EXHIBIT 4.4
THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN
I-SECTOR CORPORATION
PURCHASE WARRANT
Issued to:
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
Exercisable to Purchase
50,000 Units
of
I-SECTOR CORPORATION
Void after ____________, 2009
1
This is to certify that, for value received and subject to the terms
and conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue to
the Warrantholder, at any time on or after ______________, 2005 and on or before
_____________, 2009, up to ____ Units (hereinafter defined) at the Exercise
Price (hereinafter defined).
This Warrant Certificate is issued subject to the following terms and
conditions:
1. Definitions of Certain Terms. Except as may be otherwise
clearly required by the context, the following terms have the following
meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Cashless Exercise" means an exercise of Warrants in
which, in lieu of payment of the Exercise Price, the Holder elects to receive a
lesser number of Securities such that the value of the Securities that such
Holder would otherwise have been entitled to receive but has agreed not to
receive, as determined by the closing price of such Securities on the date of
exercise or, if such date is not a trading day, on the next prior trading day,
is equal to the Exercise Price with respect to such exercise. A Holder may only
elect a Cashless Exercise if Securities issuable by the Company on such exercise
are publicly traded securities.
(c) "Closing Date" means the date on which the Offering
is closed.
(d) "Commission" means the Securities and Exchange
Commission.
(e) "Common Stock" means the common stock, par value
$0.01, of the Company.
(f) "Company" means I-Sector Corporation, a Delaware
corporation.
(g) "Company's Expenses" means any and all expenses
payable by the Company or the Warrantholder in connection with an offering
described in Section 6 hereof, except Warrantholder's Expenses.
(h) "Effective Date" means the date on which the
Registration Statement is declared effective by the Commission.
(i) "Exercise Price" means the price at which the
Warrantholder may purchase one Unit upon exercise of Warrants as determined from
time to time pursuant to the provisions hereof. The initial Exercise Price is
$________ per Unit.
(j) "Offering" means the public offering of Units made
pursuant to the Registration Statement.
(k) "Participating Underwriter" means any underwriter
participating in the sale of the Securities pursuant to a registration under
Section 6 of this Warrant Certificate.
1
(l) "Registration Statement" means the Company's
registration statement (File No. 333 -113575) as amended on the Closing Date.
(m) "Rules and Regulations" means the rules and
regulations of the Commission adopted under the Act.
(n) "Securities" means the securities obtained or
obtainable upon exercise of the Warrant or securities obtained or obtainable
upon exercise, exchange, or conversion of such securities.
(o) "Unit" means two shares of Common Stock and one Unit
Warrant.
(p) "Unit Warrant" means a warrant to purchase one share
of Common Stock issued pursuant to the Warrant Agreement.
(q) "Warrant Agreement" means that certain Warrant
Agreement, dated as of ______________, 2004, by and between the Company and
American Stock Transfer & Trust Company relating to the issuance of Unit
Warrants.
(r) "Warrant Certificate" means a certificate evidencing
the Warrant.
(s) "Warrantholder" means a record holder of the Warrant
or Securities. The initial Warrantholder is ▇▇▇▇▇▇▇ Investment Company, Inc.
(t) "Warrantholder's Expenses" means the sum of (i) the
aggregate amount of cash payments made to an underwriter, underwriting
syndicate, or agent in connection with an offering described in Section 6 hereof
multiplied by a fraction the numerator of which is the aggregate sales price of
the Securities sold by such underwriter, underwriting syndicate, or agent in
such offering and the denominator of which is the aggregate sales price of all
of the securities sold by such underwriter, underwriting syndicate, or agent in
such offering and (ii) all out-of-pocket expenses of the Warrantholder, except
for the fees and disbursements of one firm retained as legal counsel for the
Warrantholder that will be paid by the Company.
(u) "Warrant" means the warrant evidenced by this
certificate, any similar certificate issued in connection with the Offering, or
any certificate obtained upon transfer or partial exercise of the Warrant
evidenced by any such certificate.
2. Exercise of Warrant. All or any part of the Warrant
represented by this Warrant Certificate may be exercised commencing on the first
anniversary of the Effective Date and ending at 5 p.m. Pacific Time on the fifth
anniversary of the Effective Date by surrendering this Warrant Certificate,
together with appropriate instructions, duly executed by the Warrantholder or by
its duly authorized attorney, at the office of the Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; or at such other office or agency as the Company
may designate. The date on which such instructions are received by the Company
shall be the date of exercise. If the Holder has elected a Cashless Exercise,
such instructions shall so state. Upon receipt of notice of exercise, the
Company shall promptly instruct its transfer agent to prepare certificates for
the Securities to be received by the Warrantholder upon completion of the
Warrant exercise. When such certificates are prepared, the Company shall notify
the Warrantholder and deliver such
2
certificates to the Warrantholder or as per the Warrantholder's instructions
promptly upon payment in full by the Warrantholder, in lawful money of the
United States, of the Exercise Price payable with respect to the Securities
being purchased, if any. If the Warrantholder shall represent and warrant that
all applicable registration and prospectus delivery requirements for their sale
have been complied with upon the prior sale of the Securities received upon
exercise of the Warrant, such certificates shall not bear a legend with respect
to the Securities Act of 1933.
If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.
3. Adjustments in Certain Events. The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:
(a) If the outstanding shares of the Company's Common
Stock are divided into a greater number of shares or a dividend in stock is paid
on the Common Stock, the number of shares of Common Stock for which the Warrant
is then exercisable will be proportionately increased and the Exercise Price
will be proportionately reduced; and, conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares of Common Stock, the
number of shares of Common Stock for which the Warrant is then exercisable will
be proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this Section 3(a) will
be made with the intent and, as nearly as practicable, the effect that neither
the percentage of the total equity of the Company obtainable on exercise of the
Warrants nor the price payable for such percentage upon such exercise will be
affected by any event described in this Section 3(a).
(b) In case of any change in the Common Stock through
merger, consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, then, as a condition of such
change, lawful and adequate provision will be made so that the holder of this
Warrant Certificate will have the right thereafter to receive upon the exercise
of the Warrant the kind and amount of shares of stock or other securities or
property to which he would have been entitled if, immediately prior to such
event, he had held the number of shares of Common Stock obtainable upon the
exercise of the Warrant. In any such case, appropriate adjustment will be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the Warrantholder, to the end that the provisions set
forth herein will thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Warrant. The Company will not permit any change in its
capital structure to occur unless the issuer of the shares of stock or other
securities to be received by the holder of this Warrant Certificate, if not the
Company, agrees to be bound by and comply with the provisions of this Warrant
Certificate.
3
(c) When any adjustment is required to be made in the
number of shares of Common Stock, other securities, or the property purchasable
upon exercise of the Warrant, the Company will promptly determine the new number
of such shares or other securities or property purchasable upon exercise of the
Warrant and (i) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new number of such shares or other
securities or property purchasable upon exercise of the Warrant and (ii) cause a
copy of such statement to be mailed to the Warrantholder within thirty (30) days
after the date of the event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other
securities will be issued in connection with the exercise of the Warrant, but
the Company will pay, in lieu of fractional shares, a cash payment therefor on
the basis of the mean between the bid and asked prices of the Common Stock in
the over-the-counter market or the last sale price of the Common Stock on the
principal exchange or other trading facility on which the Common Stock is traded
on the day immediately prior to exercise.
(e) If securities of the Company or securities of any
subsidiary of the Company are distributed pro rata to holders of Common Stock,
such number of securities will be distributed to the Warrantholder or its
assignee upon exercise of its rights hereunder as such Warrantholder or assignee
would have been entitled to if this Warrant Certificate had been exercised prior
to the record date for such distribution. The provisions with respect to
adjustment of the Common Stock provided in this Section 3 will also apply to the
securities to which the Warrantholder or its assignee is entitled under this
Section 3(e).
(f) Notwithstanding anything herein to the contrary,
there will be no adjustment made hereunder on account of (i) the sale by the
Company of the Common Stock or other Securities purchasable upon exercise of the
Warrant and (ii) any adjustment to the Unit Warrants pursuant to the Warrant
Agreement.
(g) If, immediately prior to any exercise of Warrants,
there are no outstanding Unit Warrants, or other securities for which the
Warrants are then exercisable and that are convertible into or exercisable to
purchase Common Stock ("Other Securities"), then upon such exercise of Warrants,
the Company shall issue to the Warrantholder, in lieu of Unit Warrants, or such
Other Securities, and in addition to any other Common Stock issuable upon such
exercise of Warrants, the number of shares of Common Stock that would have been
issuable upon exercise of the Unit Warrants, or exercise or conversion of such
Other Securities underlying the exercised Warrants, reduced by a number of
shares of Common Stock equal in value to the exercise price (if any) of such
Unit Warrants or Other Securities.
4. Reservation of Securities. The Company agrees that the number
of shares of Common Stock or other Securities sufficient to provide for the
exercise of the Warrant upon the basis set forth above will at all times during
the term of the Warrant be reserved for exercise.
5. Validity of Securities. All Securities delivered upon the
exercise of the Warrant will be duly and validly issued in accordance with their
terms, and the Company will pay all documentary and transfer taxes, if any, in
respect of the original issuance thereof upon exercise of the Warrant.
4
6. Registration of Securities Issuable on Exercise of Warrant
Certificate.
(a) The Company will register the Securities with the
Commission pursuant to the Act so as to allow the unrestricted sale of the
Securities to the public from time to time commencing on the first anniversary
of the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company will
also file such applications and other documents necessary to permit the sale of
the Securities to the public during the Registration Period in those states in
which the Units were qualified for sale in the Offering or such other states as
the Company and the Warrantholder agree to. In order to comply with the
provisions of this Section 6(a), the Company is not required to file more than
one registration statement. No registration right of any kind, "piggyback" or
otherwise, will last longer than five years from the Effective Date.
(b) The Company will pay all of the Company's Expenses
and each Warrantholder will pay its pro rata share of the Warrantholder's
Expenses relating to the registration, offer, and sale of the Securities.
(c) Except as specifically provided herein, the manner
and conduct of the registration, including the contents of the registration,
will be entirely in the control and at the discretion of the Company. The
Company will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during the
period of its use. In addition, if the Warrantholder participating in the
registration is advised by counsel for ▇▇▇▇▇▇▇ Investment Company, Inc. (or if
▇▇▇▇▇▇▇ Investment Company, Inc. is not a Warrantholder, counsel representing
more than 50% of the then outstanding warrants) that the registration statement,
in that counsel's opinion, is deficient in any material respect, the Company
will use its best efforts to cause the registration statement to be amended to
eliminate the concerns raised.
(d) The Company will furnish to the Warrantholder the
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Securities owned by
it.
(e) The Company will, at the request of Warrantholders
holding at least 50 percent of the then outstanding Warrants, (i) furnish an
opinion of the counsel representing the Company for the purposes of the
registration pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter, (ii) furnish an appropriate letter from the
independent public accountants of the Company, addressed to the Warrantholders
and any Participating Underwriter, and (iii) make representations and warranties
to the Warrantholders and any Participating Underwriter. A request pursuant to
this subsection (e) may be made on three occasions. The documents required to be
delivered pursuant to this subsection (e) will be dated within ten days of the
request and will be, in form and substance, equivalent to similar documents
furnished to the underwriters in connection with the Offering, with such changes
as may be appropriate in light of changed circumstances.
7. Indemnification in Connection with Registration.
5
(a) If any of the Securities are registered, the Company
will indemnify and hold harmless each selling Warrantholder, any person who
controls any selling Warrantholder within the meaning of the Act, and any
Participating Underwriter against any losses, claims, damages, or liabilities,
joint or several, to which any Warrantholder, controlling person, or
Participating Underwriter may be subject under the Act or otherwise; and it will
reimburse each Warrantholder, each controlling person, and each Participating
Underwriter for any legal or other expenses reasonably incurred by the
Warrantholder, controlling person, or Participating Underwriter in connection
with investigating or defending any such loss, claim, damage, liability, or
action, insofar as such losses, claims, damages, or liabilities, joint or
several (or actions in respect thereof), arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained, on
the effective date thereof, in any such registration statement or any
preliminary prospectus or final prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any case to the extent that any loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement,
preliminary prospectus, final prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
by a Warrantholder for use in the preparation thereof; provided, however, that
the foregoing indemnification with respect to the preliminary prospectus shall
not insure to the benefit of any Participating Underwriter from which the person
asserting any such loss, claim, damage or liability, action or proceeding
purchased Units if (1) a copy of the final prospectus (as then amended or
supplemented) was required by law to be delivered to such person at or prior to
the written confirmation of the sale of Units to such person, (2) a copy of the
final prospectus (as then amended or supplemented) was not sent or given to such
person by or on behalf of such Participating Underwriter and such failure was
not due to the Company's failure to make available sufficient quantities of the
final prospectus to those Underwriters, and (3) the final prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability, action or proceeding. The indemnity agreement
contained in this subparagraph (a) will not apply to amounts paid to any
claimant in settlement of any suit or claim unless such payment is first
approved by the Company, such approval not to be unreasonably withheld.
(b) Each selling Warrantholder, as a condition of the
Company's registration obligation, will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed any registration
statement or other filing or any amendment or supplement thereto, and any person
who controls the Company within the meaning of the Act, against any losses,
claims, damages, or liabilities to which the Company or any such director,
officer, or controlling person may become subject under the Act or otherwise,
and will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in said registration statement, any preliminary
or final prospectus, or other filing, or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged
6
untrue statement or omission or alleged omission was made in said registration
statement, preliminary or final prospectus, or other filing, or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Warrantholder for use in the preparation thereof; provided,
however, that the indemnity agreement contained in this subparagraph (b) will
not apply to amounts paid to any claimant in settlement of any suit or claim
unless such payment is first approved by the Warrantholder, such approval not to
be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under
subparagraphs (a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party otherwise than under
subparagraphs (a) and (b).
(d) If any such action is brought against any indemnified
party and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party;
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
8. Restrictions on Transfer. This Warrant Certificate and the
Warrant may not be sold, transferred, assigned or hypothecated for a one-year
period after the Effective Date except to underwriters of the Offering or to
individuals who are either a partner or an officer of such an underwriter or by
will or by operation of law. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder, into a certificate or certificates
evidencing the same aggregate number of Warrants.
9. No Rights as a Shareholder. Except as otherwise provided
herein, the Warrantholder will not, by virtue of ownership of the Warrant, be
entitled to any rights of a shareholder of the Company but will, upon written
request to the Company, be entitled to receive such quarterly or annual reports
as the Company distributes to its shareholders.
10. Notice. Any notices required or permitted to be given
hereunder will be in writing and may be served personally or by mail; and if
served by mail will be addressed as follows:
If to the Company:
I-Sector Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer;
7
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.
11. Applicable Law. This Warrant Certificate will be governed by
and construed in accordance with the laws of the State of Oregon, without
reference to conflict of laws principles thereunder. All disputes relating to
this Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon to the exclusion of all other courts that might have
jurisdiction.
Dated as of ______________, 2004
I-SECTOR CORPORATION
By: _____________________________________
Name:
Title:
8
