Warrant to Purchase Common Stock Agreement between Virage, Inc. and JRT Investment Company

Summary

This agreement grants JRT Investment Company the right to purchase up to 200,000 shares of common stock from Virage, Inc. at a price of $0.57 per share before December 23, 2005. The warrant includes provisions for adjustments to the price and number of shares in case of stock splits, dividends, mergers, or other corporate changes. The shares issued under this warrant are not registered under the Securities Act and have restrictions on transfer. The agreement outlines the rights and obligations of both parties regarding the exercise and adjustment of the warrant.

EX-4.6 3 p16658_ex4-6.txt WARRANT TO PURCHASE COMMON STOCK Exhibit 4.6 SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. WARRANT TO PURCHASE COMMON STOCK of VIRAGE, INC. 1. Number of Shares Subject to Warrant. FOR VALUE RECEIVED, on and after the date hereof, and subject to the terms and conditions herein set forth, Holder (as defined below) is entitled to purchase from Virage, Inc., a Delaware corporation (the "Company"), at any time (subject to Section 6 hereof) before the Termination Date (as defined below), at a price per share equal to the Warrant Price (as defined below and subject to adjustments as described below), the Warrant Stock (as defined below and subject to adjustments as described below) upon exercise of this Warrant pursuant to Section 6 hereof. 2. Definitions. As used in this Warrant, the following terms shall have the definitions ascribed to them below: (a) "Holder" shall mean JRT Investment Company, a limited partnership wholly owned by the Jim Joseph Revocable Trust dated January 19, 1990 or its assigns. (b) "Securities" shall mean fully paid and non-assessable shares of Common Stock of the Company. (c) "Termination Date" shall mean 5:00 p.m. Pacific Time on December 23, 2005. (d) "Warrant Price" shall be equal to $0.57. (e) "Warrant Stock" shall mean the Securities purchasable upon exercise of this Warrant. The total number of shares to be issued upon exercise of the Warrant, subject to adjustment as described in Section 3 below, shall equal two hundred thousand (200,000) shares. 3. Adjustments and Notices. The Warrant Price shall be subject to adjustment from time to time in accordance with the following provisions: -1- (a) Subdivision, Stock Dividends or Combinations. In case the Company shall at any time subdivide the outstanding shares of the Securities or shall issue a stock dividend with respect to the Securities, the Warrant Stock and the Warrant Price in effect immediately prior to such subdivision or the issuance of such dividend shall be proportionately increased and decreased, respectively, and in case the Company shall at any time combine the outstanding shares of the Securities, the Warrant Stock and Warrant Price in effect immediately prior to such combination shall be proportionately decreased and increased, respectively, effective at the close of business on the date of such subdivision, dividend or combination, as the case may be. (b) Reclassification, Exchange, Substitution, In-Kind Distribution. In the case of any reclassifications, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant or upon the payment of a dividend in cash, securities or property other than Securities, the Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the amount of cash and number and kind of securities and property that Holder would have received for the Warrant Stock if this Warrant had been exercised immediately before the record date for such reclassification, exchange, substitution, or other event or immediately prior to the record date for such dividend. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise the new Warrant. The provisions of this Section 3(b) shall similarly apply to successive reclassifications, exchanges, substitutions, or other events and successive dividends. (c) Reorganization, Merger etc. In case of any (i) merger or consolidation of the Company into or with another corporation where the Company is not the surviving corporation, (ii) sale, transfer or lease (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of the Company, or (iii) sale by the Company's stockholders of 50% or more of the Company's outstanding securities in one or more related transactions from and after the occurrence thereof, the Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of the Securities theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reorganization, merger or sale by the Holder to which the Holder would have been entitled if this Warrant had been exercised immediately prior to the record date for such reorganization, merger or sale. The provisions of this subparagraph (c) shall similarly apply to successive reorganizations, mergers and sales. (d) No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Section 3 and in taking all such action as may be necessary or appropriate to protect the Holder's rights under this Section 3 against impairment. If the Company takes any action affecting the Securities, other than as described above, that adversely affects Holder's rights under this Warrant, the Warrant Price shall be adjusted downward. -2- (e) Notice. Upon any adjustment of the Warrant Price and any increase or decrease in the number of shares of the Securities purchasable upon the exercise or conversion of this Warrant, then, and in each such case, the Company, as promptly as practicable thereafter, shall give written notice thereof to the Holder of this Warrant at the address of such Holder as shown on the books of the Company which notice shall state the Warrant Price as adjusted and the increased or decreased number of shares purchasable upon the exercise or conversion of this Warrant, setting forth in reasonable detail the method of calculation of each. The Company further agrees to notify the Holder of this Warrant in writing (including via electronic mail) of a reorganization, merger or sale in accordance with Section 3(c) hereof at least thirty (30) days prior to the effective date thereof. (f) Fractional Shares. No fractional shares shall be issuable upon exercise or conversion of the Warrant and the number of shares to be issued shall be rounded down to the nearest whole share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying the Holder an amount computed by multiplying the fractional interest by the fair market value of a full share. 4. No Stockholder Rights. This Warrant, by itself, as distinguished from any shares purchased hereunder, shall not entitle its Holder to any of the rights of a stockholder of the Company. 5. Reservation of Stock. On and after the date hereof, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the conversion of the Warrant Stock. Issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Warrant Stock issuable upon the exercise or conversion of this Warrant. 6. Exercise of Warrant. (a) Method of Exercise. This Warrant may be exercised in whole or part by the Holder, at any time after the date hereof and prior to the Termination Date, by the surrender of this Warrant, together with the Notice of Exercise and Investment Representation Statement in the forms attached hereto as Attachment 1 and Attachment 2, respectively, duly completed and executed at the principal office of the Company, specifying the portion of the Warrant to be exercised and accompanied by payment in full of the Warrant Price, by cash or check, with respect to the shares of Warrant Stock being purchased. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated for all purposes as holder of such shares of record as of the close of business on such date. As promptly as practicable after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full shares of Warrant Stock issuable upon such exercise. If the Warrant shall be exercised for less than the total number of shares of Warrant Stock then issuable upon exercise, promptly after surrender of the Warrant upon such exercise, the Company will execute and deliver a new Warrant, dated the date hereof, evidencing the right of the Holder to the balance of the Warrant Stock purchasable hereunder upon the same terms and conditions set forth herein. All of the Warrant Stock issuable upon exercise of the rights represented by this Warrant will, upon issuance and receipt of the Warrant Price thereof, be fully paid and non-assessable, and free of all taxes, liens and charges with respect to the issuance thereof and any preemptive or similar rights. The Company shall pay all taxes and any and all United States federal, state and local taxes and other charges that may be payable in connection with the preparation, issuance and delivery of the certificates representing the Warrant Stock. -3- (b) Conversion. In lieu of exercising this Warrant or any portion hereof, the Holder shall have the right to convert this Warrant or any portion hereof into Warrant Stock by executing and delivering to the Company at its principal office the written Notice of Conversion and Investment Representation Statement in the forms attached hereto as Attachment 2 and Attachment 3, respectively, specifying the portion of the Warrant to be converted, and accompanied by this Warrant. The number of Warrant Stock to be issued upon such conversion shall be computed using the following formula: X = (P) (Y) (A-B) ------------- A where X = the number of Warrant Stock to be issued to the Holder for the portion of the Warrant being converted. P = the portion of the Warrant being converted expressed as a decimal fraction. Y = the total number of Warrant Stock issuable upon exercise of the Warrant in full pursuant to Section 6(a) above. A = the fair market value of one share of Warrant Stock. The term "Fair Market Value" shall mean the average of the daily closing prices of the Securities for the ten (10) consecutive Trading Days ending on the Trading Day preceding the date of such exercise. As used herein the term "Trading Days" with respect to the Securities means (i) if the Securities are quoted on the NASDAQ Stock Markets, Inc. and any similar system of automated dissemination of quotations of securities prices, days on which trades may be made on such system or (ii) if the Securities are listed or admitted for trading on any national securities exchange, days on which such national securities exchange is open for business. B = the Warrant Price in effect under this Warrant on the date of conversion. Any portion of this Warrant that is converted shall be immediately canceled and, unless this Warrant has been fully converted or has expired, a New Warrant representing the portion of the Warrant Stock, if any, with respect to which this Warrant shall not have been converted, shall be issued to the Holder hereof. 7. Transfer of Warrant. This Warrant may be transferred or assigned by the Holder hereof in whole or in part, provided that (i) the transferor provides, at the Company's request, an opinion of counsel satisfactory to the Company that such transfer does not require registration under the Act and the securities law applicable with respect to any other applicable jurisdiction, and (ii) the Company, in its sole discretion, consents to such assignment or transfer. 8. Market Stand-Off Agreement. The Holder, if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, shall agree not to sell or otherwise transfer or dispose of any securities held by the Holder during the one hundred eighty (180) day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, if such securities are registered pursuant to a secondary offering or similar offer to sell securities. 9. Termination. This Warrant shall terminate on the Termination Date. -4- 10. Miscellaneous. This Warrant shall be governed by the laws of the State of California, as such laws are applied to contracts to be entered into and performed entirely in California. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed or waived orally, but only by an instrument in writing signed by the Company and the Holder of this Warrant. All notices and other communications from the Company to the Holder of this Warrant shall be delivered personally or mailed by first class mail, postage prepaid, to the address furnished to the Company in writing by the last Holder of this Warrant who shall have furnished an address to the Company in writing, and if mailed shall be deemed given three days after deposit in the United States mail. ISSUED: December 23, 2002 VIRAGE, INC. By: /s/ Paul G. Lego ------------------------- Paul G. Lego, President -5- Attachment 1 NOTICE OF EXERCISE TO: Virage, Inc. 1. The undersigned hereby elects to purchase _________________ shares of the Warrant Stock of Virage, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any. 2. Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below: ---------------------------------------- (Name) ---------------------------------------- (Address) - ------------------------------- ------------------------------- (Date) (Name of Warrant Holder) By: ---------------------------- Title: -------------------------- -6- Attachment 2 INVESTMENT REPRESENTATION STATEMENT Shares of the Securities (as defined in the attached Warrant) of Virage, Inc. In connection with the purchase of the above-listed securities, the undersigned hereby represents to Virage, Inc. (the "Company") as follows: (a) The securities to be received upon the exercise of the Warrant (the "Securities") will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof. (b) The undersigned understands that the Securities issuable upon exercise of the Warrant at the time of issuance may not be registered under the Securities Act of 1933, as amended (the "Act"), and applicable state securities laws, on the ground that the issuance of such securities is exempt pursuant to Section 4(2) of the Act and state law exemptions relating to offers and sales not by means of a public offering, and that the Company's reliance on such exemptions is predicated on the undersigned's representations set forth herein. (c) The undersigned represents that it has had the opportunity to ask questions of the Company concerning the Company's business and assets and has had all questions which have been asked by it satisfactorily answered by the Company. (d) The undersigned acknowledges that the Securities issuable upon exercise of the Warrant must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. The undersigned is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through a "broker's transaction" or in transactions directly with a "market makers" (as provided by Rule 144(f)) and the number of shares being sold during any three-month period not exceeding specified limitations. Dated: ---------------------------- ------------------------------- (Type or Printed Name) By: ---------------------------- (Signature) -------------------------------- (Title) -7- Attachment 3 NOTICE OF CONVERSION TO: VIRAGE, INC. 1. The undersigned hereby elects to acquire ____________ shares of the Securities of Virage, Inc. pursuant to the terms of the attached Warrant, by conversion of _____ percent (____%) of the Warrant. 2. Please issue a certificate or certificates representing said shares of Securities in the name of the undersigned or in such other name as is specified below: ---------------------------------------- (Name) ---------------------------------------- (Address) Dated: -------------------------------- ------------------------------- (Type or Printed Name) By: ---------------------------- (Signature) -------------------------------- (Title) -8-