Option to Purchase
_______ Units
INFOSAFE SYSTEMS, INC.
Unit Purchase Option
Dated: February 18, 1997
THIS CERTIFIES THAT X.X. Xxxxx Investment Banking Corp. (herein
sometimes called the "Holder") is entitled to purchase from Infosafe Systems,
Inc., a Delaware corporation (hereinafter called the "Company"), at the prices
and during the periods as hereinafter specified, up to_______________ (_______)
Units ("Units"), each Unit consisting of _______ units identical to those sold
by the Company in its initial public offering ("IPO") in January 1995 ("IPO
Unit"), each IPO Unit consisting of one share of Class A Common Stock, $.01 par
value ("Common Stock") of the Company, one Class A Warrant ("Class A Warrant")
and one Class B Warrant ("Class B Warrant"). Each Class A Warrant is exercisable
to purchase one share of Common Stock and one Class B Warrant at an exercise
price of $6.50 from January 18, 1995 until __________, 2002, and each Class B
Warrant is exercisable to purchase one share of Common Stock at an exercise
price of $8.75 until ___________, 2002. The Class A Warrants and Class B
Warrants are herein collectively referred to as the "Warrants."
This Option, together with options of like tenor, constituting in
the aggregate options (the "Options") to purchase Units, subject to adjustment
in accordance with Section 8 of this Option (the "Option Units"), was originally
issued pursuant to an agency agreement between the Company and X.X. Xxxxx
Investment Banking Corp., as placement agent (the "Placement Agent") in
connection with a private placement (the "Offering") of up to one hundred Units
(the "Private Units") through the Placement Agent in consideration for
$__________ received for the Options.
Except as specifically otherwise provided herein, the Common Stock
and the Warrants issued pursuant to the option herein granted (the "Option")
shall bear the same terms and conditions as described under the caption
"Description of Securities" in the Confidential Term Sheet dated February 10,
1997, and the Exhibits thereto (the "Term Sheet") and the Warrants shall be
governed by the terms of the Warrant Agreement dated as of February 10, 1997
executed in connection with the Offering (the "Warrant Agreement"), and except
that (i) the holder shall have registration rights under the Securities Act of
1933, as amended (the "Act"), for the Option, the Common Stock and the Warrants
included in the Option Units, and the shares of Common Stock underlying the
Warrants, as more fully described in Section 6 of this Option and (ii) the
Warrants issuable upon exercise of the Option will not be subject to redemption
by the Company. The Company will list the Option Units, the Common Stock and the
Warrants underlying this Option on the Nasdaq National Market, the Nasdaq Small
Cap Market or such other exchange or market as the IPO Units, Common Stock or
Warrants may then be listed or quoted. In the event of any extension of the
expiration date or reduction of the
exercise price of the Warrants, the same changes to the Warrants included in the
Option Units shall be simultaneously effected.
1. The rights represented by this Option shall be exercised at the
prices, subject to adjustment in accordance with Section 8 of this Option ("the
"Exercise Price"), and during the periods as follows:
(a) Between ____________, 1997 and February ___, 2002
inclusive, the Holder shall have the option to purchase Option
Units hereunder at a price of $50,000 per Unit. For purposes
of the adjustments under Section 8 hereof, the Per Share
Exercise Price shall be deemed to be $50,000 subject to
further adjustment as provided in such Section 8.
(b) After February ___, 2002, the Holder shall have no
right to purchase any Option Units hereunder.
2. (a) The rights represented by this Option may be exercised at any
time within the period above specified, in whole or in part, by (i) the
surrender of this Option (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); and (ii)
payment to the Company of the exercise price then in effect for the number of
Option Units specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any. This Option shall be deemed to have
been exercised, in whole or in part to the extent specified, immediately prior
to the close of business on the date this Option is surrendered and payment is
made in accordance with the foregoing provisions of this Section 2, and the
person or persons in whose name or names the certificates for shares of Common
Stock and Warrants shall be issuable upon such exercise shall become the holder
or holders of record of such Common Stock and Warrants at that time and date.
The certificates for the Common Stock and Warrants so purchased shall be
delivered to the Holder as soon as practicable but not later than ten (10) days
after the rights represented by this Option shall have been so exercised.
(b) At any time during the period above specified, during
which this Option may be exercised, the Holder may, at its option, exchange this
Option, in whole or in part (an "Option Exchange"), into the number of Option
Units determined in accordance with this Section (b), by surrendering this
Option at the principal office of the Company or at the office of its stock
transfer agent, accompanied by a notice stating such Xxxxxx's intent to effect
such exchange, the number of Option Units into which this Option is to be
exchanged and the date on which the Holder requests that such Option Exchange
occur (the "Notice of Exchange"). The Option Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
shares of Common Stock and Warrants issuable upon such Option Exchange and, if
applicable, a new Option of like tenor evidencing the balance of the Option
Units remaining subject to this Option, shall be issued as of the Exchange Date
and delivered to the Holder within
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seven (7) days following the Exchange Date. In connection with any Option
Exchange, this Option shall represent the right to subscribe for and acquire the
number of Option Units (rounded to the next highest integer) equal to (x) the
number of Option Units specified by the Holder in its Notice of Exchange up to
the maximum number of Option Units subject to this option (the "Total Number")
less (y) the number of Option Units equal to the quotient obtained by dividing
(A) the product of the Total Number and the existing Exercise Price by (B) the
Fair Market Value. "Fair Market Value" shall mean first, if there is a trading
market as indicated in Subsection (i) below for the Units, such Fair Market
Value of the Units and if there is no such trading market in the Units, then
Fair Market Value shall have the meaning indicated in Subsections (ii) through
(v) below for the aggregate value of all shares of Common Stock and Warrants
which comprise a Unit:
(i) If the Units are listed on a national securities exchange
or listed or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market or the
Nasdaq Small Cap Market, the Fair Market Value shall be the average
of the last reported sale prices or the average of the means of the
last reported bid and asked prices, respectively, of the Units on
such exchange or market for the twenty (20) business days ending on
the last business day prior to the Exchange Date; or
(ii) If the Common Stock or Warrants are listed on a national
securities exchange or admitted to unlisted trading privileges on
such exchange or listed for trading on the Nasdaq National Market or
the Nasdaq Small Cap Market, the Fair Market Value shall be the
average of the last reported sale prices or the average of the means
of the last reported bid and asked prices, respectively, of Common
Stock or Warrants, respectively, on such exchange or market for the
twenty (20) business days ending on the last business day prior to
the Exchange Date; or
(iii) If the Common Stock or Warrants are not so listed or
admitted to unlisted trading privileges, the Fair Market Value shall
be the average of the means of the last reported bid and asked
prices of the Common Stock or Warrants, respectively, for the twenty
(20) business days ending on the last business day prior to the
Exchange Date; or
(iv) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the Fair Market Value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of
the Company ending prior to the Exchange Date, determined in such
reasonable manner as may be prescribed by the Board of Directors of
the Company; or
(v) If the Warrants are not so listed or admitted to unlisted
trading privileges, and bid and asked prices are not so reported for
Warrants, then Fair Market Value for the Warrants shall be an amount
equal to the difference between
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(i) the Fair Market Value of the shares of Common Stock and Warrants
which may be received upon the exercise of the Warrants, as
determined herein, and (ii) the Warrant Exercise Price.
3. Any transfer, sale or such assignment of this Option shall be
effected by the Holder (i) executing the form of assignment at the end hereof
and (ii) surrendering this Option for cancellation at the office or agency of
the Company referred to in Section 2 hereof, accompanied by a certificate
(signed by an officer of the Holder if the Holder is a corporation), stating
that each transferee is a permitted transferee under this Section 3 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Option or Options of like tenor and representing in
the aggregate rights to purchase the same number of Option Units as are
purchasable hereunder.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued as part of the Option Units purchased hereunder and the
Common Stock which may be issued upon exercise of the Warrants will, upon
issuance, be duly and validly issued, fully paid and nonassessable and no
personal liability will attach to the holder thereof. The Company further
covenants and agrees that during the periods within which this Option may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
this Option and that it will have authorized and reserved a sufficient number of
shares of Common Stock for issuance upon exercise of the Warrants included in
the Option Units.
5. This Option shall not entitle the Holder to any voting rights or
any other rights, or subject to the Holder to any liabilities, as a stockholder
of the Company.
6. (a) The Company shall advise the Holder or its transferee,
whether the Holder holds the Option or has exercised the Option and holds Option
Units or any of the securities underlying the Option Units, by written notice at
least thirty (30) days prior to the filing of any post-effective amendment to
the Registration Statement or of any new registration statement or
post-effective amendment thereto under the Act covering any securities of the
Company, for its own account or for the account of others, and will for a period
of seven years from the effective date of the Registration Statement, upon the
request of the Holder, include in any such post-effective amendment or
registration statement, such information as may be required to permit a public
offering of the Option, all or any of the Option Units, the Common Stock or
Warrants included in the Option Units or the Common Stock issuable upon the
exercise of the Warrants (the "Registrable Securities").
(b) If the Placement Agent, X.X. Xxxxx & Co., Inc. or X.
Xxxxxx Xxxxx (each a "Holder" and together, the "Holders") shall give notice to
the Company at any time to the effect that such holder desires to register under
the Act this Option, the Option Units or any of the underlying securities
contained in the Option Units under such circumstances that a public
distribution (within the meaning of the Act) of any such securities will be
involved then the Company will promptly, but no later than twenty days after
receipt of such notice, file a
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post-effective amendment to the current Registration Statement or a new
registration statement on Form S-1 or such other form as the Holder requests
pursuant to the Act, to the end that the Option, the Option Units and/or any of
the securities underlying the Option Units may be publicly sold under the Act as
promptly as practicable thereafter and the Company will use its best efforts to
cause such registration to become and remain effective (including the taking of
such steps as are necessary to obtain the removal of any stop order); provided,
that such holder shall furnish the Company with appropriate information in
connection therewith as the Company may reasonably request in writing. The
Holder may, at its option, request the filing of a post-effective amendment to
the current Registration Statement or a new registration statement under the Act
on two occasions during the seven year period beginning ___, 1997. The Holder
may, at its option request the registration of the Option and/or any of the
securities underlying the Option in a registration statement made by the Company
as contemplated by Section 6(a) or in connection with a request made pursuant to
this Section 6(b) prior to acquisition of the Option Units issuable upon
exercise of the Option and even though the Holder has not given notice of
exercise of the Option. The Holder may, at its option, request such
post-effective amendment or new registration statement during the described
period with respect to the Option, the Option Units as a unit, or separately as
to the Common Stock and/or Warrants included in the Option Units and/or the
Common Stock issuable upon the exercise of the Warrants, and such registration
rights may be exercised by the Holder prior to or subsequent to the exercise of
the Option.
Within ten days after receiving any such notice pursuant to this
Section 6(b), the Company shall give notice to the other holders of the Options,
advising that the Company is proceeding with such post-effective amendment or
registration statement and offering to include therein the securities underlying
the Options of the other holders, provided that they shall furnish the Company
with such appropriate information (relating to the intentions of such holders)
in connection therewith as the Company shall reasonably request in writing. In
the event the registration statement is not filed within the period specified
herein, the expiration date of this Option and the underlying Warrants shall be
extended by an amount of time equal to the delay in filing, and in the event the
registration statement is not declared effective under the Act prior to February
__, 2004, the Company shall extend the expiration date of the Option and the
underlying Warrants to a date not less than 90 days after the effective date of
such registration statement. All costs and expenses of the first such
post-effective amendment or new registration statement under this paragraph 6(b)
shall be borne by the Company, except that the holders shall bear the fees of
their own counsel and any underwriting discounts or commissions applicable to
any of the securities sold by them. If the Company determines to include
securities to be sold by it in any registration statement originally requested
pursuant to this Section 6(b), such registration shall instead be deemed to have
been a registration under Section 6(a) and not under this Section 6(b).
The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at least six
months (and for up to an additional three months if requested by the Holder)
from the effective date thereof.
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(c) Whenever pursuant to Section 6 a registration statement
relating to any Registrable Securities is filed under the Act, amended or
supplemented, the Company shall (i) supply prospectuses and such other documents
as the Holder may request in order to facilitate the public sale or other
disposition of the Registrable Securities, (ii) use its best efforts to register
and qualify any of the Registrable Securities for sale in such states as such
Holder designates, (iii) furnish indemnification in the manner provided in
Section 7 hereof, (iv) notify each Holder of Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and, at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not included an
untrue statement of a material fact or omit to state material fact required to
be stated therein or necessary to make the statements therein not misleading and
(v) do any and all other acts and things which may be necessary or desirable to
enable such Holders to consummate the public sale or other disposition of the
Registrable Securities, The Holder shall furnish appropriate information in
connection therewith and indemnification as set forth in Section 7.
(d) The Company shall not permit the inclusion of any
securities other than the Registrable Securities to be included in any
registration statement filed pursuant to Section 6(b) hereof without the prior
written consent of the Holder.
(e) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (or, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) if such registration
includes an underwritten public offering, a "cold comfort" letter dated the
effective date of such registration statement and dated the date of the closing
under the underwriting agreement signed by the independent public accountants
who have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(f) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
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investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonable
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to non-confidential books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
as any such Holder shall reasonably request.
7. (a) Whenever pursuant to Section 6 a registration statement
relating to the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each holder of the
Registrable Securities covered by such registration statement, amendment or
supplement (such holder being hereinafter called the "Distributing Holder"), and
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse the Distributing
Holder and each such controlling person and underwriter for any legal or other
expenses reasonably incurred by the Distributing Holder or such controlling
person or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder specifically for use in the
preparation thereof.
(b) If requested by the Company prior to the filing of any
registration statement covering the Registrable Securities, each Distributing
Holder will agree, severally but not jointly, to indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in said registration statement,
said preliminary prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, said preliminary prospectus, said final
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prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished by such Distributing Holder specifically for
use in the preparation thereof; except that the maximum amount which may be
recovered from the Distributing Holder pursuant to this Section 7 or otherwise
shall be limited to the amount of net proceeds received by the Distributing
Holder from the sale of the Registrable Securities.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(8) In addition to the provisions of Section 1(a) of this Option,
the Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of the Options shall be subject to adjustment from
time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective
date of such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by multiplying
the Exercise Price by a fraction, the denominator of which shall be
the number of shares of Common Stock outstanding after giving effect
to such action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock
entitling them to subscribe
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for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price (the "Subscription Price") (or having
a conversion price per share) less than (i) the current market price
of the Common Stock (as defined in Subsection (h) below) on the
record date mentioned below, or (ii) the Exercise Price on a per
share basis giving no value to the Warrants included in the Option
Units (the "Per Share Exercise Price") on such record date, the
Exercise Price shall be adjusted so that the same shall equal the
lower of (i) the price determined by multiplying the number of
shares then comprising an Option Unit by the product of the Per
Share Exercise Price in effect immediately prior to the date of such
issuance multiplied by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding on the
record date mentioned below and the number of additional shares of
Common Stock which the aggregate offering price of the total number
of shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would purchase at
such current market price per share of the Common Stock, and the
denominator of which shall be the sum of the number of shares of
Common Stock outstanding on such record date and the number of
additional shares of Common Stock offered for subscription or
purchase (or into which the convertible securities so offered are
convertible) or (ii) in the event the Subscription Price is equal to
or higher than the current market price but is less than the Per
Share Exercise Price, the price determined by multiplying the number
of shares then comprising an Option Unit by the product of the Per
Share Exercise Price in effect immediately prior to the date of
issuance multiplied by a fraction, the numerator of which shall be
the sum of the number of shares outstanding on the record date
mentioned below and the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the Per Share
Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on the record date
mentioned below and the number of additional shares of Common Stock
offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be
made successively whenever such rights or warrants are issued and
shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights or
warrants; and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are not
delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would
then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible into
Common Stock) actually delivered.
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(c) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or
distributions referred to in Subsection (a) above) or subscription
rights or warrants (excluding those referred to in Subsection (b)
above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the number of shares
then comprising an Option Unit by the product of the Per Share
Exercise Price in effect immediately prior thereto multiplied by a
fraction, the numerator of which shall be the total number of shares
of Common Stock outstanding multiplied by the current market price
per share of Common Stock (as defined in Subsection (h) below), less
the fair market value (as determined by the Company's Board of
Directors) of said assets or evidences of indebtedness so
distributed or of such rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of
Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately
after the record date for the determination of shareholders entitled
to receive such distribution.
(d) In case the Company shall issue shares of its Common
Stock, (excluding shares issued (i) in any of the transactions
described in Subsections (a), (b), (c) or (e) of this Section 8;
(ii) upon exercise of options granted to the Company's employees
under a plan or plans adopted by the Company's Board of Directors
and approved by its shareholders, if such shares would otherwise be
included in this Subsection (d), (but only to the extent that the
aggregate number of shares excluded hereby and issued after the date
hereof, shall not exceed 5% of the Company's Common Stock
outstanding at the time of any issuance); (iii) upon exercise of
options and warrants or upon conversion of convertible securities
outstanding at February ___, 1997 and this Option; (iv) to
shareholders of any corporation which merges into the Company in
proportion to their stock holdings of such corporation immediately
prior to such merger, upon such merger, or (v) in a bona fide public
offering pursuant to a firm commitment underwriting; but only if no
adjustment is required pursuant to any other specific subsection of
this Section (8) (without regard to Subsection (i) below) with
respect to the transaction giving rise to such rights) for a
consideration per share (the "Offering Price") less than (i) the
current market price per share, as defined in Subsection (h) below,
on the date the Company fixes the offering price of such additional
shares, or (ii) the Per Share Exercise Price, then the Exercise
Price shall be adjusted immediately thereafter so that it shall
equal the lower of (i) the price determined by multiplying the
number of shares then comprising an Option Unit by the product of
the Per Share Exercise Price in effect immediately prior thereto
multiplied by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding immediately prior
to the issuance of such additional shares and the number of shares
of Common Stock which the
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aggregate consideration received, determined as provided in
Subsection (g) below, for the issuance of such additional shares
would purchase at such current market price per share of Common
Stock, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after the issuance of such
additional shares or (ii) in the event the Offering Price is equal
to or higher than the current market price per share but less than
the Per Share Exercise Price, the price determined by multiplying
the number of shares then comprising an Option Unit by the product
of the Per Share Exercise Price in effect immediately prior to the
date of issuance multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares and the
number of shares of Common Stock which the aggregate consideration
received, determined as provided in Subsection (g) below, for the
issuance of such additional shares would purchase at the Per Share
Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
(e) In case the Company shall issue any securities convertible
into or exchangeable for its Common Stock, excluding securities
issued in transactions described in Subsections (b) and (c) above,
for a consideration per share of Common Stock (the "Conversion
Price") initially deliverable upon conversion or exchange of such
securities, determined as provided in Subsection (g) below, less
than (i) the current market price per share, as defined in
Subsection (h) below, in effect immediately prior to the issuance of
such securities, or (ii) the Per Share Exercise Price, then the
Exercise Price shall be adjusted immediately thereafter so that it
shall equal the lower of (i) the price determined by multiplying the
number of shares then comprising an Option Unit by the product of
the Per Share Exercise Price in effect immediately prior thereto
multiplied by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding immediately prior
to the issuance of such securities and the number of shares of
Common Stock which the aggregate consideration received, determined
as provided in Subsection (g) below, for such securities would
purchase at such current market price per share of Common Stock, and
the denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to such issuance and the
maximum number of shares of Common Stock of the Company deliverable
upon conversion of or in exchange for such securities at the initial
conversion or exchange price or rate, or (ii) in the event the
Conversion Price is equal to or higher than the current market price
per share but less than the Per Share Exercise Price, the price
determined by multiplying the number of shares then comprising an
Option Unit by the product of the Per Share Exercise Price in effect
immediately prior to the date of issuance multiplied by a fraction,
the numerator of which shall be the sum of the number of
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shares outstanding immediately prior to the issuance of such
securities and the number of shares of Common Stock which the
aggregate consideration received, determined as provided in
Subsection (g) below, for such securities would purchase at the Per
Share Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to
the issuance of such securities and the maximum number of shares of
Common Stock of the Company deliverable upon conversion of or in
exchange for such securities at the initial conversion or exchange
price or rate. Such adjustment shall be made successively whenever
such an issuance is made.
(f) Whenever the Exercise Price payable upon exercise of each
Option is adjusted pursuant to Subsections (a), (b), (c), (d) or (e)
above, (i) the number of shares of Common Stock included in an
Option Unit shall simultaneously be adjusted by multiplying the
number of shares of Common Stock included in Option Unit immediately
prior to such adjustment by the Exercise Price in effect immediately
prior to such adjustment and dividing the product so obtained by the
Exercise Price, as adjusted and (ii) the number of shares of Common
Stock or other securities issuable upon exercise of the Warrants
included in the Option Units and the exercise price of such Warrants
shall be adjusted in accordance with the applicable terms of the
Warrant Agreement.
(g) For purposes of any computation respecting consideration
received pursuant to Subsections (d) and (e) above, the following
shall apply:
(A) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the
fair market value thereof as determined in good faith by the
Board of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock,
the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the
issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion
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or exchange thereof the consideration in each case to be
determined in the same manner as provided in clauses (A) and
(B) of this Subsection (g).
(h) For the purpose of any computation under Subsections (b),
(c), (d) and (e) above, the current market price per share of Common
Stock at any date shall be deemed to be the average of the daily
closing prices for 30 consecutive business days before such date.
The closing price for each day shall be the last sale price regular
way or, in case no such reported sale takes place on such day, the
average of the last reported bid and asked prices regular way, in
either case on the principal national securities exchange, including
the Nasdaq National Market, on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on such
exchange or market, the average of the highest reported bid and
lowest reported asked prices as reported by Nasdaq, or other similar
organization if Nasdaq is no longer reporting such information, or
if not so available, the fair market price as determined by the
Board of Directors.
(i) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least five cents ($0.05) in such price; provided, however, that any
adjustments which by reason of this Subsection (c)(i) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment required to be made hereunder. All
calculations under this Section 8 shall be made to the nearest cent
or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section 8 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such
changes in the Exercise Price, in addition to those required by this
Section 8, as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in shares of
Common Stock, or any subdivision, reclassification or combination of
Common Stock, hereafter made by the Company shall not result in any
Federal Income tax liability to the holders of Common Stock or
securities convertible into Common Stock (including Warrants
issuable upon exercise of this Option).
(j) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly but no later than 10 days after
any request for such an adjustment by the Holder, cause a notice
setting forth the adjusted Exercise Price and adjusted number of
Option Units issuable upon exercise of each Option and, if
requested, information describing the transactions giving rise to
such adjustments, to be mailed to the Holders, at the address set
forth herein, and shall cause a certified copy thereof to be mailed
to its transfer agent, if any. The Company may retain a firm of
independent certified public accountants selected by the Board of
Directors (who may be the regular accountants employed by the
Company) to make any computation required by this Section 8, and a
certificate signed by such firm shall be conclusive evidence of the
correctness of such adjustment.
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(k) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (a) above, the Holder of this
Option thereafter shall become entitled to receive any shares of the
Company, other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Option shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Subsections (a) to (i) inclusive
above.
(l) In case any event shall occur as to which the other
provisions of this Section 8 or Section 1(a) hereof are not strictly
applicable but as to which the failure to make any adjustment would
not fairly protect the purchase rights represented by this Option in
accordance with the essential intent and principles hereof then, in
each such case, the Holders of Options representing the right to
purchase a majority of the Option Units may appoint a firm of
independent public accountants reasonably acceptable to the Company,
which shall give their opinion as to the adjustment, if any, on a
basis consistent with the essential intent and principles
established herein, necessary to preserve the purchase rights
represented by the Options. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Holder of this
Option and shall make the adjustments described therein. The fees
and expenses of such independent public accountants shall be borne
by the Company.
9. This Agreement shall be governed by and in accordance with the
laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
IN WITNESS WHEREOF, Infosafe Systems, Inc. has caused this Option to
be signed by its duly authorized officers under its corporate seal, and this
Option to be dated February ___, 1997.
INFOSAFE SYSTEMS, INC.
By: ____________________________
Authorized Officer
(Corporate Seal)
Attest:
__________________________
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PURCHASE FORM
(To be signed only upon exercise of option)
The undersigned, the holder of the foregoing Option, hereby
irrevocably elects to exercise the purchase rights represented by such Option
for, and to purchase thereunder, Units of Infosafe Systems, Inc., each Unit
consisting of _______ IPO Units, each IPO Unit consisting of one (1) share of
$.01 par value Class A Common Stock, one (1) Class A Warrant to purchase one
share Series A of Common Stock and one (1) Class B Warrant, and one Class B
Warrant and herewith makes payment of $_________ thereof.
Dated:_________, ____. Instructions for Registration of Stock and Warrants
___________________________________________________
Print Name
___________________________________________________
Address
___________________________________________________
Signature
OPTION EXCHANGE
The undersigned, pursuant to the provisions of the foregoing Option,
hereby elects to exchange its Option for _________ Units of Infosafe Systems,
Inc., each Unit consisting of _______ IPO Units, each IPO Unit consisting of one
(1) share of $.01 par value Class A Common Stock, one (1) Class A Warrant to
purchase one (1) share of Series A Common Stock and one (1) Class B Warrant, and
one (1) Class B Warrant, pursuant to the Option Exchange provisions of the
Option.
Dated:_____________, ____.
___________________________________________________
Print Name
___________________________________________________
Address
___________________________________________________
Signature
TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns, and
transfers unto the right to purchase Units represented by the foregoing Option
to the extent of _____ Units , and appoints _____________ attorney to transfer
such rights on the books of _____________, with full power of substitution in
the premises.
Dated: _______________, ______
X.X. XXXXX INVESTMENT BANKING CORP.
By: _______________________________________
____________________________________________
Address
In the presence of:
