Exhibit 4.3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF SUCH SECURITIES
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-
ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION, OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF ARTICLE III OF THIS WARRANT.
WARRANT
TO PURCHASE SHARES OF SERIES B PREFERRED STOCK
AS HEREIN DESCRIBED
Dated April 1, 1996
This certifies that for value received:
PHOENIX LEASING INCORPORATED
or registered assigns, is entitled, subject to the terms set forth herein, to
purchase from NUANCE COMMUNICATIONS, a California corporation (the "Company"),
-------
up to the Initial Number, as defined herein, of fully paid and non-assessable
shares of the Company's Series B Preferred Stock, at the Initial Exercise Price,
as defined herein, per share; provided, however, that the Initial Number of
-------- -------
shares of Series B Preferred Stock purchasable hereunder shall be increased by
the Additional Number, without any action by the Company or the Holder, as of
the date that the Company has leased in excess of Six Hundred Thousand Dollars
($600,000) of equipment pursuant to the Master Equipment Lease, dated as of the
date hereof, between Phoenix Leasing Incorporated and the Company. The Initial
Number is the number obtained by dividing Thirty Thousand Dollars ($30,000) by
the Initial Exercise Price; if such number includes a fraction, the fraction
shall be adjusted down to the closest integral number. The Additional Number is
the number obtained by dividing Ten Thousand Dollars ($10,000) by the Initial
Exercise Price; if such number includes a fraction, the fraction shall be
adjusted down to the closest integral number. The Initial Exercise Price is the
price per share at which the Company sells shares of stock in its most current
bona fide equity financing; if such financing does not occur within sixty (60)
days of the date hereof, it shall be the price per share at which the Company
sold shares of stock in the last bona fide equity financing which closed prior
to the date hereof. The Initial Exercise Price per share and the number of
shares purchasable hereunder are subject to adjustment in certain events, all as
more fully set forth under Article IV herein.
ARTICLE I
DEFINITIONS
-----------
"Articles of Incorporation" means the Amended and Restated Articles of
-------------------------
Incorporation of the Company, as filed with the California Secretary of State on
August 29, 1995, as amended by Certificate of Amendment of Articles of
Incorporation of the Company, as filed with the California Secretary of State on
November 14, 1995.
"Closing Date" means April 1, 1996.
------------
"Commission" means the Securities and Exchange Commission, or any other
----------
federal agency then administering the Exchange Act or the Securities Act, as
defined herein.
"Common Stock" means the Company's Common Stock, any stock into which such
------------
stock shall have been changed or any stock resulting from any reclassification
of such stock, and any other capital stock of the Company of any class or series
now or hereafter authorized having the right to share in distributions either of
earnings or assets of the Company without limit as to amount or percentage.
"Company" means NUANCE COMMUNICATIONS, a California corporation, and any
-------
successor corporation.
"Convertible Securities" means evidences of indebtedness, shares of stock
----------------------
or other securities which are convertible into or exchangeable for, with or
without payment of additional consideration, shares of Common Stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event or both.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Exercise Period" means the period commencing on the Closing Date and
---------------
terminating at the later to occur of: (i) 5:00 p.m., Pacific Time on the tenth
(10th) anniversary of the Closing Date, or (ii) 5:00 p.m., Pacific Time on the
fifth (5th) anniversary of the closing of the Company's initial sale and
issuance of shares of Common Stock in an underwritten public offering, pursuant
to a Registration.
"Exercise Price" means the price per share of Series B Preferred Stock set
--------------
forth in the Preamble to this Warrant, as such price may be adjusted pursuant to
Article IV hereof.
"Fair Market Value" means
-----------------
(i) If shares of Series B Preferred Stock or Common Stock, as the
case may be, are being sold pursuant to a Registration and Fair Market Value is
being determined as of the closing
-2-
of the public offering, the "price to public" specified for such shares in the
final prospectus for such public offering;
(ii) If shares of Series B Preferred Stock or Common Stock, as the
case may be, are then listed or admitted to trading on any national securities
exchange or traded on any national market system and Fair Market Value is not
being determined as of the date described in clause (i) of this definition, the
average of the daily closing prices for the thirty (30) trading days before such
date, excluding any trades which are not bona fide, arm's length transactions.
The closing price for each day shall be the last sale price on such date or, if
no such sale takes place on such date, the average of the closing bid and asked
prices on such date, in each case as officially reported on the principal
national securities exchange or national market system on which such shares are
then listed, admitted to trading or traded;
(iii) If no shares of Series B Preferred Stock or Common Stock, as
the case may be, are then listed or admitted to trading on any national
securities exchange or traded on any national market system or being offered to
the public pursuant to a Registration, the average of the reported closing bid
and asked prices thereof on such date in the over-the-counter market as shown by
the National Association of Securities Dealers automated quotation system or, if
such shares are not then quoted in such system, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Holder;
(iv) If no shares of Series B Preferred Stock of Common Stock, as
the case may be, are then listed or admitted to trading on any national exchange
or traded on any national market system, if no closing bid and asked prices
thereof are then so quoted or published in the over-the-counter market and if no
such shares are being offered to the public pursuant to a Registration, the Fair
Market Value of a share of Series B Preferred Stock or Common Stock, as the case
may be, shall be as mutually agreed by the Company and the Holder; provided,
--------
however, that if the Company and the Holder are unable to mutually agree upon
- -------
the Fair Market Value, and the value asserted by the Holder is not greater than
one hundred ten percent (110%) of the value asserted by the Company, then the
Fair Market Value shall be the sum of (1) the value asserted by the Company and
(2) fifty percent (50%) of the difference between the value asserted by the
Company and the value asserted by the Holder; provided further, however, that if
-------- ------- -------
the Company and the Holder are unable to mutually agree upon the Fair Market
Value and the immediately preceding proviso is not operative, the Company and
such Holder shall, within five (5) days from the date that either party
determines that they cannot agree or the value asserted by the Holder is greater
than one hundred ten percent (110%) of the value asserted by the Company,
jointly retain a valuation firm satisfactory to each of them. If the Company
and the Holder are unable to agree on the selection of such a firm within such
five (5) day period, the Company and the Holder shall, within twenty (20) days
after expiration of such five day period, each retain a separate independent
valuation firm. If either the Company or the Holder fail to retain such a
valuation firm during such twenty (20) day period, then the valuation firm
retained by the Holder or the Company, as the case may be, shall alone take the
actions described below. Such firms shall determine within thirty (30) days of
being retained the Fair Market Value of a share of Series B Preferred Stock or
Common Stock, as the case may be, and deliver their opinion
-3-
in writing to the Company and to the Holder as to the fair value. If such firms
cannot jointly agree upon the Fair Market Value, then, unless otherwise directed
in writing by both the Company and the Holder, such firms, in their sole
discretion, shall choose another firm independent of the Company and the Holder,
which firm shall make such determination and render such an opinion as promptly
as practicable. In either case, the determination so made shall be conclusive
and binding on the Company and the Holder. The fees and expenses for such
determination made by such firms shall be paid by the Company. In the
determination of the Fair Market Value of a share of Series B Preferred Stock or
Common Stock, as the case may be, there shall not be taken into consideration
any premium for shares representing control of the Company or any discount
related to shares representing a minority interest therein or related to any
illiquidity or lack of marketability of shares arising from restrictions on
transfer under federal and applicable state securities laws or otherwise.
"Fiscal Year" means the fiscal year of the Company.
-----------
"Holder" means the person in whose name this Warrant is registered on the
------
books of the Company maintained for such purpose.
"Option" means any right, warrant or option to subscribe for or purchase
------
shares of Common Stock or Convertible Securities.
"Person" means and includes natural persons, corporations, limited
------
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, government entities and authorities and other organizations, whether or
not legal entities.
"Preferred Stock" means the Preferred Stock of the Company, as defined in
---------------
the Articles of Incorporation.
"Principal Executive Office" means the Company's office at 333 Ravenswood
--------------------------
Avenue, Building 110, Menlo Park, California 94025, or such other office as
designated in writing to the Holder by the Company.
"Register," "Registered" and "Registration" refer to a registration
-------- ---------- ------------
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Rights Agreement" means the Investor Rights Agreement, dated as of August
----------------
29, 1995, by and among the Company and the shareholders of the Company named
therein, attached hereto as Exhibit "E".
-----------
"Rule 144" means Rule 144 as promulgated by the Commission under the
--------
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that the Commission may promulgate.
-4-
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Series B Preferred Stock" means the Series B Preferred Stock of the
------------------------
Company, as defined in the Articles of Incorporation.
"Shareholder" means a holder of one or more Warrant Shares or shares of
-----------
Common Stock acquired upon conversion of Warrant Shares.
"Warrant" means the warrant dated as of Closing Date issued to Holder and
-------
all warrants issued upon the partial exercise, transfer or division of or in
substitution for any Warrant.
"Warrant Shares" means the shares of Series B Preferred Stock issuable upon
--------------
the exercise of this Warrant provided that if under the terms hereof there shall
be a change such that the securities purchasable hereunder shall be issued by an
entity other than the Company or there shall be a change in the type or class of
securities purchasable hereunder, then the term shall mean the securities
issuable upon the exercise of the rights granted hereunder.
ARTICLE II
EXERCISE
--------
2.1 Exercise Right; Manner of Exercise. The purchase rights represented
----------------------------------
by this Warrant may be exercised by the Holder, in whole or in part, at any time
and from time to time during the Exercise Period upon (i) surrender of this
Warrant, together with an executed Notice of Exercise, substantially in the form
of Exhibit "A" attached hereto, at the Principal Executive Office, and (ii)
-----------
payment to the Company of the aggregate Exercise Price for the number of Warrant
Shares specified in the Notice of Exercise (such aggregate Exercise Price the
"Total Exercise Price"). The Total Exercise Price shall be paid by check;
--------------------
provided, however, that if the Warrant Shares are acquired in conjunction with a
- -------- -------
Registration of such Warrant Shares or the Common Stock acquirable upon
conversion of such Warrant Shares, then Holder may arrange for the aggregate
Exercise Price for such Warrant Shares to be paid to the Company from the
proceeds of the sale of such Warrant Shares or the Common Stock acquirable upon
conversion of such Warrant Shares pursuant to such Registration. The Person or
Person(s) in whose name(s) any certificate(s) representing the Warrant Shares
which are issuable upon exercise of this Warrant shall be deemed to become the
holder(s) of, and shall be treated for all purposes as the record holder(s) of,
such Warrant Shares, and such Warrant Shares shall be deemed to have been
issued, immediately prior to the close of business on the date on which this
Warrant and Notice of Exercise are presented and payment made for such Warrant
Shares, notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Warrant Shares shall not then
be actually delivered to such Person or Person(s). Certificates for the Warrant
Shares so purchased shall be delivered to the Holder within a reasonable time,
not exceeding fifteen (15) days after this Warrant is exercised. If this
Warrant is exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, deliver a new Warrant evidencing the rights of the
Holder to purchase this balance of the Warrant Shares which Holder is entitled
to purchase hereunder. The issuance of Warrant Shares
-5-
upon exercise of this Warrant shall be made without charge to the Holder for any
issuance tax with respect thereto or any other cost incurred by the Company in
connection with the exercise of this Warrant and the related issuance of Warrant
Shares.
2.2 Conversion of Warrant.
---------------------
(a) Right to Convert. In addition to, and without limiting, the other
----------------
rights of the Holder hereunder, the Holder shall have the right (the "Conversion
----------
Right") to convert this Warrant or any part hereof into Warrant Shares at any
- -----
time and from time to time during the term hereof. Upon exercise of the
Conversion Right with respect to a particular number of Warrant Shares (the
"Converted Warrant Shares"), the Company shall deliver to the Holder, without
------------------------
payment by the Holder of any Exercise Price or any cash or other consideration,
that number of Warrant Shares computed using the following formula:
X = B-A
---
Y
Where: X= The number of Warrant Shares to be issued to the Holder
Y= The Fair Market Value of one Warrant Share as of the Conversion
Date
B= The Aggregate Fair Market Value (i.e., Fair Market Value x
----
Converted Warrant Shares)
A= The Aggregate Exercise Price (i.e., Exercise Price x Converted
----
Warrant Shares)
(b) Method of Exercise. The Conversion Right may be exercised by the
-----------------
Holder by the surrender of this Warrant at the Principal Executive Office,
together with a written statement (the "Conversion Statement") specifying that
--------------------
the Holder intends to exercise the Conversion Right and indicating the number of
Warrant Shares to be acquired upon exercise of the Conversion Right. Such
conversion shall be effective upon the Company's receipt of this Warrant,
together with the Conversion Statement, or on such later date as is specified in
the Conversion Statement (the "Conversion Date") and, at the Holder's election,
---------------
may be made contingent upon the closing of the consummation of the sale of
Common Stock pursuant to a Registration. Certificates for the Warrant Shares so
acquired shall be delivered to the Holder within a reasonable time, not
exceeding fifteen (15) days after the Conversion Date. If applicable, the
Company shall, upon surrender of this Warrant for cancellation, deliver a new
Warrant evidencing the rights of the Holder to purchase the balance of the
Warrant Shares which Holder is entitled to purchase hereunder. The issuance of
Warrant Shares upon exercise of this Warrant shall be made without charge to the
Holder for any issuance tax with respect thereto or any other cost incurred by
the Company in connection with the conversion of this Warrant and the related
issuance of Warrant Shares.
(c) Automatic Conversion. If, as of the last day of the Exercise
--------------------
Period, this Warrant has not been fully exercised, then as of such date this
Warrant shall be automatically
-6-
converted, in full, in accordance with this Section 2.2, without any action or
notice by Holder. For purposes of such automatic conversion, the date of
automatic conversion shall be the Conversion Date.
2.3 Fractional Shares. The Company shall not issue fractional shares of
-----------------
Series B Preferred Stock or Common Stock or scrip representing fractional shares
of Series B Preferred Stock or Common Stock upon any exercise or conversion of
this Warrant. As to any fractional share of Series B Preferred Stock or Common
Stock which the Holder would otherwise be entitled to purchase from the Company
upon such exercise or conversion, the Company shall purchase from the Holder
such fractional share at a price equal to an amount calculated by multiplying
such fractional share (calculated to the nearest 1/100/th/ of a share) by the
fair market value of a share of Series B Preferred Stock or Common Stock, as
applicable, on the date of the Notice of Exercise or the Conversion Date, as
applicable, as determined in good faith by the Company's Board of Directors.
Payment of such amount shall be made in cash or by check payable to the order of
the Holder at the time of delivery of any certificate or certificates arising
upon such exercise or conversion.
2.4 Continued Validity. A Shareholder shall be entitled to all rights to
------------------
which a Holder of this Warrant is entitled pursuant to the provisions of this
Warrant, except rights which by their terms apply only to a Warrant. The
Company shall, at the time of the exercise of this Warrant, in whole or in part,
upon the request of a Shareholder, acknowledge in writing, in form reasonably
satisfactory to the Shareholder, its continuing obligation to afford to the
Shareholder all rights to which the Shareholder is entitled in accordance with
the provisions of this Warrant; provided, however, that if the Shareholder fails
-------- -------
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to the Shareholder all such rights.
ARTICLE III
TRANSFER, EXCHANGE AND REPLACEMENT
----------------------------------
3.1 Restrictions on Transfers.
-------------------------
(a) Compliance with Securities Act. The Holder, by acceptance hereof,
------------------------------
agrees that this Warrant, the Series B Preferred Stock to be issued upon
exercise hereof and the shares of Common Stock to be issued upon conversion of
such shares of Series B Preferred Stock are being acquired for investment,
solely for the Holder's own account and not as a nominee for any other Person,
and that the Holder will not offer, sell or otherwise dispose of this Warrant,
any such shares of Series B Preferred Stock or any such shares of Common Stock
except under circumstances which will not result in a violation of the
Securities Act or the restrictions on transfer of this Warrant set forth in
Section 8.8 hereof. Upon exercise of this Warrant, the Holder shall confirm in
writing, by executing the form attached as Exhibit "B" hereto, that the shares
-----------
if Series B Preferred Stock or Common Stock purchased thereby are being acquired
for investment, solely for the Holder's own account and not as a nominee for any
other Person, and not with a view toward distribution or resale.
(b) Certificate Legends. This Warrant, all shares of Series B
-------------------
Preferred Stock issued upon exercise of this Warrant (unless Registered under
the Securities Act), and all shares of Common Stock issued upon conversion of
such shares of Series B Preferred Stock (unless
-7-
Registered under the Securities Act) shall be stamped or imprinted with a legend
in substantially the following form (in addition to any legends required by
applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF SUCH
SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF ARTICLE III OF THE
WARRANT UNDER WHICH THIS SECURITY WAS ISSUED.
(c) Disposition of Warrant or Shares. With respect to any offer, sale
--------------------------------
or other disposition of this Warrant, any shares of Series B Preferred Stock
issued upon exercise of this Warrant or shares of Common Stock acquired pursuant
to conversion of such shares of Series B Preferred Stock prior to Registration
of such shares, the Holder or the Shareholder, as the case may be, agrees to
give written notice to the Company prior to thereto, describing briefly the
manner thereof, together with a written opinion of the Holder's or Shareholder's
counsel, if reasonably requested by the Company, to the effect that such offer,
sale or other disposition may be effected without Registration under the
Securities Act or qualification under any applicable state securities laws of
this Warrant or such shares, as the case may be, and indicating whether or not
under the Securities Act certificates for this Warrant or such shares, as the
case may be, to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Securities Act. Promptly upon receiving such written notice and
reasonably satisfactory opinion, if so requested, the Company, as promptly as
practicable, shall notify the Holder or the Shareholder, as the case may be,
that it may sell or otherwise dispose of this Warrant or such shares, as the
case may be, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this subsection (c) that
the opinion of counsel for the Holder of the Shareholder, as the case may be, is
not reasonably satisfactory to the Company, the Company shall so notify the
Holder or the Shareholder, as the case may be, promptly after such determination
has been made and shall specify the legal analysis supporting any such
conclusion. Notwithstanding the foregoing, this Warrant or such shares, as the
case may be, may be offered, sold or otherwise disposed of in accordance with
Rule 144, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide reasonable
assurance that the provisions of Rule 144 have been satisfied. Each certificate
representing this Warrant or the shares thus transferred (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Securities Act, unless in
the aforesaid reasonably satisfactory opinion of counsel for the Holder or the
Shareholder, as the case may be, such legend is not necessary in order to insure
compliance with the Securities Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
-8-
(d) Warrant Transfer Procedure. Transfer of this Warrant to a third
--------------------------
party, following compliance with the preceding subsections of this Section 3.1
and compliance with the transfer restrictions set forth in Section 8.8, shall be
effect by execution of the Assignment Form attached hereto as Exhibit "C", and
-----------
surrender for registration of transfer of this Warrant at the Principal
Executive Officer, together with funds sufficient to pay any applicable transfer
tax. Upon receipt of the duly executed Assignment Form and the necessary
transfer tax funds, if any, the Company, at its expense, shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Warrants representing the right to purchase a like aggregate number of
shares of Series B Preferred Stock.
(e) Termination of Restrictions. The restrictions imposed under this
---------------------------
Section 3.1 upon the transferability of the Warrant, the shares of Series B
Preferred Stock acquired upon the exercise of this Warrant and the shares of
Common Stock issuable upon conversion of such shares of Series B Preferred Stock
shall cease when (i) a registration statement covering all shares of Common
Stock issued or issuable upon conversion of the Series B Preferred Stock becomes
effective under the Securities Act, (ii) the Company is presented with an
opinion of counsel reasonably satisfactory to the Company that such restrictions
are no longer required in order to insure compliance with the Securities Act or
with a Commission "no-action" letter stating that future transfers of such
securities by the transferor or the contemplated transferee would be exempt from
registration under the Securities Act, or (iii) such securities may be
transferred in accordance with Rule 144(k). When such restrictions terminate,
the Company shall, or shall instruct its transfer agent to, promptly, and
without expense to the Holder or the Shareholder, as the case may be, issue new
securities in the name of the Holder and/or the Shareholder, as the case may be,
not bearing the legends required under subsection (b) of this Section 3.1. In
addition, new securities shall be issued without such legends if such legends
may be properly removed under the terms of Rule 144(k).
3.2 Exchange. At the Holder's option, this Warrant may be exchanged for
--------
other Warrants representing the right to purchase a like aggregate number of
shares of Series B Preferred Stock upon surrender of this Warrant at the
Principal Executive Office. Whenever this Warrant is so surrendered to the
Company at the Principal Executive Office for exchange, the Company shall
execute and deliver the Warrants which the Holder is entitled to receive. All
Warrants issued upon any registration of transfer or exchange of Warrants shall
be the valid obligations of the Company, evidencing the same rights, and
entitled to the same benefits, as the Warrants surrendered upon such
registration of transfer or exchange. No service charge shall be made for any
exchange of this Warrant.
3.3 Replacement. Upon receipt of evidence reasonably satisfactory to the
-----------
Company of the loss, theft, destruction or mutilation of this Warrant and (i) in
the case of any such loss theft or destruction, upon delivery of indemnity
reasonably satisfactory to the Company in form and amount, or (ii) in the case
of any such mutilation, upon surrender of such Warrant for cancellation at the
Principal Executive Office, the Company, at its expense, shall execute and
deliver, in lieu thereof, a new Warrant.
-9-
ARTICLE IV
ANTIDILUTION PROVISIONS
-----------------------
4.1 Conversion of Series B Preferred Stock. If all of the Series B
--------------------------------------
Preferred Stock is converted into shares of Common Stock in connection with a
Registration, then this Warrant shall automatically become exercisable for that
number of shares of Common Stock equal to the number of shares of Common Stock
that would have been received if this Warrant had been exercised in full and the
shares of Series B Preferred Stock received thereupon had been simultaneously
converted into shares of Common Stock immediately prior to such event, and the
Exercise Price shall be automatically adjusted to equal the amount obtained by
dividing (i) the aggregate Exercise Price of the shares of Series B Preferred
Stock for which this Warrant was exercisable immediately prior to such
conversion, by (ii) the number of shares of Common Stock for which this Warrant
is exercisable immediately after such conversion.
4.2 Reorganization, Reclassification or Recapitalization of the Company.
-------------------------------------------------------------------
In case of (1) a capital reorganization, reclassification or recapitalization of
the Company's capital stock (other than in the cases referred to in Section 4.4
hereof), (2) the Company's consolidation or merger with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the merger are
converted, by virtue of the merger, into other property, whether in the form of
securities, cash or otherwise, or (3) the sale or transfer of the Company's
property as an entirety or substantially as an entirety, then, as part of such
reorganization, reclassification, recapitalization, merger, consolidation, sale
or transfer, lawful provision shall be made so that there shall thereafter be
deliverable upon the exercise of this Warrant or any portion thereof (in lieu of
or in addition to the number of shares of Series B Preferred Stock theretofore
deliverable, as appropriate), and without payment of any additional
consideration, the number of shares of stock or other securities or property to
which the holder of the number of shares of Series B Preferred Stock which would
otherwise have been deliverable upon the exercise of this Warrant or any portion
thereof at the time of such reorganization, reclassification, recapitalization,
consolidation, merger, sale or transfer would have been entitled to receive in
such reorganization, reclassification, recapitalization, consolidation, merger,
sale or transfer. This Section 4.2 shall apply to successive reorganizations,
reclassifications, recapitalizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder for shares of Series B Preferred Stock in
connection with any transaction described in this Section 4.2 is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors.
4.3 Splits and Combinations. If the Company at any time subdivides any of
-----------------------
its outstanding shares of Series B Preferred Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and, conversely if the outstanding shares of Series
B Preferred Stock are combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased. Upon any adjustment of the Exercise Price under this Section 4.3,
the number of shares of Series B
-10-
Preferred Stock issuable upon exercise of this Warrant shall equal the number of
shares determined by dividing (i) the aggregate Exercise Price payable for the
purchase of all shares issuable upon exercise of this Warrant immediately prior
to such adjustment by (ii) the Exercise Price per share in effect immediately
after such adjustment.
4.4 Reclassifications. If the Company changes any of the securities as to
-----------------
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted. No adjustment shall be made
pursuant to this Section 4.4 upon any conversion described in Section 4.1
hereof.
4.5 Dividends and Distributions. If the Company declares a dividend or
---------------------------
other distribution on the Series B Preferred Stock or if a dividend or other
distribution on the Series B Preferred Stock occurs pursuant to the Articles of
Incorporation (other than a cash dividend or distribution), then, as part of
such dividend or distribution, lawful provision shall be made so that there
shall thereafter be deliverable upon the exercise of this Warrant or any portion
thereof, in addition to the number of shares of Series B Preferred Stock
receivable thereupon and without payment of any additional consideration, the
amount of the dividend or other distribution to which the holder of the number
of shares of Series B Preferred Stock obtained upon exercise hereof would have
been entitled to receive had the exercise occurred as of the record date for
such dividend or distribution.
4.6 Liquidation; Dissolution. If the Company shall dissolve, liquidate or
------------------------
wind up its affairs, the Holder shall have the right, but not the obligation, to
exercise this Warrant effective as of the date of such dissolution, liquidation
or winding up. If any such dissolution, liquidation or winding up results in
any cash distribution to the Holder in excess of the aggregate Exercise Price
for the shares of Series B Preferred Stock for which this Warrant is exercised,
then the Holder may, at its option, exercise this Warrant without making payment
of such aggregate Exercise Price and, in such case, the Company shall, upon
distribution to the Holder, consider such aggregate Exercise Price to have been
paid in full, and in making such settlement to the Holder, shall deduct an
amount equal to such aggregate Exercise Price from the amount payable to the
Holder.
4.7 Maximum Exercise Price. At no time shall the Exercise Price exceed
----------------------
the amount set forth in the Preamble to this Warrant, unless the Exercise Price
is adjusted pursuant to Section 4.3 hereof.
4.8 Other Dilutive Events. If any event occurs as to which the other
---------------------
provisions of this Article IV are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase rights represented by
this Warrant in accordance with the essential intent and principles hereof,
then, in each such case, the Company shall appoint a firm of independent public
accountants of recognized national standing (which may be the Company's regular
auditors) which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in this Article
IV, necessary to preserve, without dilution, the purchase rights
-11-
represented by this Warrant. Upon receipt of such opinion, the Company shall
promptly mail a copy thereof to the Holder and shall make the adjustments
described therein.
4.9 Amendment of Articles of Incorporation. If (i) the Warrant is
--------------------------------------
outstanding and (ii) no shares of Series B Preferred Stock are issued and
outstanding, then the Company shall not amend, or otherwise take any action that
would affect, Article III, Section 4(d) of the Articles of Incorporation with
respect to the Series B Preferred Stock, without the prior written consent of
the Holder, given in its sole discretion. If the Articles of Incorporation are
amended in violation of this Section 4.9, then the provisions of this Article IV
shall be adjusted so that the Holder shall receive with respect to the shares of
Common Stock received upon conversion of the shares of Series B Preferred Stock
obtained upon exercise of this Warrant thereafter, what would have been received
had the Articles of Incorporation not been so amended, upon payment of the same
amount as would have been required had the Articles of Incorporation not been so
amended.
4.10 Certificates and Notices.
------------------------
(a) Adjustment Certificates. Upon any adjustment of the Exercise
-----------------------
Price and/or the number of shares of Series B Preferred Stock purchasable upon
exercise of this Warrant, a certificate, signed by (i) the Company's President
and Chief Financial Officer, or (ii) any independent firm of certified public
accountants of recognized national standing the Company selects at its own
expense, setting forth in reasonable detail the events requiring the adjustment
and the method by which such adjustment was calculated, shall be mailed to the
Holder and shall specify the adjusted Exercise Price and the number of shares of
Series B Preferred Stock purchasable upon exercise of the Warrant after giving
effect to the adjustment.
(b) Extraordinary Corporate Events. If the Company, after the date
------------------------------
hereof, proposes to effect (i) any transaction described in Sections 4.2 or 4.4
hereof, (ii) a liquidation, dissolution or winding up of the Company described
in Section 4.6 hereof, or (iii) any payment of a dividend or distribution with
respect to Series B Preferred Stock or Common Stock, then, in each such case,
the Company shall mail to the Holder a notice describing such proposed action
and specifying the date on which the Company's books shall close, or a record
shall be taken, for determining the holders of Series B Preferred Stock or
Common Stock, as appropriate, entitled to participate in such action, or the
date on which such reorganization, reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date as of which it is expected that
holders of Series B Preferred Stock and Common Stock of record shall be entitled
to receive securities and/or other property deliverable upon such action, if any
such date is to be fixed. Such notice shall be mailed to the Holder at least
twenty (20) days prior to the record date for such action in the case of any
action described in clause (i) or clause (ii) above, and in the case of any
action described in clause (ii) above, at least twenty (20) days prior to the
date on which the action described is to take place and at least twenty (20)
days prior to the record date for determining holders of Series B Preferred
Stock or Common Stock, as appropriate, entitled to receive securities and/or
other property in connection with such action.
4.11 No Impairment. The Company shall not, by amendment of the Articles of
-------------
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation,
-12-
merger, dissolution, issued or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but shall at all times in good
faith assist in the carrying out of all the provisions of this Article IV and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment.
4.12 Application. Except as otherwise provided herein, all sections of
-----------
this Article IV are intended to operate independently of one another. If an
event occurs that requires the application of more than one section, all
applicable sections shall be given independent effect.
ARTICLE V
REGISTRATION RIGHTS
-------------------
Concurrent with the execution and delivery of this Warrant, the Company
shall cause the Holder to become a party to the Rights Agreement and the Holder
shall be deemed a "Holder", as defined in the Rights Agreement, for purposes of
the Rights Agreement and shall be entitled to all the rights, and be subject to
all the obligations, of a Holder under the Rights Agreement, the Warrant Shares
shall be deemed "Series B Preferred Stock", as defined in the Rights Agreement,
and the Common Stock issuable upon conversion of the Warrant Shares shall be
deemed "Registrable Securities", as defined in the Rights Agreement, for
purposes of the Rights Agreement. Such actions shall be effected by the Company
executing and delivering to the Holder a fully-executed Amendment to Rights
Agreement substantially in the form of Exhibit "F" hereto.
-----------
ARTICLE VI
INFORMATION
-----------
6.1 Financial Information. The Company shall deliver to the Holder,
---------------------
concurrent with delivery to any of the Investors, as defined in the Rights
Agreement, all information delivered to any of the Investors pursuant to Section
2.1 of the Rights Agreement and all other information delivered to any of the
Investors from time to time pursuant to the Rights Agreement as in effect from
time to time during the term hereof. If the Rights Agreement is terminated for
any reason, and for so long as the Company is not subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the Exchange Act, the
Company shall deliver to the Holder all information that was required to be
delivered to any of the Investors, as defined in the Rights Agreement, pursuant
to Section 2.1 of the Rights Agreement, as in effect on the date hereof.
6.2 Inspection. The Company shall permit the Holder, at the Holder's
----------
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Holder.
-13-
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
----------------------------------------------------
7.1 Representations and Warranties. The Company represents and warrants
------------------------------
that:
(a) Legal Status; Qualification. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
California and is qualified or licensed to do business in all other countries,
states and provinces in which the laws thereof require the Company to qualify
and/or be licensed, except where failure to qualify or be licensed would not
have a material adverse effect on the business or assets of the Company taken as
a whole;
(b) Capitalization. The Company's authorized capital stock consists
--------------
of: (i) 10,000,000 shares of Preferred Stock, of which (A) 3,150,000 shares are
designated as Series A Preferred Stock, of which series 3,150,000 shares are
issued and outstanding, and (B) 5,500,000 shares are designated as Series B
Preferred Stock, of which series 4,948,946 shares are issued and outstanding;
and (ii) 15,000,000 shares of Common Stock, of which 1,905,416 shares are issued
and outstanding;
(c) Options. Except as described in Exhibit "D" hereto there are no
------- -----------
options, warrants or similar rights to acquire from the Company, or agreements
or other obligations by the Company, absolute or contingent, to issue or sell
Common Stock, whether on conversion or exchange of Convertible Securities or
otherwise;
(d) Preemptive Rights. Except as described in Exhibit "D", no
----------------- -----------
shareholder of the Company has any preemptive rights to subscribe for shares of
Common Stock;
(e) Authority. The Company has the right and power, and is duly
---------
authorized and empowered, to enter into, execute, deliver and perform this
Warrant;
(f) Binding Effect. This Warrant has been duly authorized, executed
--------------
and delivered and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms;
(g) No Conflict. The execution, delivery and/or performance by the
-----------
Company of this Warrant shall not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of any
provision contained in the Company's Articles of Incorporation or By-laws or
contained in any agreement, instrument, or document to which the Company is a
party or by which it is bound;
(h) Consents. No consent, approval, authorization or other order of
--------
any court, regulatory body, administrative agency or other governmental body is
required for the valid issuance of the Warrant or for the performance of any of
the Company's obligations hereunder, except for the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended,
-14-
and the rules promulgated thereunder, which filing will be effected in
accordance with such section and rules;
(i) Offering. Neither the Company nor any agent acting on its behalf
--------
has, either directly or indirectly, sold, offered for sale or disposed of, or
attempted or offered to dispose of, this Warrant or any part hereof, or any
similar obligation of the Company, to, or has solicited any offers to buy any
thereof from, any person or persons other than the Holder. Neither the Company
nor any agent acting on its behalf will sell or offer for sale or dispose of, or
attempt or offer to dispose of, this Warrant or any part thereof to, or solicit
any offers to buy any warrant of like tenor from, or otherwise approach or
negotiate in respect thereof, with, any Person or Persons so as thereby to bring
the issuance of this Warrant within the provisions of Section 5 of the
Securities Act;
(j) Registration. It is not necessary in connection with the issuance
------------
and sale of this Warrant to the Holder to Register this Warrant under the
Securities Act; and
(k) Overall Representations and Warranties. The representations and
--------------------------------------
warranties of the Company contained in this Warrant, and the other provisions of
this Warrant, do not contain any untrue statement of material fact or omit any
material fact necessary to make the statements contained herein, in view of the
circumstances under which they were made, not misleading.
7.2 Covenants. The Company covenants that:
---------
(a) Authorized Shares. The Company will take all reasonable actions
-----------------
necessary to authorize, and reserve for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of shares
of Series B Preferred Stock to provide for the exercise of the rights
represented by this Warrant (for purposes of determining compliance with this
covenant, the shares of Series B Preferred Stock issuable upon exercise of all
other options and warrants shall be deemed issued and outstanding), and a
sufficient number of shares of Common Stock to provide for the conversion into
Common Stock of all the shares of Series B Preferred Stock issued and issuable
upon the exercise of this Warrant but theretofore unconverted (for purposes of
determining compliance with this covenant, the shares of Common Stock issuable
upon exercise of all options and warrants to acquire Common Stock and upon
conversion of all instruments convertible into Common Stock shall be deemed
issued and outstanding);
(b) Proper Issuance. The Company, at its expense, will take all such
---------------
action as may be necessary to assure that the Series B Preferred Stock issuable
upon the exercise of this Warrant, and the Common Stock issuable upon the
conversion of such Series B Preferred Stock, may be so issued without violation
of any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which any capital stock of the Company may be listed.
Such action may include, but not be limited to, causing such shares to be duly
registered or approved or listed on relevant domestic securities exchanges; and
(c) Fully Paid Shares. The Company will take all actions necessary or
-----------------
appropriate to validly and legally issue (i) fully paid and non-assessable
shares of Series B Preferred Stock upon exercise of this Warrant and (ii) fully
paid and non-assessable shares of Common Stock
-15-
upon conversion of such shares of Series B Preferred Stock. All such shares will
be free from all taxes, liens and charges with respect to the issuance thereof,
other than any stock transfer taxes in respect to any transfer occurring
contemporaneously with such issuance.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Certain Expenses. The Company shall pay all expenses in connection
----------------
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issuance, sale and delivery of
the Warrant, the Warrant Shares and the shares of Common Stock issuable upon
conversion of the Warrant Shares.
8.2 Holder Not a Shareholder. Prior to the exercise of this Warrant as
------------------------
hereinbefore provided, the Holder shall not be entitled to any of the rights of
a shareholder of the Company including, without limitation, the right as a
shareholder (i) to vote on or consent to any proposed action of the Company or
(ii) except as provided herein, to receive (a) dividends or any other
distributions made to shareholders, (b) notice of or attend any meetings of
shareholders of the Company, or (c) notice of any other proceedings of the
Company. Notwithstanding the foregoing, the Company shall provide to the Holder
the information delivered to shareholders as required pursuant to Section 6.1(d)
hereof.
8.3 Like Tenor. All Warrants shall at all times be substantially
----------
identical except as to the Preamble.
8.4 Remedies. The Company stipulates that the remedies at law of the
--------
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate to the fullest extent permitted by law, and that such terms
may be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.
8.5 Enforcement Costs. If any party to, or beneficiary of, this Warrant
-----------------
seeks to enforce its rights hereunder by legal proceedings or otherwise, then
the non-prevailing party shall pay all reasonable costs and expenses incurred by
the prevailing party, including, without limitation, all reasonable attorneys'
fees (including the allocable costs of in-house counsel).
8.6 Nonwaiver; Cumulative Remedies. No course of dealing or any delay or
------------------------------
failure to exercise any right hereunder on the part of the Holder and/or any
Shareholder shall operate as a waiver of such right or otherwise prejudice the
rights, powers or remedies of the Holder or such Shareholder. No single or
partial waiver by the Holder and/or any Shareholder of any provision of this
Warrant or of any breach or default hereunder or of any right or remedy shall
operate as a waiver of any other provision, breach, default right or remedy or
of the same provision, breach, default, right or remedy on a future occasion.
The rights and remedies provided in this Warrant are cumulative and are in
addition to all rights and remedies which the Holder and each Shareholder may
have in law or in equity or by statute or otherwise.
-16-
8.7 Notices. Any notice, demand or delivery to be made pursuant to this
-------
Warrant will be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to (a) the Holder and the Shareholders at their last known
addresses appearing on the books of the Company maintained for such purpose or
(b) the Company at its Principal Executive Office. The Holder, the Shareholders
and the Company may each designate a different address by notice to the other
pursuant to this Section 8.7. A notice shall be deemed effective upon the
earlier of (i) receipt or (ii) the third day after mailing in accordance with
the terms of this Section 8.7.
8.8 Successors and Assigns.
----------------------
(a) The Holder may transfer all or part of this Warrant to another
Person without the Company's consent, so long as such Person is not a competitor
or potential competitor of the Company at the time of transfer, as reasonably
determined by the Company's Board of Directors.
(b) This Warrant shall be binding upon the Company and any Person
succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets, and all of the obligations of the
Company with respect to the shares of Series B Preferred Stock issuable upon
exercise of this Warrant and the shares of Common Stock issuable upon the
conversion of such shares of Series B Preferred Stock, shall survive the
exercise, expiration or termination of this Warrant and all of the covenants and
agreements of the Company shall inure to the benefit of the Holder, each
Shareholder and their respective permitted successors and assigns. The Company
shall, at the time of exercise of this Warrant, in whole or in part, upon
request of the Holder or any Shareholder but at the Company's expense,
acknowledge in writing its continuing obligations hereunder with respect to
rights of the Holder or such Shareholder to which it shall continue to be
entitled after such exercise in accordance with the terms hereof; provided that
the failure of the Holder or any Shareholder to make any such request shall not
affect the continuing obligation of the Company to the Holder or such
Shareholder in respect of such rights.
8.9 Modification; Severability.
--------------------------
(a) If, in any action before any court or agency legally empowered to
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
(b) If any term is not curable as set forth in subsection (a) above,
the unenforceability of such term shall not affect the other provisions of this
Warrant but this Warrant shall be construed as if such unenforceable term had
never been contained herein.
8.10 Integration. This Warrant replaces all prior and contemporaneous
-----------
agreements and supersedes all prior and contemporaneous negotiations between the
parties with respect to the transactions contemplated herein and constitutes the
entire agreement of the parties with respect to the transactions contemplated
herein.
-17-
8.11 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of the Company in this Warrant shall survive the execution and
delivery of this Warrant for a period of six (6) months, notwithstanding any
investigation by the Holder or its agents.
8.12 Amendment. This Warrant may not be modified or amended except by
---------
written agreement of the Company, the Holder and the Shareholder(s), if any.
8.13 Headings. The headings of the Articles and Sections of this Warrant
--------
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
8.14 Meanings. Whenever used in this Warrant, any noun or pronoun shall be
--------
deemed to include both the singular and plural and to cover all genders; and the
words "herein," "hereof" and "hereunder" and words of similar import shall refer
to this instrument as a whole, including any amendments hereto.
8.15 Governing Law. This Warrant shall be governed by, and construed in
-------------
accordance with, the laws of the State of California applicable to contracts
entered into and to be performed wholly within California by California
residents.
-18-
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of April 1, 1996.
NUANCE COMMUNICATIONS
By:__________________________
Title:_______________________
-19-
SCHEDULE OF EXHIBITS
--------------------
EXHIBIT "A"- Notice of Exercise (Section 2.1)
EXHIBIT "B"- Investment Representation Certificate (Section 3.1(a))
EXHIBIT "C"- Assignment Form (Section 3.1(d))
EXHIBIT "D"- Schedule of Options and Preemptive Rights (Sections 7.1(c) and
7.1(d))
EXHIBIT "E"- Rights Agreement (Article I)
EXHIBIT "F"- Amendment to Rights Agreement (Article V)
-20-
EXHIBIT "A"
-----------
NOTICE OF EXERCISE FORM
-----------------------
(To be executed only upon partial or full
exercise of the within Warrant)
The undersigned registered Holder of the within Warranty hereby irrevocably
exercises the within Warrant for and purchases shares of Series B Preferred
Stock of NUANCE COMMUNICATIONS and herewith makes payment therefor in the amount
of $_________, all at the price and on the terms and conditions specified in the
within Warrant and requests that a certificate (or ____ certificates in
denominations of shares) for the shares of Series B Preferred Stock of NUANCE
COMMUNICATIONS hereby purchased be issued in the name of and delivered to
(choose one) (a) the undersigned or (b) [NAME], whose address is and, if such
shares of Series B Preferred Stock shall not include all the shares of Series B
Preferred Stock issuable as provided in the within Warrant, that a new Warrant
of like tenor for the number of shares of Series B Preferred Stock of NUANCE
COMMUNICATIONS not being purchased hereunder be issued in the name of and
delivered to (choose one) (a) the undersigned or (b) [NAME], whose address is
___________________.
Dated: ___________________, 199__
Signature Guaranteed
_________________________________________
_________________________________________
By:______________________________________
(Signature of Registered Holder)
Title:___________________________________
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this Notice of Exercise must be guaranteed by a
commercial bank or trust company in the United States or a member firm
of the New York Stock Exchange.
-21-
EXHIBIT "B"
-----------
INVESTMENT REPRESENTATION CERTIFICATE
-------------------------------------
Purchaser:
Company: NUANCE COMMUNICATIONS
Security: Series B Preferred Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
---------- ---------
follows:
(a) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
----------
Act");
- ---
(b) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefor, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
---
the Purchaser's representation was predicted solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future;
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, the Purchaser understands that the certificate evidencing the
Securities will be imprinted with the legend referred to in the Warrant under
which the Securities are being purchased;
(d) The Purchaser is aware of the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less
-22-
than two (2) years after the party has purchased and paid for the securities to
be sold; (iii) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934) and the amount of securities
being sold during any three-month period not exceeding the specified limitations
stated therein;
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market upon which to make such a sale then exists,
the Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, the Purchaser may be precluded from selling
the Securities under Rule 144 even if the two-year minimum holding period had
been satisfied; and
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than 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 their respective brokers who participate in
such transactions do so at their own risk.
Date: ________________, 199___
PURCHASER:
_____________________________________
-23-
EXHIBIT "C"
-----------
ASSIGNMENT FORM
---------------
(To be executed only upon the assignment of
the within Warrant)
FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant
hereby sells, assigns and transfers unto _____, whose address is ____________
all of the rights of the undersigned under the within Warrant, with respect to
shares of Series B Preferred Stock of NUANCE COMMUNICATIONS and, if such shares
of Series B Preferred Stock shall not include all the shares of Series B
Preferred Stock issuable as provided in the within Warrant, that a new Warrant
of like tenor for the number of shares of Series B Preferred Stock of NUANCE
COMMUNICATIONS not being transferred hereunder be issued in the name of and
delivered to the undersigned, and does hereby irrevocably constitute and appoint
_____________ attorney to register such transfer on the books of NUANCE
COMMUNICATIONS maintained for the purpose, with full power of substitution in
the premises.
Dated: _____________, 199__
Signature Guaranteed
____________________________________
____________________________________
By:_________________________________
(Signature of Registered Holder)
Title:______________________________
NOTICE: The signature to this Assignment must correspond with the name upon
the face of the within Warrant in every particular, without alteration
or enlargement or any change whatever.
The signature to this Notice of Assignment must be guaranteed by a
commercial bank or trust company in the United States or a member firm
of the New York Stock Exchange.
-24-
EXHIBIT "D"
-----------
OUTSTANDING OPTIONS AND PREEMPTIVE RIGHTS
-----------------------------------------
(Sections 7.1(c) and 7.1(d))
-25-
EXHIBIT "E"
-----------
RIGHTS AGREEMENT
----------------
(Article I)
-26-
EXHIBIT "F"
-----------
AMENDMENT TO RIGHTS AGREEMENT
-----------------------------
(Article V)
-27-