Stock Purchase Warrant - NetIQ Corp. and Heidrick & Struggles Inc.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 140,000 SHARES
OF THE COMMON STOCK OF
NetIQ Corporation
EFFECTIVE DATE: March 31, 2002
EXPIRATION DATE: July 28, 2003
This certifies that HEIDRICK & STRUGGLES, INC. or its permitted transferees
or assigns (each individually, the "Holder") for the agreed upon value of $1.00
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, shall be entitled to purchase from NETIQ
CORPORATION, a Delaware corporation (the "Company"), having its principal place
of business at 3553 North First Street, San Jose, CA 95134, a maximum of 140,000
fully paid and nonassessable shares of the Company's Common Stock ("Common
Stock") for cash at a price equal to $21.81 per share (the "Exercise Price") at
any time, or from time to time, up to and including 5:00 p.m. Pacific time on
the Expiration Date, upon the surrender to the Company at its principal place of
business (or at such other location as the Company may advise the Holder in
writing) of this Warrant properly endorsed, a Form of Subscription in
substantially the form attached hereto duly filled in and signed and, as
applicable, upon payment in cash or by check of the aggregate Exercise Price for
the number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof, or the surrender of the right to acquire
the number of shares of Common Stock determined in accordance with Section 1.2.
The Exercise Price and the number of shares of Common Stock purchasable
hereunder are subject to adjustment as provided in Section 3 of this Warrant.
The Warrant is being issued pursuant to the Agreement between the Company
and the Holder dated as of May 9, 2001 and revised as of May 17, 2001 (the
"Agreement"). This Warrant represents the complete understanding between the
Company and Heidrick & Struggles, Inc. with respect to the warrant contemplated
in the Agreement and satisfies in full the Company's obligation to issue a
warrant under the Agreement.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 General. This Warrant is exercisable at the option of the holder of
record hereof at any time or from time to time up to the Expiration Date for all
or any number of the shares of Common Stock (but not for a fraction of a share),
which may be purchased hereunder. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be
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and are deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant, properly
endorsed, the completed and executed Form of Subscription and appropriate
payment for such shares shall have each been delivered to the Company at its
principal place of business. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder is
entitled upon such exercise, shall be delivered to the Holder by the Company at
the Company's expense within a reasonable time after the rights represented by
this Warrant have been so exercised, and in any event within 10 business days of
such exercise. In case of a purchase of less than all the shares which may be
purchased under this Warrant, the Company shall cancel this Warrant and execute
and deliver a new Warrant or Warrants of like tenor for the balance of the
shares purchasable under the Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time. Each stock certificate so delivered
shall be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name designated by such Holder.
1.2 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant for cash, the Holder may elect a "Net Issue
Exercise" pursuant to which it will receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being exercised) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Form of Subscription and notice of such election in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
--------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under the Warrant
or, if only a portion of the Warrant is being exercised, the portion
of the Warrant being exercised (at the date of such exercise)
A = the fair market value of one share of the Company's Common Stock
(at the date of such exercise)
B = Exercise Price (as adjusted to the date of such exercise).
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that where there is a public market for the Company's
Common Stock, the fair market value per share shall be the average of the
closing prices of the Company's Common Stock quoted on the Nasdaq National
Market (or similar system) or on any exchange on which the Common Stock is
listed, whichever is applicable, over the five (5) trading day period ending on
the trading day immediately preceding the day the Warrant is being exercised.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Common Stock which may be issued upon the exercise
of
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the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that, during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved, for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of authorized but unissued Common Stock, or other
securities and property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that the Company shall not be required to effect a
registration under Federal or State securities laws with respect to such
exercise. The Company will not take any action which would result in any
adjustment of the Exercise Price (as set forth in Section 3 hereof) if the total
number of shares of Common Stock issuable after such action upon exercise of all
outstanding warrants, together with all shares of Common Stock then outstanding
and all shares of Common Stock then issuable upon exercise of all options and
upon the conversion of all convertible securities and other equity purchase
rights then outstanding, would exceed the total number of shares of Common Stock
then authorized by the Company's Certificate of Incorporation (the "Company
Charter").
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price
and the number of shares purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events
described in this Section 3. Upon each adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
3.1 Subdivision or Combination of Stock. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of shares
(by reverse stock split or otherwise), the Exercise Price in effect immediately
prior to such combination shall be proportionately increased.
3.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the Holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution,
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(b) any cash paid or payable otherwise than as a cash dividend,
or
(c) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.1 above),
then, and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clause (b) and clause (c) above) which such Holder
would hold on the date of such exercise had such Holder been the holder of
record of such Common Stock as of the date on which holders of Common Stock
received or became entitled to receive such shares or all other additional stock
and other securities and property. Notwithstanding the foregoing, in the case of
distributions (or deemed distributions) of securities or other property
described in the previous sentence other than Common Stock or additional stock
of the Company, or, in either case rights with respect thereto, the Company may,
in lieu of the additional entitlement described in the previous sentence,
entitle the Holder of this Warrant to receive, upon the exercise of this Warrant
and without payment of any additional consideration therefor, the equivalent
value thereof in cash (as determined by the Company's Board of Directors).
3.3 Reorganization, Consolidation, Merger or Sale. If any recapitalization
or reorganization of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets or other transaction shall be effected in such a
way that holders of Common Stock shall be entitled to receive stock (an "Organic
Change"), then, as a condition of such Organic Change, lawful and adequate
provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented by this Warrant) such shares of
stock as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by this Warrant. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the
Exercise Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. Prior to the consummation of any such Organic Change, the successor
entity (if other than the Company) resulting from such consolidation or the
corporation purchasing such assets shall assume by written instrument reasonably
satisfactory in form and substance to the Holders executed and mailed or
delivered to the registered Holder hereof at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase. Notwithstanding the foregoing or any other
provision of this Warrant, if any recapitalization or reorganization of the
capital stock of the Company, or any consolidation or merger of the Company with
another corporation, or the
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sale of all or substantially all of its assets or other transaction shall be
effected in such a way that holders of Common Stock shall be entitled to receive
assets or property other than stock (an "Organic Non-Stock Change"), this
Warrant shall, if possible, automatically net issue exercise in accordance with
Section 1.2 immediately prior to the occurrence of such Organic Non-Stock Change
or, if net issue exercise in accordance with Section 1.2 is not possible, then
this Warrant shall expire immediately prior to the occurrence of such Organic
Non-Stock Change.
3.4 Notices of Change.
(a) Immediately upon any adjustment in the number or class of
shares subject to this Warrant and/or of the Exercise Price, the Company shall
give written notice thereof to the Holder, setting forth in reasonable detail
and certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Holder at least
10 business days prior to the date on which the Company closes its books or
takes a record for determining rights to receive any dividends or distributions.
(c) The Company shall also give written notice to the Holder at
least 30 business days prior to the date on which an Organic Change shall take
place.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, 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 then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such Holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.
7. WARRANTS TRANSFERABLE. This Warrant and all rights hereunder are
non-transferable; provided, however, that the holder may transfer this Warrant
and the rights hereunder, in part or whole, to an affiliate or an employee of
Heidrick & Struggles, Inc. and any such affiliate or employee transferee may
transfer this Warrant to Heidrick & Struggles, Inc.
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8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.
9. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Due Authority. The execution and delivery by the Company of
this Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the shares of Common
Stock, have been duly authorized by all necessary corporate action on the part
of the Company, and the Warrant is not inconsistent with the Company Charter or
Bylaws and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.
(b) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for any filing required by applicable
federal and state securities laws, which filing will be effective by the time
required thereby.
(c) Exempt Transaction. Subject to the accuracy of the Holders
representations in Section 10 hereof, the issuance of the Common Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "1933 Act"), in reliance upon Section 4(2) thereof, and (ii) the
qualification requirements of the applicable state securities laws.
10. REPRESENTATIONS AND COVENANTS OF THE HOLDER.
This Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder:
(a) Investment Purpose. The Warrant and the Common Stock issuable
upon exercise of the Warrant will be acquired for investment and not with a view
to the sale or distribution of any part thereof, and the Holder has no present
intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption pursuant to the 1933 Act.
(b) Private Issue. The Holder understands (i) that the Warrant
and the Common Stock issuable upon exercise of this Warrant is not registered
under the 1933 Act or qualified under applicable state securities laws on the
ground that the issuance contemplated by this Warrant will be exempt from the
registration and qualifications requirements thereof pursuant to Section 4(2) of
the 1933 Act and any applicable state securities laws, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(c) Disposition of Holders Rights. In no event will the Holder
make a disposition of the Warrant or the Common Stock issuable upon exercise of
the Warrant unless
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and until (i) it shall have notified the Company of the proposed disposition,
and (ii) if requested by the Company, it shall have furnished the Company with
an opinion of counsel (which counsel may either be inside or outside counsel to
the Holder) satisfactory to the Company and its counsel to the effect that (A)
appropriate action necessary for compliance with the 1933 Act has been taken, or
(B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Common Stock or Common Stock
issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Common Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act. Whenever the restrictions
imposed hereunder shall terminate, as hereinabove provided, the Holder or holder
of a share of Common Stock then outstanding as to which such restrictions have
terminated shall be entitled to receive from the Company, without expense to
such holder, one or more new certificates for the Warrant or for such shares of
Common Stock not bearing any restrictive legend.
(d) Financial Risk. The Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Holder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the Warrant, or (ii) the Common Stock issuable upon exercise of the
Warrant, it may be required to hold such securities for an indefinite period.
The Holder also understands that any sale of the Warrant or the Common Stock
issuable upon exercise of the Warrant which might be made by it in reliance upon
Rule 144 under the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.
(f) Accredited Investor. Holder is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the 1933 Act, as presently
in effect.
11. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
amended or waived only by an instrument in writing signed, in the case of an
amendment, by the Holder and the Company or in the case of waiver, by the party
against which enforcement of the same is sought.
12. NOTICES. Any notice, request or other document required or permitted to
be given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by an established overnight service provider (e.g., Federal
Express), or registered or certified mail, postage prepaid, to each such holder
at its address as shown on the books of the Company or to the Company at the
address indicated therefor in the first paragraph of this Warrant or such other
address as either may from time to time provide to the other in accordance with
this Section.
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13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof.
14. DESCRIPTIVE HEADINGS. The description headings of the several sections
and paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
15. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California, without giving effect to principles of conflicts of
laws.
16. LOST WARRANTS. The Company represents and warrants to the Holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
17. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Exercise Price.
18. RESTRICTIVE LEGEND. Certificates representing shares of Common Stock
issued pursuant to this Warrant shall bear a legend substantially in the form of
the legend set forth on the first page of this Warrant to the extent that and
for so long as such legend is required pursuant to applicable law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its officers, thereunto duly authorized.
NETIQ CORPORATION
a Delaware corporation
By:
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Name:
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Title:
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ATTEST:
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Name:
Title: Secretary
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EXHIBIT A
SUBSCRIPTION FORM
Date: _________________, 200___
NetIQ Corporation
3553 North First Street
San Jose, CA 95134
Attn: President
Ladies and Gentlemen:
|_| The undersigned hereby elects to exercise the warrant issued to it by NetIQ
Corporation (the "Company") and dated January 25, 2002 (the "Warrant") and
to purchase thereunder __________________________________ shares of the
Common Stock of the Company (the "Shares") at a purchase price of
___________________________________________ Dollars ($__________) per Share
or an aggregate purchase price of __________________________________
Dollars ($__________) (the "Exercise Price"). Pursuant to the terms of the
Warrant the undersigned has delivered the Exercise Price herewith in full
in cash or by certified check or wire transfer.
|_| The undersigned hereby elects to convert _______________________ percent
(____%) of the value of the Warrant pursuant to the provisions of Section
1.2 of the Warrant.
Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:
Name:
---------------------------------
Address:
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Very truly yours,
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By:
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Title:
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