1
EXHIBIT 10.15
THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
Warrant No. 1 September 7, 1993
COMMON STOCK PURCHASE WARRANT
This certifies that, for value received, ______________ and permitted
assigns (the "Holder"), is entitled to purchase on the terms and conditions
contained herein from Financial Pacific Insurance Group, Inc., a Delaware
corporation (the "Corporation"), ________ shares (subject to adjustment as set
forth in Sections 4 and 5 below, the "Warrant Shares") of the Corporation's
Common Stock, $.001 par value per share (the "Common Stock"), at the price of
$1.00 per Warrant Share so purchased (subject to adjustment as set forth in
Section 4 below, the "Warrant Purchase Price") at any time on or after the date
hereof, subject to Section 1.2, and prior to September 7, 2003 (the "Exercise
Period"), on surrender to the Corporation at its principal office at 0000 Xxxxx
Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000 (or at such other location
as the Corporation may advise Holder in writing) of this Warrant properly
endorsed with the Form of Subscription attached hereto duly filled in and
signed and upon payment in cash or by certified or cashier's check of the
Warrant Purchase Price for the appropriate number of Warrant Shares for which
this Warrant is being exercised, as determined in accordance with the
provisions hereof. In lieu of paying cash upon exercise of this Warrant, the
Holder may elect to make a cashless exercise, in which event the Holder will be
entitled to receive the Warrant Shares minus the number of shares of Common
Stock valued based on the Current Market Value (as defined below) equal to the
Warrant Purchase Price.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment; Definition.
1.1 Optional Exercise. Subject to Section 1.2 hereof and to the
limitations on exercise set forth in Section 2 hereof, this Warrant is
exercisable at the option of the Holder, from time to time during the Exercise
Period, for all or any part of the Warrant Shares. The Corporation agrees that
the Warrant Shares purchased under this Warrant shall be and are deemed to be
issued to the Holder as the record owner of such
2
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares. Subject to the provisions of
Section 2, certificates for shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time after this Warrant has been
exercised, and, in case of a purchase of less than all the Warrant Shares, the
Corporation shall cancel this Warrant and, within a reasonable period of time,
shall execute and deliver to the Holder a new Warrant of like tenor for the
balance of the Warrant Shares. Each stock certificate so delivered shall be
registered in the name of the Holder or such other name as shall be designated
thereby, subject to the limitations contained in Section 2.
1.2 Mandatory Exercise. Notwithstanding any provision herein to the
contrary, this Warrant must be exercised by the Holder, if at all, upon the
effective date of a registration statement filed pursuant to the Securities Act
of 1933, as amended (other than a registration relating solely to a transaction
under Rule 145 under such Act or any successor thereto, or an employee benefit
plan of the Corporation), in connection with the sale of the Corporation's
Common Stock in a firm commitment, underwritten public offering with gross
proceeds to be received by the Corporation which equal or exceed $10,000,000
and a public offering price of the Common Stock of not less than $5.00 per
share (as adjusted for stock splits, dividends or other recapitalization
transactions) (an "Initial Public Offering"). The Corporation shall give the
Holder not less than 15 days notice of the expected date of the effectiveness
of such registration statement. Not later than the effective date, the Holder
shall give the Corporation notice to the effect that (i) the Holder does not
elect to exercise this Warrant, (ii) the Holder elects to make a cash exercise
of this Warrant (which notice shall be accompanied by the payment of the
Warrant Purchase Price) or (iii) the Holder elects to make a cashless exercise
of this Warrant as provided in the first paragraph hereof. If the Holder does
not give any notice to the Corporation, the Holder shall be deemed to have
elected to make a cashless exercise of this Warrant.
1.3 Definitions. As used herein, the following terms shall have the
following meanings:
"Current Market Value" per share of Common Stock means (i) if an
Initial Public Offering of the Common Stock has taken place, the price at the
close of the market on the first day of trading of such Common Stock following
the effectiveness of a registration statement for the Common Stock and (ii) if
no Initial Public Offering has taken place, the Fair Market Value of the Common
Stock based upon the Fair Market Value of 100% of the Corporation if sold as a
going concern and without regard to any discount for the lack of liquidity or
on the basis that the relevant shares of Common Stock do not constitute a
majority or controlling interest in the Corporation and assuming the exercise
of all warrants, convertible securities, options or other rights to subscribe
for or purchase any additional shares of Common Stock or securities convertible
or exchangeable into Common Stock.
2.
3
"Fair Market Value" shall mean the value obtainable upon a sale in an
arm's length transaction to an unaffiliated third party under usual and normal
circumstances, with neither the buyer nor the seller under any compulsion to
act, with equity to both, as determined by the Board in good faith; provided,
however, that if the Holder shall dispute the Fair Market Value as determined
by the Board, the Holder may undertake to have the Holder and the Corporation
retain an Independent Expert. The determination of Fair Market Value by the
Independent Expert shall be final, binding and conclusive on the Corporation
and the Holder. All costs and expenses of the Independent Expert shall be borne
by the Holder, unless the determination of Fair Market Value by the Independent
Expert is more than 5% more favorable to the Corporation than the Fair Market
Value determined by the Board, in which event the cost of the Independent
Expert shall be shared equally by the Holder and the Corporation, or more than
10% more favorable to the Corporation than the Fair Market Value determined by
the Board, in which event the cost of the Independent Expert shall be borne
solely by the Corporation.
"Independent Expert" shall mean an investment banking firm reasonably
agreeable to the Corporation and the Holder who does not (and whose affiliates
do not) have a financial interest in the Corporation or any of its stockholders.
2. Limitation on Transfer and Exercise. Notwithstanding the provisions
of Section 1, the Corporation shall not be required to deliver any certificate
for shares of Common Stock upon exercise of this Warrant except in accordance
with the provisions, and subject to the limitations, of Section 9 and 10 hereof.
3. Due Authorization and Issuance; Reservation of Issuance. The
Corporation covenants and agrees that all shares of Common Stock which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable
shares of the Common Stock of the Corporation, free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised,
the Corporation will at all times have authorized and reserved, for the purpose
of issue or transfer upon exercise of this Warrant, a sufficient number of
authorized but unissued shares of Common Stock, or other securities and
property, when and as required to provide for the exercise of this Warrant.
4. Warrant Purchase Price. The Warrant Purchase Price shall be subject
to adjustment from time to time as hereinafter provided (such price, or the
price as last adjusted, also being referred to herein as the "Warrant Purchase
Price"). Upon each adjustment of the Warrant Purchase Price, the Holder shall
thereafter be entitled to purchase, at the Warrant Purchase Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Warrant Purchase Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
3.
4
adjustment, and dividing the product thereof by the Warrant Purchase Price
resulting from such adjustment.
4.1 Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares by way of stock split, stock dividend or
similar event, the Warrant Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares by way of reverse stock split or similar event, the Warrant Purchase
Price in effect immediately prior to such combination shall be proportionately
increased.
4.2 Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of the
capital stock of the Corporation, any consolidation or merger of the
Corporation with another entity, or the sale of all or substantially all of the
Corporation's assets to another entity 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, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provisions shall be made whereby the Holder shall thereafter have
the right to purchase and receive upon the basis and the terms and conditions
specified in this Warrant and in lieu of the shares of Common Stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for the number of shares of Common
Stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place and in any such case appropriate
provision shall be made with respect to the rights and interests of the holder
of this Warrant to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant Purchase Price and of the
number of shares of Common Stock purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument, executed and mailed or delivered to the Holder at the
last address thereof appearing on the books of the Corporation, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
4.3 Issuance of Certain Additional Shares. If the
Corporation shall sell or issue to any person any shares of Common Stock or any
options, warrants or rights entitling any person to subscribe for, purchase or
convert or, exchange shares of Common Stock (other than (i) sales or issuances
to officers or employees of, or consultants or advisors to, the Corporation
pursuant to any stock incentive plan or arrangement approved by the
5
Corporation's Board of Directors and (ii) shares issued upon the conversion of
shares of Series A Convertible Preferred Stock) at a price per share of Common
Stock, or having an exercise price per share of Common Stock, as the case may
be, that is less than the Current Market Value of Common Stock on the date of
issuance (such shares being referred to as the "Below Market Shares"), the
Warrant Purchase Price shall be adjusted on and after the date of such sale or
issuance by multiplying the Warrant Purchase Price by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on such
date plus the number of shares of Common Stock that the aggregate purchase
price or exercise price of such Below Market Shares would purchase at the
Current Market Value, and of which the denominator shall be the number of
shares of Common Stock outstanding on such date plus the number of Below Market
Shares. The adjustment to the Warrant Purchase Price set forth above shall be
made successively whenever a sale or issuance of Below Market Shares occurs;
provided, however, that, if any such options, warrants or rights expire without
the issuance of shares of Common Stock, then the Warrant Purchase Price shall
again be adjusted to equal the Warrant Purchase Price in effect had such
issuance of Below Market Shares not occurred.
4.4 Notice of Adjustment. Upon any adjustment of the Warrant
Purchase Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to the Holder
at the address thereof as shown on the books of the Corporation. The notice
shall state the Warrant Purchase Price resulting from such adjustment and the
revised number of Warrant Shares purchasable hereunder, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
5. Warrant Shares. Reference is hereby made to that certain
Restricted Stock Agreement dated as of September 7, 1993, between the
Corporation and Xxxxxx X. Xxxxxxx (the "Restricted Stock Agreement"), as in
effect on the date hereof and without regard to any amendments adverse to the
Holder made without the consent of the Holder. In the event that, pursuant to
the Restricted Stock Agreement, the Corporation repurchases the Initial Shares
(as defined in the Restricted Stock Agreement) from Xxxxxx X. Xxxxxxx pursuant
to Section 1 of the Restricted Stock Agreement, the number of Warrant Shares
purchasable hereunder by the Holder shall be reduced as provided in this
Section 5. If all of the original Initial Shares are repurchased under Section
1 of the Restricted Stock Agreement, the number of Warrant Shares purchasable
hereunder by the Holder shall be reduced to 89,360, as adjusted as otherwise
provided herein. If some but less than all of the original Initial Shares are
repurchased under Section 1 of the Restricted Stock Agreement, the number of
Warrant Shares purchasable hereunder by the Holder shall be the number between
103,810 and 89,360 reduced in proportion to the percentage of the original
Initial Shares so repurchased. Upon any adjustment of the number of Warrant
Shares, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, addressed to the Holder at the
address thereof as shown on the books of the Corporation. The notice shall
state the revised number of Warrant Shares, setting forth in
5.
6
reasonable detail the method of calculation and the facts upon which such
calculation is based.
6. Issue Tax. The issuance of shares of Common Stock upon the exercise
of this Warrant shall be made without charge to the Holder for any issue tax in
respect thereof, provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
and delivery of any shares of Common Stock in a name other than that of the
then Holder of this Warrant.
7. Closing of Books. The Corporation will at no time close its transfer
books against the transfer of this Warrant or of any shares of Common Stock
issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise hereof.
8. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder the
right to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of Directors of the Corporation or
any other matter or any rights whatsoever as a stockholder of the
Corporation. No dividends or interest shall be payable or accrued in respect
of this Warrant or the shares of Common Stock purchasable hereunder until, and
only to the extent that, this Warrant shall have been exercised. No provisions
hereof, in the absence of affirmative action by the Holder to purchase shares
of Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of such Holder for the Warrant
Purchase Price or as a stockholder of the Corporation, whether such liability
is asserted by the Corporation or by its creditors.
9. Restrictions on Transferability of Securities; Compliance with
Securities Act.
9.1 Restrictions on Transferability. The Warrant and the Common
Stock issuable hereunder shall not be transferable except upon the conditions
specified in this Section 9, which conditions are intended to insure compliance
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"). Each holder of this Warrant or the Common Stock issuable hereunder will
cause any proposed transferee of the Warrant or such Common Stock to agree to
take and hold such securities subject to the provisions and upon the conditions
specified in this Section 9.
9.2 Transfers Not Subject to Restrictions. Subject to Section 10
hereof, the Holder may sell, assign or transfer this Warrant to his parents,
the parents of his spouse, his spouse or issue or adopted children, or to a
trust established for the benefit of his parents, the parents of his spouse,
his spouse, issue, adopted children, or himself, or dispose of them under his
will.
6.
7
9.3 Restrictive Legend. Each certificate representing (a) this
Warrant, (b) the shares of Common Stock or other securities issued upon
exercise of the Warrant and (c) any other securities issued in respect of such
shares of Common Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event (collectively the "Restrictive
Securities"), shall (unless otherwise permitted by the provisions of Section
9.4 below or unless such securities have been registered under the Securities
Act) be imprinted with the following legend, in addition to any legend required
under applicable state securities laws:
THIS WARRANT AND THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Upon request of a holder of such a certificate, the Corporation shall
remove the foregoing legend therefrom or issue to such holder a new certificate
therefor free of any transfer legend, if, with such request, the Corporation
shall have received either the opinion referred to in Section 9.4(a) or the
"no-action" letter referred to in Section 9.4(b) to the effect that any
transfer by such holder of the securities evidenced by such certificate will be
exempt from the registration and/or qualification requirements of, and that
such legend is not required in order to establish compliance with, the
Securities Act, and if applicable, any state securities laws under which
transfer restrictions on such securities had been previously imposed.
9.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in
all respects with the provisions of this Section 9.4. Prior to any proposed
transfer of any Restricted Securities, the holder thereof shall give written
notice to the Corporation of such holder's intention to effect such transfer.
Each such notice shall describe the manner and circumstances of the proposed
transfer in sufficient detail, and shall be accompanied by either (a) an
unqualified written legal opinion addressed to the Corporation from counsel who
shall be reasonably satisfactory to the Corporation, which opinion shall be
reasonably satisfactory in form and substance to the Corporation's counsel, to
the effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act and any applicable state
securities laws, or (b) a "no-action" letter from the Securities and Exchange
Commission (and any necessary state securities administrator) to the effect
that the distribution of such securities without registration will not result in
a recommendation by the
7.
8
staff of the Commission (or such administrators) that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the holder to the Corporation. Each certificate
evidencing the Restricted Securities transferred as above provided shall bear
the appropriate restrictive legend set forth in Section 9.4 above.
10. Transferability of Warrant. Each qualified transferee of this
Warrant must, prior to the acknowledgement and acceptance of such transfer by
the Corporation, agree to take and hold this Warrant subject to the provisions
specified herein. Any such permitted transfers may be made without charge to
the Holder (except for transfer taxes), at the office or agency of the
Corporation referred to in the first paragraph of this Warrant, by the Holder
or by its duly authorized attorney, upon surrender of this Warrant properly
endorsed.
11. Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the Corporation, of the Holder and of the holder of shares of
Common Stock issued upon exercise of this Warrant contained in Section 8, 9 and
10 shall survive the exercise of this Warrant.
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request or other document required or permitted
to be given or delivered to the record Holder or the Corporation shall be
delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such Holder at its address as shown on the books of the Corporation or
to the Corporation at the address indicated therefor in the first paragraph of
this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Corporation by merger, consolidation or acquisition
of all or substantially all of the Corporation's assets, and all of the
obligations of the Corporation relating to the Common Stock issuable upon the
exercise of this Warrant shall survive such merger, consolidation or
acquisition and all of the covenants and agreements of the Corporation shall
inure to the benefit of the permitted successors and assigns of the Holder.
15. Descriptive Headings; Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of Delaware without regard to conflicts of laws principles
thereof.
16. Lost Warrant or Certificates. The Corporation represents and
warrants to the Holder that upon receipt of evidence reasonably satisfactory to
the Corporation of the
8.
9
loss, theft, destruction or mutilation of this Warrant or certificate
evidencing shares of Common Stock issued on exercise hereof and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Corporation, or in the case of any such mutilation upon
surrender and cancellation of such Warrant or stock certificate, the Corporation
will make and deliver a new Warrant or stock certificate, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
17. Expiration of Warrant. Subject to Section 1.2 hereof, this Warrant
shall expire and shall no longer be exercisable on or after September 7, 2003.
18. Stockholders Agreement. All Common Stock or other securities issuable
upon exercise of this Warrant shall be subject to all of the provisions of and
shall be entitled to the benefits of the Stockholders Agreement dated as of
September 7, 1993 by and among the Corporation and the stockholders of the
Corporation as of such date (the "Stockholders Agreement"). Upon such exercise,
the holder of the Common Stock or other securities issuable hereunder shall
become a "Stockholder" under such Agreement, as the Stockholders Agreement may
have been modified, supplemented or amended prior to the date of such exercise.
The provisions of this Section 18 shall not apply if the Stockholders Agreement
has been terminated, either by agreement of the parties thereto or by its own
terms, prior to the date of such exercise.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed and issued by the officer or officers thereunto duly authorized as of
this 7th day of September, 1993.
FINANCIAL PACIFIC INSURANCE GROUP,
INC., a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
-----------------------------
__________________, President
9.
