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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Amendment No. 3)*
EVOLVE SOFTWARE, INC.
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(Name of Issuer)
Common Stock, $0.001 Par Value
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(Title of Class of Securities)
30049P104
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(CUSIP Number)
Scott A. Arenare, Esq.
Managing Director and General Counsel
Warburg Pincus LLC
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
Copies to:
Francis S. Currie, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94025
(650) 752-2000
October 9, 2001
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(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box o.
Note. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
CUSIP No. 30049P104 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Warburg Pincus Private Equity VIII, L.P. I.R.S. #13-416869
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF SHARES -----------------------------------------
BENEFICIALLY OWNED BY EACH 8 SHARED VOTING POWER
REPORTING PERSON WITH 50,003,298(1)
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9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
50,003,298(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,003,298(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.8%(2)
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14 TYPE OF REPORTING PERSON*
PN
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[*SEE INSTRUCTIONS BEFORE FILLING OUT!]
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(1) Includes 30,000,000 shares of Common Stock that may be acquired at any
time upon the conversion of Series A Preferred Stock, 20,000,000 shares of
Common Stock that may be acquired within 60 days pursuant to the remaining
Preferred Stock Warrant and Common Stock Warrants (discussed in Items 3-5) and
3,298 shares of Common Stock owned by a Member and Managing Director of Warburg
Pincus LLC and Partner of Warburg Pincus & Co.
(2) Calculated in accordance with Rule 13d-3 under the Exchange Act, based
upon the number of shares of Common Stock outstanding as of January 31, 2002
(as represented by the issuer in its 10-Q filed with the Securities and
Exchange Commission on February 14, 2002) including shares issuable upon
conversion of Series A Preferred stock issued and outstanding on the date
hereof and shares issuable within 60 days to the Reporting Persons.
CUSIP No. 30049P104 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Warburg Pincus & Co. I.R.S. #13-6358475
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
0
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NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED BY EACH 50,003,298(1)
REPORTING PERSON WITH -----------------------------------------
9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
50,003,298(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,003,298(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.8%(2)
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14 TYPE OF REPORTING PERSON*
PN
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[*SEE INSTRUCTIONS BEFORE FILLING OUT!]
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(1) Includes 30,000,000 shares of Common Stock that may be acquired at any
time upon the conversion of Series A Preferred Stock, 20,000,000 shares of
Common Stock that may be acquired within 60 days pursuant to the remaining
Preferred Stock Warrant and Common Stock Warrants (discussed in Items 3-5) and
3,298 shares of Common Stock owned by a Member and Managing Director of Warburg
Pincus LLC and Partner of Warburg Pincus & Co.
(2) Calculated in accordance with Rule 13d-3 under the Exchange Act, based
upon the number of shares of Common Stock outstanding as of January 31, 2002
(as represented by the issuer in its 10-Q filed with the Securities and
Exchange Commission on February 14, 2002) including shares issuable upon
conversion of Series A Preferred Stock issued and outstanding on the date
hereof and including shares issuable within 60 days to the Reporting Persons.
CUSIP No. 30049P104 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Warburg Pincus LLC I.R.S. #13-3536050
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
0
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NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED BY EACH 50,003,298(1)
REPORTING PERSON WITH -----------------------------------------
9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
50,003,29
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,003,298(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.8%(2)
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14 TYPE OF REPORTING PERSON*
OO
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[*SEE INSTRUCTIONS BEFORE FILLING OUT!]
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(1) Includes 30,000,000 shares of Common Stock that may be acquired at any
time upon the conversion of Series A Preferred Stock, 20,000,000 shares of
Common Stock that may be acquired within 60 days pursuant to the remaining
Preferred Stock Warrant and Common Stock Warrants (discussed in Items 3-5) and
3,298 shares of Common Stock owned by a Member and Managing Director of Warburg
Pincus LLC and Partner of Warburg Pincus & Co.
(2) Calculated in accordance with Rule 13d-3 under the Exchange Act, based
upon the number of shares of Common Stock outstanding as of January 31, 2002
(as represented by the issuer in its 10-Q filed with the Securities and
Exchange Commission on February 14, 2002) including shares issuable upon
conversion of Series A Preferred stock issued and outstanding on the date
hereof and including shares issuable within 60 days to the Reporting Persons.
This Amendment No. 3 ("Amendment No. 3") to that certain statement on
Schedule 13D of Warburg Pincus Private Equity VIII, L.P., a Delaware limited
partnership ("WP VIII"), Warburg Pincus LLC, a New York limited liability
company ("WP LLC") and Warburg, Pincus & Co., a New York general partnership
("WP," and together with WP VIII and WP LLC, the "Reporting Persons") filed on
October 3, 2001 (the "Original Statement") and amended on October 17, 2001 and
February 4, 2002 (the "Amended Statements" and together with the Original
Statement, the "Statement") hereby amends and restates the Statement as
provided herein. Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Statement. This Amendment is being filed to
reflect the exercise by WP VIII of a warrant to purchase 500,000 shares of
Series A Preferred Stock and the issuance to WP VIII of a warrant to purchase
2,500,000 shares of Common Stock.
Items 3 and 5 of the Statement are hereby amended and restated in their
entirety as follows:
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Series A Preferred Stock Purchase Agreement (the "Purchase
Agreement") attached hereto as Exhibit 2, dated as of September 23, 2001, by
and between WP VIII, the Company and certain other investors named in the
Schedule of Purchasers to the Purchase Agreement, (1) WP VIII purchased
1,000,000 shares of the Company's Series A Preferred Stock (the "Series A
Preferred Stock") at a price of $10 per share, with the purchase price paid in
cash on October 9, 2001 (the "Closing Date"); (2) the Company issued to WP VIII
two warrants to purchase up to an aggregate of 1,000,000 additional shares of
Series A Preferred Stock at a price of $10 per share in cash, which warrants
are exercisable for up to one year after the Closing Date in certain
circumstances, in the forms attached hereto as Exhibit 3 ("Preferred Stock
Warrants"); (3) the Company issued to WP VIII a warrant to purchase up to
5,000,000 shares of Common Stock at a price of $1.00 per share in the form
attached hereto as Exhibit 4 ("Common Stock Warrant") and (4) the Company
agreed to grant to WP VIII additional Common Stock Warrants to purchase that
number of shares of Common Stock equal to 25% of the number of shares of Common
Stock into which the shares of Series A Preferred Stock issued upon exercise of
the Preferred Stock Warrants are convertible, at the time such Preferred Stock
Warrants are exercised. Each share of Series A Preferred Stock will be
convertible into Common Stock at an initial conversion price of $0.50, or at an
initial conversion rate of 20 shares of Common Stock for each share of Series A
Preferred Stock converted, subject to certain adjustments as set forth in the
Certificate of Designation of Series A Preferred Stock of the Company, attached
hereto as Exhibit 5 (the "Certificate of Designation").
On March 25, 2002, WP VIII exercised a Preferred Stock Warrant to purchase
500,000 shares of Series A Preferred Stock (the "March 25 Preferred Stock
Warrant") at a price of $10 per share, for an aggregate purchase price of
$5,000,000. In connection with the exercise and pursuant to the terms of the
Purchase Agreement, the Company issued WP VIII a new Common Stock Warrant to
purchase 2,500,000 shares of Common Stock at a purchase price of $1.00 per
share, in the form attached hereto as Exhibit 4.
The total amount of funds used to purchase the Series A Preferred Stock
pursuant to the Purchase Agreement and the March 25 Preferred Stock Warrant was
$15,000,000 and was furnished from the working capital of WP VIII. If WP VIII
elects to exercise the remaining Preferred Stock Warrant in full, the total
amount of funds that will be required to purchase the additional shares of
Series A Preferred Stock issuable upon such exercise will be $5,000,000, which
will be furnished from the working capital of WP VIII. If WP VIII elects to
exercise the Common Stock Warrants in full for cash, the total amount of funds
that will be required to purchase the Common Stock pursuant to such warrants
will be $7,500,000 ($10,000,000 if the remaining Preferred Stock Warrant is
exercised in full), which will be provided from the working capital of WP VIII.
However, the Common Stock Warrants provide WP VIII the option to convert such
warrants on a cashless basis by electing to have the Company withhold a number
of shares otherwise issuable upon exercise of the Warrants that is equal in
value at the time of conversion to the aggregate exercise price of the Common
Stock Warrants. WP VIII has not made any determination as to whether it would
exercise the Common Stock Warrants, if at all, either for cash or on a cashless
basis. Except as otherwise expressly stated, all shares are reported on a
common stock equivalent basis, assuming that all warrants issued or issuable
pursuant to the Purchase Agreement are exercised in full for cash.
Item 5. Interest in Securities of the Issuer.
(a) Assuming (i) exercise of the remaining Preferred Stock Warrant issued
to WP VIII; (ii) full conversion of the shares of Series A Preferred Stock
issued to WP VIII at the closing and upon exercise of the March 25 Preferred
Stock Warrant and issuable pursuant to the remaining Preferred Stock Warrant
and (iii) full exercise for cash of all Common Stock Warrants issued to WP VIII
at the closing and upon exercise of the March 25 Preferred Stock Warrant and
issuable upon exercise of the remaining Preferred Stock Warrant, WP VIII may be
deemed to beneficially own 50,000,000 shares of Common Stock, representing
approximately 52.7% of the outstanding shares of Common Stock, based on the
44,729,867 shares of Common Stock outstanding as of January 31, 2002 (which
number was represented by the Company in its 10-Q filed with the Securities and
Exchange Commission on February 14, 2002), calculated in accordance with Rule
13d-3 under the Exchange Act. By reason of their respective relationships with
WP VIII and each other, each of the other Reporting Persons may also be deemed
under Rule 13d-3 under the Exchange Act to own beneficially 50,000,000 shares
of Common Stock, representing approximately 52.7% of the outstanding Common
Stock. Until such time as the Common Stock Warrant and the Preferred Stock
Warrants are exercised, the Reporting Persons disclaim beneficial ownership of
any shares of Common Stock issuable thereon.
One Member and Managing Director of WP LLC and Partner of WP owns
approximately 3,298 shares of Common Stock. The Reporting Persons expressly
disclaim beneficial ownership of these shares.
(b) WP and WP LLC share with WP VIII the power to vote or to direct the
vote and to dispose or to direct the disposition of the 50,003,298 shares of
Common Stock it may be deemed to beneficially own.
The Reporting Persons are making this single, joint filing because they
may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of
the Exchange Act. Each Reporting Person disclaims beneficial ownership of all
shares of Common Stock, other than those reported herein as being owned by it.
(c) Other than as set forth in Item 4 hereof, no transactions in the
Common Stock were effected during the last sixty days by the Reporting Persons
or any of the persons set forth on Schedule I or in Item 2(d) hereto.
(d) Except as set forth in this Item 5, no person other than each
respective record owner referred to herein of securities is known to have the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, such securities.
(e) Not applicable.
Item 7. Material to be Filed as Exhibits
1. Joint Filing Agreement*
2. Series A Preferred Stock Purchase Agreement, dated as of September
23, 2001, by and between the Company, WP VIII and certain other
persons.*
3. Form of Form A Subscription Warrant and Form of Form B Subscription
Warrant.*
4. Form of Warrant to Purchase Shares of Common Stock, as amended.
5. Form of Certificate of Designation of Series A Preferred Stock of
Evolve Software, Inc. *
6. Form of Preemptive Rights Agreement between the Company, WP VIII and
certain other persons.*
7. Power of Attorney.*
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* Previously filed
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 5, 2002 WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Scott Arenare
-------------------------------
Name: Scott Arenare
Title: Partner
Dated: April 5, 2002 WARBURG PINCUS & Co.
By: /s/ Scott Arenare
-------------------------------
Name: Scott Arenare
Title: Partner
Dated: April 5, 2002 WARBURG PINCUS LLC
By: /s/ Scott Arenare
-------------------------------
Name: Scott Arenare
Title: Managing Director
Exhibit Index
1. Joint Filing Agreement*
2. Series A Preferred Stock Purchase Agreement, dated as of September 23,
2001, by and between the Company, WP VIII and certain other persons.*
3. Form of Form A Subscription Warrant and Form of Form B Subscription
Warrant.*
4. Form of Warrant to Purchase Shares of Common Stock, as amended.
5. Form of Certificate of Designation of Series A Preferred Stock of Evolve
Software, Inc. *
6. Form of Preemptive Rights Agreement between the Company, WP VIII and
certain other persons.*
7. Power of Attorney.*
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* Previously filed
Exhibit 4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
WARRANT
To Purchase Shares of Common Stock of
Evolve Software, Inc.
Number:_____
THIS CERTIFIES that, for value received Warburg Pincus Private Equity VIII,
L.P., is entitled, upon the terms and subject to the conditions hereinafter set
forth, to purchase from Evolve Software, Inc., a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock, par value $0.001 per share ("Common Stock") at the purchase price
per share as set forth in Section 1 below ("Exercise Price"). The number of
shares and Exercise Price are subject to adjustment as provided in Section 10
hereof.
Section 1. Number of Shares; Exercise Price; Term.
1.1 Subject to adjustments as provided herein, this Warrant is
exercisable for up to 2,500,000 shares (the "Shares") of the
Company's Common Stock for an aggregate purchase price of
$2,500,000, or a purchase price of $1.00 per share.
1.2 Subject to the terms and conditions set forth herein, this Warrant
shall be exercisable during the term commencing on the date hereof
and ending on the seventh anniversary of the date of this Warrant,
and shall be void thereafter.
Section 2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed.
Section 3. Exercise or Conversion of Warrant.
3.1 The purchase rights represented by this Warrant are exercisable by
the registered holder hereof, in whole or in part, at any time, or
from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise
or Conversion annexed hereto duly completed and executed on behalf
of the holder hereof, at the office of the Company in Emeryville,
California (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at
the address of such holder appearing on the books of the Company),
and subject to Section 3.2 hereof, upon payment of the purchase
price of the shares thereby purchased in cash or check acceptable to
the Company, whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and,
if this Warrant is converted in part, a new Warrant for the
remaining portion of this Warrant.
3.2 Notwithstanding any provisions herein to the contrary, if the Fair
Market Value (as hereinafter defined) is greater than the Exercise
Price (at the date of calculation, as set forth below), in lieu of
exercising this Warrant as hereinabove permitted, the holder may
elect to convert this Warrant, in whole or in part, into shares of
Common Stock equal to the value (as determined below) of the
exercised portion of this Warrant by surrender of such portion of
this Warrant for conversion at the office of the Company referred to
in Section 3.1 above, together with the Notice of Exercise or
Conversion, in which event the Company shall issue to the holder
that number of shares of Common Stock computed using the formula
below and, if this Warrant is converted in part, a new Warrant for
the remaining portion of this Warrant.
CS = WCS x (FMV-EP)
FMV
Where, for purposes of this Section 3.2
CS equals the number of shares of Common Stock to be issued to the
holder
WCS equals the number of shares of Common Stock purchasable under the
Warrant which are to be converted by the holder
FMV equals the Market Price, as defined in Section 10, of one share of
the Company's Common Stock
EP equals the Exercise Price (as adjusted to the date of such
calculation).
3.3 The Company agrees that, upon exercise or conversion of this Warrant
in accordance with the terms hereof, the shares so purchased shall
be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the date on which this Warrant
shall have been exercised or converted. The parties intend that in
the event this Warrant is converted into shares of Common Stock
pursuant to Section 3.2 above, the holder be entitled to "tack" the
holding period of this Warrant to the holding period of the shares
issued upon such conversion for purposes of the holding period
requirements of Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act"). Certificates for shares purchased
hereunder and, on partial exercise or conversion of this Warrant, a
new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the
date on which this Warrant shall have been exercised or converted.
3.4 The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise
of the rights represented by this Warrant and payment of the
Exercise Price or surrender of the appropriate number of Shares, be
fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified
herein).
3.5 The Company will reserve and keep available free from preemptive
rights, out of its authorized but unissued shares of Common Stock,
the full number of Shares deliverable upon the exercise of this
Warrant in full. The Company or, if appointed, a transfer agent (a
"Transfer Agent") will be irrevocably authorized and directed at all
times to reserve such number of authorized shares of Common Stock as
are required for such purpose. The Company will keep a copy of this
Warrant on file with each Transfer Agent. The Company will furnish
such Transfer Agent with a copy of all notices of adjustments and
certificates related thereto which are transmitted to the holder
pursuant to Section 11 hereof.
Section 4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise or
conversion of this Warrant. In lieu of any fractional share to which
such holder would otherwise be entitled, such holder shall be
entitled, at its option, to receive either (i) a cash payment equal
to the excess of fair market value for such fractional share above
the Exercise Price for such fractional share (as mutually determined
by the Company and the holder) or (ii) a whole share if the holder
tenders the Exercise Price for one whole share.
Section 5. Charges, Taxes and Expenses. Issuance of certificates for
shares upon the exercise or conversion of this Warrant shall be made
without charge to the holder hereof for any issue or transfer tax or
other incidental expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the
holder of this Warrant or in such name or names as may be directed by
the holder of this Warrant; provided, however, that in the event
certificates for shares are to be issued in a name other than the name
of the holder of this Warrant, this Warrant when surrendered for
exercise or conversion shall be accompanied by the Assignment Form
attached hereto duly executed by the holder hereof and the Notice of
Exercise or Conversion duly completed and executed and stating in whose
name and certificates are to be issued; and provided further, that such
assignment shall be subject to applicable laws and regulations. Upon
any transfer involved in the issuance or delivery of any certificates
for shares of the Company's securities, the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for
any transfer tax incidental thereto.
Section 6. No Rights as Shareholders. This Warrant does not entitle the
holder hereof to any voting rights, dividend rights or other rights as
a shareholder of the Company prior to the exercise or conversion
hereof.
Section 7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this
Warrant. This Warrant may be surrendered for exchange, transfer,
exercise or conversion in accordance with its terms, at the office of
the Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
Section 8. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company
of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
Section 9. Saturdays, Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall
be a legal holiday, then such action may be taken or such right may
be exercised on the next succeeding day not a Saturday or a Sunday or
a legal holiday.
Section 10. Adjustment of Exercise Price. The Exercise Price and the
number of Warrant Shares issuable on Exercise of each Warrant are
subject to adjustment from time to time as described in this Section
10. All calculations under this Section 10 will be made to the nearest
one-hundredth of a cent or to the nearest one-hundredth of a share, as
the case may be.
10.1 Antidilution Adjustments. Subject to Section 10.3, the following
adjustments shall be made:
(a) Common Stock Issued at Less than Market Value. If the Company issues
or sells any Common Stock other than Excluded Stock (as defined in
Section 10.4) without consideration or for consideration per share
less than the Market Price (as defined in Section 10.4) (provided,
however, that no sale of securities pursuant to a bona fide
underwritten public offering will be deemed to be for less than
Market Price), as of the day of such issuance or sale, the Exercise
Price in effect immediately prior to each such issuance or sale will
immediately (except as provided below) be reduced to the price
determined by multiplying the Exercise Price, in effect immediately
prior to such issuance or sale, by a fraction, (x) the numerator of
which shall be the sum of (i) the number of shares of Common Stock
issued and outstanding immediately prior to such issue, (ii) the
number of shares of Common Stock issuable upon conversion of shares
of Preferred Stock outstanding immediately prior to such issue,
(iii)the number of shares of Common Stock issuable upon exercise of
outstanding in-the-money Options and conversion of outstanding
in-the-money Convertible Securities prior to such issue and (iv) the
number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such additional
shares of Common Stock so issued or sold would purchase at the
Market Price on the last trading day immediately preceding such
issuance or sale and (y) the denominator of which shall be (i) the
number of shares of Common Stock issued and outstanding immediately
prior to such issue, (ii) the number of shares of Common Stock
issuable upon conversion of shares of Preferred Stock outstanding
immediately prior to such issue, (iii)the number of shares of Common
Stock issuable upon exercise of outstanding in-the-money Options and
conversion of outstanding in-the-money Convertible Securities prior
to such issue, and (iv) the number of shares of Common Stock so
issued or sold. In such event, the number of Shares issuable upon
the exercise of this Warrant shall be increased to the number
obtained by dividing (x) the product of (A) the number of Shares
issuable upon the exercise of this Warrant before such adjustment,
and (B) the Exercise Price in effect immediately prior to the
issuance giving rise to this adjustment by (y) the new Exercise
Price determined in accordance with the immediately preceding
sentence. For the purposes of any adjustment of the Exercise Price
and the number of Shares issuable upon exercise of each Warrant
pursuant to this Section 10.1(a), the following provisions shall be
applicable:
(1) In the case of the issuance of Common Stock for cash, the amount of
the consideration received by the Company shall be deemed to be the
amount of the cash proceeds received by the Company for such
Common Stock before deducting therefrom any discounts or commissions
allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock (otherwise than upon the
conversion of any shares of capital stock or other securities of the
Company) for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration other
than cash shall be deemed to be the fair value thereof as determined
by the Board of Directors, provided, however, that such fair value
as determined by the Board of Directors shall not exceed the
aggregate Market Price of the shares of Common Stock being issued as
of the date the Board of Directors authorizes the issuance of such
shares.
(3) In the case of the issuance of (A) options, warrants or other rights
to purchase or acquire Common Stock (whether or not at the time
exercisable) or (B) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or options, warrants or rights to
purchase such convertible or exchangeable securities (whether or not
at the time exercisable):
(i) the aggregate maximum number of shares of Common Stock deliverable
upon exercise of such options, warrants or other rights to purchase
or acquire Common Stock shall be deemed to have been issued at the
time such options, warrants or rights are issued and for a
consideration equal to the consideration (determined in the manner
provided in Sections 10.1(a)(1) and (2)), if any, received by the
Company upon the issuance of such options, warrants or rights plus
the minimum purchase price provided in such options, warrants or
rights for the Common Stock covered thereby;
(ii) the aggregate maximum number of shares of Common Stock deliverable
upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options, warrants
or other rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such
securities were issued or such options, warrants or rights were
issued and for a consideration equal to the consideration, if any,
received by the Company for any such securities and related options,
warrants or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration (determined in the manner provided in Section
10.1(a)(1) and (2)), if any, to be received by the Company upon the
conversion or exchange of such securities, or upon the exercise of
any related options, warrants or rights to purchase or acquire such
convertible or exchangeable securities and the subsequent conversion
or exchange thereof;
(iii)on any change in the number of shares of Common Stock deliverable
upon exercise of any such options, warrants or rights or conversion
or exchange of such convertible or exchangeable securities or any
change in the consideration to be received by the company upon such
exercise, conversion or exchange, but excluding changes resulting
from the antidilution provisions thereof (to the extent comparable
to the antidilution provisions contained herein), the Exercise Price
and the number of Shares issuable upon exercise of this Warrant as
then in effect shall forthwith be readjusted to such Exercise Price
and number of Shares as would have been obtained had an adjustment
been made upon the issuance of such options, warrants or rights not
exercised prior to such change, or of such convertible or
exchangeable securities not converted or exchanged prior to such
change, upon the basis of such change;
(iv) on the expiration or cancellation of any such options, warrants or
rights (without exercise), or the termination of the right to
convert or exchange such convertible or exchangeable securities
(without exercise), if the Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall have been adjusted upon
the issuance thereof, the Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall forthwith be readjusted
to such Exercise Price and number of Shares as would have been
obtained had an adjustment been made upon the issuance of such
options, warrants, rights or such convertible or exchangeable
securities on the basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise of such options,
warrants or rights, or upon the conversion or exchange of such
convertible or exchangeable securities; and
(v) if the Exercise Price and the number of Shares issuable upon
exercise of this Warrant shall have been adjusted upon the issuance
of any such options, warrants, rights or convertible or exchangeable
securities, no further adjustment of the Exercise Price and the
number of Shares issuable upon exercise of this
Warrant shall be made for the actual issuance of Common Stock upon
the exercise, conversion or exchange thereof; provided, however,
that no increase in the Exercise Price shall be made pursuant to
subclauses (i) and (ii) of this Section 10.1(a)(3).
Notwithstanding anything to the contrary in this Section
10.1(a), no adjustment will be required in respect of issuances of Common Stock
(or options to purchase Common Stock) pursuant to stock options granted prior
to the date hereof.
(b) Certain Repurchases of Common Stock. In case the Company effects a
Pro Rata Repurchase (as defined in Section 10.4) of Common Stock,
then the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to the
effective date of such Pro Rata Repurchase by a fraction of which
the numerator shall be (x) the product of (A) the number of shares
of Common Stock outstanding immediately before such Pro Rata
Repurchase (after giving effect to the conversion of all outstanding
in-the-money Convertible Securities and the exercise of all
outstanding in-the-money Options) and (B) the Market Price of a
share of Common Stock on the trading day immediately preceding the
first public announcement by the Company or any of its Affiliates of
the intent to effect such Pro Rata Repurchase, minus (y) the
aggregate purchase price of the Pro Rata Repurchase, and of which
the denominator shall be the product of (x) the number of shares of
Common Stock outstanding immediately prior to such ProRata
Repurchase (after giving effect to the conversion of outstanding all
in-the-money Convertible Securities and the exercise of all
outstanding in-the-money Options) minus the number of shares of
Common Stock so repurchased and (y) the Market Price per share of
Common Stock on the trading day immediately preceding the first
public announcement of such Pro Rata Repurchase. In such event, the
number of Shares issuable upon the exercise of this Warrant shall be
increased to the number obtained by dividing (x) the product of (A)
the number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (B) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this
adjustment by (y) the new Exercise Price determined in accordance
with the immediately preceding sentence.
(c) Business Combinations. Subject to Section 12 hereof, in case of any
Change of Control (as defined in Section 10.4) or reclassification
of Common Stock (other than a reclassification of Common Stock
referred to in Section 10.1(d)), the Shares issued or issuable upon
exercise of this Warrant after the date of such Change of Control or
reclassification will be exchangeable for the number of shares of
stock or other securities or property (including cash) to which the
Shares issuable (at the time of such consolidation, merger, sale,
lease or conveyance) upon exercise of this Warrant immediately prior
to such Change of Control or reclassification would have been
entitled upon such Change of Control or reclassification; and in any
such case, if necessary, the provisions set forth herein with
respect to the rights and interests thereafter of the holder shall
be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. In
determining the kind and amount of stock, securities or the property
receivable upon consummation of such Change of Control, if the
holders of Common Stock have the right to elect the kind or amount
of consideration receivable upon consummation of such Change of
Control, then the holder shall have the right to make a similar
election upon exercise of this Warrant with respect to the number of
shares of stock or other securities or property which the holder
will receive upon exercise of this Warrant.
(d) Stock Splits, Subdivisions, Reclassifications or Combinations. If
the Company shall (1) declare a dividend or make a distribution on
its Common Stock in shares of Common Stock, (2) subdivide or
reclassify the outstanding shares of Common Stock into a greater
number of shares, or (3) combine or reclassify the outstanding
Common Stock into a smaller number of shares, the number of Shares
issuable upon exercise of this Warrant 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 so that the holder after such date shall be
entitled to purchase the number of Shares which such holder would
have owned or been entitled to receive after such date had this
Warrant been exercised immediately prior to such date. In such event
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 adjusted to the number
obtained by dividing (x) the product of (A) the number of Shares
issuable upon the exercise of this Warrant before such adjustment
and (B) the Exercise Price in effect immediately prior to the
issuance giving rise to this adjustment by (y) the new number of
shares issuable upon exercise of the Warrant determined pursuant to
the immediately preceding sentence.
(e) Other Distributions. In case the Company shall fix a record date for
the making of a distribution to all holders of shares of its Common
Stock (1) of shares of any class other than its Common Stock or (2)
of evidence of indebtedness of the Company or any subsidiary or (3)
of assets, or (4) of warrants or similar rights (in each case
excluding any dividends or distribution referred to in Section
10.1(d)), in each such case the Exercise Price in effect on the
record date will be reduced by an amount equal, in the case of a
distribution in cash, to the amount thereof payable per share of the
Common Stock, or in the case of any other distribution, to the fair
value thereof per share of the Common Stock as determined by the
Board of Directors. Such reductions shall take effect on the record
date for such distribution. In such event, the number of Shares
issuable upon the exercise of this Warrant shall be increased to the
number obtained by dividing (x) the product of (A) the number of
Shares issuable upon the exercise of this Warrant before such
adjustment, and (B) the Exercise Price in effect immediately prior
to the issuance giving rise to this adjustment by (y) the new
Exercise Price determined in accordance with the immediately
preceding sentence. In the event that such distribution is not so
made, the Exercise Price and the number of Shares issuable upon
exercise of this Warrant then in effect shall be readjusted,
effective as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or warrants,
as the case may be, to the Exercise Price that would then be in
effect and the number of Warrant Shares that would then be issuable
upon exercise of this Warrant if such record date and distribution
had not been fixed.
(f) No adjustment in the Exercise Price or the number of Warrant Shares
issuable upon the exercise of each Warrant is required if the amount
of the adjustment is less than $0.01 or one-hundredth (1/100th) of a
share, as the case may be; provided, however, that any adjustments
which by reason of this Section 10.1(f) are not required to be made
will be carried forward and given effect in any subsequent
adjustment.
(g) For the purposes of this Section 10.1, the term "shares of Common
Stock" shall include (1) the class of stock designated as the Common
Stock of the Company at the date hereof or (2) any other class of
stock resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from no par
value to par value.
(h) Notwithstanding the foregoing, in any case which this Section 10.1
provides that an adjustment becomes effective immediately after a
record date for an event, the Company may defer until the occurrence
of such event (1) issuing to the holder of any Warrant exercised or
converted after such record date and before the occurrence of such
event the additional securities issuable upon such exercise or
conversion after giving effect to such adjustment and (2) paying to
the holder any amount in cash in lieu of any fraction pursuant to
Section 4.
(i) If the Company takes any action affecting the Common Stock, other
than action described in this Section 10.1, which in the opinion of
the Board of Directors of the Company would materially adversely
affect the conversion rights of the holder of the Warrants, the
Exercise Price for the Warrants and/or the number of Warrant Shares
received upon exercise of the Warrant may be adjusted, to the extent
permitted by law, in such manner, if any, and at such time, as such
Board may determine in good faith to be equitable in the
circumstances.
10.2 Voluntary Adjustment by the Company. The Company may at its option,
at any time during the term of the Warrants, reduce the then current
Exercise Price or increase the number of Shares for which the
Warrant may be exercised to any amount deemed appropriate by the
Board of Directors of the Company; provided, however, that if the
Company elects to make such adjustment, such adjustment will remain
in effect for at least a 15-day period, after which time the Company
may, at its option, reinstate the Exercise Price or number of Shares
in effect prior to such reduction, subject to any interim
adjustments pursuant to Section 10.1.
10.3 Miscellaneous. Except as provided in Section 10.1, no adjustment in
respect of any dividends or other payments or distributions made to
holders of securities issuable upon exercise of Warrants will be
made during the term of a Warrant or upon the exercise of a Warrant.
To the extent (but only to the extent) that the holder's rights
hereunder have been protected by the holder's exercise (at holder's
election and
reasonable allocation) of its preemptive rights under any
Pre-Emptive Rights Agreement or similar agreement between the
Company and the holder hereof, no adjustments will be made to the
Exercise Price or the number of Warrant Shares.
10.4 Definitions. For purposes hereof, the following terms shall have the
following meanings:
"Change of Control" means (A) (i)the Corporation's sale of all
or substantially all of its business, assets or property
(including intellectual property) or (ii)any transaction or
series of related transactions resulting in a reorganization,
merger, or consolidation (whether or not the Corporation is the
entity surviving such transaction) in which holders of all
voting equity securities of the Corporation immediately prior
to such transaction will hold (by reason of their holdings in
the Corporation) less than 50% of the voting equity securities
of the Corporation or other entity surviving such transaction
or (B) a transaction or series of related transactions in which
a person or group (as defined in Rule13d-5(b)(1) under the
Securities Exchange Act of 1934 (the "Exchange Act"))
(excluding Warburg Pincus Private Equity VIII, L.P. and its
affiliates) acquires beneficial ownership (as determined in
accordance with Rule 13d-3 under the Exchange Act) of more than
50% of the voting equity securities of the Corporation.
"Convertible Securities" means shall mean any evidences of
indebtedness, shares (other than Common Stock and Series A
Preferred Stock) or other securities convertible into or
exchangeable for Common Stock.
"Excluded Stock" means shares of Common Stock issued or
issuable: (i) upon conversion of shares of Series A Preferred
Stock of the Company, and upon the issuance of Options,
including exercise or conversion of Convertible Securities
subject to such Options, issued or issuable pursuant to the
terms of the agreement or agreements governing initial issuance
and sale of Series A Preferred Stock, or upon exercise or
conversion of Options or Convertible Securities outstanding as
of the date hereof; (ii) to officers, directors or employees
of, or consultants to, the Company pursuant to a stock grant,
option plan or purchase plan or other stock incentive program,
including without limitation sales of shares to such persons
pursuant to restricted stock purchase agreements approved by
the Board of Directors; (iii) as a dividend or distribution on
the Series A Preferred Stock or in connection with any stock
split, stock dividend or similar transaction; (iv) in
connection with (1)equipment lease financing transactions with
institutions regularly engaged in equipment leasing or (2)bank
lending, if such transactions are approved by the Board of
Directors, and such issuance is not principally for the purpose
of raising additional equity capital for the Company; provided
however that the number of shares of Common Stock so excluded
in any fiscal year of the Company shall not exceed 0.5% of the
number of shares of Common Stock outstanding (determined as of
the date of issuance of such shares of Common Stock), after
giving effect to the conversion of all outstanding shares
Series A Preferred Stock and other "in-the-money" (as such term
is defined below) securities convertible into Common Stock
unless such grants are approved by a majority of the Series A
Directors present and voting; (v) securities issued to
customers or joint venture partners or in connection with other
strategic alliances approved by the Board of Directors
including a majority of the Series A Directors present and
voting which involve the grant of licenses or localization,
distribution, OEM, bundling, manufacturing or resale rights
with respect to the Company's products or technology; (vi)
securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially
all of the assets of the other corporation, or other
reorganization approved by the Board of Directors including a
majority of the Series A Directors present and voting; (vii) by
way of dividend or other distribution on shares of Common Stock
excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses(i), (ii), (iii), (iv), (v) or
(v) or on shares of Common Stock so excluded, provided that
such issuance is made (x) pursuant to obligations of the
Company established in connection with the original issuance of
such securities or (y) to all holders of the Company's capital
stock in proportion to the number of shares held.
"In-the-money" Options and Convertible Securities shall be
deemed to include all securities exercisable for or convertible
into shares of Common Stock with a fair market value equal to
or greater than the fair market value of the consideration
which must be paid or which must be foregone to effect such
exercise or conversion.
"Market Price" means, with respect to a particular security, on
any given day, the average of the daily closing prices for 10
consecutive trading days ending on the trading day prior to the
day in question or, in case no such reported sale takes place
on such day, the average of the last closing bid and asked
prices regular way, in either case on the principal national
securities exchange on which the applicable security is listed
or admitted to trading, or if not listed or admitted to trading
on any national securities exchange, (1) the average of the
daily closing prices for 10 consecutive trading days commencing
on the 5th trading day prior to the day in question reported by
the NASDAQ Stock Market if such security is traded
over-the-counter and quoted in the NASDAQ Stock Market, or (2)
if such security is so traded, but not so quoted, the average
of the closing reported bid and asked prices of such security
as reported by the NASDAQ Stock Market or any comparable
system, or (3) if such security is not listed on the NASDAQ
Stock Market or any comparable system, the average of the
closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose. If such security
is not listed and traded in a manner that the quotations
referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall be
deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors of the
Company.
"Options" means rights, options or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or
Convertible Securities.
"Pro Rata Repurchases" means any purchase of shares of Common
Stock by the Company or any Affiliate (as defined in the
Preferred Stock Purchase Agreement) thereof, other than Warburg
Pincus Private Equity VIII, L.P. or any of its affiliates,
pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other
offer available to substantially all holders of Common Stock,
whether for cash, shares of capital stock of the Company, other
securities of the Company, evidences of indebtedness of the
Company or any other person or any other property (including,
without limitation, shares of capital stock, other securities
or evidences of indebtedness of a subsidiary of the Company),
or any combination thereof, effected while this Warrant is
outstanding; provided, however, that "Pro Rata Repurchase"
shall not include any purchase of shares by the Company or any
Affiliate thereof made directly or indirectly in accordance
with the requirements of Rule 10b-18 as in effect under the
Exchange Act; and provided further that "Pro Rata Purchase"
shall not include any reclassification or combination of Common
Stock referred to in Section 10.1(d). The "effective date" of a
Pro Rata Repurchase shall mean the date of acceptance of shares
for purchase or exchange under any tender or exchange offer
which is a Pro Rata Repurchase or the date of purchase with
respect to any Pro Rata Repurchase that is not a tender or
exchange offer.
"Series A Directors" means directors of the Company elected by
holders of Series A Preferred Stock of the Company voting as a
separate class; provided however that commencing at such time
as no director elected by holders of Series A Preferred Stock
of the Company voting as a separate class continues to serve on
the Board of Directors, "Series A Directors" shall be deemed to
refer to all directors of the Company.
Section 11. Notice of Adjustments; Notices. Whenever the Exercise Price
or number of shares purchasable hereunder shall be adjusted pursuant to
Section 10 hereof, the Company shall issue a certificate signed by its
Chief Financial Officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Exercise Price and number
of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first class
mail, postage prepaid) to the holder of this Warrant and to the
Transfer Agent.
Section 12. Change of Control.
(a) Exchange Right. In the event of a Trigger Date (as defined in
Exhibit A) the Company shall promptly notify the holder of the
occurrence thereof. In lieu of the application of Section 10.1(c),
the holder may in its sole discretion elect by delivering written
notice to the Company together with this Warrant after the
occurrence of an Initiation Date (as defined in Exhibit A) to cause
the Company to purchase this Warrant, in whole or in part, at a
valuation based on a computation of the option value of the Warrant
using Black-Scholes option valuation and making the assumptions
described in the Black-Scholes methodology described in Exhibit A
(the "Exchange Right"). The Company's obligation to purchase this
Warrant pursuant to this Section shall be conditioned, and shall
occur, upon the consummation of a Change of Control.
(b) Payment in Common Stock. In the event of a Change of Control, at the
election of the Company all or any portion of such purchase price
may be paid in Common Stock (valued as set forth in Exhibit A),
provided the Company has used its best efforts to ensure that the
Common Stock paid in exchange for this Warrant (including any
securities issued in respect of such Common Stock in the Change of
Control) shall be freely tradable on a national stock exchange or
the Nasdaq National Market by the holder pursuant to an effective
registration statement under the Securities Act, or pursuant to Rule
144 or Rule 145 under the Securities Act without volume restrictions
under applicable securities laws or under contract.
Section 13. Miscellaneous.
13.1 Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed
in accordance with and governed by the laws of said state, without
giving effect to the conflict of laws principles.
13.2 Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
13.3 Attorney's Fees. In any litigation, arbitration or court proceeding
between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses
incurred in enforcing this Warrant.
13.4 Amendments. This Warrant may be amended and the observance of any
term of this Warrant may be waived only with the written consent of
the Company and Warburg or its successor in interest.
13.5 Notice. Any notice required or permitted hereunder shall be deemed
effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified
mail, postage prepaid and addressed to the party to be notified at
the address indicated below for such party, or at such other address
as such other party may designate by ten-day advance written notice.
IN WITNESS WHEREOF, Evolve Software, Inc. has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: March , 2002
EVOLVE SOFTWARE, INC.
By:
Title:
WARRANT HOLDER:
Warburg Pincus Private Equity VIII, L.P.
By Warburg Pincus & Co., as General Partner
By: ________________________________
Barry Taylor
Title: General Partner
--------------------------------
SIGNATURE PAGE TO INVESTMENT WARRANT
NOTICE OF EXERCISE OR CONVERSION
To: Evolve Software, Inc.
1. (a) The undersigned hereby irrevocably elects to exercise the Warrant,
represented by the attached Warrant, to purchase _____________ shares of Common
Stock (the "Shares") as provided for therein and upon confirmation from the
Company that such shares of Common Stock will be issued, agrees that it will
tender in payment for such shares of Common Stock payment of the purchase price
in full in the form of a wire transfer of immediately available funds to the
order of Evolve Software, Inc. in the amount of $_______, all in accordance
with the terms of the Warrant.
(b) The undersigned hereby irrevocably elects to convert its right
to acquire ___________ Shares under the attached Warrant, pursuant to Section
3.2 of the Warrant.
(c) The undersigned hereby irrevocably elects to exercise the
Exchange Right pursuant to Section 12 of the attached Warrant and to cause the
Company to purchase the Warrant in accordance with Section 12 thereof.
[Strike paragraphs that do not apply.]
2. Except in the case of paragraph (c), above, the undersigned requests
that a certificate for such Shares be registered in the name of _______________
whose address is _______________ and that such certificate will be delivered to
__________________ whose address is ____________________. If said number of
Shares is less than all of the Shares purchasable hereunder, the undersigned
requests that a new Warrant representing the right to purchase the remaining
balance of the Shares be registered in the name of ____________ whose address
is ____________ and that such warrant will be delivered to ___________ whose
address is ______________.
3 . If the Shares are being acquired for cash, the Shares to be received
by the undersigned upon exercise of the Warrant are being acquired for its own
account, not as a nominee or agent, and not with a view to resale or
distribution of any part thereof, and the undersigned has no present intention
of selling, granting any participation in, or otherwise distributing the same.
The undersigned further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person, with respect to the
Stock. The undersigned believes it has received all the information it
considers necessary or appropriate for deciding whether to purchase the Shares.
4. The undersigned understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in transactions not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this connection, the
undersigned represents that it is familiar with SEC Rule144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
5. The undersigned understands the instruments evidencing the Shares may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE144 OF SUCH ACT."
(b) Any legend required by applicable state law.
Dated: ________________
________________
(Insert Employer Identification
Number of Holder)
Signature ______________________
Note: Signature must conform
in all respect to name
of holder as specified
on the face of the
Warrant in every
particular, without
alteration or
enlargement or any
change whatsoever,
unless the Warrant has
been assigned.
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this form
to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_____________________________________
(Please Print)
whose address is _____________________________________
_____________________________________
(Please Print)
Dated: ___________, _______.
Holder's Signature: __________________________
Holder's Address: __________________________
__________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
Exhibit A:
Change of Control
Section 1: Certain Definitions:
"Trigger Date" shall mean, as determined by the Company, in connection with a
Change of Control, the earliest of the following dates: (i) the date of the
definitive documentation for such event; (ii) the date the Board of Directors
recommends that the stockholders tender their shares into a tender or exchange
offer that would result in a Change in Control or (iii) if none of the
foregoing has yet occurred, the Initiation Date.
"Initiation Date" shall mean, in connection with any Change of Control, (i) the
date that is the later of the date of shareholder or regulatory approval, if
such approvals are required, (ii) in connection with a tender or exchange
offer, the date that the minimum tender condition and all other material
conditions to such offer have been satisfied or (iii) if none of the foregoing
has yet occurred, the occurrence of a Change of Control.
Section 2: Change of Control Pursuant to a Merger or Acquisition
In the event of a Change of Control as a result of a merger or acquisition of
the Company, the following terms shall have the meanings set forth below:
"Acquiror" shall mean the third-party that has entered into such definitive
documentation with the Company or that has commenced such a tender or exchange
offer
"Acquiror's Share Price" shall mean the average of the Acquiror's closing stock
prices for the 10 trading day period immediately preceding the Initiation Date.
"Company Stock Price", for purposes of this Section 2, shall mean the average
of the Company's closing stock prices for the 10 trading day period immediately
preceding the Initiation Date.
In the event of a Change of Control as a result of a merger or acquisition of
the Company, the computation of the value of the Warrant shall use the
Black-Scholes calculation methods using the following assumptions:
1) Volatility of the closing sales price of the Common Stock for the
260-trading day period ending on the Trigger Date as reported by
Bloomberg; 2) Dividend Yield of 0.00%; 3) Interest Rate of 5.50%; 4)
Exercise price will be the Exercise Price as adjusted and then in
effect for the Warrant at the time of the Trigger Date; 5) Term of the
Warrant will be the remaining term of the Warrant from the Trigger Date
to the stated expiration date of the Warrant; and 6) The underlying
security price for purposes of the Black-Scholes model will be
calculated as follows:
a) In the event of an "all cash" deal, the cash per share offered
to holders of the Company's Common Stock by the Acquiror; b) In
the event of an "all stock" deal:
x) in the event of a fixed exchange ratio transaction, the
price per share of the Company's Common Stock arrived at by
multiplying the Acquiror's Stock Price by the number of
Acquiror's shares being offered for 1 share of the Company's
Common Stock; y) in the event of a fixed value transaction,
the value offered by the Acquiror for 1 share of the
Company's Common Stock.
c) In the event of a transaction contemplating various forms of
consideration for each share of the Company's Common Stock, the
cash portion, if any, shall be valued as per paragraph a) above;
the stock portion shall be valued as per paragraph b) above, and
any other forms of consideration shall be valued by the Company
in good faith, without applying any discounts to such
consideration; provided, that in the event the Company's
stockholders are offered a choice of consideration, the value
offered per share shall be deemed the aggregate value of all
consideration offered for all of the outstanding shares of the
Company's Common Stock, divided by the total number of
outstanding shares of the Company's Common Stock.
Section 3: Other Change of Control Events
In all other Change of Control events, the computation of the option value of
each Warrant shall use the Black-Scholes calculation methods using the
following assumptions:
1) Volatility of the closing sales price of the Common Stock for the
260-trading day period ending on the Trigger Date as reported by
Bloomberg; 2) Dividend Yield of 0.00%; 3) Interest Rate of 5.50%; 4)
Exercise price will be the Exercise Price as adjusted and then in effect
for the Warrant at the time of the Change of Control Event ; 5) Term of
the Warrant will be the remaining term of the Warrant from the Change in
Control Event Date to the stated expiration date of the Warrant; and 6)
The underlying security price for purposes of the Black-Scholes model
will be calculated using the average of the closing market price of the
Company's Common Stock for the ten (10) trading days commencing
immediately after the date of the Change in Control event (for purposes
of this Section 3, "Company Stock Price").
Section 4: Exercisability; Form of Payment
The holder can exercise the Exchange Right at any time during the ten (10)
business days following the Initiation Date and the Company shall provide
written notice to the holder immediately upon occurrence of the Initiation
Date. In the event the Company elects to exchange the Warrant for shares of
Common Stock of the Company pursuant to Section 12(b) thereof, the holder will
receive that number of shares of Common Stock arrived at by dividing the value
of the Warrant, as determined above, by the Company Stock Price, determined in
accordance with Section 2 or Section3, as applicable.
Section 5: General
Upon a calculation of the value of the Warrant based on the Black-Scholes
computations above, such value will not be discounted in any way. If the holder
disputes the valuation of the Warrant, the Company and the holder will choose a
mutually agreeable investment banking or appraisal firm to compute the
valuation of the Warrant using the guidelines above, and such valuation shall
be final. The fees and expenses of such firm shall be borne equally by the
Company and the holder.