EXHIBIT 1.2
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT.
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR ASSIGNED TO ANY OTHER
PERSON OR ENTITY FOR A PERIOD OF ONE YEAR EXCEPT TO OFFICERS OF VAN KASPER &
COMPANY.
______________, 1998
WARRANT
TO SUBSCRIBE FOR AND PURCHASE
COMMON STOCK OF ATG INC.
VOID AFTER 5:00 P.M., SAN FRANCISCO TIME, ON _________, 2003
OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M.,
SAN FRANCISCO TIME, ON THE IMMEDIATELY
PRECEDING BUSINESS DAY
NO. ______
THIS CERTIFIES that for and in consideration of $.01 per Warrant Share (as
defined below) issuable hereunder, VAN KASPER & COMPANY ("Van Kasper"), or
registered assigns, is entitled to subscribe for and purchase from ATG Inc., a
California corporation (hereinafter called the "Company"), at the price of
$_______ per share, an amount equal to 120% of the price per share to the public
in the Company's initial public offering of the Common Stock (as defined below)
(such price, as from time to time to be adjusted as hereinafter provided, being
hereinafter called the "Warrant Price"), at any time and from time to time but
not earlier than the Commencement Date (as defined below) or later than the
Expiration Date (as defined below), up to 170,000 fully paid, nonassessable
shares of no par value Common Stock of the Company ("Common Stock"), subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth, including without limitation the provisions of Section 2 hereof. The
shares of Common Stock purchasable upon exercise of this Warrant are herein
referred to as the "Warrant Shares." "Commencement Date" shall mean
____________, 1999, which is one year from the date hereof. "Expiration Date"
shall mean 5:00 p.m., San Francisco time, on ___________, 2003, which is five
years from the date hereof, or if not a Business Day, as defined herein, at 5:00
p.m., San Francisco time, on the immediately
preceding Business Day. "Business Day" shall mean a day other than a Saturday,
Sunday or other day on which banks in the State of California are authorized by
law to remain closed.
This Warrant may represent a portion of a warrant that was originally
issued to Van Kasper on ____________, 1998 to purchase up to 170,000 shares of
Common Stock (the "Original Warrant"). To the extent that Van Kasper may have
transferred all or a portion of such warrant, the capitalized term "Warrants" as
used in this Warrant shall mean all warrants (including this Warrant) that
constituted a portion of the Original Warrant.
1. Exercise of Warrant
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(a) Cash Exercise. This Warrant may be exercised, at any time and
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from time to time but not earlier than the Commencement Date or later than the
Expiration Date, by the holder hereof or its permitted assigns (hereinafter
referred to as the "Warrantholder"), in whole or in part (but not as to a
fractional share of Common Stock and in no event for less than 100 shares
(unless less than an aggregate of 100 shares are then purchasable under all
outstanding Warrants held by a Warrantholder)), by the completion of the
subscription form attached hereto and by the surrender of this Warrant (properly
endorsed) at the Company's offices at 47375 Fremont Boulevard, Fremont,
California 94538 (or at such other location in the United States as it may
designate by notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and by payment to the
Company of the Warrant Price, in cash or by certified or official bank check,
for each share being purchased.
(b) Net Exercise. Notwithstanding anything to the contrary contained
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in Subsection 1(a), the Warrantholder may elect to exercise this Warrant and
receive shares on a "net exercise" basis in an amount equal to the value of this
Warrant by delivery of the subscription form attached hereto and surrender of
this Warrant at the principal office of the Company, in which event the Company
shall issue to Warrantholder a number of shares computed using the following
formula:
X = (P)(Y)(A-B)
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A
Where: X = the number of shares of Common Stock to be issued to
Warrantholder.
P = the portion of the Warrant, expressed as a percentage, being
exercised.
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Y = the number of shares of Common Stock issuable upon exercise
of this Warrant.
A = the Current Market Price (as defined in Subsection 1(d)) of
one share of Common Stock on the date of exercise.
B = Warrant Price.
(c) Procedure for Exercise. In the event of any exercise of the share
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purchase rights represented by this Warrant, a certificate or certificates for
the total number of whole shares of Common Stock so purchased, registered in the
name of the Warrantholder, shall be delivered to the Warrantholder within a
reasonable time, not exceeding five Business Days, after the share purchase
rights represented by this Warrant shall have been so exercised; and, unless
this Warrant has expired, a new Warrant representing the number of shares
(except a remaining fractional share), if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the
Warrantholder within such time. With respect to any such exercise, the
Warrantholder shall for all purposes be deemed to have become the holder of
record of the number of shares of Common Stock evidenced by such certificate or
certificates from the date on which this Warrant was surrendered and if exercise
is pursuant to Section 1(a), payment of the Warrant Price was made, irrespective
of the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the Company
are closed, such person shall be deemed to have been the holder of such shares
at the close of business on the next succeeding date on which the stock transfer
books are open. No fractional shares shall be issued upon exercise of this
Warrant and no payment or adjustment shall be made upon any exercise on account
of any cash dividends on the Common Stock issued upon such exercise. If any
fractional interest in a share of Common Stock would, except for the provisions
of this Section 1, be delivered upon any such exercise, the Company, in lieu of
delivering the fractional share thereof, shall pay to the Warrantholder an
amount in cash equal to the Current Market Price of such fractional interest, as
defined below.
(d) Current Market Price. For any computation hereunder, the "Current
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Market Price" per share of Common Stock on any date shall be deemed to be the
average of the daily Market Price per share for the 30 consecutive Trading Days
commencing 45 Trading Days before the date in question. "Market Price" is
defined as the closing sale price (or, if no closing sale price is reported, the
closing bid price) of the Common Stock in the over-the-counter market, and
reported by the National Association of Securities Dealers Automated Quotation
System ("Nasdaq"), or, if the Common Stock is not quoted on Nasdaq, as reported
by the National Quotation Bureau Incorporated. In the event that the Common
Stock is hereafter listed for trading on one or more United States national or
regional securities exchanges, Market Price shall be the closing price on the
exchange or
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system designated by the Board of Directors of the Company as the principal
United States market in which the Common Stock is traded. If Market Price cannot
be established as described above, Market Price shall be the fair market value
of the Common Stock as determined in good faith by the Board of Directors. The
term "Trading Day" shall mean a day on which Nasdaq or the principal registered
national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business.
2. Adjustment of Warrant Price and Number and Kind of Warrant Shares
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The Warrant Price and the number and kind of shares issuable hereunder
shall be subject to adjustment from time to time upon the happening of certain
events as provided in this Section 2. For purposes hereof, the "Total Warrant
Price" shall mean the product of multiplying the total number of Warrant Shares
issuable hereunder by the Warrant Price, in each case as in effect from time to
time.
(a) Adjustments
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(1) if at any time prior to the exercise of this Warrant in
full, the Company shall (A) declare a dividend or make a distribution on the
Common Stock payable in shares of its capital stock (whether shares of Common
Stock or of capital stock of any other class); (B) subdivide, reclassify or
recapitalize its outstanding Common Stock into a greater number of shares; (C)
combine, reclassify or recapitalize its outstanding Common Stock into a smaller
number of shares, or (D) issue any shares of its capital stock by
reclassification of its Common Stock (excluding any such reclassification in
connection with a consolidation or a merger), the Warrant Price, and the number
and kind of shares covered by this Warrant, in effect at the time of the record
date of such dividend, distribution, subdivision, combination, reclassification
or recapitalization shall be proportionately adjusted so that the Warrantholder
shall be entitled to receive, against payment of the Total Warrant Price, the
aggregate number and kind of shares which, if this Warrant had been exercised in
full by payment of the Total Warrant Price immediately prior to such event, it
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination, reclassification or
recapitalization. Any adjustment required by this Section 2(a) shall be made
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares.
(2) If at any time prior to the exercise of this Warrant in
full, the Company shall make a distribution to all holders of the Common Stock
of stock of a subsidiary or securities convertible into or exercisable for such
stock, then in lieu of an adjustment in the Warrant Price or the number of
shares of Common Stock purchasable upon the exercise of this Warrant, the
Warrantholder, upon the exercise hereof at any time
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after such distribution, shall be entitled to receive from the Company, such
subsidiary or both, as the Company shall determine, the stock or other
securities to which the Warrantholder would have been entitled if the
Warrantholder had exercised this Warrant immediately prior thereto, all subject
to further adjustment as provided in this Section 2, and the Company shall
reserve, for the life of the Warrant such securities of such subsidiary;
provided, however, that no adjustment in respect of dividends or interest on
such stock or other securities shall be made during the term of this Warrant or
upon its exercise.
(3) If at any time prior to the exercise of this Warrant in
full, the Company shall issue rights or warrants to all holders of Common Stock
as such entitling them (for a period expiring within sixty days after the record
date of the determination of shareholders entitled to receive the same) to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price per share (as defined above) on such record date, then, in
each such case the number of Warrant Shares shall be adjusted by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of this
Warrant by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants,
plus the number of additional shares of Common Stock offered for subscription or
purchase, and the denominator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares that the aggregate offering price of the total number of shares
of Common Stock so offered would purchase at such Current Market Price. For
purposes of this Section 2(a)(3), the issuance of rights or warrants to
subscribe for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights or warrants to purchase the Common Stock
into which such securities are convertible at an aggregate offering price equal
to the aggregate offering price of such securities plus the minimum aggregate
amount (if any) payable upon conversion of such securities into Common Stock.
(4) If at any time prior to the exercise of this Warrant in
full, the Company shall distribute to all holders of its Common Stock evidence
of indebtedness of the Company or assets of the Company (excluding cash
dividends or distributions out of retained earnings) or rights or warrants to
subscribe for securities of the Company (excluding those referred to in Sections
2(a)(2) or (3) above), then in each case the Warrant Price shall be adjusted to
a price determined by multiplying the Warrant Price in effect immediately prior
to such distribution by a fraction, the numerator of which shall be the then
Current Market Price per share of Common Stock (as defined above) on the record
date for determination of shareholders entitled to receive such distribution,
less the then fair value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights or
warrants which are applicable
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to one share of Common Stock, and the denominator of which shall be the Current
Market Price per share of Common Stock; provided, however, that if the then
Current Market Price per share of Common Stock on the record date for
determination of shareholders entitled to receive such distribution is less than
the then fair value of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants which are applicable to
one share of Common Stock, the foregoing adjustment of the Warrant Price shall
not be made and in lieu thereof, this Warrant shall be adjusted so that the
holder of this Warrant shall be entitled to receive upon exercise of this
Warrant only the kind and number of assets, evidences of indebtedness,
subscription rights and warrants (or, in the event of the redemption of such
evidences of indebtedness, subscription rights or warrants, any cash paid in
respect of such redemption) that such Warrantholder would have owned or have
been entitled to receive after the happening of such distribution had this
Warrant been exercised immediately prior to the record date of such distribution
by payment of the Total Warrant Price.
(5) No adjustment in the Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($.05) in such price; provided, however, that any adjustments which by reason of
this Section 2(a)(5) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 2(a) shall be made to the nearest cent or to the nearest one hundredth
of a share, as the case may be. Notwithstanding anything in this Section 2(a) to
the contrary, the Warrant Price shall not be reduced to less than the then
existing par value of the Common Stock as a result of any adjustment made
hereunder.
(6) In the event that at any time, as the result of any
adjustment made pursuant to this Section 2(a), the Warrantholder thereafter
shall become entitled to receive any securities other than Common Stock,
thereafter the number of such other securities so receivable, upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section 2(a).
(7) Notwithstanding the foregoing, no adjustments shall be made
pursuant to Sections 2(a)(2), (3) or (4) hereof unless the Company directly or
indirectly shall make substantially similar adjustments to any stock options
granted pursuant to any stock option plan or otherwise grant similar benefits in
lieu of such adjustments to the holder of such stock options.
(b) No Adjustment for Dividends. No adjustment in respect of any cash
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dividends shall be made during the term of this Warrant or upon the exercise of
this Warrant.
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(c) Termination of Purchase Rights in Certain Transactions. In case
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of any reclassification, capital reorganization or other change of outstanding
shares of Common Stock (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par value of the Common
Stock) or in case of any consolidation or merger of the Company with or into
another corporation (other than a merger with a subsidiary in which the Company
is the continuing corporation and that does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock) or
in the case of any sale, lease, transfer or conveyance to another corporation of
the property and assets of the Company as an entirety or substantially as an
entirety, this Warrant shall become exercisable on the record date for such
event if this Warrant was not previously exercisable. If this Warrant is not
exercised on or prior to the consummation of any event described in the previous
sentence, then this Warrant shall then terminate, if notice of such event was
properly given pursuant to Section 7 of this Warrant.
(d) Form of Warrant After Adjustments. The form of this Warrant need
---------------------------------
not be changed because of any adjustments in the Warrant Price or the number or
kind of the shares purchasable pursuant to this Warrant, and Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant, as initially issued;
provided, however, that the Company may, at any time in its sole discretion
(which shall be conclusive), make any change in the form of Warrant certificate
that it may deem appropriate and that does not affect the substance thereof. Any
Warrant certificate thereafter issued, whether upon registration of transfer of,
or in exchange or substitution for, an outstanding Warrant certificate may be in
the form so changed.
(e) Treatment of Warrantholder. Prior to due presentment for
--------------------------
registration of transfer of this Warrant, the Company may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
(f) Notice of Adjustment. Upon any adjustment of the Warrant Price,
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then and in each such case the Company shall give written notice thereof, by
first-class mail, postage prepaid, addressed to each Warrantholder at his, her
or its address as shown on the books of the Company, which notice shall state
the Warrant Price resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
(g) Stock to Be Reserved. The Company will at all times reserve and
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keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the exercise of this Warrant as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of this
Warrant. The Company
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covenants that all shares of Common Stock which shall be so issued upon full
payment of the Warrant Price therefor or as otherwise set forth herein, shall be
duly and validly issued and fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Company covenants that it will
from time to time take all such action as may be required to ensure that the par
value per share, if any, of the Common Stock is at all times equal to or less
than the effective Warrant Price. The Company will take all such action as may
be necessary to ensure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any registered national securities exchange or automated quotation system upon
which the Common Stock may be listed. The Company will not take any action which
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock issued and issuable after such action upon exercise of this Warrant
would exceed the total number of shares of Common Stock then authorized by the
Company's Articles of Incorporation. The Company has not granted and will not
grant any right of first refusal with respect to shares issuable upon exercise
of this Warrant, and there are no preemptive rights associated with such shares.
(h) Issue Tax. The issuance of certificates for shares of Common
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Stock upon exercise of any Warrant shall be made without a charge to the
Warrantholder for any issuance tax in respect thereof, provided that the Company
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 certificate in a name
other than that of the Warrantholder.
(i) Closing of Books. The Company will at no time close its transfer
----------------
books against the transfer of the shares of Common Stock issued or issuable upon
the exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant.
(j) Definition of Common Stock. As used herein the term "Common
--------------------------
Stock" shall mean and include the no par value Common Stock of the Company, or
securities of any class or classes resulting from any recapitalization or
reclassification thereof.
3. Registration Rights
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(a) Demand Registration. Beginning as of the Commencement Date and
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ending on ____________, 2003, if at any time the holder or holders of Warrants
to purchase not less than 50% of the Warrant Shares or the holder or holders of
not less than 50% of all outstanding Warrant Shares (the "Initiating Holders")
shall request that the Company register the offer and sale such number of
Warrants and/or Warrant Shares to the public under the Securities Act of 1933,
as amended (the "Securities Act"), the Company shall file a registration
statement with the Securities and Exchange Commission
8
("SEC") for the purpose of registering such Warrants and/or Warrant Shares under
the Securities Act. The request described above shall be made in writing
directed to the Company at the address set forth in Section 7 of this Warrant
(the "Demand Registration Notice").
Within ten days after receiving a Demand Registration Notice, the
Company shall issue a notice ("Company's Notice") informing all holders of
Warrants or Warrant Shares who did not issue a Demand Registration Notice
("Other Holders") offering to include the Warrants and/or Warrant Shares of the
Other Holders in that registration statement for sale to the public. Each Other
Holder must notify the Company by no later than 10 days after the Company's
Notice is sent whether that Other Holder wishes to include his, her or its
Warrants and/or Warrant Shares in the registration statement. If any Other
Holder delivers such a notice to the Company in a timely manner, that Other
Holder's Warrants and/or Warrant Shares will be included in the Registration
Statement. If any Other Holder does not inform the Company in writing that his,
her or its Warrants and/or Warrant Shares are to be included in such
registration statement, that Other Holder will be deemed to have waived all
rights to include his, her or its Warrants and/or Warrant Shares in the
registration statement.
For the purposes of this Warrant, all Warrants and/or Warrant
Shares for which a request for registration has been made pursuant to this
Section 3(a) or Section 3(b) shall be referred to as "Subject Securities."
Promptly upon receipt of a Demand Notice and after the expiration of the period
by which the Other Holders must submit a notice requesting inclusion of their
Warrants and/or Warrant Shares in the registration statement, the Company shall
prepare and file with the SEC a registration statement on the applicable form
for the registration of the Subject Securities and use its best efforts to cause
such registration statement to become effective (including without limitation,
filing post-effective amendments, appropriate qualifications under applicable
blue sky or other state securities laws, and appropriate compliance with the
rules and regulations promulgated under the Securities Act (the "Regulations"))
as soon as practicable to permit or facilitate the sale and distribution of the
Subject Securities. The Company shall be obligated to effect only one (1) such
registration pursuant to this Section 3(a).
Notwithstanding the provisions of this Section 3(a), if the
Company shall furnish to the Warrantholder a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company and its shareholders for such a registration statement to be filed and
it is therefore appropriate to defer a filing of such registration statement,
the Company shall have the right to defer such filing for a period of not more
than one hundred twenty (120) days after receipt of the request from the
Warrantholder to effect such a registration; provided, however, that the Company
may not utilize this right more than once in any twenty-four month period; and
provided, further,
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that the Warrantholder may, at any time in writing, withdraw such request for
such registration and therefore preserve the right provided in this Section 3(a)
for the Warrantholder to request such registration.
If the Initiating Holders intend to distribute the Subject
Securities by means of an underwriting, they shall so advise the Company in the
Demand Registration Notice, and the Company shall so advise the Other Holders in
the Company's Notice. The right of any holder of Warrants and/or Warrant Shares
pursuant to this Section 3(a) shall be conditioned on such holder's agreement to
participate in such underwriting. The Company shall enter into an underwriting
agreement with the managing underwriter selected by the holders of a majority of
the Subject Securities being registered and agreed to by the Company in its
reasonable business judgment. In the event that the managing underwriter
determines in its best judgment that market conditions require a limitation on
the number of shares to be registered, then (i) if other selling shareholders
without contractual registration rights have requested registration of
securities in the proposed offering, the Company will reduce or eliminate such
securities held by selling shareholders without registration rights before any
reduction or elimination of the Subject Securities, (ii) any shares included by
the Company in such registration shall be reduced or eliminated before any
reduction or elimination of the Subject Securities, (iii) any shares requested
to be registered by other selling shareholders with contractual registration
rights shall be reduced or eliminated before any reduction or elimination of the
Subject Securities and (iv) lastly, the number of Subject Securities may be
reduced, provided that any such reduction (after taking into account the effect
of clauses (i), (ii) and (iii) shall be pro rata to all selling holders of
Subject Securities.
(b) Preparation of Documents. Prior to filing a registration
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statement or any amendments or supplements thereto with the SEC required hereby,
the Company will furnish to the counsel selected by the Warrantholder copies of
all documents proposed to be filed, which documents will be subject to the
timely review of such counsel. In connection therewith, the Company shall
prepare and file a registration statement to effect such registration. The
Warrantholder agrees to provide all such information and materials and take all
such action as may be reasonably required in order to permit the Company to
comply with all applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such registration statement.
(c) Piggyback Registration. If (but without any obligation to do so)
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the Company proposes to register, prior to ____________, 2003, with the SEC any
of the Common Stock under the Securities Act (other than pursuant to a request
under Section 3(a) and other than securities to be issued pursuant to a stock
option or other employee benefit or similar plan, or in connection with a
merger, acquisition, or a transaction pursuant to Rule 145 under the Securities
Act), the Company shall as promptly as practicable, but at least 30 days prior
to the filing of the applicable registration statement, give written notice to
the Warrantholder of its intention to effect such registration. If, within 20
days after receipt of such notice and after the Commencement Date but before
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the Expiration Date, the Warrantholder submits a written request to the Company
specifying the amount of Warrant Shares that the Warrantholder proposes to sell,
the Company shall include the shares (but not this Warrant) specified in such
request in such registration statement (and any related qualification under blue
sky laws or other compliance) and the Company shall keep each such registration
statement in effect and maintain compliance with each federal and state law and
regulation as set forth in Section 3(d).
Prior to filing a registration statement under the Securities Act
under which the Warrant Shares may be included pursuant to this Section 2(c),
the Company shall give reasonable notice to the holder(s) of this Warrant or
Warrant Shares as provided for above and shall allow such Warrant Shares to be
included in such registration statement subject to the following terms and
conditions: (i) such shares need not be included in any underwritten offering if
and to the extent that the managing underwriter determines in its best judgment
that their inclusion would impair the success of the offering provided that (A)
if other selling shareholders without contractual registration rights have
requested registration of securities in the proposed offering, the Company will
reduce or eliminate such securities held by selling shareholders without
registration rights before any reduction or elimination of Warrant Shares, and
(B) any such reduction or elimination (after taking into account the effect of
clause (A)) shall be pro rata to all other selling shareholders with contractual
registration rights; and (ii) the Company shall have no obligation pursuant to
this Section if at the time the registration statement is proposed to be filed
the holders may freely sell the Warrant Shares pursuant to the Regulations.
(d) Covenants of the Company. In connection with any offering of
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Subject Securities registered pursuant to the terms of this Warrant, the Company
shall (i) furnish to the Warrantholder such number of copies of any registration
statement (including any preliminary prospectus) as it may reasonably request in
order to effect the offering and sale of the Subject Securities to be offered
and sold, but only while the Company shall be required under the provisions
hereof to cause the registration statement to remain current; (ii) take such
action as shall be desirable or necessary to qualify the Subject Securities
covered by such registration statement under such blue sky or other state
securities laws for offer and sale as the Warrantholder shall request, and (iii)
keep the Warrantholder advised in writing as to the initiation of each
registration and as to the completion thereof. Upon any registration becoming
effective pursuant to this Section 3, the Company shall use its best efforts to:
(A) keep such registration statement current for a period of 120 days; (B)
prepare and file with the SEC such amendments and supplements to such
registration statement as may be necessary to comply with the provisions of the
Regulations with respect to the disposition of all securities covered by such
registration statement; (C) cause all such Subject Securities registered
pursuant to such registration statement to be listed on each securities exchange
or automated
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quotation system on which the Common Stock is then listed; (D) provide a
transfer agent and registrar for all Subject Securities registered pursuant to
such registration statement and CUSIP number for all such Subject Securities in
each case not later than the effective date of such registration; and (E)
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC.
(e) Sales by the Company. In connection with any offering of Subject
--------------------
Securities pursuant to Section 3(a), the Company agrees not to effect any public
sale or distribution of Common Stock for the seven-day period preceding, and the
90-day period following, the effective date of any such registration; provided
that during this period the Company may issue (i) to employees, officers and
directors of the Company options, to purchase Common Stock (provided that such
options may not be exercisable within the 90-day period) and (ii) shares of
Common Stock upon the exercise of previously outstanding options, warrants or
rights.
(f) Expenses. With respect to the registration of Subject Securities
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pursuant to Section 3(a), together with any inclusion of the Subject Securities
in a so-called piggyback registration pursuant to Section 3(c), the Company will
pay all expenses incident to its performance of or compliance with this Section
3 including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing expenses,
messenger, telephone and delivery expenses, and fees and disbursements of its
counsel and independent certified public accountants; provided that, if a
registration of Subject Securities pursuant to Section 3(a) is withdrawn at the
request of the Warrantholder, the Warrantholder shall reimburse the Company for
all expenses the Company has reasonably incurred in connection with such
registration. Notwithstanding the foregoing, the Company shall not bear the
underwriting discounts or commissions relating to the offering of Subject
Securities pursuant to Section 3(a) or 3(c), and the fees and expense (if any)
of legal counsel to the holders of the Subject Securities being registered. The
Warrantholder will also be responsible for any stock transfer taxes, broker's
fees or other direct marketing expenses, all internal management and personnel
and administrative costs of the Warrantholder, if any, incurred by it in
connection with effecting any such transactions.
(g) Indemnification. The Company will indemnify, to the maximum
---------------
extent permitted by law, the Warrantholder, its officers and directors and each
person who controls the Warrantholder (within the meaning of Section 15 the
Securities Act) against all losses, claims, damages, liabilities and expenses
(or actions, proceedings or settlements in respect thereof) caused by, arising
out of or based on any untrue or alleged untrue statement of a material fact
contained in any registration statement (or any amendment or supplement thereto)
of the Company relating to the sale of Subject Securities registered pursuant to
this Section 3, or any exhibits or materials incorporated by reference therein,
filed with the SEC, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
12
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by the Warrantholder
expressly for use therein.
The Warrantholder will indemnify, to the maximum extent permitted by
law, the Company, its officers and directors and each person who controls the
Company (within the meaning of the Section 15 of the Securities Act) against all
losses, claims, damages, liabilities and expenses (or actions, proceedings or
settlements in respect thereof) caused by, arising out of or based on any untrue
or alleged untrue statement of a material fact contained in any registration
statement (or any amendment or supplement thereto) of the Company relating to
the sale of Subject Securities registered pursuant to this Section 3, or any
exhibits or materials incorporated by reference therein, filed with the SEC, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only insofar as the same are caused by or contained in any information furnished
in writing to the Company by the Warrantholder expressly for use therein.
Any person entitled to indemnification under this Section 3(g) will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim in which case, the indemnifying party shall be obligated to pay the fees
and expenses of up to two counsel for all parties indemnified by such
indemnifying party with respect to such claim.
The indemnifications set forth in this Section 3(g) shall survive the
termination or expiration of this Warrant.
4. Notices of Record Dates
-----------------------
In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive
13
any dividend or other distribution (other than cash dividends out of retained
earnings), or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any right to sell shares of stock of any class or any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all the assets of the Company to or consolidation or merger of
the Company with or into any other corporation or entity, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will give notice to the Warrantholder
specifying (1) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and stating the amount and character of
such dividend, distribution or right, and (2) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be given at least 10 days and not more than 90
days prior to the date therein specified, and such notice shall state that the
action in question or the record date is subject to the effectiveness of a
registration statement under the Securities Act, or to a favorable vote of
shareholders, if either is required. Failure to mail or receive such notice or
any defect therein shall not affect the validity of any such action.
5. No Shareholder Rights or Liabilities
------------------------------------
This Warrant shall not entitle the Warrantholder to any voting rights
or other rights as a shareholder of the Company. No provision hereof, in the
absence of affirmative action by the Warrantholder to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the
Warrantholder, shall give rise to any liability of such Warrantholder for the
Warrant Price or as a shareholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
6. Lost, Stolen, Mutilated or Destroyed Warrant
--------------------------------------------
In case the certificate or certificates evidencing the Warrant shall
be mutilated, lost, stolen or destroyed, the Company shall, at the request of
the Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation
14
of the mutilated certificate or certificates, or in lieu of and substitution for
the certificate or certificates lost, stolen or destroyed, a new Warrant
certificate or certificates of like tenor and representing an equivalent right
or interest, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant and a bond of indemnity, if
requested, also satisfactory in form and amount at the applicant's cost.
Applicants for such substitute Warrant certificate or certificates shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
7. Notices
-------
All notices, requests and other communications required or permitted
to be given or delivered hereunder shall be in writing, and shall be delivered
or shall be sent by certified or registered mail or overnight courier, postage
prepaid and addressed, or by facsimile, and if to the Warrantholder to such
Warrantholder at such address or facsimile number as shall have been furnished
to the Company by notice from such Warrantholder and if to the Company, at 47375
Fremont Boulevard, Fremont, California 94538, Attention: President, facsimile
number (510) 651-3731, or at such other address or facsimile number as shall
have been furnished to the Warrantholder by notice from the Company.
8. Restrictions on Transfer
------------------------
This Warrant may not be sold, transferred, hypothecated or assigned to
any other person or entity for a period of one year from the date of this
Warrant, except to officers of Van Kasper in accordance with all applicable
laws. This Warrant shall bear a legend setting forth the foregoing restriction.
9. Compliance with Securities Act
------------------------------
This Warrant and the Warrant Shares may not be offered or sold except
in compliance with the Securities Act of 1933, as amended, and then only against
receipt of an agreement of such person to whom such offer or sale is made to
comply with the provisions of this Section 9 with respect to any resale or
other disposition of the Warrant or Warrant Shares. The Company may cause the
following legend to be set forth on this Warrant and each certificate
representing the Warrant Shares to the extent that the offer and sale of the
Warrant Shares has not been registered under the Securities Act pursuant to
Section 3 hereof, unless counsel for the Company is of the opinion as to any
such certificate that such legend is unnecessary;
THIS WARRANT [THESE SHARES] HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED EXCEPT
15
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
10. Amendments and Waivers
----------------------
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
11. Severability
------------
If one or more provisions of this Warrant are held to be unenforceable
under applicable law, such provisions shall be excluded from this Warrant, and
the balance of this Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
12. Governing Law
-------------
This Warrant shall be governed by and construed under the laws of the
State of California without regard to conflict of law principles.
13. Headings
--------
The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect any of the terms hereof.
IN WITNESS WHEREOF, the Company has executed this Warrant on and as of
the day and year first above written.
ATG INC.,
a California corporation
________________________________________
Doreen M. Chiu
Chief Executive Officer
16
SUBSCRIPTION FORM
(To be executed upon exercise of this Warrant)
___________________ :
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
___________ shares of Common Stock, as provided for therein, and either tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $__________ or, if the
undersigned elects pursuant to Section 1(b) of the within Warrant to convert
such Warrant into Common Stock on a net exercise basis, the undersigned
exercises the within Warrant by exchange under the terms of said Section 1(b).
Please issue a certificate or certificates for such Common Stock in the
name of and pay any cash for any fractional share to:
Name:___________________________________
Address:________________________________
Social Security No:_____________________
If said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder rounded up to the
next higher number of shares.
Dated:_____________ Signature: _____________________________
Note: The above signature must
correspond exactly with the name
of the original Warrantholder on
the first page of this Warrant or
with the name of the assignee
appearing in the assignment form
below.
Dated:_____________ Signature Guaranteed: __________________
(Signature must be guaranteed by a bank or trust company having an office
or correspondent in the United States or by a member firm of a registered
national securities exchange or the National Association of Securities Dealers,
Inc.)
17
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, ___________________________ hereby sells, assigns, and
transfers unto ______________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ___________________________ as his attorney to transfer
said Warrant on the books of the within-named Company with respect to the number
of shares of Common Stock set forth below, with full power of substitution in
the premises:
Names of Assignee(s)/Address No. of Shares
---------------------------- -------------
And if said number of shares shall not be all the shares covered by the Warrant,
a new Warrant is to be issued in the name of said undersigned for the balance
remaining of the shares covered by said Warrant.
Dated:_____________ Signature:______________________________
Note: The above signature must
correspond with the name of the
original Warrantholder on the
face of this Warrant
Dated:_____________ Signature Guaranteed:_______________________________
(Signature must be guaranteed by a bank or trust company having an office
or correspondent in the United States or by a member firm of a registered
national securities exchange or the National Association of Securities Dealers,
Inc.)