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EXHIBIT 4.1
[FORM OF COMMON STOCK PURCHASE WARRANT]
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
APPLIED DIGITAL SOLUTIONS, INC.
COMMON STOCK PURCHASE WARRANT
No. W-_______ October 26, 2000
Warrant to Purchase ____
Shares of Common Stock
APPLIED DIGITAL SOLUTIONS, INC.
APPLIED DIGITAL SOLUTIONS, INC., Missouri corporation (the "Company"),
for value received, hereby certifies that ________________ or registered assigns
(the "Holder"), is entitled to purchase from the Company _______________(1) (the
"Warrant Shares") duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock, par value $.001 per share, of the Company (the "Common
Stock"), at a purchase price equal to $______(2) per share (the "Purchase
Price"), at any time or from time to time on and after the date hereof and prior
to 5:00 P.M., New York City time, on October 26, 2005 (the "Expiration Date"),
all subject to the terms, conditions and adjustments set forth below in this
Warrant.
This Warrant is one of the Common Stock Purchase Warrants
(collectively, the "Warrants", such term to include any such warrants issued in
substitution therefor) originally issued pursuant to the terms of the Securities
Purchase Agreement, dated as of October 25, 2000, by and among the Company and
the Buyers signatory thereto (the "Purchase Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned such
terms in the Purchase Agreement.
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(1) A number of shares equal to 4,000 multiplied by each $100,000 paid for the
preferred stock purchased by the Holder.
(2) 125% of the closing price of the Company's common stock on the date prior
to issuance.
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1. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms shall have the meanings indicated:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean, all shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to Section 3.3 or
3.4, deemed to be issued) by the Company after the Initial Issuance Date (as
defined in the Purchase Agreement), whether or not subsequently reacquired or
retired by the Company other than (a) (i) shares of Common Stock issued upon
conversion of the Series C Preferred Shares, (ii) shares of Common Stock issued
upon exercise of the Warrants, (iii) such number of additional shares of Common
Stock as may become issuable by conversion of the Series C Preferred Shares and
exercise of the Warrants by reason of adjustments required pursuant to the
anti-dilution provisions applicable to such Warrants or Series C Preferred
Shares; (b) shares of Common Stock issued pursuant to Approved Stock Plans (as
defined herein), (c) shares of Common Stock issued in connection with
acquisitions of assets or stock of an unaffiliated third party consummated on an
arms-length basis (including any brokerage commissions or finders fees relating
thereto and any shares issuable in respect of rights granted by an acquired
company which were in existence at the time of acquisition of such company by
the Company); (d) shares of Common Stock issued in connection with joint
ventures, licensing arrangements or strategic relationships; provided that no
more that 10 million shares are so issued in the aggregate pursuant to clauses
(c) and (d) during the three (3) month period beginning on the Initial Issuance
Date; and (e) shares of Common Stock issued pursuant to any right (contingent or
otherwise) to purchase such shares as set forth in Schedule 3(c)(i) to the
Purchase Agreement.
"ANNIVERSARY DATE" shall mean October 26 of each calendar year.
"APPROVED STOCK PLAN" shall mean any contract, plan or agreement which
has been or shall be approved by the Board of Directors of the Company pursuant
to which the Company's securities may be issued to any employee, officer,
director, consultant or other service provider of the Company in an aggregate
amount that does not exceed 25% of the Company's then outstanding Common Stock.
"AVERAGE MARKET PRICE" shall mean the average of the Closing Price of
the Common Stock for the ten (10) trading days immediately preceding the
applicable date.
"BUSINESS DAY" shall mean any day other than a Saturday or a Sunday or
a day on which commercial banking institutions in the City of New York are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
"BUY IN ACTUAL DAMAGES" shall have the meaning assigned to it in
Section 2.6 of this Agreement.
"CLOSING PRICE" shall mean for any security as of any date, the last
closing price on the Nasdaq National Market at 4:00 Eastern Standard Time as
reported by Bloomberg, L.P. ("BLOOMBERG") or, if the Nasdaq National Market is
not the principal securities exchange for such security, the last closing price
of such security on the principal securities exchange or trading market where
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such security is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing price is reported for such security by Bloomberg,
the last trade price of such security as reported by Bloomberg, or, if no last
trade price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Price cannot be calculated
for such security on such date, as set forth above, the Closing Price of such
security shall be the fair market value as determined in good faith by an
investment banking firm jointly selected by the Company and the Holders, with
the fees and expenses of such determination borne solely by the Company.
"COMMISSION" shall mean the Securities and Exchange Commission or any
successor agency having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any stock into which such
Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
"COMPANY" shall have the meaning assigned to it in the introduction to
this Warrant, such term to include any corporation or other entity which shall
succeed to or assume the obligations of the Company hereunder in compliance with
Section 4.
"CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
"CURRENT MARKET PRICE" shall mean, on any date specified herein, the
average of the daily Closing Prices for the Common Stock during the 10
consecutive trading days commencing 15 trading days before such date, except
that, if on any such date the shares of Common Stock are not listed or admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Fair Value on
such date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"EXPIRATION DATE" shall have the meaning assigned to it in the
introduction to this Warrant.
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"FAIR VALUE" shall mean, on any date specified herein (i) in the case
of cash, the dollar amount thereof, (ii) in the case of a security admitted for
trading on any national securities exchange or quoted in the over-the-counter
market, the Average Market Price, and (iii) in all other cases as determined in
good faith jointly by the Board of Directors of the Company and the Holder;
PROVIDED, HOWEVER, that if such parties are unable to reach agreement within a
reasonable period of time, the Fair Value shall be determined in good faith by
an independent investment banking firm selected jointly by the Company and the
Holder or, if that selection cannot be made within ten days, by an independent
investment banking firm selected by the American Arbitration Association in
accordance with its rules, and PROVIDED FURTHER, that the Company shall pay all
of the fees and expenses of any third parties incurred in connection with
determining the Fair Value.
"OPTIONS" shall mean any rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
"OTHER SECURITIES" shall mean any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
"PERSON" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"PURCHASE AGREEMENT" shall have the meaning assigned to it in the
introduction to this Warrant.
"PURCHASE PRICE" shall mean the amount per share indicated in the
introductory paragraph to this Warrant subject to adjustment and readjustment
from time to time as provided in Section 3, and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by Section 3.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Agreement
dated as of October 25, 2000, substantially in the form of Exhibit C to the
Purchase Agreement.
"RIGHTS" shall have the meaning assigned to it in Section 3.10.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder, or any successor
statute.
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"WARRANTS" shall have the meaning assigned to it in the introduction to
this Warrant.
2. EXERCISE OF WARRANT.
2.1. MANNER OF EXERCISE; PAYMENT OF THE PURCHASE PRICE. (a) This
Warrant may be exercised by the Holder, in whole or in part, at any time or from
time to time on and after the date hereof and prior to the Expiration Date, by
surrendering to the Company at its principal office (or such other office or
agency of the Company as the Company may designate in a written notice to the
Holder) this Warrant, together with the form of Election to Purchase Shares
attached hereto as Exhibit A (or a reasonable facsimile thereof) duly executed
by the Holder and accompanied by payment of the Purchase Price as described
below for the number of shares of Common Stock specified in such form.
(b) Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check or bank draft payable to the order of the Company or by
wire transfer to the account of the Company, (ii) by cancellation of such number
of the shares of Common Stock otherwise issuable to the Holder upon such
exercise as shall be specified in such Election to Purchase Shares, such that
the excess of the Current Market Price of such specified number of shares on the
date of exercise over the portion of the Purchase Price attributable to such
shares shall equal the Purchase Price attributable to the shares of Common Stock
to be issued upon such exercise, in which case upon delivery of such notice such
amount shall be deemed to have been paid to the Company and the number of shares
issuable upon such exercise shall be reduced by such specified number, or (iii)
by surrender to the Company for cancellation, certificates representing shares
of Common Stock of the Company owned by the Holder (properly endorsed for
transfer in blank) having a Current Market Price on the date of Warrant exercise
equal to the Purchase Price.
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to, and the
Purchase Price shall have been received by, the Company as provided in Section
2.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 2.3 shall be deemed
to have become the holder or holders of record thereof for all purposes.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC.; CHARGES, TAXES AND EXPENSES.
Subject to Section 2.5 (a) as soon as practicable after each exercise of this
Warrant, in whole or in part, and in any event within three Business Days
thereafter, the Company shall cause to be issued in such denominations as may be
requested by Xxxxxx in the Election to Purchase Shares, in the name of and
delivered to the Holder or, subject the Purchase Agreement, as the Holder may
direct,
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(i) a certificate or certificates, or, if then permissible
under the Securities Act, at a Holder's request to electronically issue
such shares (e.g., through DWAC or DTC), an electronic issuance for the
number of shares of Common Stock (or Other Securities) to which the
Holder shall be entitled upon such exercise plus, in lieu of issuance
of any fractional share to which the Holder would otherwise be
entitled, if any, a certified check for the amount of cash equal to the
same fraction multiplied by the Current Market Price per share on the
date of Warrant exercise, PROVIDED, HOWEVER, that in the event
sufficient funds are not legally available for the payment of such
amount, the number of shares of Common Stock for which such
certificate(s) represents shall be rounded up to the nearest whole
number, and
(ii) in case such exercise is for less than all of the shares
of Common Stock purchasable under this Warrant, a new Warrant or
Warrants of like tenor, for the balance of the shares of Common Stock
purchasable hereunder.
(b) Issuance of certificates for shares of Common Stock upon
the exercise 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 such taxes and expenses shall be
paid by the Company.
2.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company shall, at
the time of each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, PROVIDED that if the
Holder of this Warrant shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford such rights to the
Holder.
2.5. EXERCISE DISPUTES. In the case of any dispute with
respect to the number of shares to be issued upon exercise of this Warrant, the
Company shall promptly issue such number of shares of Common Stock that is not
disputed and shall submit the disputed determinations or arithmetic calculations
to the Holder via facsimile within two (2) Business Days of receipt of the
Holder's Election to Purchase Shares. If the Holder and the Company are unable
to agree as to the determination of the Purchase Price within two (2) Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall in accordance with this Section, submit via
facsimile the disputed determination to an independent reputable accounting firm
of national standing, selected jointly by the Company and the Holder. The
Company shall cause such accounting firm to perform the determinations or
calculations and notify the Company and the Holder of the results within
forty-eight (48) hours from the time it receives the disputed determinations of
calculations. Such accounting firm's determination shall be binding upon all
parties absent manifest error. The Company shall then on the next Business Day
issue certificate(s) representing the appropriate number of shares of Common
Stock in accordance with such accounting firm's determination and this Section.
All fees and expenses of such determination and calculation shall be borne by
the Company.
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2.6. FAILURE TO DELIVER COMMON STOCK. If, at any time, the Holder of
this Warrant submits this Warrant, an Election to Purchase Shares and payment to
the Company of the Purchase Price for each of the shares of Common Stock
specified in the Election to Purchase Shares in accordance with Section 2.1
above, and the Company, for any reason, fails to deliver, on or prior to the
last possible date which the Company could have issued such Common Stock to the
Holder without violating this Section 2, the number of shares of Common Stock
for which the Holder is entitled upon such exercise, the Company shall pay
damages to the Holder equal to the greater of (a) actual damages incurred by the
Holder as a result of the Holder's needing to "buy in" shares of Common Stock to
the extent necessary to satisfy its securities delivery requirements ("Buy In
Actual Damages") and (b) if the Company fails to deliver such certificates
within five days after the last possible date on which the Company could have
issued such Common Stock to the Holder without violating this Section 2, on each
date such exercise is not timely effected in an amount equal to 1% of the
product of (i) the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is entitled and (ii) the Closing Price of
the Common Stock on the last possible date which the Company could have issued
such Common Stock to the Holder without violating this Section 2.
3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
3.1. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Purchase Price as a result of the calculations made in this Section 3, this
Warrant shall thereafter evidence the right to receive, at the adjusted Purchase
Price, that number of shares of Common Stock (calculated to the nearest
one-hundredth) obtained by dividing (i) the product of the aggregate number of
shares covered by this Warrant immediately prior to such adjustment and the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by (ii) the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
3.2. ADJUSTMENT OF PURCHASE PRICE.
3.2.1. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case the
Company at any time or from time to time after the date hereof shall issue or
sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3.3 or 3.4 but excluding
Additional Shares of Common Stock purchasable upon exercise of Rights referred
to in Section 3.10), without consideration or for a consideration per share less
than either the Purchase Price or the Average Market Price as in effect
immediately prior to such issue or sale (the "Base Price"), then, and in each
such case, subject to Section 3.8, the Purchase Price shall be reduced,
concurrently with such issue or sale, to a price (calculated to the nearest .001
of a cent) determined by multiplying such Purchase Price by a fraction
(a) the numerator of which shall be the sum of (i) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale and (ii) the number of shares of Common Stock which the gross
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consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
such Base Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale, PROVIDED
that, for the purposes of this Section 3.2.1, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued
pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed
to be outstanding, and (y) treasury shares shall not be deemed to be
outstanding.
3.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case the Company
at any time or from time to time after the date hereof shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on the Common Stock, then, in each such case,
subject to Section 3.8, the Purchase Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
any class of securities entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Purchase Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading, less the Fair Value of such dividend or distribution
applicable to one share of Common Stock, and
(y) the denominator of which shall be such Current Market
Price.
3.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (other than warrants issued as an ancillary
part of any bank facility or borrowing from any financial institution not
undertaken to raise, or raising, directly or indirectly, equity capital)
(whether or not the rights thereunder are immediately exercisable) then, and in
each such case, the maximum number of Additional Shares of Common Stock (as set
forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue, sale, grant or assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), PROVIDED that such Additional Shares of Common Stock shall
not be deemed to have been issued unless (i) the consideration per share
(determined pursuant to Section 3.5) of such shares would be less than either
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the Purchase Price or the Average Market Price as in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be and (ii) such Additional Shares of Common Stock are
not purchasable pursuant to Rights referred to in Section 3.10, and PROVIDED,
FURTHER, that
(a) whether or not the Additional Shares of Common Stock
underlying such Options or Convertible Securities are deemed to be
issued, no further adjustment of the Purchase Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Purchase Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration or termination (or purchase by the
Company and cancellation or retirement) of any such Options which shall
not have been exercised or the expiration of any rights of conversion
or exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Purchase Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-dividend trading,
as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
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such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue or sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to Section 3.5)
upon the issue or sale of such Convertible Securities with
respect to which such Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Purchase Price by an amount in
excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Purchase Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
3.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
3.5. COMPUTATION OF CONSIDERATION. For the purposes of this Section 3,
(a) the consideration for the issue or sale of any Additional Shares of
Common Stock shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at the amount
of cash received by the Company, without deducting any expenses paid or
incurred by the Company or any commissions or compensations paid or
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concessions or discounts allowed to underwriters, dealers or others
performing similar services in connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the Fair Value thereof at the time of
such issue or sale, and
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and (ii)
above, allocable to such Additional Shares of Common Stock, such
allocation to be determined in the same manner that the Fair Value of
property not consisting of cash or securities is to be determined as
provided in the definition of 'Fair Value' herein;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 3.3, relating to Options and Convertible Securities, shall
be deemed to have been issued for a consideration per share determined by
dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in full of
such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number
to protect against dilution) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall
be deemed to have been issued for no consideration.
3.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Purchase Price in
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effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
3.7. DILUTION IN CASE OF OTHER SECURITIES. In case any Other Securities
shall be issued or sold or shall become subject to issue or sale upon the
conversion or exchange of any stock (or Other Securities) of the Company (or any
issuer of Other Securities or any other Person referred to in Section 4) or to
subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 3, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 3 with respect to the Purchase Price and the number
of shares purchasable upon Warrant exercise shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants, so as
to protect the holders of the Warrants against the effect of such dilution.
3.8. DE MINIMIS ADJUSTMENTS. If the amount of any adjustment of the
Purchase Price per share required pursuant to this Section 3 would be less than
$.01, such amount shall be carried forward and adjustment with respect thereto
made at the time of and together with any subsequent adjustment which, together
with such amount and any other amount or amounts so carried forward, shall
aggregate a change in the Purchase Price of at least $.01 per share. All
calculations under this Warrant shall be made to the nearest .001 of a cent or
to the nearest one-hundredth of a share, as the case may be.
3.9. ABANDONED DIVIDEND OR DISTRIBUTION. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution (which results in an adjustment to the
Purchase Price under the terms of this Warrant) and shall, thereafter, and
before such dividend or distribution is paid or delivered to stockholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Purchase Price and number of
shares of Common Stock purchasable upon Warrant exercise by reason of the taking
of such record shall be reversed, and any subsequent adjustments, based thereon,
shall be recomputed.
3.10. SHAREHOLDER RIGHTS PLAN. Notwithstanding the foregoing, in the
event that the Company shall distribute "poison pill" rights pursuant to a
"poison pill" shareholder rights plan (the "Rights"), the Company shall, in lieu
of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof, make
proper provision so that each Holder who exercises a Warrant after the record
date for such distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, a number of Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
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Common Stock issuable upon such exercise at the time of such exercise would be
entitled in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such exercise occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.
3.11. PURCHASE OF COMMON STOCK BY THE COMPANY. If the Company at any
time while this Warrant is outstanding shall, directly or indirectly through a
subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Current Market Price then in
effect, then the Purchase Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Purchase Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
gross consideration for the total number of shares of Common Stock so purchased,
redeemed or acquired would purchase at the Current Market Price; and (ii) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such purchase, redemption or acquisition. For the purposes of
this Section 3.11, the date as of which the Current Market Price shall be
computed shall be the earlier of (x) the date on which the Company shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock. For the purposes of this Section 3.11, a purchase, redemption or
acquisition of a Option shall be deemed to be a purchase of the underlying
Common Stock, and the computation herein required shall be made on the basis of
the full exercise, conversion or exchange of such Option on the date as of which
such computation is required hereby to be made, whether or not such Option is
actually exercisable, convertible or exchangeable on such date.
4. CONSOLIDATION, MERGER, ETC.
4.1. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital reorganization or reclassification resulting in the issue
of Additional Shares of Common Stock for which adjustment in the Purchase Price
is provided in Section 3.2.1 or 3.2.2), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the Holder of this Warrant,
upon the exercise hereof at the time of the consummation of such transaction
shall be entitled (x) to receive (at the aggregate Purchase Price in effect at
the time of such consummation for all Common Stock or Other Securities issuable
upon such exercise immediately prior to such consummation), in lieu of the
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Common Stock or Other Securities issuable upon such exercise prior to such
consummation, the amount of securities, cash or other property to which such
Holder would actually have been entitled as a stockholder upon such consummation
if such Holder had exercised this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as possible
to the adjustments provided for in Sections 3 through 5 or (y) to sell this
Warrant (or, at such Holder's election, a portion hereof) to the Person
continuing after or surviving upon such consummation, or to the Company (if the
Company is the continuing or surviving Person) at a sales price equal to the
amount of cash, property and/or securities to which a Holder of the number of
shares of Common Stock which would otherwise have been delivered upon the
exercise of this Warrant would have been entitled upon the consummation of any
such transaction (the "Event Consideration"), less the amount or portion of such
Event Consideration having a fair value equal to the aggregate Purchase Price
applicable to this Warrant or the portion hereof so sold.
4.2. REDEMPTION AT THE COMPANY'S ELECTION UPON MERGER TRANSACTION. At
any time or times on or after the date the Company publicly discloses a pending,
proposed or intended Merger Transaction (as defined below), the Company shall
have the right in its sole discretion, to require that all, but not less than
all, of this Warrant be redeemed ("Merger Redemption Election") at a price per
Warrant equal to the Purchase Price (the "Merger Redemption Price"); provided
that the Conditions to Merger Redemption Election (as set forth below) are
satisfied or waived by the Holder of this Warrant. The Company shall exercise
its right to make a Merger Redemption Election by providing the Holder of this
Warrant written notice ("Notice of Merger Redemption") by facsimile or overnight
courier, after the public disclosure of a proposed, pending or intended Merger
Transaction and at least twenty (20) trading days prior to the date of
consummation of the Merger Transaction. The Notice of Merger Redemption shall
indicate the anticipated date on which the Company shall redeem this Warrant
("Merger Election Redemption Date"), which date shall be the date of
consummation of the Merger Transaction. If the Company has exercised its right
of Merger Redemption Election and the conditions to such Merger Redemption
Election have been satisfied then this Warrant shall be redeemed as of the
Merger Election Redemption Date by payment by or on behalf of the Company to the
Holder of this Warrant of the Merger Redemption Price concurrent with the
closing of the Merger Transaction. The Holder of this Warrant shall thereupon
and within two (2) business days after the Merger Election Redemption Date, or
such earlier date as the Company and the Holder of this Warrant mutually agree,
surrender this Warrant to the Company. If the Company fails to pay the full
Merger Redemption Price with respect to this Warrant on the Merger Election
Redemption Date, the Merger Redemption Election shall be null and void with
respect this Warrant and the Holder of this Warrant shall be entitled to all the
rights of a Holder herein. Conditions to Merger Redemption Election means the
following conditions: (i) on each day during the period beginning on the date
the Company delivers its Notice of Merger Redemption the Holder of this Warrant
and ending on and including the date immediately preceding the Merger Election
Redemption Date, (A) no Permitted Blackout Period (as defined in the
Registration Rights Agreement) shall be in effect and the Registration Statement
shall have been effective and available for the sale of all of the Registrable
Securities on each such date or (B) all Warrant Shares may be sold without
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restriction under Rule 144(k) (assuming cashless exercise of the Warrants)
during such period; (ii) during the period beginning on the date of issuance of
this Warrant and ending on and including the date immediately preceding the
Merger Election Redemption Date, the Company shall have delivered Warrant Shares
upon exercise of this Warrant to the Buyers on a timely basis as set forth in
this Warrant; (iii) the Company shall have received the Stockholder Approval (as
defined in the Purchase Agreement); and (iv) the Company shall not have failed
to timely make any payments within five (5) business days of when such payment
is due, whether as interest or penalty payments, pursuant to the Certificate of
Designation, the Purchase Agreement, the Registration Rights Agreement or this
Warrant, including, but not limited to, dividends, whether in shares of
Preferred Stock or cash, default interest and cash payments due. Notwithstanding
the above, the Holder of this Warrant may exercise this Warrant pursuant to
Section 2 on or prior to the date immediately preceding the Merger Election
Redemption Date. For purposes of this Section 4.2, "Merger Transaction" means
the consolidation, merger or other business combination of the Company with or
into another Person (other than (A) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities, or (B) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company).
4.3. ASSUMPTION OF OBLIGATIONS. Except as provided in Section 4.2
hereof and notwithstanding anything contained in the Warrants or in the Purchase
Agreement to the contrary, the Company shall not effect any of the transactions
described in clauses (a) through (d) of Section 4.1 unless, prior to the
consummation thereof, each Person (other than the Company) which may be required
to deliver any stock, securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the Holder of this Warrant, (a) the obligations of
the Company under this Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition to, and
shall not release the Company from, any continuing obligations of the Company
under this Warrant), (b) the obligations of the Company under the Purchase
Agreement and the Registration Rights Agreement (if applicable) and (c) the
obligation to deliver to the Holder such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions of this Section 4, the
Holder may be entitled to receive and such Person shall have similarly delivered
to such Holder an opinion of counsel for such Person, which counsel shall be
reasonably satisfactory to such Holder, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof (including,
without limitation, all of the provisions of Sections 4.1, 4.3 and 4.4) shall be
applicable to the Securities, cash or property which such Person may be required
to deliver upon any exercise of this Warrant or the exercise of any rights
pursuant hereto. Nothing in this Section 4 shall be deemed to authorize the
Company to enter into any transaction not otherwise permitted by the Purchase
Agreement.
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4.4. OBLIGATION TO SECURE RIGHT TO SELL WARRANT. If with respect to the
consummation of any of the transactions described in clauses (a) through (d) of
Section 4.1, the Holder of this Warrant has exercised its right as provided in
clause (y) of Section 4.1 to sell this Warrant or a portion thereof, the Company
agrees that, subject to Section 4.2 hereof, as a condition to the consummation
of any such transaction the Company shall secure such right of Holder to sell
this Warrant to the Person continuing after or surviving upon such consummation
and the Company shall not effect any such transaction unless upon or prior to
the consummation thereof the amounts of cash, property and/or securities
required under such clause (y) are delivered to the Holder of this Warrant. The
obligation of the Company to secure such right of the Holder to sell this
Warrant shall be subject to such Holder's cooperation with the Company,
including, without limitation, the giving of customary representations and
warranties to the purchaser in connection with any such sale. Prior notice of
any of the transactions describe in clauses (a) through (d) of Section 4.1 shall
be given to the Holder of this Warrant in accordance with Section 8 hereof.
5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 3 or Section 4 hereof are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder
in accordance with the essential intent and principles of such Sections, then,
in each such case, the Board of Directors of the Company shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to preserve, without dilution, the
purchase rights represented by this Warrant.
6. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, 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 of this Warrant. Without limiting the generality of the
foregoing, the Company (a) shall not permit the par value of any shares of stock
receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) shall take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock, free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges on the exercise of the
Warrants from time to time outstanding, and (c) shall not take any action which
results in any adjustment of the Purchase Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of shares of Common Stock
(or Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such exercise.
7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise of this Warrant, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate, signed by the Chairman of the Board, President or one of
the Vice Presidents of the Company, and by the Chief Financial Officer, the
Treasurer or one of the Assistant Treasurers of the Company, setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or to be received
by the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of Common Stock outstanding
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or deemed to be outstanding, and (c) the Purchase Price in effect immediately
prior to such issue or sale and as adjusted and readjusted (if required by
Section 3) on account thereof. The Company shall forthwith mail a copy of each
such certificate to each holder of a Warrant and shall, upon the written request
at any time of any holder of a Warrant, furnish to such holder a like
certificate. The Company shall also keep copies of all such certificates at its
principal office and shall cause the same to be available for inspection at such
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the holder thereof. The Company
shall, upon the request in writing of the Holder (at the Company's expense),
retain independent public accountants of recognized national standing selected
by the Board of Directors of the Company to make any computation required in
connection with adjustments under this Warrant, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment, which
shall be binding on the Holder and the Company.
8. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company, any consolidation or merger involving the Company and any
other Person, any transaction or series of transactions in which more
than 50% of the voting securities of the Company are transferred to
another Person, or any transfer, sale or other disposition of all or
substantially all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified but in no event earlier than the public announcement of such
proposed transaction or event.
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9. REGISTRATION OF COMMON STOCK. If any shares of Common Stock required
to be reserved for purposes of exercise of this Warrant require registration
with or approval of any governmental authority under any federal or state law
(other than the Securities Act) before such shares may be issued upon exercise,
the Company shall, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national securities
exchange or trade market, the Company shall, at its expense, obtain promptly and
maintain the approval for listing on each such exchange or trade market, upon
official notice of issuance, the shares of Common Stock issuable upon exercise
of the then outstanding Warrants and maintain the listing of such shares after
their issuance; and the Company shall also list on such national securities
exchange or trade market, shall register under the Exchange Act and shall
maintain such listing of, any Other Securities that at any time are issuable
upon exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange or trade market
by the Company.
10. RESERVATION OF STOCK, ETC. The Company shall at all times reserve
and keep available, solely for issuance and delivery upon exercise of the
Warrants, 100% of the number of shares of Common Stock (or Other Securities)
from time to time issuable upon exercise of all Warrants at the time outstanding
and otherwise in accordance with the terms of the Purchase Agreement. All shares
of Common Stock (or Other Securities) issuable upon exercise of any Warrants
shall be duly authorized and, when issued upon such exercise, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges. The transfer agent for the Common
Stock, which may be the Company (the "Transfer Agent"), and every subsequent
Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of any of the purchase rights represented by this Warrant, are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be requisite for
such purpose. The Company shall keep copies of this Warrant on file with the
Transfer Agent for the Common Stock and with every subsequent Transfer Agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by this Warrant. The Company shall supply such
Transfer Agent with duly executed stock certificates for such purpose. All
Warrant Certificates surrendered upon the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of stock which have been issued upon
the exercise of such Warrants. Subsequent to the Expiration Date, no shares of
stock need be reserved in respect of any unexercised Warrant.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. Each Warrant issued by
the Company shall be numbered and shall be registered in a warrant register (the
"Warrant Register") as it is issued and transferred, which Warrant Register
shall be maintained by the Company at its principal office or, at the Company's
election and expense, by a Warrant Agent or the Company's transfer agent. The
Company shall be entitled to treat the registered Holder of any Warrant on the
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Warrant Register as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in such Warrant
on the part of any other Person, and shall not be affected by any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes. A Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
11.2. TRANSFER OF WARRANTS. Subject to the restrictions on transfer set
forth in the Purchase Agreement, this Warrant and all rights hereunder are
transferable in whole or in part, without charge to the Holder hereof, upon
surrender of this Warrant with a properly executed Form of Assignment attached
hereto as Exhibit B at the principal office of the Company (or such other office
or agency of the Company as it may in writing designate to the Holder). Upon any
partial transfer, the Company shall at its expense issue and deliver to the
Holder a new Warrant of like tenor, in the name of the Holder, which shall be
exercisable for such number of shares of Common Stock with respect to which
rights under this Warrant were not so transferred and to the transferee a new
Warrant of like tenor, in the name of the transferee, which shall be exercisable
for such number of shares of Common Stock with respect to which rights under
this Warrant were so transferred.
11.3. REPLACEMENT OF WARRANTS. On receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
11.4. ADJUSTMENTS TO PURCHASE PRICE AND NUMBER OF SHARES.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.
11.5. FRACTIONAL SHARES. Notwithstanding any adjustment pursuant to
Section 3 in the number of shares of Common Stock covered by this Warrant or any
other provision of this Warrant, the Company shall not be required to issue
fractions of shares upon exercise of this Warrant or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, the Company
shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the
Current Market Price of a share of Common Stock on the date of Warrant exercise.
12. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates that there
would be no adequate remedy at law to the Holder of this Warrant in the event of
any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant and accordingly, the Company
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agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by the
Holder hereof in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
13. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof any rights as a
stockholder of the Company or as imposing any obligation on the Holder to
purchase any securities or as imposing any liabilities on the Holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
14. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given hereunder must be in writing and will be
deemed to have been delivered (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile, (iii) three days after being sent by U.S.
certified mail, return receipt requested, or (iv) one Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Applied Digital Solutions, Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
If to a Holder, to its address and facsimile number on the register
maintained by the Company. Each party shall provide five days' prior written
notice to the other party of any change in address or facsimile number.
Notwithstanding the foregoing, the exercise of any Warrant shall be effective in
the manner provided in Section 2.
15. AMENDMENTS. This Warrant and any term hereof may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, except by written instrument duly
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executed by the party against which enforcement of such amendment, modification,
supplement, termination or consent to departure is sought.
16. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof", "herein" and "hereunder"
and words of similar import when used in this Warrant shall refer to this
Warrant as a whole and not to any particular provision of this Warrant, and
Section and paragraph references are to the Sections and paragraphs of this
Warrant unless otherwise specified; (4) the word "including" and words of
similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
17. GOVERNING LAW. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to the
conflict of laws principles thereof).
18. JUDICIAL PROCEEDINGS. Any legal action, suit or proceeding brought
against the Company with respect to this Warrant may be brought in any federal
court of the Southern District of New York or any state court located in New
York County, State of New York, and by execution and delivery of this Warrant,
the Company hereby irrevocably and unconditionally waives any claim (by way of
motion, as a defense or otherwise) of improper venue, that it is not subject
personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court. The Company hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, at its address set forth or provided for in
Section 14, such service to become effective 10 days after such mailing. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section. The Company irrevocably submits to the exclusive jurisdiction of the
aforementioned courts in such action, suit or proceeding.
19. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock (and
Other Securities) issuable upon exercise of this Warrant shall constitute
Registrable Securities (as such term is defined in the Registration Rights
Agreement). Each holder of this Warrant shall be entitled to all of the benefits
afforded to a holder of any such Registrable Securities under the Registration
Rights Agreement and such holder, by its acceptance of this Warrant, agrees to
be bound by and to comply with the terms and conditions of the Registration
Rights Agreement applicable to such holder as a holder of such Registrable
Securities.
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20. LIMITATION ON EXERCISE. Notwithstanding any provision to the
contrary contained herein, in no event shall the Holder be entitled to exercise
this Warrant, nor will the Company recognize such exercise, such that upon
giving effect to such exercise, the aggregate number of shares of Common Stock
then beneficially owned by the Holder and its "affiliates" as defined in Rule
144 of the Act would exceed 4.99% of the total issued and outstanding shares of
the Common Stock following such exercise; PROVIDED, HOWEVER, that Holder may
elect to waive this restriction upon not less than sixty-one (61) days prior
written notice to the Company. For purposes of this Section, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act.
APPLIED DIGITAL SOLUTIONS, INC.
By:
--------------------------
Name:
Title:
-22-
23
EXHIBIT A to
COMMON STOCK PURCHASE
WARRANT
[FORM OF]
ELECTION TO PURCHASE SHARES
AND TRANSFER AGENT INSTRUCTIONS
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase ____ shares of Common Stock, par value $.001 per share ("Common
Stock"), of APPLIED DIGITAL SOLUTIONS, INC. (the "Company") and hereby [makes
payment of $________ in consideration therefor] [or] [makes payment in
consideration therefor by reduction pursuant to Section 2.1(b)(iii) of the
Warrant of the number of shares of Common Stock otherwise issuable to the Holder
upon Warrant exercise by ______ shares] [or] [makes payment in consideration
therefor by delivery of the following Common Stock Certificates of the Company
pursuant to Section 2.1(b)(iv) of the Warrant, certificates of which are
attached hereto for cancellation _______ [list certificates by number and
amount]]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:
ISSUE TO:
----------------------------------------------------------------------
(NAME)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
-------------------------------------------------------------------------------
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
--------------------------------------------------------------------
(NAME)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is less than
the number of shares of Common Stock covered by the Warrant, the undersigned
requests that a new Warrant representing the number of shares of Common Stock
not so purchased be issued and delivered as follows:
ISSUE TO:
--------------------------------------------------------------------
(NAME OF XXXXXX)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
-------------------------------------------------------------------------------
(NAME OF XXXXXX)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________________ [NAME OF XXXXXX]
By
-------------------------
Name:
Title:
-23-
24
__________________, as transfer agent and registrar of the Common
Stock, is hereby authorized and directed to issue the above number of shares of
Common Stock in the name of the above referenced entity or person and to deliver
the certificates representing such shares using an overnight delivery service.
APPLIED DIGITAL SOLUTIONS, INC.
By
-------------------------
Name:
Title:
-24-
25
EXHIBIT B to
COMMON STOCK PURCHASE
WARRANT
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.001 per share ("Common Stock") of APPLIED
DIGITAL SOLUTIONS, INC., represented by the Warrant, with respect to the number
of shares of Common Stock set forth below:
NAME OF XXXXXXXX ADDRESS NO. OF SHARES
---------------- ------- -------------
and does hereby irrevocably constitute and appoint ________ as Attorney to make
such transfer on the books of APPLIED DIGITAL SOLUTIONS, INC. maintained for
that purpose, with full power of substitution in the premises.
Dated: [NAME OF XXXXXX]
-------------------------
By
---------------------------
Name:
Title:
-25-
