EXHIBIT 4.3
Option to Purchase
_______ Units
FORM OF
INFOSAFE SYSTEMS, INC.
Unit Purchase Option
Dated: February 18, 1997
THIS CERTIFIES THAT X.X. Xxxxx Investment Banking Corp.
(herein sometimes called the "Holder") is entitled to purchase from
Infosafe Systems, Inc., a Delaware corporation (hereinafter called
the "Company"), at the prices and during the periods as hereinafter
specified, up to_______________ (_______) Units ("Units"), each
Unit consisting of _______ units identical to those sold by the
Company in its initial public offering ("IPO") in January 1995
("IPO Unit"), each IPO Unit consisting of one share of Class A
Common Stock, $.01 par value ("Common Stock") of the Company, one
Class A Warrant ("Class A Warrant") and one Class B Warrant ("Class
B Warrant"). Each Class A Warrant is exercisable to purchase one
share of Common Stock and one Class B Warrant at an exercise price
of $6.50 from January 18, 1995 until __________, 2002, and each
Class B Warrant is exercisable to purchase one share of Common
Stock at an exercise price of $8.75 until ___________, 2002. The
Class A Warrants and Class B Warrants are herein collectively
referred to as the "Warrants."
This Option, together with options of like tenor,
constituting in the aggregate options (the "Options") to purchase
Units, subject to adjustment in accordance with Section 8 of this
Option (the "Option Units"), was originally issued pursuant to an
agency agreement between the Company and X.X. Xxxxx Investment
Banking Corp., as placement agent (the "Placement Agent") in
connection with a private placement (the "Offering") of up to one
hundred Units (the "Private Units") through the Placement Agent in
consideration for $__________ received for the Options.
Except as specifically otherwise provided herein, the
Common Stock and the Warrants issued pursuant to the option herein
granted (the "Option") shall bear the same terms and conditions as
described under the caption "Description of Securities" in the
Confidential Term Sheet dated February 10, 1997, and the Exhibits
thereto (the "Term Sheet") and the Warrants shall be governed by
the terms of the Warrant Agreement dated as of February 10, 1997
executed in connection with the Offering (the "Warrant Agreement"),
and except that (i) the holder shall have registration rights under
the Securities Act of 1933, as amended (the "Act"), for the Option,
the Common Stock and the Warrants included in the Option Units, and
the shares of Common Stock underlying the Warrants, as more fully
described in Section 6 of this Option and (ii) the Warrants
issuable upon exercise of the Option will not be subject to
redemption by the Company. The Company will list the Option Units,
the Common Stock and the Warrants underlying this Option on the
Nasdaq National Market, the Nasdaq Small Cap Market or such other
exchange or market as the IPO Units, Common Stock or Warrants may
then be listed or quoted. In the event of any extension of the
expiration date or reduction of the exercise price of the Warrants,
the same changes to the Warrants included in the Option Units shall
be simultaneously effected.
1. The rights represented by this Option shall be
exercised at the prices, subject to adjustment in accordance with
Section 8 of this Option ("the "Exercise Price"), and during the
periods as follows:
(a) Between ____________, 1997 and February
___, 2002 inclusive, the Holder shall have the
option to purchase Option Units hereunder at a price
of $50,000 per Unit. For purposes of the
adjustments under Section 8 hereof, the Per Share
Exercise Price shall be deemed to be $50,000 subject
to further adjustment as provided in such Section 8.
(b) After February ___, 2002, the Holder shall
have no right to purchase any Option Units
hereunder.
2. (a) The rights represented by this Option may be
exercised at any time within the period above specified, in whole
or in part, by (i) the surrender of this Option (with the purchase
form at the end hereof properly executed) at the principal
executive office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the
Company); and (ii) payment to the Company of the exercise price
then in effect for the number of Option Units specified in the
above-mentioned purchase form together with applicable stock
transfer taxes, if any. This Option shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date this Option is
surrendered and payment is made in accordance with the foregoing
provisions of this Section 2, and the person or persons in whose
name or names the certificates for shares of Common Stock and
Warrants shall be issuable upon such exercise shall become the
holder or holders of record of such Common Stock and Warrants at
that time and date. The certificates for the Common Stock and
Warrants so purchased shall be delivered to the Holder as soon as
practicable but not later than ten (10) days after the rights
represented by this Option shall have been so exercised.
(b) At any time during the period above specified,
during which this Option may be exercised, the Holder may, at its
option, exchange this Option, in whole or in part (an "Option
Exchange"), into the number of Option Units determined in
accordance with this Section (b), by surrendering this Option at
the principal office of the Company or at the office of its stock
transfer agent, accompanied by a notice stating such Xxxxxx's
intent to effect such exchange, the number of Option Units into
which this Option is to be exchanged and the date on which the
Holder requests that such Option Exchange occur (the "Notice of
Exchange"). The Option Exchange shall take place on the date
specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the shares of Common Stock and Warrants
issuable upon such Option Exchange and, if applicable, a new Option
of like tenor evidencing the balance of the Option Units remaining
subject to this Option, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) days following the
Exchange Date. In connection with any Option Exchange, this Option
shall represent the right to subscribe for and acquire the number
of Option Units (rounded to the next highest integer) equal to
(x) the number of Option Units specified by the Holder in its
Notice of Exchange up to the maximum number of Option Units subject
to this option (the "Total Number") less (y) the number of Option
Units equal to the quotient obtained by dividing (A) the product of
the Total Number and the existing Exercise Price by (B) the Fair
Market Value. "Fair Market Value" shall mean first, if there is a
trading market as indicated in Subsection (i) below for the Units,
such Fair Market Value of the Units and if there is no such trading
market in the Units, then Fair Market Value shall have the meaning
indicated in Subsections (ii) through (v) below for the aggregate
value of all shares of Common Stock and Warrants which comprise a
Unit:
(i) If the Units are listed on a national
securities exchange or listed or admitted to unlisted
trading privileges on such exchange or listed for trading
on the Nasdaq National Market or the Nasdaq Small Cap
Market, the Fair Market Value shall be the average of the
last reported sale prices or the average of the means of
the last reported bid and asked prices, respectively, of
the Units on such exchange or market for the twenty (20)
business days ending on the last business day prior to
the Exchange Date; or
(ii) If the Common Stock or Warrants are listed on a
national securities exchange or admitted to unlisted
trading privileges on such exchange or listed for trading
on the Nasdaq National Market or the Nasdaq Small Cap
Market, the Fair Market Value shall be the average of the
last reported sale prices or the average of the means of
the last reported bid and asked prices, respectively, of
Common Stock or Warrants, respectively, on such exchange
or market for the twenty (20) business days ending on the
last business day prior to the Exchange Date; or
(iii) If the Common Stock or Warrants are not so
listed or admitted to unlisted trading privileges, the
Fair Market Value shall be the average of the means of
the last reported bid and asked prices of the Common
Stock or Warrants, respectively, for the twenty (20)
business days ending on the last business day prior to
the Exchange Date; or
(iv) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked
prices are not so reported, the Fair Market Value shall
be an amount, not less than book value thereof as at the
end of the most recent fiscal year of the Company ending
prior to the Exchange Date, determined in such reasonable
manner as may be prescribed by the Board of Directors of
the Company; or
(v) If the Warrants are not so listed or admitted
to unlisted trading privileges, and bid and asked prices
are not so reported for Warrants, then Fair Market Value
for the Warrants shall be an amount equal to the
difference between (i) the Fair Market Value of the
shares of Common Stock and Warrants which may be received
upon the exercise of the Warrants, as determined herein,
and (ii) the Warrant Exercise Price.
3. Any transfer, sale or such assignment of this Option
shall be effected by the Holder (i) executing the form of
assignment at the end hereof and (ii) surrendering this Option for
cancellation at the office or agency of the Company referred to in
Section 2 hereof, accompanied by a certificate (signed by an
officer of the Holder if the Holder is a corporation), stating that
each transferee is a permitted transferee under this Section 3
hereof; whereupon the Company shall issue, in the name or names
specified by the Holder (including the Holder) a new Option or
Options of like tenor and representing in the aggregate rights to
purchase the same number of Option Units as are purchasable
hereunder.
4. The Company covenants and agrees that all shares of
Common Stock which may be issued as part of the Option Units
purchased hereunder and the Common Stock which may be issued upon
exercise of the Warrants will, upon issuance, be duly and validly
issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof. The Company further covenants and
agrees that during the periods within which this Option may be
exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to
provide for the exercise of this Option and that it will have
authorized and reserved a sufficient number of shares of Common
Stock for issuance upon exercise of the Warrants included in the
Option Units.
5. This Option shall not entitle the Holder to any
voting rights or any other rights, or subject to the Holder to any
liabilities, as a stockholder of the Company.
6. (a) The Company shall advise the Holder or its
transferee, whether the Holder holds the Option or has exercised
the Option and holds Option Units or any of the securities
underlying the Option Units, by written notice at least thirty (30)
days prior to the filing of any post-effective amendment to the
Registration Statement or of any new registration statement or
post-effective amendment thereto under the Act covering any
securities of the Company, for its own account or for the account
of others, and will for a period of seven years from the effective
date of the Registration Statement, upon the request of the Holder,
include in any such post-effective amendment or registration
statement, such information as may be required to permit a public
offering of the Option, all or any of the Option Units, the Common
Stock or Warrants included in the Option Units or the Common Stock
issuable upon the exercise of the Warrants (the "Registrable
Securities").
(b) If the Placement Agent, X.X. Xxxxx & Co., Inc.
or X. Xxxxxx Xxxxx (each a "Holder" and together, the "Holders")
shall give notice to the Company at any time to the effect that
such holder desires to register under the Act this Option, the
Option Units or any of the underlying securities contained in the
Option Units under such circumstances that a public distribution
(within the meaning of the Act) of any such securities will be
involved then the Company will promptly, but no later than twenty
days after receipt of such notice, file a post-effective amendment
to the current Registration Statement or a new registration
statement on Form S-1 or such other form as the Holder requests
pursuant to the Act, to the end that the Option, the Option Units
and/or any of the securities underlying the Option Units may be
publicly sold under the Act as promptly as practicable thereafter
and the Company will use its best efforts to cause such
registration to become and remain effective (including the taking
of such steps as are necessary to obtain the removal of any stop
order); provided, that such holder shall furnish the Company with
appropriate information in connection therewith as the Company may
reasonably request in writing. The Holder may, at its option,
request the filing of a post-effective amendment to the current
Registration Statement or a new registration statement under the
Act on two occasions during the seven year period beginning ___,
1997. The Holder may, at its option request the registration of
the Option and/or any of the securities underlying the Option in a
registration statement made by the Company as contemplated by
Section 6(a) or in connection with a request made pursuant to this
Section 6(b) prior to acquisition of the Option Units issuable upon
exercise of the Option and even though the Holder has not given
notice of exercise of the Option. The Holder may, at its option,
request such post-effective amendment or new registration statement
during the described period with respect to the Option, the Option
Units as a unit, or separately as to the Common Stock and/or
Warrants included in the Option Units and/or the Common Stock
issuable upon the exercise of the Warrants, and such registration
rights may be exercised by the Holder prior to or subsequent to the
exercise of the Option.
Within ten days after receiving any such notice pursuant
to this Section 6(b), the Company shall give notice to the other
holders of the Options, advising that the Company is proceeding
with such post-effective amendment or registration statement and
offering to include therein the securities underlying the Options
of the other holders, provided that they shall furnish the Company
with such appropriate information (relating to the intentions of
such holders) in connection therewith as the Company shall
reasonably request in writing. In the event the registration
statement is not filed within the period specified herein, the
expiration date of this Option and the underlying Warrants shall be
extended by an amount of time equal to the delay in filing, and in
the event the registration statement is not declared effective
under the Act prior to February __, 2004, the Company shall extend
the expiration date of the Option and the underlying Warrants to a
date not less than 90 days after the effective date of such
registration statement. All costs and expenses of the first such
post-effective amendment or new registration statement under this
paragraph 6(b) shall be borne by the Company, except that the
holders shall bear the fees of their own counsel and any
underwriting discounts or commissions applicable to any of the
securities sold by them. If the Company determines to include
securities to be sold by it in any registration statement
originally requested pursuant to this Section 6(b), such
registration shall instead be deemed to have been a registration
under Section 6(a) and not under this Section 6(b).
The Company will maintain such registration statement or
post-effective amendment current under the Act for a period of at
least six months (and for up to an additional three months if
requested by the Holder) from the effective date thereof.
(c) Whenever pursuant to Section 6 a registration
statement relating to any Registrable Securities is filed under the
Act, amended or supplemented, the Company shall (i) supply
prospectuses and such other documents as the Holder may request in
order to facilitate the public sale or other disposition of the
Registrable Securities, (ii) use its best efforts to register and
qualify any of the Registrable Securities for sale in such states
as such Holder designates, (iii) furnish indemnification in the
manner provided in Section 7 hereof, (iv) notify each Holder of
Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect,
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading and, at the request of any
such Holder, prepare and furnish to such Holder a reasonable number
of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not included
an untrue statement of a material fact or omit to state material
fact required to be stated therein or necessary to make the
statements therein not misleading and (v) do any and all other acts
and things which may be necessary or desirable to enable such
Holders to consummate the public sale or other disposition of the
Registrable Securities, The Holder shall furnish appropriate
information in connection therewith and indemnification as set
forth in Section 7.
(d) The Company shall not permit the inclusion of
any securities other than the Registrable Securities to be included
in any registration statement filed pursuant to Section 6(b) hereof
without the prior written consent of the Holder.
(e) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a
signed counterpart, addressed to such Holder or underwriter, of (i)
an opinion of counsel to the Company, dated the effective date of
such registration statement (or, if such registration includes an
underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) if such
registration includes an underwritten public offering, a "cold
comfort" letter dated the effective date of such registration
statement and dated the date of the closing under the underwriting
agreement signed by the independent public accountants who have
issued a report on the Company's financial statements included in
such registration statement, in each case covering substantially
the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered
to underwriters in underwritten public offerings of securities.
(f) The Company shall deliver promptly to each
Holder participating in the offering requesting the correspondence
and memoranda described below and to the managing underwriter
copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and underwriter to do
such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement
as it deems reasonable necessary to comply with applicable
securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access
to non-confidential books, records and properties and opportunities
to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such
reasonable times as any such Holder shall reasonably request.
7. (a) Whenever pursuant to Section 6 a registration
statement relating to the Registrable Securities is filed under the
Act, amended or supplemented, the Company will indemnify and hold
harmless each holder of the Registrable Securities covered by such
registration statement, amendment or supplement (such holder being
hereinafter called the "Distributing Holder"), and each person, if
any, who controls (within the meaning of the Act) the Distributing
Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the
meaning of the Act) any such underwriter, against any losses,
claims, damages or liabilities, joint or several, to which the
Distributing Holder, any such controlling person or any such
underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and will reimburse the Distributing Holder and each such
controlling person and underwriter for any legal or other expenses
reasonably incurred by the Distributing Holder or such controlling
person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity
with written information furnished by such Distributing Holder
specifically for use in the preparation thereof.
(b) If requested by the Company prior to the filing
of any registration statement covering the Registrable Securities,
each Distributing Holder will agree, severally but not jointly, to
indemnify and hold harmless the Company against any losses, claims,
damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final
prospectus, or said amendment or supplement, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said
registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished by such Distributing
Holder specifically for use in the preparation thereof; except that
the maximum amount which may be recovered from the Distributing
Holder pursuant to this Section 7 or otherwise shall be limited to
the amount of net proceeds received by the Distributing Holder from
the sale of the Registrable Securities.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party, give the indemnifying party
notice of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this
Section 7.
(d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(8) In addition to the provisions of Section 1(a) of
this Option, the Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of the
Options shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) In case the Company shall (i) declare a
dividend or make a distribution on its outstanding shares
of Common Stock in shares of Common Stock, (ii) subdivide
or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect at
the time of the record date for such dividend or
distribution or of the effective date of such
subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to
such action. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for
the issuance of rights or warrants to all holders of its
Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or
having a conversion price per share) less than (i) the
current market price of the Common Stock (as defined in
Subsection (h) below) on the record date mentioned below,
or (ii) the Exercise Price on a per share basis giving no
value to the Warrants included in the Option Units (the
"Per Share Exercise Price") on such record date, the
Exercise Price shall be adjusted so that the same shall
equal the lower of (i) the price determined by
multiplying the number of shares then comprising an
Option Unit by the product of the Per Share Exercise
Price in effect immediately prior to the date of such
issuance multiplied by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding on the record date mentioned below and the
number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would
purchase at such current market price per share of the
Common Stock, and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding
on such record date and the number of additional shares
of Common Stock offered for subscription or purchase (or
into which the convertible securities so offered are
convertible) or (ii) in the event the Subscription Price
is equal to or higher than the current market price but
is less than the Per Share Exercise Price, the price
determined by multiplying the number of shares then
comprising an Option Unit by the product of the Per Share
Exercise Price in effect immediately prior to the date of
issuance multiplied by a fraction, the numerator of which
shall be the sum of the number of shares outstanding on
the record date mentioned below and the number of
additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common
Stock so offered (or the aggregate conversion price of
the convertible securities so offered) would purchase at
the Per Share Exercise Price in effect immediately prior
to the date of such issuance, and the denominator of
which shall be the sum of the number of shares of Common
Stock outstanding on the record date mentioned below and
the number of additional shares of Common Stock offered
for subscription or purchase (or into which the
convertible securities so offered are convertible). Such
adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective
immediately after the record date for the determination
of shareholders entitled to receive such rights or
warrants; and to the extent that shares of Common Stock
are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such
rights or warrants the Exercise Price shall be readjusted
to the Exercise Price which would then be in effect had
the adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute
to the holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends or
distributions and dividends or distributions referred to
in Subsection (a) above) or subscription rights or
warrants (excluding those referred to in Subsection (b)
above), then in each such case the Exercise Price in
effect thereafter shall be determined by multiplying the
number of shares then comprising an Option Unit by the
product of the Per Share Exercise Price in effect
immediately prior thereto multiplied by a fraction, the
numerator of which shall be the total number of shares of
Common Stock outstanding multiplied by the current market
price per share of Common Stock (as defined in
Subsection (h) below), less the fair market value (as
determined by the Company's Board of Directors) of said
assets or evidences of indebtedness so distributed or of
such rights or warrants, and the denominator of which
shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per
share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such
adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the
record date for the determination of shareholders
entitled to receive such distribution.
(d) In case the Company shall issue shares of its
Common Stock, (excluding shares issued (i) in any of the
transactions described in Subsections (a), (b), (c) or
(e) of this Section 8; (ii) upon exercise of options
granted to the Company's employees under a plan or plans
adopted by the Company's Board of Directors and approved
by its shareholders, if such shares would otherwise be
included in this Subsection (d), (but only to the extent
that the aggregate number of shares excluded hereby and
issued after the date hereof, shall not exceed 5% of the
Company's Common Stock outstanding at the time of any
issuance); (iii) upon exercise of options and warrants
or upon conversion of convertible securities outstanding
at February ___, 1997 and this Option; (iv) to
shareholders of any corporation which merges into the
Company in proportion to their stock holdings of such
corporation immediately prior to such merger, upon such
merger, or (v) in a bona fide public offering pursuant to
a firm commitment underwriting; but only if no adjustment
is required pursuant to any other specific subsection of
this Section (8) (without regard to Subsection (i) below)
with respect to the transaction giving rise to such
rights) for a consideration per share (the "Offering
Price") less than (i) the current market price per share,
as defined in Subsection (h) below, on the date the
Company fixes the offering price of such additional
shares, or (ii) the Per Share Exercise Price, then the
Exercise Price shall be adjusted immediately thereafter
so that it shall equal the lower of (i) the price
determined by multiplying the number of shares then
comprising an Option Unit by the product of the Per Share
Exercise Price in effect immediately prior thereto
multiplied by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common
Stock which the aggregate consideration received,
determined as provided in Subsection (g) below, for the
issuance of such additional shares would purchase at such
current market price per share of Common Stock, and the
denominator of which shall be the number of shares of
Common Stock outstanding immediately after the issuance
of such additional shares or (ii) in the event the
Offering Price is equal to or higher than the current
market price per share but less than the Per Share
Exercise Price, the price determined by multiplying the
number of shares then comprising an Option Unit by the
product of the Per Share Exercise Price in effect
immediately prior to the date of issuance multiplied by a
fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of
shares of Common Stock which the aggregate consideration
received, determined as provided in Subsection (g) below,
for the issuance of such additional shares would purchase
at the Per Share Exercise Price in effect immediately
prior to the date of such issuance, and the denominator
of which shall be the number of shares of Common Stock
outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(e) In case the Company shall issue any securities
convertible into or exchangeable for its Common Stock,
excluding securities issued in transactions described in
Subsections (b) and (c) above, for a consideration per
share of Common Stock (the "Conversion Price") initially
deliverable upon conversion or exchange of such
securities, determined as provided in Subsection (g)
below, less than (i) the current market price per share,
as defined in Subsection (h) below, in effect immediately
prior to the issuance of such securities, or (ii) the Per
Share Exercise Price, then the Exercise Price shall be
adjusted immediately thereafter so that it shall equal
the lower of (i) the price determined by multiplying the
number of shares then comprising an Option Unit by the
product of the Per Share Exercise Price in effect
immediately prior thereto multiplied by a fraction, the
numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to
the issuance of such securities and the number of shares
of Common Stock which the aggregate consideration
received, determined as provided in Subsection (g) below,
for such securities would purchase at such current market
price per share of Common Stock, and the denominator of
which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such issuance and
the maximum number of shares of Common Stock of the
Company deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange
price or rate, or (ii) in the event the Conversion Price
is equal to or higher than the current market price per
share but less than the Per Share Exercise Price, the
price determined by multiplying the number of shares then
comprising an Option Unit by the product of the Per Share
Exercise Price in effect immediately prior to the date of
issuance multiplied by a fraction, the numerator of which
shall be the sum of the number of shares outstanding
immediately prior to the issuance of such securities and
the number of shares of Common Stock which the aggregate
consideration received, determined as provided in
Subsection (g) below, for such securities would purchase
at the Per Share Exercise Price in effect immediately
prior to the date of such issuance, and the denominator
of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the
issuance of such securities and the maximum number of
shares of Common Stock of the Company deliverable upon
conversion of or in exchange for such securities at the
initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an
issuance is made.
(f) Whenever the Exercise Price payable upon
exercise of each Option is adjusted pursuant to
Subsections (a), (b), (c), (d) or (e) above, (i) the
number of shares of Common Stock included in an Option
Unit shall simultaneously be adjusted by multiplying the
number of shares of Common Stock included in Option Unit
immediately prior to such adjustment by the Exercise
Price in effect immediately prior to such adjustment and
dividing the product so obtained by the Exercise Price,
as adjusted and (ii) the number of shares of Common Stock
or other securities issuable upon exercise of the
Warrants included in the Option Units and the exercise
price of such Warrants shall be adjusted in accordance
with the applicable terms of the Warrant Agreement.
(g) For purposes of any computation respecting
consideration received pursuant to Subsections (d) and
(e) above, the following shall apply:
(A) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be
the amount of such cash, provided that in no case
shall any deduction be made for any commissions,
discounts or other expenses incurred by the Company
for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of
Common Stock for a consideration in whole or in part
other than cash, the consideration other than cash
shall be deemed to be the fair market value thereof
as determined in good faith by the Board of
Directors of the Company (irrespective of the
accounting treatment thereof), whose determination
shall be conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of
Common Stock, the aggregate consideration received
therefor shall be deemed to be the consideration
received by the Company for the issuance of such
securities plus the additional minimum
consideration, if any, to be received by the Company
upon the conversion or exchange thereof the
consideration in each case to be determined in the
same manner as provided in clauses (A) and (B) of
this Subsection (g).
(h) For the purpose of any computation under
Subsections (b), (c), (d) and (e) above, the current
market price per share of Common Stock at any date shall
be deemed to be the average of the daily closing prices
for 30 consecutive business days before such date. The
closing price for each day shall be the last sale price
regular way or, in case no such reported sale takes place
on such day, the average of the last reported bid and
asked prices regular way, in either case on the principal
national securities exchange, including the Nasdaq
National Market, on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to
trading on such exchange or market, the average of the
highest reported bid and lowest reported asked prices as
reported by Nasdaq, or other similar organization if
Nasdaq is no longer reporting such information, or if not
so available, the fair market price as determined by the
Board of Directors.
(i) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase
or decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason
of this Subsection (c)(i) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All
calculations under this Section 8 shall be made to the
nearest cent or to the nearest one-hundredth of a share,
as the case may be. Anything in this Section 8 to the
contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the
Exercise Price, in addition to those required by this
Section 8, as it shall determine, in its sole discretion,
to be advisable in order that any dividend or
distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common
Stock, hereafter made by the Company shall not result in
any Federal Income tax liability to the holders of Common
Stock or securities convertible into Common Stock
(including Warrants issuable upon exercise of this
Option).
(j) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later
than 10 days after any request for such an adjustment by
the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Option Units
issuable upon exercise of each Option and, if requested,
information describing the transactions giving rise to
such adjustments, to be mailed to the Holders, at the
address set forth herein, and shall cause a certified
copy thereof to be mailed to its transfer agent, if any.
The Company may retain a firm of independent certified
public accountants selected by the Board of Directors
(who may be the regular accountants employed by the
Company) to make any computation required by this
Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such
adjustment.
(k) In the event that at any time, as a result of
an adjustment made pursuant to Subsection (a) above, the
Holder of this Option thereafter shall become entitled to
receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so
receivable upon exercise of this Option shall be subject
to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in
Subsections (a) to (i) inclusive above.
(l) In case any event shall occur as to which the
other provisions of this Section 8 or Section 1(a) hereof
are not strictly applicable but as to which the failure
to make any adjustment would not fairly protect the
purchase rights represented by this Option in accordance
with the essential intent and principles hereof then, in
each such case, the Holders of Options representing the
right to purchase a majority of the Option Units may
appoint a firm of independent public accountants
reasonably acceptable to the Company, which shall give
their opinion as to the adjustment, if any, on a basis
consistent with the essential intent and principles
established herein, necessary to preserve the purchase
rights represented by the Options. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to
the Holder of this Option and shall make the adjustments
described therein. The fees and expenses of such
independent public accountants shall be borne by the
Company.
9. This Agreement shall be governed by and in
accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, Infosafe Systems, Inc. has caused
this Option to be signed by its duly authorized officers under its
corporate seal, and this Option to be dated February ___, 1997.
INFOSAFE SYSTEMS, INC.
By: ____________________________
Authorized Officer
(Corporate Seal)
Attest:
__________________________
PURCHASE FORM
(To be signed only upon exercise of option)
The undersigned, the holder of the foregoing Option,
hereby irrevocably elects to exercise the purchase rights
represented by such Option for, and to purchase thereunder,
Units of Infosafe Systems, Inc., each Unit consisting of _______
IPO Units, each IPO Unit consisting of one (1) share of $.01 par
value Class A Common Stock, one (1) Class A Warrant to purchase one
share Series A of Common Stock and one (1) Class B Warrant, and one
Class B Warrant and herewith makes payment of $_________ thereof.
Dated: _________, ____. Instructions for Registration of Stock and Warrants
___________________________________________________
Print Name
___________________________________________________
Address
___________________________________________________
Signature
OPTION EXCHANGE
The undersigned, pursuant to the provisions of the
foregoing Option, hereby elects to exchange its Option for
_________ Units of Infosafe Systems, Inc., each Unit consisting of
_______ IPO Units, each IPO Unit consisting of one (1) share of
$.01 par value Class A Common Stock, one (1) Class A Warrant to
purchase one (1) share of Series A Common Stock and one (1)
Class B Warrant, and one (1) Class B Warrant, pursuant to the
Option Exchange provisions of the Option.
Dated: _____________, ____.
__________________________________________
Print Name
__________________________________________
Address
__________________________________________
Signature
TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells,
assigns, and transfers unto the right to purchase Units
represented by the foregoing Option to the extent of _____ Units ,
and appoints _____________ attorney to transfer such rights on the
books of _____________, with full power of substitution in the
premises.
Dated: _______________, ______ X.X. XXXXX INVESTMENT BANKING CORP.
By:________________________________
________________________________
Address
In the presence of:
