Exhibit 99.3
BRIDGE FUNDING AND AMENDMENT AGREEMENT
BRIDGE FUNDING AND AMENDMENT AGREEMENT (this "Agreement"), dated as of
the 5th day of February 2001, by and among ▇▇▇▇.▇▇▇, Inc., a Delaware
corporation (the "Company"), ▇▇▇▇▇.▇▇▇, Inc., a New Jersey corporation (the
"Lender"), and the Investors named on the signature pages hereto.
WHEREAS, the Company, ▇▇▇▇▇.▇▇▇ and the Investors are parties to a
certain Exchange Agreement dated as of September 13, 2000 (the "Exchange
Agreement"), whereby the Company granted holders of ▇▇▇▇▇.▇▇▇'s Series A
Exchangeable Convertible Preferred Stock (the "Preferred Stock") the right to
exchange the Preferred Stock for the Company's Class A Common Stock, $.01 par
value (the "Common Stock"), subject to the terms and conditions specified
therein.
WHEREAS, the Company desires the right to sell to ▇▇▇▇▇.▇▇▇ from time
to time, and ▇▇▇▇▇.▇▇▇ desires to purchase from the Company from time to time,
up to $5,000,0000 aggregate principal amount of the Company's senior promissory
bridge notes upon the terms and conditions set forth herein, including those set
forth in the form of note attached as Exhibit A hereto (the "Notes");
WHEREAS, in order to induce ▇▇▇▇▇.▇▇▇ to agree to purchase the Notes,
the Company desires to (1) grant to ▇▇▇▇▇.▇▇▇ certain warrants to purchase
Common Stock upon the terms and conditions specified herein, including those set
forth in the form of warrant attached as Exhibit B hereto (the "Warrants") and
(2) modify certain terms of the Exchange Agreement, in each case as set forth
herein;
WHEREAS, the amendment of the Exchange Agreement requires the execution
of a written amendment executed by the Company and the holders of a majority of
the Registrable Securities (as defined in the Exchange Agreement) then
outstanding;
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties hereto agree as follows.
SECTION 1 COMMITMENT
Subject to the terms and conditions of this Agreement, ▇▇▇▇▇.▇▇▇ hereby
agrees to purchase from the Company from time to time, promptly following
delivery by the Company of a written drawdown request, up to $5,000,000
aggregate principal amount of the Notes. The purchase and sale of the Notes
shall take place at the offices of the Company, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on the date specified in the
applicable drawdown request by the Company to ▇▇▇▇▇.▇▇▇, or at such other time,
date and place as the Company may otherwise agree (any issuance of the Notes is
referred to as a "Bridge Closing" and the date on which any Bridge Closing shall
occur is referred to herein as the "Bridge Closing Date"). The amount of any
drawdown shall be an integral multiple of $1,000,000. The Company shall not
issue a drawdown request after the earlier of (x) the six month anniversary of
the date hereof and (y) the Maturity Date (as defined in the Notes).
1
SECTION 2 ISSUANCE OF WARRANTS
Subject to Section 5, the Company shall issue Warrants to ▇▇▇▇▇.▇▇▇ to
purchase (1) 200,000 shares of Common Stock concurrent with the execution and
delivery of this Agreement, with an exercise price of $1.30 per share, (2)
160,000 shares of Common Stock per each $1,000,000 drawdown hereunder,
concurrent with each Bridge Closing, as contemplated by Section 3 below, with an
exercise price equal to the Market Price (as defined in the form of Warrants
attached hereto) on the date of issuance of such Warrants and (3) 100,000 shares
of Common Stock per month during a Default Period (as defined in the Notes),
with an exercise price equal to the Market Price on the date of issuance of such
Warrants.
SECTION 3 CLOSING DELIVERIES
3.1 DELIVERIES BY ▇▇▇▇▇.▇▇▇. On or before each Bridge Closing,
▇▇▇▇▇.▇▇▇ shall deliver to the Company, by check or by wire transfer to an
account designated by the Company at least two days prior to the Closing Date,
the purchase price for the Notes set forth in the drawdown notice.
3.2 DELIVERIES BY THE COMPANY. At the Bridge Closing:
(a) the Company shall deliver to ▇▇▇▇▇.▇▇▇ the Notes to be
purchased by ▇▇▇▇▇.▇▇▇ in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000
as ▇▇▇▇▇.▇▇▇ may request) dated the date of the Closing and
registered in ▇▇▇▇▇.▇▇▇'s name (or in the name of ▇▇▇▇▇.▇▇▇'s
nominee), against delivery by ▇▇▇▇▇.▇▇▇ to the Company or its
order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately
available funds for the account of ▇▇▇▇.▇▇▇, Inc. to account
number 323879284 at Chase Manhattan Bank, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇, ABA number ▇▇▇▇▇▇▇▇▇ (contact phone
number ▇▇▇-▇▇▇-▇▇▇▇: Attention ▇▇▇ ▇▇▇▇);
(b) the Company shall deliver to ▇▇▇▇▇.▇▇▇ Warrants to purchase
the number of shares of Common Stock equal to the product of
(x) a fraction, the numerator of which is the principal amount
of the Note(s) delivered at such Closing and the denominator
of which is 1,000,0000 and (y) 160,000 (as appropriately
adjusted for any stock split, stock dividend, stock
combination or recapitalization having similar effect); and
(c) the Company shall deliver to ▇▇▇▇▇.▇▇▇ a certificate as to the
accuracy of its representations and compliance with its
covenants hereunder.
SECTION 4 AMENDMENT OF EXCHANGE PROVISIONS.
Subject to Section 5, the Preferred Holders and the Company agree that
Section 2.01 of the Exchange Agreement is hereby amended as follows:
2
A. Subsection (a) is amended by replacing the phrase "the 60th day after such
first anniversary" with the phrase "December 31, 2001" in the second line
thereof.
B. The proviso to clause (ii) of subsection (a) is amended by replacing the
figure "$4.50" therein with the phrase"$3.00, except that such closing
price shall be deemed to be not less than $1.25 rather than $3.00 for each
Holder's pro rata share of Preferred Shares having an aggregate liquidation
preference (before giving effect to any accrued dividends included in such
liquidation preference) equal to the product (not to exceed $14.25 million)
of (x) $3,000,000 and (y) a fraction, the numerator of which is the amount
drawn down and the denominator is 1,000,000".
SECTION 5. NASDAQ WAIVER OR STOCKHOLDER APPROVAL
A condition to (x) the obligation of the Company to issue the warrants
issuable hereunder after the date hereof and (y) the effectiveness of the
reduction of the floor price from $3.00 to $1.25 set forth in the amendment to
Section 2.01 of the Exchange Agreement specified above shall be that the Company
shall have either (i) received a waiver from the NASDAQ Stock Market from its
shareholder approval rules to the extent applicable in connection with the
issuance of the Notes and complied with any conditions contained in such waiver
in order to consummate the transactions contemplated hereby at the Closing or
(ii) obtained shareholder approval to the extent required under the rules of the
NASDAQ Stock Market of the issuance of the Notes in accordance with the terms of
this Agreement pursuant to a duly called meeting of shareholders of the Company.
The Company agrees to take all action necessary to obtain the waiver described
in clause (i) above and in the absence of such waiver to obtain shareholder
approval as promptly as practicable. ▇▇▇▇▇.▇▇▇ and the Investors agree to a make
any reasonable non-economic adjustments to the terms of the transactions
contemplated hereby to accommodate any requests by NASDAQ.
SECTION 6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York without giving effect to the principles of
the conflict of laws thereof.
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WHEREAS, the undersigned have executed this Bridge Funding and
Amendment Agreement as of the date first above written.
▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
4
INVESTORS:
ASIASTAR IT FUND, L.P.
By: AsiaStar Partners, L.P., its
General Partner
By: Sycamore Management Corporation, its
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
5
PRIMUS CAPITAL FUND V LIMITED
PARTNERSHIP
By: PRIMUS VENTURE PARTNERS V, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
PRIMUS EXECUTIVE FUND V LIMITED
PARTNERSHIP
By: PRIMUS VENTURE PARTNERS V, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
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THE ▇▇▇▇▇▇▇▇ FUND, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman
7
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇,
JTROS
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
9
Exhibit A
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[FORM OF NOTE]
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION EXCEPT UNDER CERTAIN LIMITED CIRCUMSTANCES AND SUBJECT TO THE
DELIVERY OF AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR
THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
▇▇▇▇.▇▇▇, INC.
PROMISSORY NOTE DUE [date 120 days after date of initial drawdown]
No.
[Date of issuance], 2001
$[amount of drawdown (multiples of $1,000,000)]
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇.▇▇▇, INC., a Delaware
corporation (the "Company" or "▇▇▇▇.▇▇▇"), hereby promises to pay to ▇▇▇▇▇.▇▇▇,
Inc., or registered assigns, the aggregate principal sum of [AMOUNT OF DRAWDOWN]
UNITED STATES DOLLARS (US$[amount of drawdown]) on [date 120 days after date of
initial drawdown], 2001 (the "Maturity Date").
1. Interest. The Company shall pay interest (computed on the basis of a
360 day year of twelve 30 day months) on the unpaid principal balance hereof at
the rate of 10% per annum, payable on the Maturity Date. To the extent permitted
by law, the Company shall pay interest on any amount of principal or interest
not paid when due and payable, for each day during the period from the date so
due and payable to the date paid in full (a "Default Period"), at a rate equal
to 1% per month, payable on demand and computed on the basis of 30 day months
and paid for the actual number of days elapsed. In addition, to the extent
permitted by law and subject to the terms and limitations set forth in the
Bridge Funding Agreement referred to below, if the Company defaults on its
obligation to repay this Note when due and payable, the Company shall (computed
on such basis) grant to the holder hereof Warrants (as defined in the Bridge
A-1
Funding Agreement) at a rate of 100,000 (as appropriately adjusted for any stock
split, stock dividend, stock combination or recapitalization having similar
effect) Warrants per month until this Note is repaid in full.
2. Payments. Payments of principal of and interest on this Note are to
be made in lawful money of the United States of America in New York, New York or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Bridge Funding Agreement. Payments
that are due and payable hereunder on a day which is not a Business Day (as
hereinafter defined) shall be made on the next Business Day after such due date.
3. Bridge Funding Agreement. This Note is one of a series of senior
promissory notes (the "Notes") issued pursuant to the Bridge Funding and
Amendment Agreement (the "Bridge Funding Agreement") dated as of February 5,
2001 by and among the Company, ▇▇▇▇▇.▇▇▇, Inc. (the "Lender") and the Lender
investors parties thereto and is entitled to the benefits thereof. This Note is
also entitled to the benefits of the Pledge Agreement (as defined in the Bridge
Funding Agreement).
4. Prepayments. This Note may be prepaid at the option of the Company,
in whole or in part, at any time and from time to time, without payment of
premium or penalty. Notwithstanding anything herein to the contrary, if the
Company completes a business combination transaction with another public
company, the Company (to the extent permitted by law) shall promptly apply all
(or the necessary portion) of cash received in connection with such transaction
(including any bridge loans made to the Company) immediately (net of documented
out-of-pocket expenses of the Company and the other company) to prepay (without
payment of premium) the outstanding principal of (and related accrued interest
on) the Notes. To the extent such cash on hand is insufficient to so prepay all
outstanding Notes, then such prepayment shall be ratable among all holders of
Notes. Amounts prepaid may not be re-borrowed.
5. Events of Default. An "Event of Default" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any interest on
this Note when the same becomes due and payable and the default
continues for a period of 30 days; or
(b) the Company defaults in the payment of any principal of
this Note when the same becomes due and payable, whether at maturity or
upon mandatory prepayment or otherwise, and the default continues for a
period of 5 business days; or
(c) the Company fails to observe or perform any other covenant
or agreement contained in this Note to be performed by it, and such
breach is not cured or such failure continues for a period of 60 days
after the receipt of written notice by the Company from the holder
hereof stating that such notice is a "Notice of Default"; or
A-2
(d) a default under any credit agreement, mortgage, indenture
or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed
("Indebtedness") by the Company or any Material Subsidiary (or the
payment of which is guaranteed by any of the Company or any of the
Company's Subsidiaries), whether such Indebtedness or guarantee exists
on the date of this Note or is created hereafter, which default (i) is
caused by a failure to pay when due any principal of or interest on
such Indebtedness within the grace period, if any, provided for in such
Indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (ii) results in the acceleration of
such Indebtedness prior to its express maturity (without such
acceleration being rescinded or annulled) and, in each case, the
principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates
$15,000,000 or more and after written receipt by the Company from any
holder of Notes stating that such notice is a "Notice of Default"; or
(e) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance
company has accepted full liability) for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any Material Subsidiary and remain unstayed, unbonded or
undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
judgments exceeds $5,000,000; or
(f) the Company or any Material Subsidiary pursuant to or
within the meaning of any Bankruptcy Law: (i) commences a voluntary
case or proceeding; or (ii) consents to the entry of an order for
relief against such company or any Material Subsidiary in an
involuntary case or proceeding; or (iii) consents to the appointment of
a Custodian of such company or any Material Subsidiary or for all or
any substantial part of its property; or (iv) makes a general
assignment for the benefit of its creditors; or (v) takes corporate or
similar action to effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against the
Company or any Material Subsidiary in an involuntary case or
proceeding; or (ii) appoints a Custodian of such company or any
Material Subsidiary or for all or any substantial part of the property
of such company or any Material Subsidiary; or (iii) orders the
liquidation of such company or any Material Subsidiary; and in each
case referred to in this paragraph (g) the order or decree remains
unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal, state or foreign bankruptcy, insolvency or similar
law. The term "Custodian" means any custodian, receiver, trustee,
assignee, sequestor, liquidator or similar official under any
Bankruptcy Law.
A-3
6. Remedies on Default, etc.
6.1 Acceleration.
(a) If an Event of Default described in paragraph (f) or (g) of Section
5 (other than an Event of Default described in clause (i) of paragraph (f) or
described in clause (v) of paragraph (f) by virtue of the fact that such clause
encompasses clause (i) of paragraph (f)) has occurred, this Note shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the
holder hereof may at any time at its option, by notice or notices to the
Company, declare this Note to be immediately due and payable.
(c) Notwithstanding subparagraph (b) above, if any Event of Default
described in paragraph (a) or (b) of Section 5 has occurred and is continuing,
the holder may at any time, at its option, by notice or notices to the Company,
declare this Note to be immediately due and payable.
(d) Notwithstanding subparagraph (b) above, if any Event of Default
described in paragraph (d) of Section 6 has occurred and is continuing and the
Payment Default giving rise to such Event of Default is cured or the
acceleration giving rise to such Event of Default is annulled or rescinded
within 30 days after receipt of written notice of such Event of Default by the
Company from the holder stating that such notice is a "Notice of Default," then
such Event of Default and any declaration under subparagraph (b) above shall be
deemed automatically annulled and rescinded.
Upon this Note becoming due and payable under this Section 6.1, whether
automatically or by declaration, this Note will forthwith mature and the entire
unpaid principal amount hereof, plus all accrued and unpaid interest thereon,
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
6.2 Other Remedies. If any Event of Default has occurred and is
continuing, and irrespective of whether this Note has become or has been
declared immediately due and payable under Section 6.1, the holder may proceed
to protect and enforce its rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted hereby or
thereby or by law or otherwise.
7. Capitalized Terms. Capitalized terms used herein that are defined in
the Bridge Funding Agreement (as defined above) shall have the respective
meanings ascribed to such terms therein. Other capitalized terms used herein
shall have the meanings set forth below:
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
A-4
"Material Subsidiary" means any Subsidiary of the Company (other than
the Lender) which at the date of determination is a "significant subsidiary" as
defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the
Exchange Act (as such Regulation is in effect on the date hereof).
8. Governing Law. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State. In the event of any conflict between the provisions of this
Note, on the one hand, and the Bridge Funding Agreement, on the other hand, the
provisions of the Bridge Funding Agreement shall control absent manifest error.
▇▇▇▇.▇▇▇, INC.
By___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Excecutive Officer
A-5
EXHIBIT B
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[Form of Warrants]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE LAW. THE WARRANTS HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE WARRANTS UNDER THE
ACT OR AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION AS EVIDENCED BY AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED AS
TO SUCH OFFER, SALE, TRANSFER, PLEDGE, HYPOTHECATION OR DISPOSITION.
▇▇▇▇.▇▇▇, INC.
WARRANTS TO PURCHASE CLASS A COMMON STOCK
Initial Warrantholder: ▇▇▇▇▇.▇▇▇, Inc.
No. of Shares of Class A Common
Stock to be issued upon exercise in
full: [ ]
FOR VALUE RECEIVED, ▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the
"Company"), promises to issue to the Initial Warrantholder, its nominees,
successors or assigns (the "Warrantholder") [ ]([ ]) nonassessable shares (the
"Shares") of the Company's Class A Common Stock, par value $.01 per share (the
"Common Stock"), as may be adjusted pursuant to the terms hereof, at any time on
or prior to the Expiration Date (as defined herein) upon payment by the
Warrantholder to the Company of the purchase price per share in the amount of
$[1.30][market price on date of issuance for interest penalty shares], as may be
adjusted pursuant to the terms hereof (the "Warrant Exercise Price"), and to
deliver to the Warrantholder a certificate or certificates representing the
Shares purchased. The Warrantholder shall have the right to exercise this
warrant (the "Warrant") in whole or in part at any time or times on or prior to
the Expiration Date.
SECTION 1. (a) DEFINITIONS. The following terms as used in this
certificate shall have the following meanings:
"Bridge Funding Agreement" means the Bridge Funding and Amendment
Agreement dated as of February , 2001.
B-1
"Common Stock" has the meaning set forth in the first paragraph hereof.
"Expiration Date" means February 2, 2004.
"Market Price" means:
(i) the average of the closing sales price on the NASDAQ Stock
Market, or, if there shall have been no sales on the NASDAQ Stock Market on any
day, the average of the reported bid and asked prices on the NASDAQ Stock Market
at the end of such day, in each case over the twenty trading days immediately
before the date of determination of Market Price, or
(ii) if on any date of determination of Market Price, the
Common Stock shall not be listed on the NASDAQ Stock Market, the average of the
daily closing sales prices of the Common Stock on the national securities
exchange on which the Common Stock may at the time be listed, or, if there shall
have been no sales on any such exchange on any day, the average of the reported
bid and asked prices on all such exchanges at the end of such day, in each case
over the twenty trading days immediately before the date of determination of
Market Price, or
(iii) if the Common Stock is not listed on any national
securities exchange or quoted on the NASDAQ Stock Market, the "Market Price"
shall be deemed to be the fair value thereof as reasonably determined in good
faith by the Company's Board of Directors as of the date which is within 15 days
of the date as of which the determination is to be made.
"Warrants" means the warrants represented by this certificate.
(b) OTHER DEFINITIONAL PROVISIONS.
(i) Except as otherwise specified herein, all references
herein (A) to any person other than the Company, shall be deemed to include such
person's successors and assigns, (B) to the Company shall be deemed to include
the Company's successors and (C) to any applicable law defined or referred to
herein, shall be to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this certificate, the words "herein",
"hereof" and "hereunder", and words of similar import, shall refer to this
certificate as a whole and not to any provision of this certificate, and the
words "Section" and "Exhibit" shall refer to Sections of, and Exhibits to, this
certificate unless otherwise specified. Whenever the context so requires the
neuter gender includes the masculine or feminine, and the singular number
includes the plural, and vice versa.
SECTION 2. COVENANTS OF THE COMPANY. The Company will at all times
reserve and keep available out of its authorized shares of Common Stock or its
treasury shares, solely for the purpose of issuing upon the exercise of the
Warrants as herein provided, such number of shares of Common Stock as shall then
be issuable upon the exercise of the Warrants. The Company covenants that all
shares of Common Stock which shall be so issued shall, upon issuance in
accordance with the terms hereof, be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
SECTION 3. EXERCISE OF WARRANTS; LEGENDS; WARRANTHOLDER
REPRESENTATIONS. (a) In order to exercise the Warrants, and subject to the terms
of the Bridge Funding Agreement, the Warrantholder shall deliver to the Company
(i) a written notice of such holder's election to exercise Warrants, in the form
B-2
of the Subscription Notice attached as Exhibit A hereto, which notice shall
specify the number of shares of Common Stock to be purchased and (ii) payment in
cash or by a certified or cashier's check to the Company of an amount equal to
the Warrant Exercise Price multiplied by the number of Shares as to which the
Warrant is being exercised or, when the holder hereof shall elect to exercise
its rights under Section 3(b) hereof, Warrants having a value determined in
accordance with Section 3(b) equal to the aggregate exercise price, and (iii)
the surrender of this certificate, properly endorsed, at the principal office of
the Company, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other agency or
office of the Company as the Company may designate by notice to the holder
hereof). The exercise of the Warrants shall be deemed to be a representation by
the Warrantholder that the Shares are being purchased for its own account and
not with a view to the distribution thereof. After receipt of written notice and
upon the payment of the Warrant Exercise Price to the Company by the
Warrantholder, the Company shall as promptly as practicable execute or cause to
be executed and delivered to such holder a certificate or certificates
representing the aggregate number of Shares purchased. If the Warrants shall
have been exercised only in part, the Company shall also deliver a new
certificate evidencing the unexercised Warrants of like tenor evidencing the
rights of such holder to purchase the remaining Shares called for by such
Warrants.
(b) In lieu of the Warrantholder exercising the Warrants (or any
portion of the Warrants) for cash, the Warrantholder may, in connection with
such exercise, elect to satisfy the Warrant Exercise Price by exchanging solely
the Warrants represented by this certificate (or a portion thereof) and shall
receive for this certificate (or a portion thereof) a number of Shares equal to
the product of (i) the number of Shares issuable upon such exercise (or, if only
a portion of such Warrant is being exercised, issuable upon the exercise of such
portion) multiplied by (ii) a fraction, the numerator of which is the Market
Price per share of the Common Stock at the time of such exercise minus the
Warrant Exercise Price per share of the Common Stock at the time of such
exercise, and the denominator of which is the Market Price per share of the
Common Stock at the time of such exercise, such number of shares so issuable
upon such exercise to be rounded up or down to the nearest whole number of
Shares.
(c) The Warrantholder understands that the certificates evidencing the
Shares shall bear the legend set forth on the first page hereof.
(d) The Warrantholder has made, either alone or together with its
advisors, such independent investigation of the Company, its management and
related matters as it deems to be, or such advisors have advised to be,
necessary or advisable in connection with an investment in the Company through
the transactions contemplated by the Bridge Funding Agreement and the Warrants;
and it and its advisors have received all information and data that it and its
advisors believe to be necessary in order to reach an informed decision as to
the advisability of an investment in the Warrants and the Shares pursuant to the
transactions contemplated by the Bridge Funding Agreement. The Warrantholder has
completed to its satisfaction such independent investigation of the books and
records of the Company and understands the nature of the potential risks and
potential rewards of its ownership interest in the Company in each case, as it
deems to be, or such advisors have advised to be necessary in order to reach an
informed decision as to the advisability of an investment in the Warrants and
the Shares pursuant to the transaction contemplated by the Bridge Funding
B-3
Agreement. The Warrantholder is a sophisticated investor with investment
experience and, in the event of any liquidation or winding up of the Company,
has the ability to bear complete loss of its investment.
SECTION 4. ADJUSTMENTS. The number of shares of Common Stock
deliverable upon exercise of the Warrants shall be subject to adjustment from
time to time as follows:
(a) In the event the Company shall (i) take a record of the holders of
Common Stock for the purpose of entitling them to receive a dividend payable in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by reclassification of its
Common Stock any shares of the Company of any class or series, the Warrantholder
shall thereafter be entitled to receive upon the exercise of Warrants the number
of shares of Common Stock which the Warrantholder would have owned or have been
entitled to receive had the Warrants been exercised immediately prior to the
happening of such event, such adjustment to become effective immediately after
the opening of business on the day following such record date or the day upon
which such subdivision, combination or reclassification becomes effective. Upon
any adjustment in the number of Shares issuable upon exercise of Warrants under
this Section 4(a), the Warrant Exercise Price shall be appropriately adjusted.
(b) In the event that the Company takes a record of holders of Common
Stock for the purpose of entitling them to receive a dividend (other than
ordinary cash dividends pursuant to a dividend policy adopted by the Board of
Directors of the Company and dividends described in Section 4(a)) and the
Warrantholder thereafter exercises the purchase rights hereunder, such
Warrantholder shall be entitled to receive upon such exercise, in addition to
the shares of Common Stock deliverable to the Warrantholder in accordance with
the provisions hereof, the amount of the dividend as the Warrantholder would
have been entitled to receive if the Warrantholder had converted immediately
prior to the taking of such record.
(c) No adjustment in the number of Shares purchasable upon exercise of
this Warrant shall be required unless such adjustment would require an increase
or decrease of at least one-tenth of a Share in the number of Shares for which
this Warrant is exercisable; provided, however, that any adjustment which by
reason hereof is not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(d) No fractional shares of Common Stock shall be issued upon exercise
of this Warrant, but, instead, to the extent that any fraction of a share would
otherwise be issuable, the Warrant Exercise Price shall be proportionately
reduced.
SECTION 5. NOTICE OF ADJUSTMENT. Upon any event requiring an adjustment
of the number of Shares exercisable by the Warrants, then and in each such case
the Company shall promptly give written notice thereof to the Warrantholder,
which notice shall specify the number of Shares issuable upon exercise of the
Warrants and the adjusted Warrant Exercise Price after giving effect to such
adjustment and shall set forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
SECTION 6. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any capital reorganization or reclassification of the capital stock of
B-4
the Company, or any consolidation or merger of the Company with another Company,
or the sale of all or substantially all of its assets to another Company shall
be effected, then as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made
whereby the Warrantholder shall thereafter have the right to receive at any time
or times on or prior to the Expiration Date upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common Stock of the
Company immediately theretofore receivable upon the exercise of the Warrants,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
receivable upon the exercise of the Warrants had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case, appropriate provision shall be made with respect to the rights and
interests of the Warrantholder to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of the
Warrants.
SECTION 7. EXCHANGE OF WARRANTS. This certificate is exchangeable upon
the surrender hereof by the holder at such office or agency of the Company, for
a new certificate of like tenor representing in the aggregate the right to
subscribe for and purchase the number of Shares which may be subscribed for and
purchased hereunder from time to time after giving effect to all the provisions
hereof, each of such new certificates to represent the right to subscribe for
and purchase such number of Shares as shall be designated by said holder hereof
at the time of such surrender.
SECTION 8. LOST, STOLEN, MUTILATED OR DESTROYED. If this certificate is
lost, stolen, mutilated or destroyed, the Company shall, on such terms as to
indemnity or otherwise as it may in its reasonable discretion impose (which
shall, in the case of a mutilated certificate, include the surrender thereof),
issue a new certificate of like denomination and tenor as the certificate so
lost, stolen, mutilated or destroyed. Any such new certificate shall constitute
an original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed certificate shall be at any time
enforceable by anyone.
SECTION 9. NOTICE. All notices and other communications under this
certificate shall (a) be in writing (which shall include communications by
telecopy), (b) be (i) sent by registered or certified mail, postage prepaid,
return receipt requested, (ii) sent by telecopier, or (iii) delivered by hand,
(c) be given at the following respective addresses and telecopier numbers and to
the attention of the following persons:
(i) if to the Company, to it at:
▇▇▇▇.▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Executive Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
B-5
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel
at the same address
(ii) If to the holder, to it at:
▇▇▇▇▇.▇▇▇, Inc.
c/o ▇▇▇▇.▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other, and (d) be effective or deemed delivered
or furnished (i) if given by mail, on the fifth business day after such
communication is deposited in the mail, addressed as above provided, (ii) if
given by telecopier, when such communication is transmitted to the appropriate
number determined as above provided in this Section 9 and the appropriate answer
back is received or receipt is otherwise acknowledged, and (iii) if given by
hand delivery, when left at the address of the addressee addressed as above
provided.
SECTION 10. AMENDMENT AND WAIVER. No failure or delay on the part of
the Warrantholder in exercising any right, power or remedy under this
certificate shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for in this certificate are cumulative and are not exclusive
of any remedies that may be available to the holder of the Warrants at law, in
equity or otherwise.
SECTION 11. REMEDIES. The Company stipulates that the remedies at law
of the Warrantholder in the event of any default or threatened default by the
Company in the performance of or compliance with any terms hereof are not and
will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained in this certificate or by an injunction against a
violation of any of the terms hereof.
SECTION 12. SUCCESSORS AND ASSIGNS. The Warrants and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Company and the Warrantholder, to the extent
provided herein, and shall be enforceable by such Warrantholder. Notwithstanding
anything herein to the contrary but subject to the restrictions contained herein
and in the Bridge Funding Agreement, the Warrants and the rights evidenced
hereby are assignable in whole or in part by the Warrantholder.
B-6
SECTION 13. MODIFICATION AND SEVERABILITY. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any provision is unenforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions hereof, but this certificate shall be construed as if such
unenforceable provision had never been contained herein.
SECTION 14. GOVERNING LAW. This certificate shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principals thereof.
IN WITNESS WHEREOF, the Company has caused this certificate to be
executed by its duly authorized officers as of the th day of [ ], 2001.
▇▇▇▇.▇▇▇, INC.
______________________
By:
Title:
B-7
EXHIBIT A TO
WARRANT CERTIFICATE
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
REGISTERED HOLDER DESIRES TO EXERCISE WARRANTS
▇▇▇▇.▇▇▇, INC.
The undersigned hereby exercises the right to purchase ______________
of the Shares covered by the certificate evidencing the Warrants in accordance
with the terms and conditions thereof at the Warrant Exercise Price of ($1.30)
per Share and herewith makes payment of $__________, the aggregate Warrant
Exercise Price of such Shares (subject to adjustment as provided in the
certificate evidencing the Warrants) in full, or tenders solely the Warrant
certificate, or applicable portion thereof, in full satisfaction of the Warrant
Exercise Price upon the terms and conditions set forth in the certificate
evidencing the Warrants.
WARRANTHOLDER
____________________________________
By:
Title:
Total No. of Shares
Being Purchased: __________________
Dated: _______________________
