Stock Purchase Warrant - Software Technologies Corp. and Andersen Consulting LP
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
Void after
November 15, 2003
SOFTWARE TECHNOLOGIES CORPORATION
WARRANT TO PURCHASE SHARES OF COMMON STOCK
This Warrant is issued to Andersen Consulting LLP ("AC") by Software
Technologies Corporation, a California corporation (the "Company"), on November
16, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant to the
terms of that certain Warrant Purchase Agreement (the "Purchase Agreement")
dated as of November 16, 1999.
1. Purchase of Shares. Subject to the terms and conditions hereinafter
set forth and set forth in the Purchase Agreement, the holder of this Warrant is
entitled, upon surrender of this Warrant at the principal office of the Company
(or at such other place as the Company shall notify the holder hereof in
writing), to purchase from the Company up to 800,000 fully paid and
nonassessable shares of the Common Stock of the Company, as more fully described
below. The number of shares of Common Stock issuable pursuant to this Section 1
(the "Shares") shall be subject to adjustment pursuant to Section 8 hereof.
2. Purchase Price. The per share purchase price for the Shares shall be
$8.00, as adjusted from time to time pursuant to Section 8 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant may be exercised at the sole discretion
of AC (subject to the conditions set forth herein) upon the earliest to occur
(the "Exercise Date") of (i) the date of the filing of a registration statement
under the Securities Act of 1933, as amended, in connection with the issuance
and sale of shares of the Company's Common Stock in the Company's first
underwritten public offering, (ii) the date of an agreement (A) to sell or
transfer all or substantially all of the Company's assets (an "Asset Sale"), or
(B) pursuant to which the Company is to be acquired by another entity by means
of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of the
Company to persons or entities that were not shareholders of the Company prior
to such transaction (a "Merger") or (iii) November 15, 2000; and this Warrant
shall remain so exercisable until the earliest to occur of (x) November 15,
2003, (y) the date of the closing of the Company's Asset Sale, or (z) the date
of the closing of the Company's Merger.
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Starting on the Exercise Date, this Warrant shall be exercisable for
that number of shares of the Company's Common Stock equal to the amount of such
shares that have vested in accordance with a vesting schedule to be agreed upon
by the Company and AC. The holder of this Warrant understands that this Warrant
shall only become exercisable at such times as the milestones set forth in such
vesting schedule are achieved. In the event that this Warrant has not become
exercisable as to an aggregate of at least 800,000 shares on or prior to May 15,
2000, then AC shall be obligated to make a one-time payment to the Company of
$1.0 million. Such payment shall be made by AC to the Company by check or wire
transfer no later than May 25, 2000. Any such payment made under this provision
by AC shall have no effect on the exercisability of any portion of this Warrant
that had previously become exercisable.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(1) the surrender of the Warrant, together with a duly executed
copy of the form of subscription attached hereto, to the Secretary of the
Company at its principal offices; and
(2) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of cash exercising this Warrant, the holder of
this Warrant may elect to receive shares equal to the value of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the holder hereof a number of shares of Common
Stock computed using the following formula:
Y (A - B)
---------
X = A
Where
X -- The number of shares of Common Stock to be issued to the holder of
this Warrant.
Y -- The number of shares of Common Stock as to which this Warrant is
being exercised.
A -- The fair market value of one share of the Company's Common Stock.
B -- The Exercise Price (as adjusted to the date of such calculations).
For purposes of this Paragraph 5, the fair market value of Common Stock
shall mean the average of the closing bid and asked prices of the Common Stock
quoted in the over-the-counter market in which the Common Stock is traded or the
closing price quoted on any exchange on which
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the Common Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the ten (10) trading days prior to the
date of determination of fair market value (or such shorter period of time
during which such stock was traded over-the-counter or on such exchange). If the
Common Stock is not traded on the over-the-counter market or on an exchange, the
fair market value shall be the price per share as shall be determined in good
faith by the Company's Board of Directors. Notwithstanding the foregoing, in the
event this Warrant is exercised pursuant to this paragraph after the date of the
final prospectus for the Company's IPO and prior to the closing of such IPO, the
fair market value of the Common Stock shall be equal to the public offering
price set forth on the cover of the Company's prospectus.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(i) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(ii) Reclassification, Reorganization and Consolidation. In case
of any reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the holder of this Warrant, so that the holder of this
Warrant shall have the right at any time prior to the expiration of this Warrant
to purchase, at a total price equal to that payable upon the exercise of this
Warrant, the kind and amount of shares of stock and other securities and
property receivable in connection with such reclassification, reorganization, or
change by a holder of the same number
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of shares of Common Stock as were purchasable by the holder of this Warrant
immediately prior to such reclassification, reorganization, or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the holder of this Warrant so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities
and property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the purchase price per share payable hereunder, provided the
aggregate purchase price shall remain the same.
(iii) Notice of Adjustment. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Exercise Price, the Company shall promptly notify the holder
of such event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Stockholder Rights. Prior to exercise of this Warrant, the holder
shall not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company.
11. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company its successors and assigns. This Warrant cannot be assigned by AC
without the express written consent of the Company. Notwithstanding the
foregoing, this Warrant may be assigned, sold or otherwise transferred to an
affiliate of AC, and such assignment, sale or transfer shall not require the
consent of the Company so long as such assignment, sale or transfer complies
with applicable laws, rules and regulations.
12. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and AC. Any waiver or amendment effected in
accordance with this Section shall be binding upon AC, each holder of any Shares
purchased under this Warrant at the time outstanding (including securities into
which such Shares have been converted), each future holder of all such Shares,
and the Company.
13. Market Stand-off Agreement. The holder of this Warrant agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by such holder during a period of time determined by the
Company and its underwriters (not to exceed 180 days) following the effective
date of the registration statement of the Company filed under the Act with
respect to the Company's initial public offering. The holder of this Warrant
further agrees to execute any standard lock-up agreement that the underwriters
require in connection with such offering. The Company may impose stop-transfer
instructions with respect to the Common Stock (or securities) subject to the
foregoing restriction until the end of said period.
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14. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
SOFTWARE TECHNOLOGIES CORPORATION
By: /S/ JAMES DEMETRIADES
---------------------------------
James Demetriades
Chief Executive Officer
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SOFTWARE TECHNOLOGIES CORPORATION
404 E. HUNTINGTON DRIVE
MONROVIA, CA 91016
November 16, 1999
Andersen Consulting LLP
1661 Page Mill Road
Palo Alto, CA 94304
Re: WARRANT TO PURCHASE SHARES OF COMMON STOCK
Ladies and Gentlemen:
This is to confirm that the shares of Common Stock of Software
Technologies Corporation (the "Company") that may be purchased upon exercise of
that certain Warrant to Purchase Shares of Common Stock dated as of November 16,
1999 (the "Warrant") issued by the Company to Andersen Consulting LLP shall
become exercisable in accordance with the Warrant Exercise Schedule attached
hereto. This letter and the attached schedule are being provided pursuant to
Section 3 of the Warrant.
Sincerely,
SOFTWARE TECHNOLOGIES CORPORATION
By:
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Title:
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Agreed to:
ANDERSEN CONSULTING LLP
By:
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Title:
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STC WARRANT ISSUED TO ANDERSEN CONSULTING
WARRANT EXERCISE SCHEDULE
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Category Activity Metric* Number of Shares Vesting
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Program Management Program Manager AC will appoint a A total of 200,000
full-time alliance shares in the
manager to manage this aggregate will vest
program (Janet Johnson) for all of the Program
Management Activities,
and will be deemed to
vest upon signing of the
warrant purchase
agreement.
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Program Partner AC will appoint a
partner to manage and See above
oversee this program
(Christy Bass)
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Marketing Professional AC will appoint a See above
marketing professional to
support this program
as needed
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Marketing Activities White Paper AC will prepare a 50,000
"White Paper" addressing
EAI and describing client
engagements where STC and
AC have worked together &
created value.
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Capability Brochure AC will prepare a 50,000
Capability Brochure
highlighting the STC/AC
relationship and
combined skills
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Press Release AC will prepare a press 50,000
release announcing its
relationship with STC
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Internal Marketing re: AC will develop and 50,000
AC Portal distribute an internal
communication aimed at
partners, announcing
STC's involvement in
AC's global portal
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Internal Marketing to AC will develop and 50,000
AC Personnel distribute internal
communications to
introduce the AC/STC
relationship, to announce
the successful completion
of Global Portal, and to
introduce the PeopleSoft
and Siebel Intelligent
Bridge
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Client Success AC will work with STC 50,000
Testimonial to organize and prepare
a Business Benefits
Testimonial from a client ,
for internal and external
marketing initiatives
(electronic or
paper-based)
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Solution Centers AC will provide STC 10,000 per solution
with access to AC center, with up to 5
Solution Centers and allowed (Total is
personnel for 20,000 if 2 centers,
demonstration of STC etc., up to 50,000 if
products 5 centers)
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Internal Training AC will work with STC 50,000
Program to create an internal
training program for AC
professionals on STC
products
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Market Offering Creation of Market AC will use STC B2B marketspace--150,000
Offerings software in at least CRM LOB--100,000
five market offerings, FSI GMU--100,000
which will typically Any two others--75,000
include the following each
components: 1) STC
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software is "embedded"
in market offering
solution; 2) STC is
installed in the
solution center
showcasing the market
offering; 3) Market
offering personnel are
trained in STC; and 4)
AC will issue a media
announcement relating
to these facts
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Field Engagement Introductions AC will make up to 60 9,000 per introduction
opportunity (maximum earn is
introductions of an STC 540,000) (36,000
representative to AC deemed earned upon
client partners and/or signing of the warrant
clients, as the case purchase agreement due
may be. to introductions
already made at Dow,
SCI Investment, Ford
and American Family
Insurance)
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*Each metric will be deemed to be achieved and the related portion of the
Warrant shall become vested upon the mutual written consent of the Company and
AC. In order for the corresponding portion of the Warrant to become exercisable,
the metric must be achieved on or prior to May 15, 2000.