from time to time (the “Certificate of Incorporation”). Notwithstanding the foregoing, a Change of Control shall not be occasioned by the sale by the Company of its equity securities for the primary purpose of raising operating capital.
3. Method of Exercise. While this Warrant remains outstanding and exercisable in accordance with Section 2 above, the holder may exercise, in whole or in part, the purchase rights evidenced hereby. Such exercise shall be effected by:
| i. | the surrender of the Warrant, together with a notice of exercise to the Secretary of the Company at its principal offices; and |
| ii. | the payment to the Company of an amount equal to the aggregate Exercise Price for the number of Shares being purchased. |
4. Net Exercise. In lieu of cash exercising this Warrant, the holder of this Warrant may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the holder hereof a number of Shares computed using the following formula:
Y (A - B)
X = A
Where
| X -- | The number of Shares to be issued to the holder of this Warrant. |
| Y -- | The number of Shares purchasable under this Warrant. |
| A -- | The fair market value of one Share. |
| B -- | The Exercise Price (as adjusted to the date of such calculations). |
For purposes of this Section 4, the fair market value of a Share shall mean the average of the closing bid and asked prices of Shares quoted in the over-the-counter market in which the Shares are traded or the closing price quoted on any exchange on which the Shares are listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the ten (10) trading days prior to the date of determination of fair market value (or such shorter period of time during which such stock was traded over-the-counter or on such exchange). If the Shares are not traded on the over-the-counter market or on an exchange, the fair market value shall be the price per Share that the Company could obtain from a willing buyer for Shares sold by the Company from authorized but unissued Shares, as such prices shall be determined in good faith by the Company’s Board of Directors.
5. Certificates for Shares. Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the subscription notice.
6. Issuance of Shares. The Company covenants that the Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issuance thereof.
7. Reservation of Stock. The Company agrees during the term the rights under this Warrant are exercisable to reserve and keep available from its authorized and unissued shares of Common Stock, for the purpose of effecting the exercise of this Warrant such number of shares as shall from time to time be sufficient to effect the exercise of the rights under this Warrant; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient for purposes of the exercise of this Warrant in accordance with its terms, without limitation of such other remedies as may be available to the holder, the Company will use its best efforts to take such corporate action as may be necessary to increase its authorized and unissued shares of Common Stock to a number of shares as shall be sufficient for such purposes.
8. Adjustment of Exercise Price and Number of Shares. The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:
a. Merger or Reorganization. If at any time there shall be any reorganization, recapitalization, merger or consolidation (a “Reorganization”) involving the Company (other than as otherwise provided for herein or as would cause the expiration of this Warrant under Section 15) in which shares of the Company’s stock are converted into or exchanged for securities, cash or other property, then, as a part of such Reorganization, lawful provision shall be made so that the holder shall thereafter be entitled to receive upon exercise of this Warrant, the kind and amount of securities, cash or other property of the successor corporation resulting from such Reorganization, equivalent in value to that which a holder of the Shares deliverable upon exercise of this Warrant would have been entitled in such Reorganization if the right to purchase the Shares hereunder had been exercised immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the successor corporation) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the holder after such Reorganization to the end that the provisions of this Warrant shall be applicable after the event, as near as reasonably may be, in relation to any shares or other securities deliverable after that event upon the exercise of this Warrant.
b. Subdivisions, Combinations and Other Issuances. If the Company shall at any time prior to the expiration of this Warrant subdivide the Shares, by split up or otherwise, or combine its Shares, or issue additional shares of its Shares as a dividend, 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. Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 8(b) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.
c. Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or change in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 8(b) above), then the Company shall make appropriate provision so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the holder of this Warrant so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same.
d. Notice of Adjustment. The Company shall promptly notify the holder of this Warrant of such event and of the number of Shares or other securities or property purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect.
10. Representations of the Company. The Company represents that all corporate actions on the part of the Company, its officers, directors and stockholders necessary for the sale and issuance of this Warrant have been taken.
11. Representations and Warranties by the Holder. The holder of this Warrant represents and warrants to the Company as follows:
a. Investment Intent. This Warrant and the Shares issuable upon exercise thereof are being acquired for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Act”). Upon exercise of this Warrant, the holder of this Warrant shall, if so requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the securities issuable upon exercise of this Warrant are being acquired for investment and not with a view toward distribution or resale.
b. No Registration. The holder of this Warrant understands that the Warrant and the Shares have not been registered under the Act by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Act pursuant to Section 4(2) thereof, and that they must be held by the holder of this Warrant indefinitely, and that the holder of this Warrant must therefore bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Act or is exempted from such registration. The holder of this Warrant further understands that this Warrant and the Warrant Shares have not been qualified under the securities laws of any state by reason of their issuance in a transaction exempt from the qualification requirements of such state laws, which exemption depends upon, among other things, the bona fide nature of the holder’s investment intent expressed above.
c. Investment Experience. The holder of this Warrant has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of this Warrant and the Shares purchasable pursuant to the terms of this Warrant and of protecting its interests in connection therewith.
d. Speculative Nature of Investment. The holder of this Warrant understands and acknowledges that its investment in the Company is highly speculative and involves substantial risks. The holder of this Warrant is able to bear the economic risk of the purchase of the Shares pursuant to the terms of this Warrant.
e. Access to Data. The holder of this Warrant has had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction. The holder of this Warrant believes that it has received all the information that it considers necessary or appropriate for deciding whether to acquire the Securities. The holder of this Warrant understands that any such discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description. The holder of this Warrant acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results.
f. Accredited Investor. The holder of this Warrant is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission and agrees to submit to the Company such further assurances of such status as may be reasonably requested by the Company.
g. Residency. The residency of the holder of this Warrant (or, in the case of a partnership, limited liability company or corporation, such entity’s principal place of business) is correctly set forth on the signature page hereto.
h. Restrictions on Resales. The holder of this Warrant acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The holder of this Warrant is aware of the provisions of Rule 144 promulgated under the Securities Act, which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “broker’s transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable. The holder of this Warrant acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time the holder of this Warrant wishes to sell the Securities and that, in such event, the holder of this Warrant may be precluded from selling the Securities under Rule 144 even if the other applicable requirements of Rule 144 have been satisfied. The holder of this Warrant acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any disposition of the Securities. The holder of this Warrant understands that, although Rule 144 is not exclusive, the Securities and Exchange Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering other than in a registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.
i. Brokers and Finders. The holder of this Warrant has not engaged any brokers, finders or agents in connection with the Securities, and the Company has not incurred nor will incur, directly or indirectly, as a result of any action taken by the holder of this Warrant, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Securities.
j. Legal Counsel. The holder of this Warrant has had the opportunity to review this Warrant, the exhibits and schedules attached hereto and the transactions contemplated by this Warrant with its own legal counsel. The holder of this Warrant is not relying on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by this Warrant.
k. Tax Advisors. The holder of this Warrant has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Warrant. With respect to such matters, the holder of this Warrant relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The holder of this Warrant understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Warrant.
12. Restrictive Legend. The Shares (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form (together with any additional legends that are required by the Company’s Bylaws):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL HELD BY THE COMPANY OR ITS ASSIGNEE(S) AS SET FORTH IN THE COMPANY’S BYLAWS, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH RIGHT OF FIRST REFUSAL IS BINDING ON THESE SHARES.”
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING, PURSUANT TO A WARRANT, AMONG THE COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”
13. Warrants Transferable. Subject to compliance with the terms and conditions of this Section 13, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes), upon surrender of this Warrant properly endorsed or accompanied by written instructions of transfer. With respect to any offer, sale or other disposition of this Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to registration of such Warrant or Shares, the holder hereof agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such holder’s counsel, or other evidence, if requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant or the Shares and indicating whether or not under the Act certificates for this Warrant or the Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such laws. Upon receiving such written notice and reasonably satisfactory opinion or other evidence, if so requested, the Company, as promptly as practicable, shall notify such holder that such holder may sell or otherwise dispose of this Warrant or such Shares, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 13 that the opinion of counsel for the holder or other evidence is not reasonably satisfactory to the Company, the Company shall so notify the holder promptly with details thereof after such determination has been made. Each certificate representing this Warrant or the Shares transferred in accordance with this Section 13 shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Moreover, new holders are subject to any obligation of original holder, e.g., Investors’ Rights Agreement, Co-Sale and Voting.
14. Rights of Stockholders. No holder of this Warrant shall be entitled, as a Warrant holder, to vote or receive dividends or be deemed the holder of the Shares or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.
15. Expiration of Warrant; Notice of Certain Events Terminating This Warrant.
| a. | This Warrant shall expire and shall no longer be exercisable upon the earlier to occur of: |
| i. | 5:00 p.m., Delaware local time, on the seventh (7) anniversary of the original issuance of this Warrant; |
| ii. | Any Change of Control; and |
| iii. | Immediately prior to the initial public offering of the Company’s Common Stock. |
| b. | The Company shall provide at least twenty (20) days prior written notice of any event set forth in Section 15(a)(ii) or Section 15(a)(iii); provided, however, that if Investor has not exercised this Warrant prior to a Change of Control or initial public offering of the Company’s Common Stock, then this Warrant shall be automatically exercised pursuant to the terms of Section 4 hereof immediately prior to such event. |
16. Notices. All notices and other communications given or made hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, with a copy to be sent by United States first class mail, postage prepaid, (c) five (5) days after being sent by registered or certified mail, return receipt required, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page or to such electronic mail address, facsimile number or address as subsequently modified by written notice given in according with this Section 16.
17. “Market Stand-Off” Agreement. By acceptance of this Warrant, each Investor and each subsequent transferee (Investor and any such subsequent transferees, a “Holder”) hereof agrees that such Holder shall not sell, offer, pledge, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, grant any right or warrant to purchase, lend or otherwise transfer or encumber, directly or indirectly, any Common Stock (or other securities) of the Company held by such Holder, nor shall the Holder enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities), during a period of 180 days (or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions including, but not limited to, the restrictions contained in FINRA Rule 2241 or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto) following the effective date of a registration statement of the Company filed in connection with the Company’s initial public offering under the Securities Act; provided however that all officers and directors of the Company and holders of at least 1% of the Company’s voting securities are either bound by, or have agreed to be bound by, substantially identical agreements; provided however that if the underwriters for such initial public offering grant any stockholder an early release from the lock-up period, then all Holders shall be similarly released on a pro rata basis based on relative ownership of Common Stock (calculated on an as converted basis as necessary). The obligations described in this Section 17 shall not apply to a registration relating solely to employee benefit plans on Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions and may stamp each such certificate with the third legend set forth in Section 12 hereof with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of such 180 day (or other) period. Each Holder agrees, if so requested by the Company or any representative of the underwriters, to execute such underwriters standard form of “lock-up” or “market standoff” agreement in a form reasonably satisfactory to the underwriters and the Company and consistent with the conditions and provisions of this Section 17.
18. Governing Law. This Warrant and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware or of any other state.
19. Rights and Obligations Survive Exercise of Warrant. Unless otherwise provided herein, the rights and obligations of the Company, of the holder of this Warrant and of the holder of the Shares issued upon exercise of this Warrant, shall survive the exercise of this Warrant.
20. Amendments. Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Warrant and signed by the Company and the holders of a majority of the shares of capital stock issuable under all Warrants issued pursuant to the Warrant Issuance Agreement.
21. Waivers. No waiver of any single breach or default shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.
22. Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.
23. Severability. If any provision of this Warrant becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Warrant, and such illegal, unenforceable or void provision shall be replaced with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, unenforceable or void provision. The balance of this Warrant shall be enforceable in accordance with its terms.
24. Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action, or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
25. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
26. Entire Agreement. Except as expressly set forth herein, this Warrant and the Warrant Issuance Agreement (including the exhibits attached hereto and thereto) constitutes the entire agreement and understanding of the Company and the holder of this Warrant with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
Issued this _____ day of _________, 2017 to:
| Investor: | |
| Guaranteed Obligation Principal: |
| PogoTec, Inc. | |
| a Delaware corporation | |
| ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |
| President and CEO |
EXHIBIT A
NOTICE OF EXERCISE
| TO: | PogoTec, Inc. |
Attention: President
1. The undersigned hereby elects to purchase __________ Shares of _____________ pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
☐ The undersigned elects to exercise the attached Warrant by means of a cash payment, and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes, if any.
☐ The undersigned elects to exercise the attached Warrant by means of the net exercise provisions of Section 4 of the Warrant.
3. Please issue a certificate or certificates representing said Shares in the name of the undersigned or in such other name as is specified below:
| (Name) | ||
| (Address) |
4. The undersigned hereby represents and warrants that the aforesaid Shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such shares and all representations and warranties of the undersigned set forth in Section 11 of the attached Warrant (including Section 11 (e) thereof) are true and correct as of the date hereof. The undersigned agrees to comply with all of the provisions of the attached Warrant (including Section 17 thereof).
| (Signature) | |
| (Name) | |
| (Title) | |
| (Date) |
| A-1 |
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _______________________________________________ the right represented by the attached Warrant to purchase ____________ shares of ________________________ of PogoTec, Inc. to which the attached Warrant relates, and appoints ______________ Attorney to transfer such right on the books of __________, with full power of substitution in the premises.
| (Print investor name) | |
| (Signature) | |
| (Print name of signatory, if signing for an entity) | |
| (Print title of signatory, if signing for an entity) |
| Address: | |