EXHIBIT 4.9
WARRANT AGREEMENT (this "Agreement"). dated as of October 11,
2000, by and between HOME DIRECTOR, INC., a Delaware corporation (the
"Company"), and XXXXXXX XXXXX SECURITIES, INCORPORATED (the "Agent").
W I T N E S S E T H
WHEREAS, pursuant to that certain Placement Agency Agreement,
dated April 10, 2000, the Company proposes to sell to the Agent and/or its
designees warrants ("Warrants") to purchase 575,000 shares of common stock, par
value $.00l per share, of the Company ("Common Stock").
NOW, THEREFORE, in consideration of the premises, the payment
by the Agent to the Company of ONE DOLLAR, the agreements herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Holders (as defined below) are hereby granted the right to
purchase, at any time from the date hereof until 5:30 p.m., New York time, on
the earlier of(a) the tenth anniversary of the date hereof and (b) the third
anniversary of the closing date of the initial public offering of the Company's
Common Stock occurring within such ten-year period (the "Warrant Exercise
Term"), 575,000 shares of Common Stock at the initial exercise price (subject to
adjustment as provided in Section 8 hereof) of $.001 per share of Common Stock,
subject to the terms and conditions of this Agreement.
2. WARRANT CERTIFICATES. The Warrant certificate(s) (the "Warrant Certificates")
delivered and to be delivered pursuant to this Agreement shall be in the form
set forth in Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. EXERCISE OF WARRANT.
3.1 METHOD OF EXERCISE. The Warrants are initially exercisable at an initial
exercise price (subject to adjustment as provided in Section 8 hereof) per share
of Common Stock set forth in Section 5 hereof payable by certified or official
bank check in New York Clearing House funds, subject to adjustment as provided
in Section 8 hereof. Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the shares of Common Stock issuable
upon exercise of the Warrants (the "Warrant Shares") at the Company's principal
offices, currently at 000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional shares of the Common Stock underlying the
Warrants). Warrants may be exercised to purchase all or part of the shares of
Common Stock represented thereby. In the case of purchase of less than all the
shares of Common Stock purchasable under any Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the shares of Common Stock.
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3.2 EXERCISE BY SURRENDER OF WARRANT. In addition to the method of payment set
forth in Section 3.1 and in lieu of any cash payment required thereunder, the
Holder(s) of the Warrant shall have the right at any time and from time to time,
provided that the Common Stock and/or the Company's Common Stock, par value
$.001 per share ("Common Stock"), underlying the Common Stock (collectively the
"Stock") is registered under the Securities Exchange Act of 1934 (the "Exchange
Act"), to exercise the Warrants in full, or in part by surrendering the Warrant
Certificate in the manner specified in Section 3.1 in exchange for the number of
shares of Common Stock equal to the product of (x) the number of shares as to
which the Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the Market Price (as defined in Section 8.1 (vi) hereof)
of the Stock less the Exercise Price and the denominator of which is such Market
Price.
Solely for the purposes of this Section 3.2, Market Price
shall be calculated either (i) on the date on which the annexed Form of Election
is deemed to have been sent to the Company pursuant to Section 13 hereof
("Notice Date") or (ii) as the average of the Market Price for each of the five
(5) trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, certificates for
shares of Common Stock or other securities, properties or rights underlying such
Warrants, shall be issued forthwith (and in any event such issuance shall be
made within five business days) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Section 5
hereof) be issued in the name of, or in such names as may be directed by, the
Holder thereof; provided, however that the Company shall not be required to pay
any tax which may be payable in respect to any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or people requesting the issuance thereof shall have
paid to the Company the amount of such tax or it shall be established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the
shares of Common Stock (and/or other securities, property or rights issuable
upon exercise of the Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. EXERCISE PRICE.
5.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided in Section
8 hereof, the Warrants shall be exercisable to purchase Common Stock at a price
of l .00 per share. The adjusted exercise price shall be the price which shall
result from time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 8 hereof.
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5.2 EXERCISE PRICE. The term "Exercise Price herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context.
6. REGISTRATION RIGHTS.
6.1 REGISTRATION. Under the Securities Act of 1933 Neither the Warrants, the
Warrant Shares nor the shares of Common Stock underlying the Warrant Shares
(collectively, the "Warrant Securities") have been registered under the
Securities Act of 1933 (the "Act") for public resale. The Warrants, and any
securities issuable upon exercise of the Warrants shall bear the following
legends:
The Securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and may not be offered,
sold, pledged or otherwise transferred except pursuant to (i) an effective
registration statement under the Act, or (ii) to the extent applicable, Rule 144
under the Act (or any similar rule under the Act relating to the disposition of
securities), provided that the issuer of this certificate is provided with an
opinion of counsel reasonably satisfactory to the issuer, that an exemption from
registration under such Act is available.
The transfer or exchange of the securities represented by this
certificate is restricted in accordance with the warrant agreement referred to
herein.
6.2 PIGGYBACK REGISTRATION. If, at any time commencing after the date hereof
until the expiration of the Warrant Exercise Term, the Company proposes to
register any of its securities under the Act on a registration statement that
may be used for the registration of the Warrant Securities (other than in
connection with a merger, pursuant to Form X-0, X-0 or comparable registration
statement, in connection with a registration requested pursuant to Section 6.3
hereof or in connection with an exchange offer or an offering of securities
solely to the Company's existing stockholders) it will give written notice by
registered mail, at least thirty (30) business days prior to the filing of each
such registration statement, to the Agent and to all other Holders of the
Warrant Securities of its intention to do so. If the Agent or other Holders of
the Warrant Securities notify the Company within twenty (20) days after receipt
of any such notice of its or their desire to include any Warrant Securities in
such proposed registration statement, the Company shall afford the Agent and
such Holders of the Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement.
Notwithstanding the provisions of this Section 6.2, (A) the
Company shall have the right any time after it shall have given written notice
pursuant to this Section 6.2 (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect to postpone or
not to file any such proposed registration statement, or to withdraw the same
after filing but prior to the effective date thereof and (B) if the underwriter
or underwriters, if any, of any such proposed public offering shall be of the
reasonable opinion that the total amount or kind of securities held by the
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holders of Warrant Securities and any other persons or entities entitled to be
included in such Public Offering would adversely affect the success of such
public offering, then the amount of securities to be offered for the accounts of
holders of Warrant Securities shall be reduced pro rata to the extent necessary
to reduce the total amount of securities to be included in such public offering
to the amount reasonably recommended by the underwriter or underwriters thereof,
whereupon the Company shall only be obligated to register such limited portion
(which may be none) of the Warrant Securities with respect to which such holder
has provided notice pursuant to this Section 6.2. In no event shall the Company
be required pursuant to this Section 6.2 to reduce the amount of securities to
be registered by it.
6.3 DEMAND REGISTRATION.
(a) So long as the Company shall have any of its securities registered under the
Act or the Exchange Act, at any time commencing after the date hereof until
expiration of the Warrant Exercise Term, the Holders of the Warrant Securities
representing a "Majority" (as hereinafter defined) of such Warrant Securities
(assuming the exercise of all of the then outstanding Warrants) shall have the
right (which right is in addition to the registration rights under Section 6.2
hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the "Commission"),
on two (2) occasions, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and the counsel for the Agent and Holders, in order to comply with
the provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Securities for no less than one hundred twenty (120) days by
such Holder and any other Holders of the Warrant Securities who notify the
Company within ten (10) days after receiving notice from the Company of such
request.
(b) The Company covenants and agrees to give written notice of any registration
request under this Section 6.3 by any Holder or Holders to all other registered
Holders of the Warrant Securities within fifteen (15) days from the date of the
receipt of any such registration request; provided that the Company shall have
the right to delay the effectiveness of such registration request (A) for such
reasonable period of time until the Company receives or prepares financial
statements for the fiscal period most recently ended prior to such written
request, if necessary to avoid the use of stale financial statements, or (B) if
the Company would be required to divulge in such registration statement the
existence of any fact relating to a material business situation, transaction or
negotiation not otherwise required to be disclosed or (C) if the Board of
Directors of the Company shall determine in good faith that the registration to
be effected would not be in the best interest of the Company, in which case the
Company shall have the right to delay such filing for a period of no longer than
one hundred (120) days.
(c) All expenses (other than underwriting discounts and commissions) incurred in
connection with registration, filings or qualification pursuant to the first
registration request made pursuant to the subsection (a) of this Section 6.3,
including, without limitation, all registration, listing, filing and
qualification fees, printers and accounting fees and the fees and disbursements
of counsel for the Holders shall be borne by the Company. Upon a second
registration request pursuant to subsection (a) of this Section 6.3, the Holders
requesting registration shall bear such costs on a pro-rata basis with respect
to the Warrant Securities in respect of which they are requesting registration.
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(d) Notwithstanding anything to the contrary contained herein, if the Company
shall not have filed a registration statement for the Warrant Securities within
the time period specified in Section 6.3 (b) hereof pursuant to the written
notice specified in Section 6.3 (a) of a Majority of the Holders of the Warrants
and/or Warrant Securities, the Company agrees that upon the written notice of
election of a Majority of the Holders of the Warrants and/or Warrant Securities
it shall repurchase (i) any and all Warrant Securities at the higher of the
Market Price as defined in Section 8.1, (vi) per share of Stock on (x) the date
of the notice sent pursuant to Section 6.3 (a) or (y) the expiration of the
one-hundred-twenty-day (120-day) period specified in Section 6.3 (b) and (ii)
any and all Warrants at such Market Price less the exercise price of such
Warrant. Such repurchase shall be in immediately available funds and shall close
within two (2) days after the later of(i) the expiration of the period specified
in Section 6.3 (b) or (ii) the delivery of the written notice of election
specified in this Section 6.3 (d).
6.4 Covenants of the Company with Respect to Registration in connection with any
registration under Sections 6.2 or 6.3 hereof, the Company covenants and agrees
as follows:
(a) The Company shall use its best efforts to file a registration statement as
soon as practicable and shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and shall furnish
each Holder desiring to sell Warrant Securities such number of prospectuses as
shall reasonably be requested.
(b) Except as provided in Section 6.3(c) above, the Company shall pay all costs
(excluding fees and expenses of Holder(s)' counsel and any underwriting or
selling commissions or other charges of any broker-dealer acting on behalf of
Holder(s)), fees and expenses in connection with all registration statements
filed pursuant to Section 6.2 and 6.3 (a) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses. The Holders(s) will pay all costs, fees and expenses in connection
with any registration statement filed pursuant to the second sentence of Section
6.3 (c).
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in the registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s) in writing, provided that
the Company shall not be obligated to qualify to do business in any jurisdiction
where it is not then so qualified or to take any action that would subject it to
general service of process where it is not so subject or would subject the
Company to any tax in any jurisdiction where it is not then so subject.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities to be
sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
to the same extent and with the same effect as the provisions pursuant to which
the Company has agreed to indemnify the Agent contained in Section 7 of that
certain Placement Agency Agreement, dated April 10, 2000, between the Agent and
the Company (the "Placement Agency Agreement").
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(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 (a) of the Exchange Act, against all loss, claim, damage or expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such a registration statement to the same extent and with
the same effect as the provision contained in Section 7 of the Placement Agency
Agreement pursuant to which the Agent has agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as requiring the
Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) The Company shall prepare and file with the SEC such amendments and
post-effective amendments to the registration statement as may be necessary to
keep the Registration effective until all such Warrant Securities are sold;
cause the prospectus to be. supplemented by. any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof as set forth in such registration statement
or supplement to the prospectus
(h) The Company shall furnish to each Holder participating in an offering
including Warrant Securities pursuant to Sections 6.2 or 6.3 hereof, 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 (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the clo6ing 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.
(i) The Company shall, as soon as practicable after the effective date of a
registration statement relating to any Warrant Securities pursuant to Section
6.2 or 6.3 hereof, and in any event within fifteen (15) months thereafter, use
its reasonable efforts to make "generally available to its security holders"
(within the meaning of Rule 158 under the Act) an earnings statement (which need
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not be audited) complying with Section 11(a) of the Act and covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the registration statement.
(j) The Company shall deliver promptly to each Holder participating in an
offering including any Warrant Securities pursuant to Sections 6.2 or 6.3 hereof
who so requests 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 shall permit each underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to 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 and as often as any such
underwriter shall reasonably request as it deems necessary to comply with
applicable securities laws and NASD rules.
(k) With respect to a registration pursuant to Section 6.3 hereof, the Company
shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting by Holders holding a Majority of the Warrant
Securities requested to be included in such underwriting. Such managing
underwriter(s) shall be satisfactory to the Company and each Holder and such
agreement shall be satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Securities and may, at their option, require
that any or all the representations, warranties and covenants of the Company to
or for the benefit of such underwriters shall also be made to and for the
benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(l) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants or Warrant Securities, shall mean in excess of fifty percent
(50%) of the outstanding Warrants or Warrant Securities that (i) are not held by
the Company, an affiliate (excluding the Agent and any affiliate of the Agent),
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith or (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
7. INTENTIONALLY DELETED.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
8.1 COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as hereinafter provided, in
case the Company shall at any time after the date hereof issue or sell any
shares of its Stock (as defined in Section 8.5), other than the issuance or
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sales referred to in Section 8.6 hereof, including shares held in the Company's
treasury and shares of Stock issued upon the exercise of any options, rights or
warrants, to subscribe for shares of Stock issued upon the direct or indirect
conversion or exchange of securities for shares of Stock, for a consideration
per share less than the Exercise Price in effect immediately prior to the
issuance or sale of such shares or the "Market Price," as defined in Section
8.1(vi), hereof per share of Stock on the date immediately prior to the issuance
or sale of such shares, or without consideration, then forthwith upon such
issuance or sale, the Exercise Price shall (until another such issuance or sale)
be reduced to the price (calculated to the nearest full cent) equal to the
quotient derived by dividing (A) an amount equal to the sum of (X) the product
of (a) the lower of (i) the Exercise Price in effect immediately prior to such
issuance or sale and (ii) the Market Price per share of Stock on the date
immediately prior to the issuance or sale of such shares, in either event,
reduced, but not to a number which is below .001, by the positive difference, if
any, between the (u) Market Price per share of Stock on the date immediately
prior to the issuance or sale and (v) the amount per share received in
connection with such issuance or sale, multiplied b the total number of shares
of Stock outstanding immediately prior to such issuance or sale, plus (Y) the
aggregate of the amount of all consideration, if any, received by the Company
upon such issuance or sale, by (B) the total number of shares Stock outstanding
immediately after such issuance or sale; provided, however, that into event
shall the Exercise Price be adjusted pursuant to this computation to an amount
in excess of the Exercise Price in effect immediately prior to such computation,
except in the case of a combination of outstanding shares of Stock, as provided
by Section 8.3 hereof.
For the purposes of this Section 8 the term Exercise Price
shall mean the Exercise Price per share of Common Stock set forth in Section 5
hereof, as adjusted from time to time pursuant to the provisions of this Section
8.
For purposes of any computation to be made in accordance with
this Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Stock for a consideration part
or all of which shall be cash, the amount of the cash consideration, shall be
deemed to be the amount of cash received by the Company for such shares (or, if
shares of Stock are offered by the Company for subscription, the subscription
price, or, if either of such securities shall be sold to underwriters or dealers
for public offering without a subscription price, the public offering price,
before deducting therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or other
persons or entities performing similar services), Or joy expense incurred in
connection therewith and less any amounts payable to security holders or any
affiliate thereof, including, without limitation, any employment agreement,
royalty, consulting agreement, covenant not to compete, earn out or contingent
payment right or similar arrangement, agreement or understanding, whether oral
or written; all such amounts shall be valued at the aggregate amount payable
thereunder whether such payments are absolute or contingent and irrespective of
the period or uncertainty of payment, the rate of interest, if any, or the
contingent nature thereof.
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Stock for a consideration
part or all of which shall be other than cash, the amount of the consideration
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therefore other than cash shall be deemed to be the value of such consideration
as determined in good faith by the Board of Directors of the Company.
(iii) Shares of Stock issuable by way of dividend or other distribution on any
capital stock of the Company shall be deemed to have been issued immediately
after the opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
Stock into securities including shares of Stock shall be deemed to involve the
issuance of such shares of Stock for consideration other than cash immediately
prior to the close of business on the date fixed for the determination of
security holders entitled to receive such shares, and the value of the
consideration allocable to such shares of Stock shall be determined as provided
in subsection (ii) of this Section 8.1.
(v) The number of shares of Stock at any one time outstanding shall include the
aggregate number of shares issued or issuable (subject to readjustment upon the
actual issuance thereof) upon the exercise of then outstanding options, rights,
warrants and upon the conversion or exchange of then outstanding convertible or
exchangeable securities.
(vi) As used herein, the phrase 9 Price" at any date shall be deemed to be the
last reported sale price, or, in case no such reported sale takes place on such
day, the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities exchange
on which the Stock is listed or admitted to trading, or, if the Stock is not
listed or admitted to trading on any national securities exchange, the average
closing bid price as furnished by the NASD through NASDAQ or similar ,
organization if NASDAQ is no longer reporting such information, or if the Stock
is not quoted on NASDAQ, as determined in good faith by resolution of the Board
of Directors of the Company, based on the best information available to it.
8.2 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE SECURITIES.
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In case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Stock, or issue any
securities convertible into or exchangeable for shares of Stock, for a
consideration per share less than the Exercise Price in effect or the Market
Price immediately prior to the issuance of such options, rights, warrants or
such convertible or exchangeable securities, or without consideration, the
Exercise Price in effect immediately prior to the issuance of such options,
rights, warrants or such convertible or exchangeable securities, as the case may
be, shall be reduced to a price determined by making a computation in accordance
with the provisions of Section 8.1 hereof; provided that:
(a) The aggregate maximum number of shares of Stock, as the case may be,
issuable under such options, rights or warrants shall be deemed to be issued and
outstanding at the time such options, rights or warrants were issued, for a
consideration equal to the minimum purchase price per share provided for in such
options, rights or warrants at the time of issuance, plus the consideration
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(determined in the same manner as consideration received on the issue or sale of
shares in accordance with the terms of the Warrants), if any, received by the
Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Stock issuable upon conversion or
exchange of any convertible or exchangeable securities shall be deemed to be
issued and outstanding at the time of issuance of such securities, and for a
consideration equal to the consideration (determined in the same manner as
consideration received on the issue or sale of shares of Stock in accordance
with the terms of the Warrants) received by the Company for such securities,
plus the minimum consideration, if any, receivable by the Company upon the
conversion or exchange thereof.
(c) If any change shall occur in the price, per share provided for in any of the
options, rights or warrants referred to in subsection (a) of this Section 8.2,
or in the price per share at which the securities referred to in subsection (b)
of this Section 8.2 are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect to shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 SUBDIVISION AND COMBINATION CASE. The Company shall at any time combine the
proportionately decreased in the case of subdivision or increased in the case of
combination.
8.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 8, the number of securities
issuable upon the exercise of each Warrant shall be adjusted to the nearest fill
amount by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Securities issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 DEFINITION OF STOCK. For the purpose of this Agreement, the term "Stock"
shall mean (i) the class of stock designated as Common Stock, Series B Common
Stock or Series C Common Stock in any Certificate of Designations of the Company
as may be amended as of the date hereof, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that the Company shall after the date
hereof issue securities with greater or superior voting rights than the shares
of Stock outstanding as of the date hereof, the Holders, at their option, may
receive upon exercise of any Warrants either shares of Stock or a like number of
such securities with greater or superior voting rights.
8.6 MERGER OR CONSOLIDATION. In case of any consolidation of the Company with,
or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Stock), the corporation formed by
10
such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such warrant, the kind
and amount of shares of stock of other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Stock of
the Company for which such warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 8. The above provision of this Subsection shall
similarly apply to successive consolidations or mergers.
8.7 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of the
Exercise Price shall be made:
(a) Upon issuance or sale of the Warrants or the shares of Stock issuable upon
the exercise of the Warrants.
(b) Upon conversion of Common Stock or other options, warrants and convertible
securities outstanding as of the date hereof into shares of Common Stock.
(c) Upon issuance of options, and Common Stock granted thereunder, granted. to
employees of the Company issued under one or more stock options plans that have
an exercise price equal to the fair market value of the Common Stock as
determined in good faith by the Board of Directors.
(d) Upon issuance of shares of Common Stock as a result of the antidilution
rights attributable to the Series B or Series C Convertible Common Stock.
(e) If the amount of said adjustment shall be less than two cents ($0.02) per
security issuable upon exercise of the Warrants, provided, however that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents ($0.02) per security issuable upon exercise
of the Warrants.
8.8 DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the Company shall at
any time prior to the exercise of all Warrants declare a dividend (other than a
dividend consisting solely of shares of Stocl or otherwise distribute to its
stockholders any assets, properties, rights, evidence of indebtedness,
securities (other than shares of Stock), whether issued by the Company or by
another, or any other thing of value, the Holders of the unexercised Warrants
shall thereafter be entitled, in addition to the shares of Stock or other
securities and property receivable upon the exercise thereof, to receive, upon
the exercise of such Warrants, the same property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution as if the
Warrants had been exercised immediately prior to such dividend or distribution.
At the time of any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the provisions of this
Subsection 8.8.
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9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant Certificate is
exchangeable without expense, upon the surrender thereof by the registered
Holder at the principal office of the Company, for a new Warrant Certificate of
like form, tenor and date representing in the aggregate the right to purchase
the same number of securities in such denominations as shall be designated by
the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like form and tenor in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required to
issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants, nor shall it be required to issue script or pay cash
in lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number or shares of Common Stock
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company shall at times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon the conversion of the Common Stock underlying the Warrants,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefore,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder. As long as the Warrants shall be
outstanding and the Company shall have a class of its securities registered
under the Act or the' Exchange Act, the Company shall use its best efforts to
cause all shares of Stock issuable upon the exercise of the Warrants to be
listed (subject to official notice of issuance) on all security exchanges on
which the Common Stock issued to the public in connection herewith may then be
listed and/or quoted.
12. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement shall be
constructed as conferring upon the Holders the right to vote or to consent or to
receive notice to stockholders in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
12
treatment of such dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option right
or warrant to subscribe therefore; or
(c) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business as an entirety shall be proposed; then, in
any one or more of said events, the Company shall give written notice of such
event at least fifteen (15) days prior to the date fixed as a record date for
the dividend or the date of closing the transfer books for the determination of
the issuance of any convertible or exchangeable securities or subscription
rights, options or warrants or for the determination of the persons or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or exchangeable
securities or subscription rights, options or warrants, or any proposed
dissolution, liquidation winding up or sale.
13. Notices All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of such Holder
as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or to such
other address as the Company may designate by notice to the Holders.
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx, LLP
1251 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
(c) if to the Agent, to the last known address of the Agent set forth in the
Placement Agency Agreement or to such other address as the Agent may designate
by notice to the Company and the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the Agent may from time to time
supplement or amend this Agreement without the approval of any holders of
Warrant Certificates (other than the Agent) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the Agent
may deem necessary or desirable and which the Company and the Agent deem shall
13
not adversely affect the interests of the Holders of Warrant Certificates. Other
amendments to this Agreement may be made only with the written consent of the
Holders of the Majority of the Warrant Securities.
15. SUCCESSORS. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
16. TERMINATION. This Agreement shall terminate at the close of business on the
seventh anniversary of the Final Closing. Notwithstanding the foregoing, the
indemnification provisions of Section 6 shall survive such termination until the
close of business on the tenth anniversary of the date hereof.
17. GOVERNING LAW: SUBMISSION TO JURISDICTION. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing conflicts of laws.
The Company, the Agent and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company, the Agent and the Holders hereby irrevocably waive
any objection to such exclusive jurisdiction or inconvenient forum. Any such
process or summons to be served upon any of the Company, the Agent and the
Holders (at the option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address as set
forth in Section 13 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the party so served in any action, proceeding or
claim. The Company, the Agent and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefore.
18. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the Placement
Agency Agreement to the extent portions thereof are referred to herein) contains
the entire understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party againsrwhom enforcement of the modification. or amendment is
sought.
19. SEVERABILITY. If any provision of this Agreement shall be held to be invalid
and unenforceable, such invalidity or unenforceability shall not affect any
other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be
construed, as a part of this Agreement and shall be given no substantive effect.
14
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed to
give to any person, entity or corporation other than the Company and the Agent
and any other registered Holders(s) of the Warrant Certificates or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and the Agent and any other Holder(s) of the Warrant Certificates or Warrant
Securities.
22. COUNTERPARTS. This Agreement may be executed in any number of counterparts
and each of such counterpart shall for all purposes be deemed to be an original,
and such count shall together constitute but one and the same instrument.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written.
HOME DIRECTOR, INC.
By:
--------------------------------
XXXXXXX XXXXX SECURITIES,
INCORPORATED
By:
--------------------------------
16
WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON. EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS. AMENDED (THE "ACT"); AND MAY NOT BE OFFERED SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE, ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), PROVIDED THAT THE
ISSUER OF THIS CERTIFICATE IS PROVIDED WTTH AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. 575,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that XXXXXXX XXXXX
SECURITIES, or its registered assigns, is the registered holder of 575,000
Warrants to purchase initially, at any time after the date hereof until 5:30
p.m. New York time on date (the "Expiration Date") that is the earlier of (a)
the tenth anniversary of the Final Closing (as defined in the Placement Agency
Agreement between HOME DIRECTOR, INC., a Delaware corporation (the "Company"),
and Xxxxxxx Xxxxx Securities, Incorporated ("Agent")) and (b) the third
anniversary of the closing date of the initial public offering of the Company's
Common Stock occurring within such ten-year period (the "Warrant Ex Term"), up
to 575,000 fully paid and non-assessable shares of common stock, par value
$0.001 per share ("Common Stock") of the Company, at the initial. exercise
price, subject to adjustment in certain events (the "Exercise Price"), of $.001
upon surrender of this Warrant Certificate and payment of the Exercise Price at
an office or agency of the Company, or by surrender of this Warrant Certificate
in lieu of cash payment, but subject to the conditions and adjustments set forth
herein and in the Warrant Agreement dated as of January 25, 2001 between the
Company and the Agent (the "Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of' Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
17
of this instrument and to which reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Company and the holders (the words "holders" or "holder" meaning the
registered holder or registered holders) of the Warrants.
The Warrant Agreement provides-that, upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company
securities issuable upon their exercise may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder, issue a
new Warrant Certificate evidencing the adjustment in. the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter or otherwise impair the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate and the executed form of assignment attached hereto at an
office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like form and tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax or other governmental
charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall- have the meanings assigned to them in the
Warrant Agreement.
IN WITNESS WHEREOF, the has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of January 25, 2001
HOME DIRECTOR, INC.
By
-------------------------------------
Xxxx X. Xxxxxx, President
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented; by this Warrant Certificate, to purchase ____________ shares of
Preferred. Stock.
In accordance with the terms of Section 3.2of the Warrant Agreement dated
as of January 25, 2001 between HOME DIRECTOR, INC. and SpencerTrask
Securities, Incorporated, the undersigned requests that a certificate for
such securities be registered in the name of ______________________ whose
address is ______________________________ and that such Certificate be delivered
to _______________________whose address is ___________________________________.
Dated: , 2000
Signature ________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate)
____________________________________________________________
(Insert Social Security or Other Identifying Number of Holder)
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[FORM OF ASSIGNMENT]
(TOT BE EXECUTED BY THE RE HOLDER IF SUCH. HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto
_______________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated: , 2000
Signature ________________________________
(Signature must conform in all respects to name
of holder as specified on the
face of the Warrant Certificate)
___________________________________________________________
(Insert Social Security or Other Identifying Number of Holder)
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