Exhibit 10.27
Exhibit C
NEITHER THE SECURITY EVIDENCED BY THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE LAW, AND NO INTEREST HEREIN OR
THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING
SAID SECURITIES, (B) TILE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE
HOLDER OF SAID SECURITIES (REASONABLY CONCURRED WITH BY LEGAL COUNSEL FOR THE
COMPANY) STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE
COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
No. ______
ISSUED: August 31, 1999
VOID AFTER: August 31, 2001
DELPHI INFORMATION SYSTEMS, INC.
WARRANT
THIS IS TO CERTIFY that, subject to the terms and conditions hereof,
InfoSpace.com, Inc. (the "Holder") or assigns is entitled, at any time on or
after August 31, 2000 but not later than 5:00 p.m., Seattle time, on August 31,
2001 (the "Exercise Period"), subject to the provisions hereof, to purchase in
whole or from time to time in part up to 250,000, fully paid and nonassessable
shares of Common Stock, $.10 par value per share, of Delphi Information Systems,
Inc., a Delaware corporation (the "Company"), at a price of $15.00 per share for
the period beginning the date hereof until August 31, 2000, and, thereafter,
$20.00 per share between August 31, 2000 until August 31, 2001 (the "Exercise
Price") (such number of shares subject to this Warrant and such Exercise Price
being subject to adjustment as provided herein). As used herein, the term
"Warrant Stock" shall mean the Company's Common Stock. This Warrant is being
issued pursuant to an Internet Promotion Agreement dated as of August 31, 1999
between the Holder and the Company (the "Promotion Agreement"). All capitalized
terms used but not otherwise defined herein shall have the meaning ascribed to
such terms in the Promotion Agreement.
1. Exercise
1.1 Warrant Stock Eligible to be Purchased
1.1.1 Vesting of Warrants
Subject to the provisions of Section 1.1.2, the right to purchase Warrant
Stock shall vest according to the following schedule (each date upon which such
shares vest being referred to herein as a "Vesting Date"):
Number of Shares or Warrant
Stock Eligible to be Purchased
Vesting Dare (the "Eligible Shares")
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September 30, 1999 62,500
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December 31, 1999 62,500
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March 31, 2000 125,000
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1.1.2 Condition to Vesting
On each Vesting Date, if Holder has failed to post Promotional Placements
pursuant to the terms of the Promotion Agreement, then the Eligible Shares that
would otherwise vest on such Vesting Date shall not vest as of such date and
shall not be eligible to be purchased pursuant to this Warrant.
1.1.3 Termination of Vesting; Accelerated Vesting
In the event that the Promotion Agreement is terminated for any reason
other than as a result of a material breach by the Company, then all future
vesting shall terminate as of the date of such termination, and any shares of
Warrant Stock that are unvested on such date shall not be eligible to be
purchased pursuant to this Warrant. In the event that InfoSpace.com terminates
the Promotion Agreement due to a material breach by the Company that is not
cured as provided in Section 6.2 of the Promotion Agreement, then this Warrant
shall vest in full upon such termination and all shares of Warrant Stock shall
become Eligible Shares. In the event that the Company terminates the Promotion
Agreement due to a material breach by InfoSpace.com then this Warrant shall
terminate immediately, and InfoSpace.com shall forfeit the right to purchase any
additional shares pursuant hereto, whether or not such shares are Eligible
Shares as of the date of such termination.
1.2 Procedure for Exercise
Subject to the foregoing, this Warrant may be exercised by the Holder, as
to those shares of Warrant Stock for which this Warrant is then exercisable as
determined in accordance with Section 1.1, at any time during the Exercise
Period in whole or part by delivering to the Company, at the address of the
Company set forth in Section 17, (a) the form of Exercise Notice attached hereto
duly completed and executed by the Holder, (b) this Warrant certificate, and (c)
cash or a bank cashier's check payable to the Company in the amount of the
Exercise Price multiplied by the number of shares for which this Warrant is
being exercised (the "Purchase Price"). The Holder will be deemed to be the
holder of record of the shares of Common Stock as to which the Warrant was
exercised in accordance with this Warrant, effective at the close of business,
Seattle time, on the date such exercise is completed and all documents specified
above are delivered to the Company.
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1.3 Net Exercise
Notwithstanding the payment provisions set forth above, the Holder may
elect to exercise this Warrant by converting this Warrant into shares of Warrant
Stock as provided in this Section 1.3, such election to be effected by surrender
of this Warrant at the principal office of the Company, together with the Notice
of Exercise indicating such election, in which case the Company shall issue to
the Holder the number of shares of Warrant Stock determined as follows:
X = Y (A-B)
-------
A
Where: X = the number of shares of Warrant Stock to be issued
Y = the number of shares of Warrant Stock as to which the
Warrant is being exercised (which in no case may exceed the
number of Eligible Shares which remain to be exercised as
of such date)
A = the Fair Market Value (as defined below) of one (1) share
of Warrant Stock
B = the Exercise Price
For purposes of this Section 1.3, the Fair Market Value of a share of
Warrant Stock shall mean:
1.3.1 The average of the closing bid and asked prices of the Warrant
Stock quoted in the Over-the-Counter Market Summary or the closing price quoted
on the Nasdaq National Market, Nasdaq SmallCap Market or any exchange on which
the Common Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the ten trading days prior to the date of
determination of fair market value (with appropriate adjustments being made to
reflect any stock split, stock dividend, stock combination or similar
recapitalization affecting the Common Stock from the first day of such ten
trading day period until the date of determination);
1.3.2 If the Warrant Stock is not traded Over-the-Counter or on the
Nasdaq National Market, the Nasdaq SmallCap Market or an exchange, fair market
value of the Warrant Stock per share shall be the price per share which the
Company could obtain from a willing buyer for shares sold by the Company from
authorized but unissued shares of Warrant Stock as such price shall be agreed by
the parties hereto, or if agreement cannot be reached within five (5) business
days of delivery of the notice pursuant to Section 1(b) hereof, as shall be
determined by a panel of appraisers. One appraiser shall be selected by the
Holder, one appraiser shall be chosen by the Company and the third appraiser
shall be chosen by the first two appraisers. If the appraisers cannot reach
agreement as to the fair market value on the foregoing basis on or before the
thirtieth (30th) day following the Holder's notice of election pursuant to this
Section 1.3, then each appraiser shall deliver its appraisal and the appraisal
which is neither the highest nor the lowest shall be the fair market value of a
share of Warrant Stock. In the event that the Company fails to choose an
appraiser or the three appraisers fail to deliver an appraisal on or before the
thirtieth (30th) day after such notice, the appraisal of the appraiser selected
by the Holder shall control and shall be fair market value for the purposes of
this Warrant. The cost of the appraiser selected by each party shall be borne by
that party and the cost of the third appraiser shall be borne one-half (1/2) by
each party. In the event that the Company does not select an appraiser or three
appraisals are not received on or before the thirtieth (30th) day after such
notice of election, the Company shall pay one-half (1/2) the
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cost of the Holder's appraiser. Appraisers selected under this Section 1.3.2
must be unaffiliated with the Holder and the Company and must have reasonable
professional qualifications for the appraisal.
1.3.3 In the event this Warrant is exercised for the purpose of
offering the Warrant Stock in a firm underwritten public offering of Common
Stock with a fixed offering price (as opposed to an auction rate or other market
driven price), the Fair Market Value per share shall be deemed to be equal to
the per share offering price to the public in such public offering. In such
event, at the election of the Holder, this Warrant may be exercised contingent
upon and effective as of the closing of such public offering and, at the
election of the Holder, the exercise of this Warrant may be further conditioned
upon the sale of all or a portion of such Warrant Stock in such public offering.
1.3.4 In conjunction with a Reorganization (as defined in Section
4), then the Fair Market Value per share shall be the value received by the
holders of Warrant Stock pursuant to such transaction for each share of Warrant
Stock, and such purchase shall be effective upon the closing of such
transaction, subject to the due, proper and prior surrender of this Warrant.
2. Delivery of Stock Certificate
Within twenty days after the exercise of this Warrant (in full or in part)
and payment of the Purchase Price then due, the Company at its expense shall
issue in the name of and deliver to the Holder (a) a certificate or certificates
for the number of fully paid and nonassessable shares of Warrant Stock to which
the Holder shall be entitled upon such exercise and (b) if applicable, a new
Warrant of like tenor to purchase up to that number of shares of Warrant Stock,
if any, as to which this Warrant shall not have been previously exercised by the
Holder or repurchased by the Company.
3. Covenants as to Warrant Stock
The Company covenants and agrees that the Company will at all times have
authorized and reserved a sufficient number of shares of Warrant Stock to
provide for the exercise of the rights represented by this Warrant. The Company
further covenants that all shares of Warrant Stock which may be issued upon the
exercise of the rights represented by this Warrant, will, upon issuance, be
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges solely with respect to the issuance thereof. The Company further
covenants and agrees that the Company will from time to time take all such
action as may be requisite to assure that the stated or par value per share of
Warrant Stock is at all times equal to or less than the then effective Exercise
Price per share of Warrant Stock issuable upon exercise of this Warrant. If and
so long as the Common Stock issuable upon the exercise of the rights represented
by this Warrant is listed on any national securities exchange or quotation
system, the Company will, if permitted by the rules of such exchange or
quotation system, use its best efforts to list and keep listed on such exchange
or quotation system, upon official notice of issuance, all shares of such
capital stock.
4. Termination Upon Reorganization
Simultaneous with the closing of a merger, consolidation, acquisition of
all or substantially all of the assets or stock, of the Company by another
entity (the "Surviving Entity") as a result of
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which the stockholders of the Company will own less than 50% of the voting
capital stock of the surviving entity or the entity that controls such surviving
entity immediately after the transaction or, in the case of a sale of assets,
the Company will own after the transaction less than 50% of the assets owned by
the Company prior to the transaction (collectively, a "Reorganization") prior to
the expiration of the Exercise Period, as a result of which the stockholders of
the Company receive cash, stock or other property in respect of their shares of
Warrant Stock, this Warrant shall be canceled and all rights granted hereunder
shall terminate; provided, however, that (a) the Company shall have delivered to
the Holder notice of the Reorganization no less than ten (10) business days
before the date scheduled for closing of the Reorganization, and (b) at the
closing of such Reorganization this Warrant will be exchanged for a warrant to
purchase such kind and number of shares of capital stock or other securities or
property of the Company or the Surviving Entity to which the Holder would have
been entitled if it had held the Warrant Stock issuable upon the exercise hereof
immediately prior to such Reorganization, which warrant shall have the same
terms and conditions hereof.
5. Adjustments for Certain Issuances
5.11 Stock Splits and Reverse Stock Splits
If the Company shall issue any shares of Warrant Stock as a stock dividend
or subdivide the number of outstanding shares of Warrant Stock into a greater
number of shares, then, in either such case, the Exercise Price in effect before
such dividend or subdivision shall be proportionately reduced and the number of
shares of Warrant Stock at that time purchasable pursuant to this Warrant (and
the number of Eligible Shares then existing and which will become Eligible
Shares on all of the succeeding Vesting Dates) shall be proportionately
increased; and, conversely, if the Company shall reduce the number of
outstanding shares of Warrant Stock by combining such shares into a smaller
number of shares, then the Exercise Price in effect before such combination
shall be proportionately increased and the number of shares of Warrant Stock at
that time purchasable pursuant to this Warrant (and the number of Eligible
Shares then existing and which will become Eligible Shares on all the succeeding
Vesting Dates) shall be proportionately decreased. Upon each adjustment in the
Exercise Price pursuant to this Section 5, the number of shares of Warrant Stock
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying such number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction, the numerator of
which shall be the Exercise Price immediately prior to such adjustment and the
denominator of which shall be the Exercise Price immediately thereafter. The
Holder shall be entitled to the same notice and information regarding such
dividend or subdivision as is furnished to holders of Warrant Stock, which
notice shall be sent to the Holder no later than the date such notice is sent to
all holders of Warrant Stock.
5.2 Other Dividends and Distributions
In case the Company shall take a record of the holders of its Warrant Stock (or
other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution other than as described in Section 5.1, or any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, then the Company will mail or cause to be mailed to the
Holder a notice specifying the date on which a record is to be taken for the
purpose of such dividend, distribution or right (the
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"Record Date"), and stating the amount and character of such dividend,
distribution or right. Such notice shall be mailed at least 5 days prior to the
Record Date therein specified.
6. Fractional Shares
No fractional shares shall be issued upon the exercise of this Warrant. In
lieu of fractional shares, the Company shall pay the Holder a sum in cash equal
to the fair market value of the fractional shares (as determined under paragraph
1.3 above) on the date of exercise.
7. Restrictions on Transfer
Neither this Warrant nor any securities purchased upon exercise of this
Warrant may be transferred unless (a) such transfer is registered under the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities or blue sky laws, (b) the Company has received a legal opinion
reasonably satisfactory to the Company to the effect that the transfer is exempt
from the prospectus delivery and registration requirements of the Securities Act
and any applicable state securities or blue sky laws; or (c) the Company
otherwise satisfies itself that such transfer is exempt from registration.
8. Legend
A legend setting forth or referring to the above restrictions shall be
placed on this Warrant, any replacement hereof and any certificate representing
a security issued pursuant to the exercise hereof, and a stop transfer
restriction or order shall be placed on the books of the Company and with any
transfer agent until such securities may be legally sold or otherwise
transferred; provided, however, that such legend shall not be required and a
stop transfer restriction order shall not be placed if (i) in the opinion of
counsel to the Holder (reasonably concurred with by counsel to the Company)
registration of any future transfer is not required by the applicable provisions
of the Securities Act; or (ii) The Company shall have waived the requirements of
such legends.
9. Holder its Owner
Subject to the terms of Section 7, the Company may deem and treat the
Holder of this Warrant as the absolute owner hereof for all purposes regardless
of any notice to the contrary.
10. Warrantholder Rights
10.1 Registration Rights in Connection with Warrant Stock
Upon exercise of all or part of this Warrant, the holder of the Warrant
Stock shall be entitled to the registration rights with respect to the Warrant
Stock set forth in Exhibit E of the Promotion Agreement.
10.2 No Rights As a Stockholder
Other than as set forth in Section 10.1 above, this Warrant shall not
entitle the Holder to any voting rights or any other rights as a stockholder of
the Company or to any other rights whatsoever
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except the rights stated herein; and except as otherwise provided herein, no
dividend or interest shall be payable or shall accrue in respect of this Warrant
or the Warrant Stock purchasable hereunder unless, until and to the extent that
this Warrant shall be exercised.
11. Construction
The validity and interpretation of the terms and provisions of this
Warrant shall be governed by the laws of the State of Delaware. The descriptive
headings of the several sections of this Warrant are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions thereof.
12. Expiration
This Warrant shall be void and all rights represented thereby shall cease
unless exercised during the Exercise Period. All restrictions set forth herein
on the shares of capital stock issued upon exercise of any rights hereunder
shall survive such exercise and expiration of the rights granted hereunder.
13. Exchange of Warrant
This Warrant is exchangeable upon the surrender hereof by the Holder at
the office of the Company for new Warrants of like tenor representing in the
aggregate the rights to subscribe for and purchase the number of shares which
may be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of shares as shall
be designated by the Holder at the time of such surrender.
14. Lost Warrant Certificate
If this Warrant is lost, stolen, mutilated or destroyed, the Company
shall, upon request in writing from the Holder and subject to compliance by
Holder with the following sentence, issue a new Warrant of like denomination,
tenor and date as this Warrant, subject to the Company's right to require the
Holder to give the Company a bond or other satisfactory security sufficient to
indemnify the Company against any claim that may be made against it (including
any expense or liability) on account of the alleged loss, theft, mutilation or
destruction of this Warrant or the issuance of such new Warrant. The Holder
shall reimburse the Company for any and all expenses and costs incurred by the
Company in connection with issuing a new Warrant under this Section.
15. Waivers and Amendments
This Warrant or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
16. Successors and Assigns.
This Warrant shall be binding upon the Company and inure to the benefit of
lnfoSpace.com and its successors and assigns.
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17. Notices.
All notices or other communications required or permitted hereunder shall
be in writing and shall be delivered by personal delivery, reputable overnight
courier service, telecopier or mailed by United States mail, first-class postage
prepaid, or by registered or certified mail with return receipt requested,
addressed as follows:
If to the Holder:
InfoSpace.com, Inc.
15375 N.E. 90th Street
Redmond, WA 98052
Fax:(425) 883-4846
Attention: General Counsel
If to the Company:
Delphi Information Systems, Inc.
3501 Algonquin Road
Suite 500
Rolling Meadows, Illinois 60008
Attention: Chief Financial Officer
With copies to: Delphi's Law Department
Each of the foregoing parties shall be entitled to specify a different
address by giving five days' advance written notice as aforesaid to the other
parties. All such notices and communications shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery and
(ii) in the case of mailing, on the third business day following the date of
such mailing.
18. Investment Intent
By accepting this Warrant, the Holder represents that it is acquiring this
Warrant (and upon exercise hereof will acquire any Warrant Stock) for investment
and not with a view to, or for sale in connection with, any distribution
thereof. Furthermore, the Company reserves the right, in connection with the
exercise hereof, to require the Holder hereof to make appropriate
representations and warranties regarding their status as an accredited investor
and their investment intent, as the Company (in consultation with its counsel)
determines to be necessary or appropriate.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
DELPHI INFORMATION SERVICES, INC.
By: /s/ Richard J. Baum
-------------------------------------
Its: CFO
------------------------------------
ACCEPTED AND AGREED:
InfoSpace.com, Inc.
By: Bernee D.L. Strom
--------------------------------
Its: President & CEO
-------------------------------
Date: 8/31/99
------------------------------
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NOTICE OF EXERCISE
TO DELPHI INFORMATION SYSTEMS, INC.
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of Delphi Information Systems, Inc. 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 1.3 of the
Warrant.
3. Please issue a certificate or certificates representing said
shares of Warrant Stock in the name of the undersigned or in such other name as
is specified below:
________________________________________
(Name)
________________________________________
________________________________________
(Address)
4. The undersigned hereby agrees with and represents to the Company
that said shares of common stock are acquired for investment and not with a view
to, or for sale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, and agrees that
the exercise of the Warrant and the issuance and transfer of the common stock to
be purchased are subject to Section 7 of the Warrant.
Dated:_______________________
________________________________________
Holder
By:_____________________________________
Its:____________________________________