Exhibit 1.1
May 24, 2001
Xxxx Xxxxxxx
Chief Financial Officer
Razorfish, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxxx:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
and conditions pursuant to which Ladenburg Xxxxxxxx & Co. Inc. ("LTCO") shall
serve as exclusive placement agent in connection with the proposed offering of
equity, equity-linked or debt securities (the "Securities") of Razorfish, Inc.
(the "Company") pursuant to a shelf registration statement (the "Offering").
The gross proceeds from the Offering will be up to $30,000,000. LTCO shall also
serve as exclusive placement agent, for a period of two weeks from the date of
this letter, for a possible private placement of equity or equity-linked
securities of the Company with one or more institutional investors (the "Private
Placement"). All references to dollars shall be to U.S. dollars. The terms of
the Private Placement and of such Offering and the Securities shall be as agreed
to between the Company and the purchasers thereof. LTCO and the Company may
agree that, with respect to an at-the-market offering of equity securities (as
such term is defined in Rule 415 promulgated under the Securities Act of 1933,
as amended), LTCO will underwrite on a firm commitment basis a number of shares
which shall not exceed 10% of the aggregate market value of the Company's
outstanding voting stock held by non-affiliates of the Company (calculated as of
a date within 60 days prior to the date of filing of the registration
statement). Such firm commitment shall be on terms and conditions to be agreed
upon, except that the underwriting fees and discount shall not exceed those
provided for herein.
Upon the terms and subject to the conditions of this Agreement, the parties
hereto agree as follows:
1. Appointment. Subject to the terms and conditions of this Agreement
------------
hereinafter set forth, the Company hereby retains LTCO, and LTCO hereby agrees
to act as the Company's exclusive placement agent only in connection with the
Offering, effective as of the date hereof; and with respect to the Private
Placement, for a period of two weeks from the date hereof. The Company expressly
acknowledges and agrees that, subject to any future agreement between the
Company and LTCO relating to a firm commitment underwriting, LTCO's obligations
hereunder are on a reasonable best efforts basis only and that the execution of
this Agreement does not constitute a commitment by LTCO to purchase the
Securities and does not ensure the successful placement of the Securities or any
portion thereof or the success of LTCO with respect to securing any other
financing on behalf of the Company. The appointment of LTCO with respect to the
Offering shall be exclusive to a limited extent, in that if the Company requests
LTCO to place a certain amount of Securities on terms specified by the Company,
and LTCO is unable to place such Securities on such terms within 10 days, then
the Company shall be free to place such Securities on such specified terms
through any other agent chosen by the Company, without any compensation becoming
due LTCO in connection with such placement. Thereafter, a further placement of
other Securities, or the same Securities but on different terms, shall again be
first attempted to be placed by LTCO. LTCO shall not commence any selling
efforts until the registration statement has been declared effective by the SEC.
Except for the exclusive two-week period to obtain a commitment for the Private
Placement, nothing in this Agreement shall be construed to preclude the Company
from selling other of its securities by means other than off of the shelf
registration statement, either before or after the effective date of the shelf
registration statement.
2. Fees and Compensation. In consideration of the services rendered by
----------------------
LTCO in connection with the Offering and the Private Placement, the Company
agrees to pay LTCO the following fees and other compensation:
(a) a gross placement agent fee payable upon each closing equal to 5.5% of the
public sale price at each such closing (with respect to equity or equity
linked Securities) and 3.0% (with respect to non-convertible debt
Securities); and
(b) Warrants equal to 6% of the number of shares of Class A Common Stock sold
(or in the event of the sale of convertible or exchangeable Securities, the
number of shares of Class A Common Stock into which such convertible or
exchangeable Securities are convertible as of such closing). Such warrants
shall be substantially in the form of Exhibit D and shall have a term of
three years and a strike price equal to 120% of the public sale price of
the Company's Class A Common Stock (or in the event of the sale of
convertible or exchangeable Securities, the number of shares of Class A
Common Stock into which such convertible or exchangeable Securities are
convertible as of such closing) in such placement; and
(c) a $50,000 non-accountable expense allowance payable upon the engagement of
LTCO by the Company hereunder.
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(d) All fees payable under paragraphs (a) and (b) above to LTCO shall be paid
to LTCO out of an attorney escrow account at the closing or by such other
means reasonably acceptable to LTCO.
3. Terms of Retention. (a) Unless extended or terminated in writing
-------------------
by the parties hereto in accordance with the provisions of the Agreement, this
Agreement shall remain in effect until June 1, 2003 (June 6, 2001 with respect
to the Private Placement).
(b) The Company shall have the right to terminate this Agreement upon
thirty (30) days' written notice to LTCO as a result of any material breach of
this Agreement by LTCO. LTCO shall have ten (10) days to cure any such breach
from the date of its deemed receipt of such notice, and if not cured within such
period, such notice of termination shall take effect as set forth therein.
(c) Notwithstanding anything herein to the contrary, the obligation to pay
the Fees and Compensation and Expenses described in Section 2, if any, and the
provisions of paragraphs 2, 5, and 8 of Exhibit A and all of Exhibit B and
Exhibit C attached hereto, each of which exhibits is incorporated herein by
reference, shall survive any termination or expiration of the Agreement. It is
expressly understood and agreed by the parties hereto that any private financing
of equity or convertible securities of the Company within 18 months of the
termination or expiration of this Agreement, with any investors to whom the
Company was introduced by LTCO and disclosed at such time to the Company in
writing (not including any buyers from LTCO in any firm commitment offering),
shall result in such fees and compensation being due and payable by the Company
to LTCO under the same terms of Section 2 above.
4. [Intentionally Omitted]
-----------------------
5. Information. The Company recognizes and confirms that in completing
------------
its engagement hereunder, LTCO will be using and relying solely on publicly
available information and on data, material and other information furnished to
LTCO by the Company or the Company's affiliates and agents. It is understood
and agreed that in performing under this engagement, LTCO will rely upon the
accuracy and completeness of, and is not assuming any responsibility for
independent verification of, such publicly available information and the other
information so furnished. Notwithstanding the foregoing, it is understood that
LTCO will conduct a due diligence investigation of the Company and the Company
will cooperate in all respects with such investigation as a condition of LTCO's
obligations hereunder.
6. Registration. Promptly following execution of this Agreement,
-------------
the Company shall prepare and, following review and approval by LTCO's counsel,
file with the SEC a registration statement with respect to the Offering. From
time to time in connection with any particular sale of Securities, the Company
will, at its own expense, obtain any registration or qualification required to
sell any
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Securities under the Blue Sky laws of any applicable jurisdictions, as
reasonably requested by LTCO, and shall pay any filing fees required by NASD
Regulation, Inc. in connection with their review of the terms of this Agreement.
7. No General Solicitation. Subject to any agreement to enter into a firm
------------------------
commitment underwriting in connection with an at-the-market offering of
Securities, the Securities will be offered only by approaching prospective
purchasers on an individual basis, both with respect to the Offering and the
Private Placement. From and after the execution of this Agreement until the
completion of the Offering, the Company shall obtain the consent of LTCO to any
proposed press release which mentions this Agreement or the Offering with LTCO,
such consent not to be unreasonably withheld or delayed, except as may otherwise
be required by law.
8. Closing. Each closing of the sale of the Securities shall be subject to
--------
customary closing conditions, including the provision by the Company to LTCO of
customary officers' certificates, opinions of counsel and "cold comfort" letters
from the Company's auditors.
9. Miscellaneous. This Agreement together with the attached Exhibits A
--------------
through D constitutes the entire understanding and agreement between the parties
with respect to its subject matter and there are no other agreements or
understandings with respect to the subject matter hereof which are not contained
in this Agreement. This Agreement may be modified only in writing signed by
both parties hereto. Notwithstanding the foregoing, to the
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extent that the parties enter into one or more definitive underwriting
agreements with respect to an offering of Securities, the provisions of such
definitive underwriting agreement shall supersede the provisions of this
Agreement to the extent provided by such underwriting agreement.
If the foregoing correctly sets forth our agreement, please confirm this by
signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking
forward to working with you on this matter.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Director of Investment Banking
Agreed to and accepted
as of the date first written above:
RAZORFISH, INC.
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
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EXHIBIT A
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STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant information about
the Company (to the extent available to the Company in the case of parties
other than the Company) that shall be reasonably requested or required by
LTCO, which information shall be complete and accurate in all material
respects at the time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently of
the Company and without breach of any confidentiality agreement; (b) LTCO
may disclose such information to its employees and attorneys, and to its
other advisors and financial sources on a need to know basis only and shall
ensure that all such employees, attorneys, advisors and financial sources
will keep such information strictly confidential; and (c) pursuant to any
order of a court of competent jurisdiction or other governmental body
(including any subpena) or as may otherwise be required by law; provided,
that in such event LTCO shall promptly notify the Company of such potential
disclosure and shall use reasonable efforts to limit such disclosure to the
extent possible and to permit the Company to appear in such action to limit
the extent of any such disclosure.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be informed
of and, to the extent practicable, participate in meetings and discussions
between the Company and any third party, including, without limitation, any
prospective purchaser of the securities, relating to the matters covered by
the terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written, delivered
to it by LTCO is prepared solely for its confidential use and shall not be
reproduced, summarized, or referred to in any public document or given or
otherwise divulged to any other person without LTCO's prior written
consent, except as may be required by applicable law or regulation, or
pursuant to any order of a court of competent jurisdiction or other
governmental body (including any subpena).
5. No fee payable to LTCO pursuant to any other agreement with the Company or
payable by the Company to any agent, lender or investor shall reduce or
otherwise affect any fee payable by the Company to LTCO hereunder. If LTCO
engages any other broker-dealer or other finder to assist LTCO in the
placement of the Offering, then the fees of such other broker-dealer or
finder shall be paid by LTCO.
6. (a) The Company represents and warrants that: (i) it has full right, power
and authority to enter into this Agreement and to perform all of its
6
obligations hereunder; (ii) this Agreement has been duly authorized and
executed by and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (iii) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not conflict with or result in a breach of (A) the
Company's certificate of incorporation or by-laws or (B) any agreement to
which the Company is a party or by which any of its property or assets is
bound.
(b) LTCO represents and warrants that: (i) it has full right, power and
authority to enter into this Agreement and to perform all of its
obligations hereunder; (ii) this Agreement has been duly authorized and
executed by and constitutes a valid and binding agreement of LTCO
enforceable in accordance with its terms; and (iii) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not conflict with or result in a breach of (A)
LTCO's certificate of incorporation or by-laws or (B) any agreement to
which LTCO is a party or by which any of its property or assets is bound.
7. Nothing contained in this Agreement shall be construed to place LTCO and
the Company in the relationship of partners or joint venturers. Neither
LTCO nor the Company shall represent itself as the agent or legal
representative of the other for any purpose whatsoever nor shall either
have the power to obligate or bind the other in any manner whatsoever.
LTCO, in performing its services hereunder, shall at all times be an
independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and the
Company and each of the persons, agents, employees, officers, directors and
controlling persons referred to in Exhibit B and their respective heirs,
executors, personal representatives, successors and assigns, and nothing
contained in this Agreement shall confer any rights upon, nor shall this
Agreement be construed to create any rights in, any person who is not party
to such Agreement, other than as set forth in this paragraph.
9. The rights and obligations of either party under this Agreement may not be
assigned without the prior written consent of the other party hereto and
any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand delivered,
or sent by a recognized overnight courier service such as Federal Express,
via facsimile and confirmed by letter, to the party to whom it is addressed
at the following addresses or such other address as such party may advise
the other in writing:
To the Company:
Xxxx Xxxxxxx
Razorfish, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
7
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxx Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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EXHIBIT B
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INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party: (a)
arising out of, or in connection with, any actions taken or omitted to be taken
by the Company, its affiliates, employees or agents, or any untrue statement or
alleged untrue statement of a material fact contained in any of the financial or
other information contained in the registration statement and/or final
prospectus furnished to LTCO by or on behalf of the Company or the omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; or (b) with respect to, caused by, or otherwise
arising out of any transaction contemplated by the Agreement or LTCO's
performing the services contemplated hereunder; provided, however, the Company
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will not be liable under this paragraph to the extent, and only to the extent,
that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from (i) LTCO's negligence or bad faith in
performing such services or (ii) arises from information provided by LTCO for
use in the registration statement and/or final prospectus.
LTCO agrees that it shall indemnify and hold harmless, the Company, its
directors, officers, employees, agents, affiliates and controlling persons
within the meaning of Section 20 of the Securities Exchange Act of 1934 and
Section 15 of the Securities Act of 1933, each as amended (any and all of whom
are referred to as an "Indemnified Party"), from and against any and all losses,
claims, damages, liabilities, or expenses, and all actions in respect thereof
(including, but not limited to, all legal or other expenses reasonably incurred
by an Indemnified Party in connection with the investigation, preparation,
defense or settlement of any claim, action or proceeding, whether or not
resulting in any liability), incurred by an Indemnified Party: (a) arising out
of, or in connection with, the negligence or bad faith of LTCO in performing the
services contemplated hereunder, or (b), arising out of, or in connection with,
any information provided by LTCO for use in the registration statement and/or
final prospectus.
If the indemnification provided for herein is conclusively determined (by an
entry of final judgment by a court of competent jurisdiction and the expiration
of the time or denial of the right to appeal) to be unavailable or insufficient
to hold any Indemnified Party harmless in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then the Company shall
contribute to the amounts paid or payable by such Indemnified Party in such
proportion as is appropriate and equitable under all circumstances taking into
account the relative benefits received
9
by the Company on the one hand and LTCO on the other, from the transaction or
proposed transaction under the Agreement or, if allocation on that basis is not
permitted under applicable law, in such proportion as is appropriate to reflect
not only the relative benefits received by the Company on the one hand and LTCO
on the other, but also the relative fault of the Company and LTCO; provided,
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however, in no event shall the aggregate contribution of LTCO and/or any
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Indemnified Party be in excess of the net compensation actually received by LTCO
and/or such Indemnified Party pursuant to this Agreement.
The Indemnifying Party shall not settle or compromise or consent to the entry
of any judgment in or otherwise seek to terminate any pending or threatened
action, claim, suit or proceeding in which any Indemnified Party is or could be
a party and as to which indemnification or contribution could have been sought
by such Indemnified Party hereunder (whether or not such Indemnified Party is a
party thereto), unless such consent or termination includes an express
unconditional release of such Indemnified Party, reasonably satisfactory in form
and substance to such Indemnified Party, from all losses, claims, damages,
liabilities or expenses arising out of such action, claim, suit or proceeding.
In the event any Indemnified Party shall incur any expenses covered by this
Exhibit B, the Indemnifying Party shall reimburse the Indemnified Party for such
covered expenses within ten (10) business days of the Indemnified Party's
delivery to the Indemnifying Party of an invoice therefor, with receipts
attached. Such obligation of the Indemnifying Party to so advance funds may be
conditioned upon the Indemnifying Party's receipt of a written undertaking from
the Indemnified Party to repay such amounts within ten (10) business days after
a final, non-appealable judicial determination that such Indemnified Party was
not entitled to indemnification hereunder.
The foregoing indemnification and contribution provisions are not in lieu of,
but in addition to, any rights which any Indemnified Party may have at common
law hereunder or otherwise, and shall remain in full force and effect following
the expiration or termination of LTCO's engagement and shall be binding on any
successors or assigns of the parties and successors or assigns to all or
substantially all of each party's business or assets.
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EXHIBIT C
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JURISDICTION
The Company and LTCO each hereby irrevocably: (a) submits to the jurisdiction
of any court of the State of New York or any federal court sitting in the State
of New York for the purposes of any suit, action or other proceeding arising out
of the Agreement between the Company and LTCO which is brought by or against the
Company or LTCO; (b) agrees that all claims in respect of any suit, action or
proceeding may be heard and determined in any such court; and (c) to the extent
that the Company or LTCO has acquired, or hereafter may acquire, any immunity
from jurisdiction of any such court or from any legal process therein, the
Company and LTCO each hereby waives, to the fullest extent permitted by law,
such immunity. The prevailing party in any litigation respecting this Agreement
shall be entitled to an award of its costs, including reasonable attorneys'
fees, in connection therewith.
The Company and LTCO each waives, and agrees not to assert in any such suit,
action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) it is not personally subject to the
jurisdiction of any such court; (b) it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in the aid
of execution, execution or otherwise) with respect to it or its property; (c)
any such suit, action or proceeding is brought in an inconvenient forum; (d) the
venue of any such suit, action or proceeding is improper; or (e) this Agreement
may not be enforced in or by any such court.
Any process against the Company or LTCO in, or in connection with, any suit,
action or proceeding filed in the United States District Court for the Southern
District of New York or any other court of the State of New York, arising out of
or relating to this Agreement or any transaction or agreement contemplated
hereby, may be served personally, or by first class mail or overnight courier
(with the same effect as though served personally) addressed to the party being
served at the address set forth in the Agreement between the Company and LTCO.
Nothing in these provisions shall affect any party's right to serve process in
any manner permitted by law or limit its rights to bring a proceeding in the
competent courts of any jurisdiction or jurisdictions or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
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EXHIBIT D
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THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
OR EXERCISED UNLESS AND UNTIL SUCH WARRANT AND/OR SHARES OF COMMON STOCK IS
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTIONS 4 AND 10 OF THIS
WARRANT.
Warrant No. 1 Number of Shares: _______
(subject to adjustment)
Date of Issuance: ______________, 2001
RAZORFISH, INC.
Common Stock Purchase Warrant
(Void after [three years])
Razorfish, Inc. a Delaware corporation (the "Company"), for value received,
hereby certifies that Ladenburg Xxxxxxxx & Co. Inc., or its registered assigns
(the "Registered Holder"), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time
commencing one year after the date of issuance and on or before 5:00 p.m.
(Eastern time) on________, 200_, _____________________ shares of Class A Common
Stock, par value $.001 per share of the Company ("Common Stock"), at a purchase
price of $__________ per share. The shares purchasable upon exercise of this
Warrant, and the purchase price per share, each as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter referred to as the
"Warrant Shares" and the "Purchase Price," respectively.
1. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in whole or in
part, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by the Registered Holder or by the Registered Holder's
duly authorized attorney, at the principal office of the Company, or at such
other office or agency as the Company may designate, accompanied by payment in
full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
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(b) The Registered Holder may, at its option, elect to pay some or all of
the Purchase Price payable upon an exercise of this Warrant by canceling all or
a portion of this Warrant. If the Registered Holder wishes to exercise this
Warrant by this method, the number of Warrant Shares purchasable (which shall in
no event exceed the total number of Warrant Shares purchasable under this
Warrant as set forth above), subject to adjustment under Section 2 of this
Warrant) shall be determined as follows:
X=Y[(A-B)/A]; where
X= the number of Warrant Shares to be issued to the Holder.
Y= the number of Warrant Shares with respect to which this Warrant is being
exercised.
A= the Fair Market Value of one share of Common Stock.
B= the Purchase Price of one share of Common Stock.
The Fair Market Value per share of Common Stock shall be determined as
follows:
(i) If the Common Stock is listed on a national securities exchange,
the Nasdaq National Market or another nationally recognized trading system
(including, without limitation, the OTC Bulletin Board and, if the average
daily trading volume for the preceding 10 trading days has been at least
100,000 shares, the Pink Sheets) as of the Exercise Date, the Fair Market
Value per share of Common Stock shall be deemed to be the average of the
high and low reported sale prices per share of Common Stock thereon on the
trading day immediately preceding the Exercise Date (provided that if no
such price is reported on such day, the Fair Market Value per share of
Common Stock shall be determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share of
Common Stock shall be deemed to be the amount most recently determined by
the Board of Directors of the Company to represent the fair market value
per share of the Common Stock (including without limitation a determination
for purposes of granting Common Stock options or issuing Common Stock under
an employee benefit plan of the Company); and, upon request of the
Registered Holder, the Board of Directors (or a representative thereof)
shall promptly notify the Registered Holder of the Fair Market Value per
share of Common Stock. Notwithstanding the foregoing, if the Board of
Directors has not made such a determination within the three-month period
prior to the Exercise Date, then (A) the Board of Directors shall make a
determination of the Fair Market Value per share of the Common Stock within
15 days of a request by the
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Registered Holder that it do so, and (B) the
exercise of this Warrant pursuant to this subsection 1(b) shall be delayed
until such determination is made.
(c) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above
accompanied by payment in full of the Purchase Price (the "Exercise Date"). At
such time, the person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in subsection
1(d) below shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within 5 business days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which the Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face
or faces thereof for the number of remaining Warrant Shares.
2. Adjustments.
(a) Adjustment for Stock Splits and Combinations. If the Company shall at
---------------------------------------------
any time or from time to time after the date on which this Warrant was first
issued (the "Original Issue Date") effect a subdivision of the outstanding
Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any
time or from time to time after the Original Issue Date combine the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event the
---------------------------------------------------
Company at any time, or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the
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close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Purchase Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Purchase Price shall be adjusted
pursuant to this paragraph as of the time of actual payment of such dividends or
distributions.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
---------------------------------------
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b),
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(d) Adjustments for Other Dividends and Distributions. In the event the
--------------------------------------------------
Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than cash out of earnings or earned surplus, determined in
accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon
exercise hereof, in addition to the number of shares of Common Stock issuable
hereunder, the kind and amount of securities of the Company and/or cash and
other property which the Registered Holder would have been entitled to receive
had this Warrant been exercised into Common Stock on the date of such event and
had the Registered Holder thereafter, during the period from the date of such
event to and including the Exercise Date, retained any such securities
receivable, giving application to all adjustments called for during such period
under this Section 2 with respect to the rights of the Registered Holder.
(e) Adjustment for Mergers or Reorganizations, etc. If there shall occur
-----------------------------------------------
any reorganization, recapitalization, consolidation or merger involving the
Company in which the Common Stock is converted into or exchanged for
15
securities, cash or other property (other than a transaction covered by
subsections 2(a), 2(b) or 2(d)), then, following any such reorganization,
recapitalization, consolidation or merger, the Registered Holder shall receive
upon exercise hereof the kind and amount of securities, cash or other property
which the Registered Holder would have been entitled to receive if, immediately
prior to such reorganization, recapitalization, consolidation or merger, the
Registered Holder had held the number of shares of Common Stock subject to this
Warrant.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
------------------------------
or readjustment of the Purchase Price pursuant to this Section 2, the Company at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Registered Holder a certificate setting
forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable
and the Purchase Price) and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request at any time of the Registered Holder, furnish or cause to be furnished
to the Registered Holder a certificate setting forth (i) the Purchase Price then
in effect and (ii) the number of shares of Common Stock and the amount, if any,
of other securities, cash or property which then would be received upon the
exercise of this Warrant.
3. Fractional Shares. The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock, as determined pursuant to subsection 1(b) above.
4. Requirements for Transfer.
(a) This Warrant and the Warrant Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities Act
of 1933, as amended (the "Act"), or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Registered Holder which is a
corporation to a wholly owned subsidiary of such corporation, or a transfer by a
Registered Holder which is a member of the National Association of Securities
Dealers (the "NASD") to an officer or employee (but not a director) of the
Registered Holder as permitted by NASD rules, provided that the transferee
agrees in writing to be subject to the terms of this Section 4, or (ii) a
transfer made in accordance with Rule 144 under the Act.
(c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
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"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered, sold
or otherwise transferred, pledged or hypothecated unless and until such
securities are registered under such Act or an opinion of counsel
satisfactory to the Company is obtained to the effect that such
registration is not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act or if sold
pursuant to an effective registration statement which is then effective
permitting the resale of the Warrant Shares.
(d) The Company will, at the Registered Holder's request, use reasonable efforts
to allow the Registered Holder to sell some or all of the Warrant Shares (but
not the Warrants) in a registered public offering under the Securities Act of
1933, as amended ("Securities Act"), pursuant to which the Company or other
holders of common stock of the Company register shares for sale. The Registered
Holder's rights hereunder shall be subject to such reasonable terms, conditions
and restrictions as are established by the Board of Directors of the Company,
which determination shall be final and binding, except that (i) such
registration rights shall only apply to registration statements filed on
Forms X-0, X-0 or S-3; (ii) after notice has been given to the Registered
Holder at least twenty (20) days prior to the filing of such registration
statement, the Registered Holder shall make a written request within ten
(10) days following receipt of such notice of the number of Warrant Shares
it wishes to be included in the registration; (iii) the Registered Holder
shall be responsible for the fees and expenses of its counsel and for all
underwriting discounts, commissions and filing fees attributable to the Warrant
Shares included in the registration statement; (iv) if the offering being
registered by the Company is underwritten and if the representative of the
underwriters certifies in writing that inclusion therein of the Warrant Shares
would materially and adversely affect the sale of the securities to be sold by
the Company thereunder, then the Company shall be required to include in the
offering only that number of Warrant Shares which the underwriters determine in
their sole discretion will not jeopardize the success of the offering (and the
securities so included will be apportioned pro rata among all selling
shareholders according to the total amount of securities entitled to be included
therein owned by each selling shareholder); and (v) the Company will use its
best efforts to register and qualify under such other securities laws of such
jurisdictions as shall be reasonably requested by the selling Registered Holder
in order to enable the Registered Holder to consummate the disposition of the
Warrant Shares being sold in such jurisdictions (provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to transact business or to file a general consent to service of
process in any such jurisdiction). The Company's obligations hereunder are
expressly conditioned upon such Registered Holder furnishing to the Company in
writing such information concerning such Registered Holder and the terms of such
Registered Holder's proposed sale of Warrant Shares as the Company
17
shall reasonably request for inclusion in the registration statement. If
any registration statement including any of the Warrant Shares is filed,
then the Company shall indemnify each Registered Holder thereof (and each
underwriter for such Registered Holder and each person, if any, who controls
such underwriter within the meaning of the Securities Act) from any loss,
claim, damage or liability arising out of, based upon or in any way relating
to any untrue statement of a material fact contained in such registration
statement or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except for any such statement or omission based on information furnished in
writing by such Registered Holder of the Warrant Shares expressly for use in
connection with such registration statement; and such Registered Holder
shall indemnify the Company (and each of its officers and directors who has
signed such registration statement, each director, each person, if any, who
controls the Company within the meaning of the Securities Act, each
underwriter for the Company and each person, if any, who controls such
underwriter within the meaning of the Securities Act) and each other such
Registered Holder or selling shareholder against any loss, claim, damage or
liability arising from any such statement or omission which was made in
reliance upon information furnished in writing to the Company by such
Registered Holder of the Warrant Shares expressly for use in connection with
such registration statement.
5. No Impairment. The Company will not, by amendment of its charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
6. Notices of Record Date, etc. In the event:
(a) the Company shall take a record of the holders of its Common Stock (or
other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or of any capital reorganization of the Company, any reclassification of
the Common Stock of the Company, any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger in which the
Company is the surviving entity and its Common Stock is not converted into or
exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(b) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
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then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such notice.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this Warrant.
8. Exchange of Warrants. Upon the surrender by the Registered Holder, properly
endorsed, to the Company at the principal office of the Company, the Company
will, subject to the provisions of Section 4 hereof, issue and deliver to or
upon the order of such Holder, at the Company's expense, a new Warrant or
Warrants of like tenor, in the name of the Registered Holder or as the
Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.
9. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. Transfers, etc.
(a) The Company will maintain a register containing the name and address of
the Registered Holder of this Warrant. The Registered Holder may change its or
his address as shown on the warrant register by written notice to the Company
requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit II hereto)
at the principal office of the Company.
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(c) Until any transfer of this Warrant is made in the warrant register, the
Company may treat the Registered Holder as the absolute owner hereof for all
purposes; provided, however, that if and when this Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the bearer
hereof as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
11. Representations of the Registered Holder. The Registered Holder of this
Warrant represents and warrants to the Company as follows:
(a) Investment. The Registered Holder is acquiring this Warrant and the
----------
Warrant Shares issuable upon the exercise of this Warrant, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same, except as otherwise may be permitted under applicable securities laws.
(b) Authority. The Registered Holder has full power and authority to enter
---------
into and to perform this Warrant in accordance with its terms. The Registered
Holder has not been organized specifically for the purpose of investing in the
Company.
(c) Accredited Investor. The Registered Holder is an Accredited Investor
-------------------
within the definition set forth in Rule 501(a) promulgated under the Securities
Act.
12. Mailing of Notices, etc. All notices and other communications from the
Company to the Registered Holder shall be mailed by first-class certified or
registered mail, postage prepaid, to the address last furnished to the Company
in writing by the Registered Holder. All notices and other communications from
the Registered Holder or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to the Company at
its principal office set forth below. If the Company should at any time change
the location of its principal office to a place other than as set forth below,
it shall give prompt written notice to the Registered Holder and thereafter all
references in this Warrant to the location of its principal office at the
particular time shall be as so specified in such notice.
13. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company. Notwithstanding the foregoing, in the event (i) the
Company effects a split of the Common Stock by means of a stock dividend and the
Purchase Price of and the number of Warrant Shares are adjusted as of the date
of the distribution of the dividend (rather than as of the record date for such
dividend), and (ii) the Registered Holder exercises this Warrant between the
record date and the distribution date for such stock dividend, the Registered
Holder shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon such exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.
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14. Change or Waiver. Any term of this Warrant may be changed or waived only
by an instrument in writing signed by the party against which enforcement of the
change or waiver is sought.
15. Section Headings. The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
16. Governing Law. This Warrant will be governed by and construed in
accordance with the internal laws of the State of New York.
EXECUTED as of the Date of Issuance indicated above.
Razorfish, Inc.
By:_______________________
Title:____________________
ATTEST:
_________________________
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EXHIBIT I
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PURCHASE FORM
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase (check applicable box):
0 _____ shares of the Common Stock covered by such Warrant; or
0 the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth
in Section 1(b).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $________.
Such payment takes the form of (check applicable box or boxes):
0 $______ in lawful money of the United States; and/or
0 the cancellation of such portion of the attached Warrant as
is exercisable for a total of _____ Warrant Shares (using a Fair
Market Value of $_____ per share for purposes of this calculation);
and/or
0 the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in Section 1(b), to
exercise this Warrant with respect to the maximum number of Warrant
Shares purchasable pursuant to the cashless exercise procedure set
forth in Section 1(b).
Signature: _____________________
Address: ______________________
______________________
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EXHIBIT II
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ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
Name of Assignee Address No. of Shares
Dated:_____________________
Signature:_______________________
The signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.
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