Series B Preferred Stock Warrant - Vocus Inc., Lazard Technology Partners II LP, Sterling Venture Partners LP
THE SECURITIES REPRESENTED HEREBY (INCLUDING, WITHOUT LIMITATION, THIS WARRANT
AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
Void after 5:00 p.m. Washington, D.C. Time, on __________________.
Warrant No. _____ _____________, 2003
SERIES B PREFERRED STOCK WARRANT
THIS IS TO CERTIFY THAT, for value received, __________________________
________________________ or its registered assigns pursuant to Section
4 hereof ('HOLDER"), is entitled to purchase, subject to the provisions of this
Warrant, from Vocus, Inc., a Delaware corporation (the "COMPANY"), _______ fully
paid, validly issued and nonassessable shares of Series B Convertible Preferred
Stock, par value $.01 per share, of the Company ("SERIES B PREFERRED STOCK") at
the exercise price of $_____ per share until the Expiration Date, as defined
below. The number of shares of Series B Preferred Stock to be received upon the
exercise of this Warrant and the price to be paid for each share of Series B
Preferred Stock may be adjusted from time to time as hereinafter set forth.
The shares of Series B Preferred Stock issued or issuable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "WARRANT SHARES," and the exercise price of a Warrant Share as adjusted
from time to time is hereinafter sometimes referred to as the "EXERCISE PRICE."
The shares of the Company's common stock, par value $.01 per share ("COMMON
STOCK"), issued or issuable upon the conversion of the Warrant Shares pursuant
to the terms of the Company's Certificate of Incorporation, as amended, are
hereinafter referred to as "WARRANT COMMON SHARES."
1. Exercise of Warrant; Notification of Expiration Date of Warrant. This
Warrant is exercisable at the option of Holder at any time or from time to time
prior to 5:00 P.M. Washington, D.C. time on ________________ (the "EXPIRATION
DATE"); provided, however, that if such day is a day on which banking
institutions in the District of Columbia are authorized by law to close, then on
the next succeeding day which shall not be such a day. This Warrant may be
exercised by presentation and surrender hereof to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Notice of
Exercise annexed hereto (the "NOTICE OF EXERCISE") duly executed and accompanied
by payment of the Exercise Price for the number of Warrant Shares specified in
such form and any applicable taxes. The purchase price for any
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Warrant Shares purchased pursuant to the exercise of this Warrant shall be paid
in full upon such exercise in cash or by certified or bank check or by wire
transfer of immediately available funds. In the alternative, the Warrant may be
exchanged for Warrant Shares as described in Section 11 hereof. As soon as
practicable after each such exercise of the Warrant, but not later than 10
business days from the date of such exercise, the Company shall issue and
deliver to Holder a certificate or certificates for the Warrant Shares issuable
upon such exercise, registered in the name of Holder or Holder's designee
(subject to the payment by Holder of any applicable transfer taxes). If the
Warrant should be exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of Holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon receipt by the Company of the Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, together with the exercise price thereof and taxes as
aforesaid in cash or certified or bank check or wire transfer of immediately
available funds and the investment letter described below, Holder shall be
deemed to be the holder of record of the shares of Series B Preferred Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Series B Preferred Stock shall not then be physically delivered to Holder.
Notwithstanding anything herein to the contrary, the Company shall use
reasonable efforts to mail to the original Holder, by certified mail, return
receipt requested, notice of the Expiration Date of the Warrant, no later than
20 days prior to the Expiration Date.
2. Reservation of Shares. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
Series B Preferred Stock as shall be required for issuance and delivery upon
exercise of the Warrant and such number of shares of Common Stock that are
issuable upon the conversion of such shares of Series B Preferred Stock.
3. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu
thereof, the Company shall, with respect to any fraction of a share called for
upon any exercise hereof, pay to Holder an amount in cash equal to such fraction
multiplied by the then-current fair market value of the share(s) of Common Stock
that one share of Series B Preferred Stock is convertible into at the time of
the exercise of the Warrant. The fair market value of a share of Common Stock
shall be an amount, not less than the book value thereof as at the end of the
most recent fiscal year of the Company ending prior to the date of the exercise
of the Warrant, determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.
4. Exchange, Transfer. Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer agent, if
any, for other Warrants of different denominations entitling Holder thereof to
purchase in the aggregate the same number of shares of Series B Preferred Stock
purchasable hereunder (as such number may be reduced as a result of any partial
exercise prior to such surrender). Subject to Section 10 hereof, Holder may
transfer or assign the Warrant, in whole or in part and from time to time. Upon
surrender of this Warrant to the Company at its principal office or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the
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Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee or assignees named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided by or combined
with other Warrants which carry identical rights and conditions upon
presentation hereof at the principal office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by
Holder hereof. The term "WARRANT" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of loss, theft or destruction, of reasonable
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor, date and amount.
5. Rights of Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a stockholder in the Company, either at law or equity
including, without limitation, any rights to dividends, and the rights of Holder
are limited to those expressed in the Warrant and are not enforceable against
the Company except to the extent set forth herein.
6. Adjustment for Certain Events. So long as this Warrant shall be
outstanding, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
6.1. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Series B Preferred Stock in shares of
Series B Preferred Stock or (ii) subdivide, combine or reclassify its
outstanding shares of Series B Preferred Stock into a greater or lesser number
of shares, the Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision, combination
or reclassification shall be proportionately adjusted as of the record or
effective date of such event by multiplying such Exercise Price by a fraction,
the denominator of which shall be the number of shares of Series B Preferred
Stock outstanding immediately following such event and the numerator of which
shall be the number of shares of Series B Preferred Stock outstanding
immediately prior thereto. For example, if the Company declares a two-for-one
forward stock split and the Exercise Price immediately prior to such event was
$50.00 per share, the adjusted Exercise Price immediately after such event would
be $25.00 per share. Such adjustment shall be made successively whenever any
event listed above shall occur.
6.2. Whenever the Exercise Price payable upon exercise of this
Warrant is adjusted pursuant to subsection 6.1 above, the number of Warrant
Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares issuable upon exercise of
this Warrant immediately prior to such adjustment by the Exercise Price in
effect immediately prior to such adjustment and dividing the product so obtained
by the Exercise Price, as adjusted pursuant to subsection 6.1 above.
6.3. In order to avoid doubt, it is acknowledged that the holder of
this Warrant shall be entitled to the benefit of all adjustments in the number
of shares of Common Stock
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issuable upon conversion of Series B Preferred Stock which occur prior to the
exercise of this Warrant as required pursuant to the Company's Certificate of
Incorporation, as amended.
6.4. No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least $.01 in such
price; provided, however, that any adjustments which by reason of this
subsection 6.4 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder.
6.5. Whenever the Exercise Price shall be adjusted as required by
this Section 6, the Company shall forthwith file in the custody of its Secretary
or an Assistant Secretary at its principal office and with its stock transfer
agent, if any, an officer's certificate showing the adjusted Exercise Price and
adjusted number of Warrant Shares determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment and such other
facts as shall be necessary to show the reason for and the manner of computing
such adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by Holder, and the Company shall, forthwith
after each such adjustment, mail, by certified mail, a copy of such certificate
to Holder or any such holder.
6.6. All calculations under this Section 6 shall be made to the
nearest cent or to the nearest Warrant Share, as the case may be.
6.7. In the event that at any time, as a result of an adjustment
made pursuant to this Section 6, Holder of this Warrant thereafter shall become
entitled to receive any shares of the Company, other than Series B Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
this 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
Series B Preferred Stock contained in this Section 6.
6.8. Irrespective of any adjustments in the Exercise Price or the
number or kind of Warrant Shares purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in this Warrant.
7. Notice to Holder. So long as this Warrant shall be outstanding, (i) if
the Company shall pay any dividend or make any distribution upon the Series B
Preferred Stock or Common Stock, or (ii) if the Company shall generally offer to
the holders of Series B Preferred Stock or Common Stock for subscription or
purchase by them any shares of any class or any other rights, or (iii) if any
capital reorganization of the Company, reclassification of the capital stock of
the Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified mail to Holder,
at least 15 days prior to the date specified in (x) or (y) below, as the case
may be, a notice containing a brief description of the proposed action and
stating the date on which (x) a record is to be taken for the purpose of such
dividend, distribution or rights, or (y) such reclassification,
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reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up is to be effected and the date, if any, is to be fixed, as of which
the holders of Series B Preferred Stock, Common Stock or other securities shall
receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
8. Reclassification, Reorganization or Merger. In case of any
reclassification or capital reorganization of outstanding shares of Series B
Preferred Stock, or in case of any consolidation or merger of the Company with
or into another corporation (other than a merger with another corporation in
which merger the Company is the surviving corporation and which does not result
in any reclassification or capital reorganization of outstanding shares of
Series B Preferred Stock) or in case of any sale, lease or conveyance to another
corporation of the property of the Company as an entirety, the Company shall, as
a condition precedent to such transaction (unless waived in writing by Holder),
cause effective provisions to be made so that Holder shall have the right
thereafter by exercising the Warrant at any time prior to the expiration of the
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification or capital reorganization and
consolidation, merger, sale or conveyance had such Holder exercised this Warrant
in full immediately prior to such event. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 8 shall similarly apply to successive
reclassifications or capital reorganizations of shares of Series B Preferred
Stock and to successive consolidations, mergers, sales or conveyances.
9. Conversion of Preferred Stock. If all of the Series B Preferred Stock
of the Company is converted into shares of Common Stock, then the number of
shares for which this Warrant may become exercisable shall be adjusted to equal
that number of shares of Common Stock equal to the number of shares of Common
Stock into which such shares of Series B Preferred Stock would have converted
had such shares of Series B Preferred Stock been outstanding immediately prior
to such event, and the Exercise Price shall be automatically adjusted to equal
the number obtained by dividing (i) the aggregate Exercise Price of the maximum
number of shares of Series B Preferred Stock for which this Warrant may have
been exercisable immediately prior to such conversion, by (ii) the maximum
number of shares of Common Stock for which this Warrant may be exercisable
immediately after such conversion. In the event of any such conversion, the term
"WARRANT SHARES" shall mean the shares of Common Stock issued or issuable upon
exercise of this Warrant.
10. Securities Law Compliance.
10.1. The Holder of this Warrant, by acceptance hereof, acknowledges
that the Warrant, the Warrant Shares to be issued upon exercise hereof and the
Warrant Common Shares to be issued upon the conversion of the Warrant Shares
have not been registered under the Securities Act of 1933, as amended (the
"ACT"), or qualified under any state securities laws and hereby represents and
warrants that such Warrant, Warrant Shares and Warrant Common Shares are being
acquired solely for investment, and not with a view toward distribution or
resale thereof and covenants and agrees that Holder will not offer, sell,
transfer, assign, pledge or otherwise dispose of this Warrant, any Warrant
Shares to be issued upon exercise hereof or the Warrant
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Common Shares to be issued upon the conversion of the Warrant Shares in the
absence of (i) an effective registration statement under the Act as to this
Warrant, such Warrant Shares or such Warrant Common Shares and registration or
qualification of this Warrant, such Warrant Shares or such Common Shares under
any applicable U.S. federal or state securities laws then in effect, or (ii) an
opinion of counsel, reasonably satisfactory to the Company, that such
registration and qualification are not required.
10.2. If appropriate, this Warrant and any Warrants issued upon
exercise or substitution or upon assignment or transfer pursuant to Sections 1
or 4, as the case may be, and all Warrant Shares issued upon exercise hereof or
the Warrant Common Shares to be issued upon the conversion of the Warrant Shares
shall be stamped or imprinted with legends setting forth the restrictions on
transfer arising under applicable federal and state securities laws, together
with any legends required under any other Company agreements to which Holder is
a party.
11. Net Exercise Right.
11.1. In lieu of exercising this Warrant in the manner provided
above in Section 1, Holder may elect to receive shares equal to the net value of
this Warrant (or the portion thereof being canceled) pursuant to the terms of
this Section 11 (the "NET EXERCISE RIGHT"), in which event the Company shall
issue to such Holder a number of Warrant Shares computed using the following
formula:
Y x (A - B)
X = -------------
A
X = The number of shares of Warrant Shares to be issued to
Holder.
Y = The number of Warrant Shares for which a written Notice of
Exercise has been given.
A = The fair market value of one Warrant Share (at the date of
such calculation).
B = Exercise Price (as adjusted to the date of such
calculation).
11.2. For purposes of this Section 11, the fair market value of one
Warrant Share on the date of calculation shall be equal to the highest price per
share which the Company could obtain on the date of calculation from a willing
buyer (not a current employee or director) for Warrant Shares sold by the
Company, from authorized but unissued shares, as determined in good faith by the
Board of Directors.
11.3. The Net Exercise Right may be exercised by Holder by the
surrender of this Warrant at the principal office of the Company together with
the Notice of Exercise duly executed specifying that Holder thereby intends to
exercise the Net Exercise Right. Certificates for the shares of stock issuable
upon exercise of the Net Exercise Right shall be delivered to
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Holder as soon as practicable after each such exercise of this Warrant, but not
later than 10 business days from the date of such exercise.
12. Representations of the Company. The Company hereby represents and
warrants to Holder that:
12.1. Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a material adverse effect on its business or properties.
12.2. Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Warrant, the performance of all
obligations of the Company hereunder and the authorization, issuance and
delivery of the Warrant Shares and the Warrant Common Shares has been taken, and
when executed and delivered by the Company, this Warrant shall constitute a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with the Warrant's terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other laws of general application affecting enforcement of creditors' rights
generally, as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
12.3. Valid Issuance of Securities. The Warrant Shares that shall be
issued to Holder hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Warrant and applicable
state and federal securities laws and the terms of any agreement to which Holder
is a party. Assuming the accuracy of the representations and warranties of
Holder set forth herein and in the Notice of Exercise, the Warrant Shares will
be issued in compliance with all applicable federal and state securities laws.
The Warrant Common Shares issuable upon conversion of the Warrant Shares has
been duly and validly reserved for issuance, and upon issuance in accordance
with the terms of this Warrant and the Company's Certificate of Incorporation,
as amended, shall be duly and validly issued, fully paid and nonassessable and
free of restrictions on transfer other than restrictions on transfer under this
Warrant and applicable federal and state securities laws and the terms of any
agreement to which the recipient of such Warrant Common Shares is a party and
will be issued in compliance with all applicable federal and state securities
laws.
13. Survival of Representations. Unless otherwise set forth in this
Warrant, the respective warranties, representations and covenants of the Company
and the Holder contained in or made pursuant to this Warrant shall survive the
execution and delivery of this Warrant.
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14. Miscellaneous.
14.1. Amendments. Neither the Warrant nor any term hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Company and Holder.
14.2. No Impairment. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder hereunder.
14.3. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware, without regard to conflicts
of law provisions thereof.
14.4. Notice. Any notice required or permitted under this Warrant
shall be in writing and shall be deemed to have been given on the date of
delivery, if delivered personally, by facsimile (or on the next business day if
the date of facsimile is other than a business day) or by deposit with a
nationally recognized overnight courier to the party to whom notice is to be
given, or on the fifth business day after mailing, if mailed to the party to
whom notice is to be given, by certified mail, return receipt requested, postage
prepaid, and addressed as follows:
If to the Company, at
Vocus, Inc.
4296 Forbes Boulevard
Lanham, Maryland 20706
Fax: (301) 459-2827
Attention: Richard Rudman, President
If to the Holder, at
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14.5. Severability. If one or more provisions of this Warrant are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Warrant, (b) the balance of this Warrant
shall be interpreted as if such provision were so excluded and (c) the balance
of this Warrant shall be enforceable in accordance with its terms.
14.6. Headings. The Section and other headings are for convenience
only and are not a part of this Warrant and shall not affect the interpretation
thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
VOCUS, INC.
By: /s/ Richard Rudman
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Richard Rudman, President
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ATTACHMENT A
NOTICE OF EXERCISE
To Vocus, Inc.:
1. The undersigned hereby elects to purchase______________________Warrant
Shares pursuant to the terms of the attached Warrant, and tenders herewith
payment of the Exercise Price of such shares in full, together with all
applicable transfer taxes, if any.
2. The undersigned hereby elects to convert the attached Warrant into
Warrant Shares in the manner specified in Section 11 of the Warrant. This
conversion is exercised with respect to____________________of the Warrant
Shares covered by the Warrant.
3. Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
Name: _____________________________
Address: _____________________________
_____________________________
_____________________________
The undersigned represents that the aforesaid Warrant Shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares
except in an offering registered under the Securities Act of 1933, as amended,
or pursuant to an exemption from such registration requirement.
____________________________________
WARRANT HOLDER
By:_________________________________
Title:______________________________
Date:_______________________________
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ATTACHMENT B
ASSIGNMENT FORM
FOR VALUE RECEIVED,_______________________________________________ hereby
sells, assigns and transfers unto
Name:__________________________________________________________________________
(Please typewrite or print in block letters)
Address: ______________________________________________________________________
the right to purchase shares of Vocus, Inc. (the "COMPANY"), represented by this
Warrant to the extent of________________shares as to which such right is
exercisable and does hereby irrevocably constitute and appoint as Attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
____________________________________
WARRANT HOLDER
By:_________________________________
Title:______________________________
Date:_______________________________
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SCHEDULE OF MATERIAL DIFFERENCES TO EXHIBIT 10.4
NUMBER OF
NAME OF WARRANT HOLDER DATE OF ISSUANCE WARRANTS EXERCISE PRICE EXPIRATION DATE
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Lazard Technology Partners 1/31/2003 412,032 $1.618 1/31/2008
II LP
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Sterling Venture Partners, LP 1/31/2003 206,016 $1.618 1/31/2008
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