Exhibit 4.6
COMMON STOCK
WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER
SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT
OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.
WARRANT TO PURCHASE SHARES OF COMMON
STOCK
THIS CERTIFIES THAT, for value received, General
Electric Capital Corporation, (“Holder”) is entitled to
subscribe for and purchase that number of shares as set forth in
Section 1 of the fully paid and nonassessable Common Stock
(the “Shares” or the “Common Stock”) of
FAVRILLE INC., a Delaware corporation (the “Company”),
at the Warrant Price (as hereinafter defined), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term “Common Stock” shall mean the
Company’s presently authorized Common Stock.
1.
Warrant Price and Number of
Shares . The
Warrant Price per share shall initially be deemed to be the average
of the closing bid and asked prices of the Common Stock over the
twenty (20) trading days immediately prior to the Closing Date,
subject to adjustment as provided in Section 7 below. The
Closing Date shall be deemed to be the actual “as of
date” of the December 2005 Amendment between Holder and
the Company. The Number of Shares shall equal Two Hundred Thousand
Dollars ($200,000) divided by the Warrant Price per
share.
2.
Conditions to Exercise
. The purchase right
represented by this Warrant may be exercised at any time, or
from time to time, in whole or in part during the term
commencing on the date hereof and ending on 5:00 P.M. Eastern
Standard time on the fifth (5 th ) annual anniversary of
this Warrant.
3.
Method of Exercise; Payment;
Issuance of Shares; Issuance of New Warrant .
(a)
Cash Exercise
. Subject to Section 2 hereof,
the purchase right represented by this Warrant may be
exercised by the Holder hereof, in whole or in part, by the
surrender of this Warrant (with a duly executed Notice of Exercise
in the form attached hereto) at the principal office of the
Company (as set forth in Section 19 below) and by payment to
the Company, by check, of an amount equal to the then applicable
Warrant Price per share multiplied by the number of shares then
being purchased. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock
so purchased shall be in the name of, and delivered to, the Holder
hereof, or as such Holder may direct (subject to the terms of
transfer contained herein and upon payment by such Holder hereof of
any applicable transfer taxes). Such delivery shall be made within
10 days after exercise of the Warrant and at the Company’s
expense and, unless this Warrant has been fully exercised or
expired, a new Warrant having terms and conditions substantially
identical to this Warrant and representing the portion of the
Shares, if any, with respect to which this Warrant shall not have
been exercised, shall also be issued to the Holder hereof within 10
days after exercise of the Warrant.
(b)
Net Issue Exercise
. In lieu of exercising this Warrant
pursuant to Section 3(a), Holder may elect to receive
shares equal to the value of this Warrant (or of any portion
thereof remaining unexercised) by surrender of this Warrant at the
principal office of the Company together with notice of such
election, in which event the Company shall issue to Holder the
number of shares of the Company’s Common Stock computed using
the following formula:
X = Y (A-B)
A
1
Where X = the number of shares of
Common Stock to be issued to Holder.
Y = the number of shares of Common
Stock purchasable under this Warrant (at the date of such
calculation).
A = the Fair Market Value of one
share of the Company’s Common Stock (at the date of such
calculation).
B = Warrant Price per share (as
adjusted to the date of such calculation).
(c)
Fair Market Value
. For purposes of this
Section 3, Fair Market Value of one share of the
Company’s Common Stock shall mean:
(i)
If the Common Stock is traded on
Nasdaq or Over-The-Counter or on an exchange, the per share Fair
Market Value for the Common Stock will be the average of the
closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or the closing price quoted on any
exchange on which the Common Stock is listed, whichever is
applicable, as published in the Western Edition of The Wall Street
Journal for the ten (10) trading days prior to the date of
determination of Fair Market Value; or
(ii)
In any other instance, the per share
Fair Market Value for the Common Stock shall be as determined in
good faith by the Company’s Board of Directors unless Holder
elects to have such fair market value determined by an appraiser,
which election must be made by Holder within ten (10) business
days of the date the Company notifies Holder of the fair market
value as determined by its Board of Directors. In the event of such
an appraisal, the cost thereof shall be borne by the Holder unless
such appraisal results in a fair market value in excess of 115% of
that determined by the Company’s Board of Directors, in which
event the Company shall bear the cost of such appraisal.
In the event of 3(c)(ii) above,
the Company’s Board of Directors shall prepare a certificate,
to be signed by an authorized Officer of the Company, setting forth
in reasonable detail the basis for and method of determination of
the per share Fair Market Value of the Common Stock. The Board will
also certify to the Holder that this per share Fair Market Value
will be applicable to all holders of the Company’s Common
Stock that require a fair market value determination as of the same
date as Holder.
(d)
Automatic Exercise
. To the extent this Warrant is not
previously exercised, it shall be automatically exercised in
accordance with Sections 3(b) and 3(c) hereof (even if
not surrendered) immediately before its expiration.
4.
Representations and Warranties of
Holder and Restrictions on Transfer Imposed by the Securities Act
of 1933 .
(a)
Representations and Warranties by
Holder . The Holder
represents and warrants to the Company with respect to this
purchase as follows:
(i)
The Holder has substantial
experience in evaluating and investing in private placement
transactions of securities of companies similar to the Company so
that the Holder is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its
interests. The Holder is an “accredited investor” as
that term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the
“Act”).
2
(ii)
The Holder is acquiring the Warrant
and the Shares of Common Stock issuable upon exercise of the
Warrant (collectively the “Securities”) for investment
for its own account and not with a view to, or for resale in
connection with, any distribution thereof. The Holder understands
that the Securities have not been registered under the Act by
reason of a specific exemption from the registration provisions of
the Act, which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein. In this
connection, the Holder understands that, in the view of the
Securities and Exchange Commission (the “SEC”), the
statutory basis for such exemption may be unavailable if this
representation was predicated solely upon a present intention to
hold the Securities for the minimum capital gains period specified
under tax statutes, for a deferred sale, for or until an increase
or decrease in the market price of the Securities or for a period
of one year or any other fixed period in the future.
(iii)
The Holder acknowledges that the
Securities must be held indefinitely unless subsequently registered
under the Act or an exemption from such registration is available.
The Holder is aware of the provisions of Rule 144 promulgated
under the Act (“Rule 144”) which permits limited
resale of securities purchased in a private placement subject to
the satisfaction of certain conditions, including, in case the
securities have been held for more than one but less than two
years, the existence of a public market for the shares, the
availability of certain 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 a transaction
directly with a “market maker” (as provided by
Rule 144(f)) and the number of shares or other securities
being sold during any three-month period not exceeding specified
limitations.
(iv)
The Holder further understands that
at the time the Holder wishes to sell the Securities there
may be no public market upon which such a sale may be
effected, and that even if such a public market exists, the Company
may not be satisfying the cu
