Exhibit 4.7
THIS WARRANT AND THE SHARES OF EQUITY SECURITIES THAT MAY BE PURCHASED PURSUANT
TO THE EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE,
OFFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
GADZOOX NETWORKS, INC.
AGREEMENT AND WARRANT TO PURCHASE COMMON STOCK
Effective Date: September 28, 2001
Void After: September 28, 2006
This Agreement and Warrant to Purchase Common Stock (this "Agreement" or
"Warrant") certifies that, for value received, Pacific Business Funding (the
"Holder"), a division of Cupertino National Bank, is entitled, subject to the
terms set forth below, to purchase from Gadzoox Networks, Inc., a Delaware
corporation (the "Company"), up to 71,942 shares of Common Stock of the Company
("Common Stock"), upon surrender of this Warrant, at the principal office of the
Company referred to below, with the subscription form attached hereto duly
executed, and simultaneous payment therefor in lawful money of the United States
(or otherwise as hereinafter provided) of the Exercise Price (as defined in
Section 2 below). The Exercise Price and the number of shares of Common Stock
purchaseable hereunder are subject to adjustment as provided herein.
1. NUMBER OF SHARES. This Warrant may be exercised, in whole or in part,
for 71,942 shares of Common Stock (the "Warrant Shares").
2. EXERCISE PRICE. The per share purchase price of the Common Stock (the
"Exercise Price") for which this Warrant may be exercised shall be $1.39 per
share.
3. EXERCISE OF WARRANT.
3.1 Time of Exercise. Subject to the terms and conditions set
forth herein, this Warrant shall be exercisable, in whole or in part, at any
time or from time to time prior to September 28, 2006; provided, however, that
this Warrant shall terminate immediately prior to the closing of (i) a merger or
consolidation of the Company with or into any other corporation or corporations
in which the stockholders of the Company shall own less than fifty percent (50%)
of the voting securities of the surviving corporation or (ii) a sale of all or
substantially all of the assets of the Company (each a "Change of Control
Event"). The Company shall give the Holder written notice of a Change of Control
Event not later than 10 days prior to the closing of such Change of Control
Event. The exercise shall be effected by (a) the surrender of this Warrant at
the principal office of
the Company as set forth in Section 12.5 (or such other office or agency of the
Company as may be designated by notice in writing to the Holder at the address
of the Holder appearing on the books of the Company), (b) delivery of the Notice
of Exercise attached hereto as Exhibit A (unless the Holder is exercising by
means of a "net exercise" as provided for in Section 4 below, in which case the
Holder shall deliver the Net Exercise Notice attached hereto as Exhibit B ("the
Net Exercise Notice")) and (c) unless payment of the Exercise Price is made
pursuant to a "net exercise" as provided under Section 4 below, payment of the
Exercise Price in cash or by check acceptable to the Company.
3.2 Effect of Exercise. This Warrant (or the portion thereof
exercised) shall be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As promptly as practicable on
or after such date, the Company, at its expense, shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise and, unless this Warrant shall
have expired, a new warrant representing the number of warrants represented by
the surrendered Warrant, if any, that shall not have been exercised shall also
be delivered to the Holder.
4. NET EXERCISE.
(a) Net Issue Exercise. In lieu of exercising this Warrant via
cash payment, the Holder 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 the completed Net Exercise
Notice indicating the Holder's election to exercise this Warrant by means of a
"net exercise," 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 Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares purchasable under this Warrant or,
if only a portion of the Warrant is being exercised, the portion
of the Warrant being cancelled (at the date of such calculation).
A = the Fair Market Value (as defined below) of one Warrant Share
(at the date of such calculation).
B = the Exercise Price (as adjusted to the date of such calculation).
If the above calculation results in a negative number, then no
shares of Common Stock shall be issued or issuable upon conversion of this
Warrant.
(b) Fair Market Value. For purposes of this Section 4, the Fair
Market Value of one Warrant Share shall be determined by the Company's Board of
Directors in good faith;
-2-
provided, however, that where there exists a public market for the Common Stock
at the time of such exercise, the fair market value per Warrant Share shall be
the average of the closing bid and asked prices of the Common Stock quoted in
the Over-The-Counter Market Summary or the average of the high and low prices as
reported by The Nasdaq National Market, the Nasdaq Small Cap Market or on any
exchange on which the Common Stock is listed, whichever is applicable, for the
five trading days prior to the date of the delivery of the Net Exercise Notice.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction computed to the nearest whole cent.
6. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant shall have been
exercised as provided herein.
7. NO TRANSFER OF WARRANT.
7.1 No Transferability of Warrant. The Holder shall not sell,
assign or otherwise transfer the Warrant or any part thereof or right thereunder
to any person or entity.
7.2 Register. The Company will maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Holder of this
Warrant may change its address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be delivered
or given by mail to the Holder as shown on the Warrant Register and at the
address shown on the Warrant Register.
8. REPRESENTATIONS AND WARRANTIES OF THE HOLDER AND RESTRICTIONS ON
TRANSFER IMPOSED BY THE SECURITIES ACT AND CALIFORNIA LAW.
8.1 Representations and Warranties by the Holder. The Holder
hereby represents and warrants to the Company as follows:
(a) The Warrant and the Warrant Shares are being
acquired for the Holder's own account, for investment and not with a view to, or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, (the "Securities
Act") or any state Blue Sky laws.
(b) The Holder understands that the Warrant and the
Warrant Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2)
-3-
thereof, that the Company has no present intention of registering the Warrant or
the Warrant Shares, that the Warrant and the Warrant Shares must be held by the
Holder indefinitely, and that the Holder must therefor bear the economic risk of
such investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from registration.
(c) The Holder further understands that the sale of the
securities which are the subject of this Agreement has not been qualified with
the Commissioner of Corporations of the State of California and the issuance of
such securities or the payment or receipt of any part of the consideration
therefor prior to such qualification is unlawful unless an exemption from such
qualification is available. The rights of all parties to this Agreement are
expressly conditioned upon such qualification being obtained or such exemption
being available. The Holder further agrees that it will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act or any state securities law. This Warrant and all Warrant
Shares issued upon exercise of this Warrant shall be stamped or imprinted with
legends in substantially the following form:
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 "SECURITIES ACT") OR
REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR TRANSFERRED
UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH OFFER, SALE OR TRANSFER OR (II) THERE IS AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT EXEMPTIONS
FROM THE REGISTRATION, QUALIFICATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS FOR SUCH OFFER, SALE OR TRANSFER ARE AVAILABLE.
(d) During the negotiation of the transactions
contemplated herein, the Holder and its representatives and legal counsel have
been afforded full and free access to corporate books, financial statements,
records, contracts, documents, and other information concerning the Company and
to its offices and facilities, have been afforded an opportunity to ask such
questions of the Company's officers, employees, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.
(e) The Holder and its representatives have been solely
responsible for the Holder's own "due diligence" investigation of the Company
and the Company's management and business, for its own analysis of the merits
and risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. In taking any action or performing
any role relative to the arranging of the proposed investment, the Holder has
acted solely in its own
-4-
interest, and the Holder (or any of its agents or employees) has not acted as an
agent of the Company. The Holder has such knowledge and experience in financial
and business matters that the Holder is capable of evaluating the merits and
risks of the purchase of the Warrant pursuant to the terms of this Agreement and
of protecting the Holder's interests in connection therewith.
(f) The Holder is an "accredited investor" as defined in
Rule 501 of the Securities Act.
9. RESERVATION AND AUTHORIZATION OF STOCK. The Company covenants that
during the term this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of this Warrant. The
Company further covenants that all shares that may be issued upon the exercise
of rights represented by this Warrant and payment of the Exercise Price, all as
set forth herein, will be validly issued, fully paid and non-assessable and free
from all insurance or transfer taxes, liens, and charges in respect of the issue
thereof created by the Company (other than taxes in respect of any transfer
occurring contemporaneously or as otherwise specified herein). The Company
agrees that issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock and
any other securities of the Company upon the exercise of this Warrant.
10. LOST DOCUMENTS. Upon receipt by the Company of evidence and
indemnity satisfactory to it of the loss, theft, destruction or mutilation of,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver to the Holder, in lieu of this Warrant, a new Warrant of
the same series and of like tenor of this Warrant.
11. ADJUSTMENTS. The number of shares purchasable hereunder are subject
to adjustment from time to time as follows:
11.1 Reorganization, Reclassification, Merger or Conveyance. If
any capital reorganization or reclassification of the capital stock of the
Company shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, or in the event the Company (or any such other corporation)
merges with or into another corporation or conveys all or substantially all of
its assets to another corporation and this Warrant does not terminate in
accordance with the provisions of Section 3.1 above, then, as a condition of
such reorganization, reclassification merger or conveyance, lawful and adequate
provisions shall be made whereby the Holder of the Warrant shall thereafter have
the right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
receivable upon the exercise of the Warrant, such shares of stock, securities or
assets (including cash) as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore so receivable, had such
reorganization, reclassification, merger or conveyance not taken place, and in
any such case appropriate provision shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price) shall
thereafter be applicable, as
-5-
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such exercise rights.
11.2 Split, Subdivision or Combination of Shares. If the Company
at any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination and the number of the securities as to which purchaser
rights under this Warrant exist shall be increased or decreased proportionately
in accordance with such split subdivision or combination.
11.3 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 12, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Secretary of the Company for filing in
the Company's records and to the Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of the Holder, furnish or cause to be furnished to the
Holder a like certificate setting forth: (a) such adjustments and readjustments;
(b) the Exercise Price at the time in effect; and (c) the number of shares and
the amount, if any, of other property that at the time would be received upon
the exercise of the Warrant. No such adjustment or change shall compel immediate
exercise of this Warrant or otherwise affect the Termination Date of this
Warrant. Irrespective of any adjustment or other changes made hereunder, this
Warrant (or any other warrant issued in exchange therefor) may continue to
express the same number and kind of Warrant Shares (except to the extent
exercised) and the same Exercise Price as are initially stated herein.
11.4 Other Adjustments (No Impairment). If any change in the
Common Stock or any other event occurs as to which the other provisions of this
Section 12 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder in accordance with such
provisions, then the Company shall make an adjustment in the number and class of
shares available under the Warrant, the Exercise Price or the application of
such provisions, so as to protect such purchase rights as aforesaid.
12. GENERAL PROVISIONS.
12.1 Governing Law. This Warrant shall be governed by and
construed under the laws of the State of California, excluding that body of law
relating to conflict of laws.
12.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
exercise of this Warrant.
12.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
-6-
12.4 Entire Agreement. This Agreement and the exhibits to this
Agreement constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
12.5 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be sent via facsimile,
overnight courier service or mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed or sent (a) if to the Holder, at
the address or facsimile number of the Holder set forth below such party's name
on the signature page hereto, or at such other address or number as the Holder
shall have furnished to the Company in writing, or (b) if to the Company, at
0000 Xxxxxxx Xxxxxx, Xxx Xxxx, 00000, facsimile: (000) 000-0000, attention:
Chief Financial Officer or at such other address or number as the Company shall
have furnished to the Holder in writing.
12.6 Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the Holder.
12.7 Separability. In case any provision of this Agreement shall
be declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
12.8 Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be an original, but all of which together
shall constitute one instrument.
*****
-7-
IN WITNESS WHEREOF, the Company and the Holder have caused the Warrant
to be executed by a duly authorized officer thereof as of the effective date of
this Warrant set forth above.
GADZOOX NETWORKS, INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
Chief Executive Officer
AGREED AND ACCEPTED:
PACIFIC BUSINESS FUNDING,
A DIVISION OF CUPERTINO NATIONAL BANK
By: /s/ Xxxxx X'Xxxx
----------------------------------
Print Name:
--------------------------
Title: Executive Vice-President
-------------------------------
EXHIBIT A
NOTICE OF EXERCISE
TO: GADZOOX NETWORKS, INC.
(1) The undersigned hereby elects to purchase ________ shares of Common
Stock ("Common Stock") of Gadzoox Networks, Inc. pursuant to the terms of the
attached Agreement and Warrant to Purchase Common Stock (the "Warrant"), and
tenders herewith payment of the Exercise Price for such shares in full at the
price per share provided in the Warrant.
(2) The undersigned hereby confirms and acknowledges that the
representations and warranties set forth in Section 8 of the Warrant remain true
and correct concerning the Holder as of the date hereof, that the shares of
Common Stock are being acquired solely for the account of the undersigned and
not as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell, or otherwise dispose of any such shares of
Common Stock except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
PACIFIC BUSINESS FUNDING,
A DIVISION OF CUPERTINO NATIONAL BANK
-----------------------------------------
Print Name
-----------------------------------------
Signature
-----------------------------------------
Title
-----------------------------------------
Date
EXHIBIT B
NET EXERCISE NOTICE
TO: GADZOOX NETWORKS, INC.
(1) The undersigned hereby elects to convert the attached Warrant to
into ________ shares of Common Stock ("Common Stock') of Gadzoox Networks, Inc.
pursuant to the terms of the attached Agreement and Warrant to Purchase Common
Stock (the "Warrant").
(2) In converting such Warrant, the undersigned hereby confirms and
acknowledges that the representations and warranties set forth in Section 8 of
the Warrant remain true and correct concerning the Holder as of the date hereof,
that the shares of Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any such
shares of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
PACIFIC BUSINESS FUNDING,
A DIVISION OF CUPERTINO NATIONAL BANK
-----------------------------------------
Print Name
-----------------------------------------
Signature
-----------------------------------------
Title
-----------------------------------------
Date