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EXHIBIT 10.35
STRONG RIVER INVESTMENTS, INC
c/o Xxxxxxxx-Xxxx & Xxxxxx (BVI) Limited
Wickhams Cay I, Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxxx. BVI
MONTROSE INVESTMENTS LTD.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
March 10, 2000
BrightStar Information Technology Group, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Re: BrightStar Information Technology Group, Inc. (the "Company").
Gentlemen:
Reference is made to the Securities Purchase Agreement (the "Purchase
Agreement"), of even date hereof, among the Company and the undersigned (the
"Purchasers"), pursuant to which the Company will issue and sell to the
Purchasers: (i) certain shares (the "Initial Shares") of common stock, $.001 par
value per share, of the Company (the "Common Stock"), (ii) Common Stock purchase
warrants, each in the form of Exhibit A to the Purchase Agreement, pursuant to
which the holder thereof shall have the right to acquire shares of Common Stock
upon the terms set forth therein (the "Initial Adjustable Warrants") and (iii)
Common Stock purchase warrants, each in the form of Exhibit D to the Purchase
Agreement, pursuant to which the holder thereof shall have the right to acquire
an aggregate of 157,500 shares of Common Stock on the terms set forth therein
(the "Initial Closing Warrants" and together with the Initial Adjustable
Warrants, the "Initial Warrants"), for an aggregate purchase price of
$7,500,000. The Initial Warrants and the Initial Shares are sometimes
collectively referred to herein as the "Initial Securities." Capitalized terms
used and not otherwise defined in this letter that are defined in the Purchase
Agreement shall have the meanings set forth in the Purchase Agreement.
The Purchasers and the Company agree that the Purchasers shall,
severally and not jointly and subject to the terms and conditions hereof,
purchase from the Company and the Company shall sell to the Purchasers on the
Additional Closing Date (as defined herein): (i) up
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to [ ](1) additional shares of Common Stock (the "Additional Shares"), (ii)
additional Initial Adjustable Warrants pursuant to which the holder thereof
shall have the right to acquire shares of Common Stock upon the terms set forth
therein (the "Additional Adjustable Warrants") and (iii) additional Initial
Closing Warrants, , pursuant to which the holders thereof shall have the right
at any time and from time to time thereafter through the fifth anniversary of
the Additional Closing Date to acquire up to an aggregate of 157,500 shares of
Common Stock upon the terms set forth therein (the "Additional Closing Warrants"
and together with the Additional Adjustable Warrants, the "Additional
Warrants"), for a purchase price of up to $7,500,000 (the "Additional Financing
Amount"), provided, that the Additional Financing Amount shall not exceed 9.5%
of the market capitalization of the Common Stock on the Additional Closing Date.
The Additional Shares and Additional Warrants are collectively referred to
herein as the "Additional Securities."
The commitments set forth in this letter is subject to the terms,
conditions and qualifications set forth below:
1. Form of Additional Adjustable Warrants. The Additional Adjustable
Warrants shall be identical to the Initial Adjustable Warrants except that the
Purchase Price applicable thereto shall equal the lesser of (i) 110% of the
average of the Per Share Market Values for the five (5) Trading Days immediately
preceding the Additional Closing Date and (ii) $12.50 (subject to equitable
adjustment for stock splits, recapitalization and similar events) (the "Share
Price").
2. Form of Additional Closing Warrants. The Additional Closing Warrants
shall be identical to the Initial Closing Warrants except that the Exercise
Price applicable thereto shall be equal to 125% of the average of the closing
bid prices of the Common Stock for the five (5) Trading Days immediately
preceding the Additional Closing Date.
3. Additional Documentation. In order to effectuate a purchase and sale
of Additional Securities, prior to their issuance, the Company and the
Purchasers shall enter into the following agreements: (a) a securities purchase
agreement identical to the Purchase Agreement, mutatis mutandis, except that for
purposes of Sections 3.8(a) and (b), the period following the Effective Date of
the additional Registration Statement shall be 60 Trading Days (the "Additional
Purchase Agreement") and (b) a registration rights agreement identical to the
Registration Rights Agreement, mutatis mutandis (the "Additional Registration
Rights Agreement," and together with the Additional Purchase Agreement and the
Additional
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(1) The number equal to $7,500,000 divided by the lesser of (i)110% of the
average of the closing bid price of the Common Stock during the five
consecutive trading days immediately prior to the Additional Closing Date
and (ii) $12.50 (subject to equitable adjustment for stock splits,
recapitalization and similar events).
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Warrants, collectively the "Additional Transaction Documents"). The Purchasers
shall prepare the Additional Transaction Documents.
4. Additional Closing. (i) Between the 180th day and the 190th day
following the Closing Date, each of the Purchasers and the Company shall have
the right to deliver a written notice to the other (the "Additional Financing
Notice") requiring such other party to either sell or buy (severally and not
jointly), as the case may be, the Additional Securities for the Additional
Financing Amount indicated therein. At the Additional Closing (as defined
herein) each Purchaser shall, severally and not jointly, purchase (subject to
the terms and conditions herein) such portion of Additional Securities as equals
such Purchaser's pro-rata portion of the Initial Securities issued and sold at
the Closing. The closing of the purchase and sale of the Additional Securities
(the "Additional Closing") shall take place at the offices of Xxxxxxxx
Xxxxxxxxx,1290 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000, on the fifth
(5th) Business Day after the Additional Financing Notice is delivered by the
Purchasers or the Company, as the case may be, or on such other date as
otherwise agreed to by the parties hereto provided, that in no case shall the
Additional Closing take place unless and until all of the conditions listed in
Section 5 of this letter shall have been satisfied by the Company or waived by
the Purchasers (it being understood that each Purchaser may elect to waive or
enforce such conditions in its own discretion). The date of the Additional
Closing is hereinafter referred to as the "Additional Closing Date."
Notwithstanding anything to the contrary contained in this letter, each
Purchaser may, prior to the Additional Closing Date, designate an Affiliate
thereof to acquire all or any portion of the Additional Securities to be sold on
the Additional Closing Date.
(ii) At the Additional Closing, the parties shall
deliver or shall cause to be delivered the following: (a) the Company shall
deliver to (x) each Purchaser or its designated Affiliate: (1) the number of
Additional Shares equal to such Purchaser's pro-rata portion of the Initial
Shares issued and sold at the Closing, registered in the name of such Purchaser
or its designated Affiliate, representing the Additional Shares to be issued and
sold to such Purchaser or its designated Affiliate at the Additional Closing,
(2) an Additional Adjustable Warrant registered in the name of such Purchaser or
its designated Affiliate, (3) an Additional Closing Warrant registered in the
name of such Purchaser or its designated Affiliate, entitling the holder thereof
to purchase a number of shares of Common Stock as equals such Purchaser's
pro-rata portion of the shares of Common Stock underlying the Initial Closing
Warrants, (4) a legal opinion in form and substance acceptable to the
Purchasers, and (5) the executed Additional Transaction Documents and the
Transfer Agent Instructions relating to the Additional Securities, and (y)
Xxxxxxxx Xxxxxxxxx, $20,000 as reimbursement of the legal fees and expenses
incurred by the Purchasers to prepare the Additional Transaction Documents,
which amount shall be deducted by the Purchasers from the amount due to the
Company for the Additional Securities and shall be paid directly to Xxxxxxxx
Xxxxxxxxx and (b) each Purchaser shall deliver to the Company: (1) its pro-rata
portion of the Additional Financing Amount, in United States dollars in
immediately available funds by wire transfer to an account designated in writing
by the Company for such purpose prior to the Additional Closing Date and (2) the
executed Additional Transaction Documents.
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5. Conditions precedent to the Additional Closing. Notwithstanding anything
to the contrary contained in this letter, the obligations of a Purchaser to
purchase Additional Securities on the Additional Closing Date is subject to the
satisfaction by the Company or waiver by the Purchasers of each of the following
conditions:
a. Closing of Initial Shares and Initial Warrants. The Closing shall
have occurred;
b. Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained in the Purchase
Agreement shall be true and correct as of the date when made and as of the
Additional Closing Date as though made on and as of the Additional Closing Date
(other than representations and warranties which relate to a specific date
(which shall not include representations and warranties relating to the "date
hereof") which representations and warranties shall be true as of such specific
date), as evidenced by an Officer's Certificate attesting to such effect to be
delivered by the Company to the Purchasers on the Additional Closing Date;
c. Performance by the Company. The Company shall have timely performed,
satisfied and complied with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company between the Closing Date and the Additional Closing Date and no Event
(as defined in the Registration Rights Agreement) shall have occurred which has
not been cured to the satisfaction of the Purchasers;
d. Underlying Shares Registration Statement. The Underlying Shares
Registration Statement shall have been declared effective under the Securities
Act by the Commission and shall have remained effective at all times, not
subject to any actual or threatened stop order or subject to any actual or
threatened suspension at any time prior to the Additional Closing Date;
e. No Injunction. Since the Closing Date, no statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated, amended, modified or endorsed by any court of governmental
authority of competent jurisdiction or governmental authority, stock market or
trading facility which prohibits the consummation of any of the transactions
contemplated by the Additional Transaction Documents or makes impracticable the
transactions contemplated thereby;
f. Adverse Changes. Since the Closing Date, no event or series of
events which have or reasonably would be expected to result in a Material
Adverse Effect shall have occurred;
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g. No Suspensions of Trading in Common Stock. The trading in the Common
Stock shall not have been suspended by the Commission or on the NASDAQ at any
time since the Closing Date;
h. Listing of Common Stock. The Common Stock shall have been at all
times since the Closing Date listed for trading on the NASDAQ;
i. Shares of Common Stock. The Company shall have duly reserved the
number of shares of Common Stock as required by the Additional Transaction
Documents to be reserved for issuance upon exercise of the Additional Warrants;
j. Performance of Exercise Obligations. The Company shall have timely
complied with its exercise and delivery requirements under the Initial Warrants;
k. Closing Threshold. For the ten (10) Trading Days immediately
preceding the date of the Additional Financing Notice, the average daily trading
volume of the Common Stock on the NASDAQ shall be at least 50,000 shares and the
average of the Per Share Market Value for such ten (10) Trading Day period shall
be greater than $8.00 (subject to equitable adjustments, stock splits and
similar adjustments);
l. Shareholder Approval. No approval of the shareholders of the Company
shall be required under the rules of the Nasdaq Stock Market or such other
exchange or trading facility or which the Common Stock is the traded or listed
for trading in order to issue a minimum of 200% of the shares of Common Stock
issuable upon exercise of the Additional Adjustable Warrants (assuming such
exercise occurred on the Additional Closing Date);
m. Deliveries pursuant to Additional Transaction Documents. On the
Additional Closing Date, the Company shall deliver the Additional Securities and
executed Additional Transaction Documents and the Transfer Agent Instructions
relating to the Additional Securities in the forms contemplated by this letter;
and
n. Beneficial Ownership of shares of Common Stock. No Purchaser shall
beneficially own in excess of 10% of the shares of Common Stock outstanding
immediately prior to the Additional Closing Date.
6. Conditions precedent to the Additional Closing. Notwithstanding anything
to the contrary contained in this letter, the obligations of the Company to sell
Additional Securities on the Additional Closing Date is subject to the
satisfaction by the Purchasers or waiver by the Company of each of the following
conditions:
a. Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser contained in the Purchase
Agreement shall be
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true and correct as of the date when made and as of the Additional Closing Date
as though made on and as of the Additional Closing Date (other than
representations and warranties which relate to a specific date (which shall not
include representations and warranties relating to the "date hereof") which
representations and warranties shall be true as of such specific date);
b. Performance by the Purchasers. Each Purchaser shall have timely
performed, satisfied and complied with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company between the Closing Date and the Additional Closing Date;
and d. Deliveries pursuant to Additional Transaction Documents. On the
Additional Closing Date, each Purchaser shall deliver the executed Additional
Transaction Documents relating to the Additional Securities in the forms
contemplated by this letter.
7. Independent Nature of Purchasers' Rights and Obligations. The rights of
each Purchaser hereunder is several and not joint with the obligations of any
other Purchaser hereunder, and neither Purchaser shall be responsible in any way
for the performance of the obligations of any other Purchaser hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to protect and
enforce its rights, including, without limitation, the rights arising out of
this letter or out of the Additional Transaction Documents, if any, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.
8. Governing Law. This letter shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof.
9. Execution. This letter may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
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Please indicate your agreement with the foregoing by executing a
countersigned copy of this letter and returning the same to our attention,
whereupon effective immediately thereafter this letter shall become a legally
valid and binding agreement between the Purchasers and the Company.
We look forward to our continuing relationship.
Sincerely,
STRONG RIVER INVESTMENTS, INC.
By:
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Name:
Title:
MONTROSE INVESTMENTS, LTD.
By:
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Name:
Title:
Agreed and accepted
March __, 2000
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
By:
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Name:
Title:
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NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
WARRANT
Warrant No.C-3 Dated: March 10, 2000
Brightstar Information Technology Group, Inc., a Delaware corporation
(the "Company"), hereby certifies that, for value received, Xxxxxxx Capital
Partners Ltd. or its registered assigns ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company up to a total of 45,000
shares of common stock, $.001 par value per share (the "Common Stock"), of the
Company (each such share, a "Warrant Share" and all such shares, the "Warrant
Shares") at an exercise price equal to $12.00 per share (as adjusted from time
to time as provided in Section 8, the "Exercise Price"), at any time and from
time to time from and after the date hereof and through and including March 10,
2005 (the "Expiration Date"), and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the Transfer
Agent or to the Company at its address for notice set forth in Section 12. Upon
any such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New
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Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company at its address for notice set forth in
Section 12 for one or more New Warrants, evidencing in the aggregate the right
to purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder
on any business day before 6:30 P.M., New York City time, at any time and from
time to time on or after the date hereof to and including the Expiration Date.
At 6:30 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem this
Warrant without the prior written consent of the Holder.
(b) Upon surrender of this Warrant, with the Form of Election
to Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 12 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but in
no event later than 3 trading days after the Date of Exercise (as defined
herein)) issue or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective or the Warrant Shares are
not freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) if this Warrant shall have been issued pursuant to a written agreement
between the original Holder and the Company, as required by such agreement. Any
person so designated by the Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant. The Company shall, upon request of the Holder, if available,
use its best efforts to deliver Warrant Shares hereunder electronically through
the Depository Trust Corporation or another established clearing corporation
performing similar functions.
(c) A "Date of Exercise" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable), with
the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly
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signed, and (ii) payment of the Exercise Price for the number of Warrant Shares
so indicated by the holder hereof to be purchased.
(d) This Warrant shall be exercisable, either in its entirety
or, from time to time, for a portion of the number of Warrant Shares. If less
than all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
4. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
5. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
6. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
7. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 7. Upon each such adjustment of the Exercise
Price pursuant to this Section 7, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant
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Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding after such event. Any adjustment made pursuant to
this Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant immediately prior to such
reclassification or share exchange. The terms of any such reclassification or
share exchange shall include such terms so as to continue to give to the Holder
the right to receive the securities or property set forth in this Section 7(b)
upon any exercise following any such reclassification or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 7(a) and (b)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
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(d) If the Company or any subsidiary thereof, as applicable
with respect to Common Stock Equivalents (as defined below), at any time while
this Warrant is outstanding, shall issue shares of Common Stock or rights,
warrants, options or other securities or debt that is convertible into or
exchangeable for shares of Common Stock ("Common Stock Equivalents"), entitling
any person to acquire shares of Common Stock at a price per share less than the
Exercise Price (if the holder of the Common Stock or Common Stock Equivalent so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then the Exercise Price shall be 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 Common Stock or such Common Stock Equivalents plus
the number of shares of Common Stock which the offering price for such shares of
Common Stock or Common Stock Equivalents would purchase at the Exercise Price,
and the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such issuance plus the number of shares
of Common Stock so issued or issuable, provided, that for purposes hereof, all
shares of Common Stock that are issuable upon conversion, exercise or exchange
of Common Stock Equivalents shall be deemed outstanding immediately after the
issuance of such Common Stock Equivalents. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued. However, upon
the expiration of any Common Stock Equivalents the issuance of which resulted in
an adjustment in the Exercise Price pursuant to this Section, if any such Common
Stock Equivalents shall expire and shall not have been exercised, the Exercise
Price shall immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price which it would have
been (but reflecting any other adjustments in the Exercise Price made pursuant
to the provisions of this Section after the issuance of such Common Stock
Equivalents) had the adjustment of the Exercise Price made upon the issuance of
such Common Stock Equivalents been made on the basis of offering for
subscription or purchase only that number of shares of the Common Stock actually
purchased upon the exercise of such Common Stock Equivalents actually exercised.
(e) In case of any (1) merger or consolidation of the Company
with or into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have been
entitled. The terms of any such merger, sale or
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consolidation shall include such terms so as continue to give the Holder the
right to receive the securities, cash and property set forth in this Section
upon any conversion or redemption following such event. This provision shall
similarly apply to successive such events.
(f) For the purposes of this Section 7, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(g) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(h) Whenever the Exercise Price is adjusted pursuant to
Section 7(c) above, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser (which shall
be a nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the Appraiser
and such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.
If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special
nonrecurring cash dividend on or a
redemption of its Common Stock; or
(iii) the Company shall authorize the granting to
all holders of the Common Stock rights or
warrants to
14
subscribe for or purchase any shares of
capital stock of any class or of any rights;
or
(iv) the approval of any stockholders of the
Company shall be required in connection with
any reclassification of the Common Stock,
any consolidation or merger to which the
Company is a party, any sale or transfer of
all or substantially all of the assets of
the Company, or any compulsory share
exchange whereby the Common Stock is
converted into other securities, cash or
property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of
the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
8. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately
available funds; or
(b) Cashless Exercise. The Holder may surrender this Warrant
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be
issued
to the Holder.
15
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing sale prices
of the Common Stock for the five (5) trading
days immediately prior to (but not
including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
9. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 9.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon such exercise and held by
such Holder after application of this Section. Since the Holder will not be
obligated to report to the Company the number of shares of Common Stock it may
hold at the time of an exercise hereunder, unless the exercise at issue would
result in the issuance of shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular exercise hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of this Warrant is exercisable shall
be the responsibility and obligation of the Holder. If the Holder has delivered
a Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder,
the Company shall notify the Holder of this fact and shall honor the exercise
for the maximum portion of this Warrant permitted to be exercised on such Date
of Exercise in accordance with the periods described herein and, at the option
of the Holder, either keep the portion of the Warrant tendered for exercise in
excess of the permitted amount hereunder for future exercises or return such
excess portion of the Warrant to the Holder. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.
16
(b) Notwithstanding anything herein to the contrary, the
Company's obligation to issue Warrant Shares upon exercise of this Warrant and
that certain Adjustable Warrant of even date hereof issued by the Company in the
name of the Holder to purchase shares of Common Stock, is limited to a number of
Warrant Shares equal to the product of (A) 1,525,000 Warrant Shares (subject to
equitable adjustments for stock splits, recapitalizations and similar events)
and (B) the quotient obtained by dividing (x) the number of shares of Common
Stock issued and sold to the original Holder as of the date hereof by (y) the
number of shares of Common Stock issued and sold by the Company as of the date
hereof, less (C) any Warrant Shares previously issued upon exercise of this
Warrant and the Adjustable Warrant (the "Threshold Maximum"). If no more Warrant
Shares shall be issuable under this Warrant then such Holder's remaining portion
of the Threshold Maximum represented by such Warrant shall be allocated pro-rata
among the remaining Holders.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable on
the exercise of this Warrant, the Company shall pay an amount in cash equal to
the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000; facsimile number
(000) 000-0000, attention Chief Financial Officer, or (ii) if to the Holder, to
the Holder at the address or facsimile number appearing on the Warrant Register
or such other address or facsimile number as the Holder may provide to the
Company in accordance with this Section.
17
12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) The corporate laws of the State of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
18
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
19
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
By:
------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
20
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To Brightstar Information Technology Group, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock, $.001 par value per share, of Brightstar Information
Technology Group, Inc. (the "Common Stock") and , if such Holder is not
utilizing the cashless exercise provisions set forth in this Warrant, encloses
herewith $________ in cash, certified or official bank check or checks, which
sum represents the aggregate Exercise Price (as defined in the Warrant) for the
number of shares of Common Stock to which this Form of Election to Purchase
relates, together with any applicable taxes payable by the undersigned pursuant
to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR
TAX IDENTIFICATION NUMBER
------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
Dated: , Name of Holder:
------------ -----
Print
-------------------------------------
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Signature must conform in all respects to
name of holder as specified on the face of
the Warrant
21
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Brightstar
Information Technology Group, Inc. to which the within Warrant relates and
appoints ________________ attorney to transfer said right on the books of
Brightstar Information Technology Group, Inc. with full power of substitution in
the premises.
Dated:
---------------, ----
---------------------------------------
Signature must conform in all respects
to name of holder as specified on the
face of the Warrant
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
--------------------------
22
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
WARRANT
Dated: March 10, 2000
Brightstar Information Technology Group, Inc., a Delaware corporation
(the "Company"), hereby certifies that, for value received, Montrose
Investments, Ltd. or its registered assigns ("Holder"), is entitled, subject to
the terms set forth below, to purchase from the Company the total number of
shares of common stock, $.001 par value per share (the "Common Stock"), of the
Company (each such share, a "Warrant Share" and all such shares, the "Warrant
Shares") calculated pursuant to Section 3 of this Warrant (subject to adjustment
for certain events as set forth herein) at an exercise price equal to $.001 per
share (as adjusted from time to time as provided in Section 8, the "Exercise
Price"), at the times set forth herein through and including the 30th Trading
Day (as defined in Exhibit A) following the Third Vesting Date (as defined
herein), plus an additional Trading Day for each Trading Day during a Blocking
Period (as defined in Section 4 of the Registration Rights Agreement) (the
"Expiration Date"), and subject to the following terms and conditions (certain
terms used herein are defined in Exhibit A attached hereto):
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
23
2. Registration of Transfers. The Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the address specified in Section 13.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
3. Duration, Vesting and Exercise.
(a) The vesting of the Warrant Shares which the Holder is
permitted to acquire pursuant to this Warrant shall occur on the dates set forth
below. On each such date, this Warrant shall vest with respect to a number of
Warrant Shares calculated pursuant to Section 3(b) below. Only the Warrant
Shares that have vested may be acquired upon exercise of this Warrant.
(i) The First Vesting Date shall be the 31st Trading Day
following the 270th day following the Closing Date (as defined in Exhibit A);
(ii) The Second Vesting Date shall be the 31st Trading
Day following the First Vesting Date; and
(iii) The Third Vesting Date shall be the 31st Trading
Day following the Second Vesting Date.
(iv) Each of the First Vesting Date, Second Vesting
Date, and Third Vesting Date shall be referred to herein as a "Vesting Date."
(b) On each Vesting Date this Warrant shall vest and become
exercisable with respect to the number of Warrant Shares calculated in
accordance with the following formula:
(Applicable Share Number) x (Purchase Price/0. 92 - Adjustment Price)
---------------------------------------------------------------------
Adjustment Price
If the number calculated in accordance with the foregoing
formula is zero or a negative number, no Warrant Shares shall vest hereunder for
such Vesting Date and the Holder shall not be obligated to transfer any shares
of Common Stock to the Company. In addition, the Holder shall not be obligated
to transfer any shares of Common Stock to the Company and the number Warrant
Shares exercisable hereunder which shall have previously vested will not
decrease.
24
(a) Notwithstanding anything herein to the contrary, if, after
the Effective Date (as defined in Exhibit A), the average of the Per Share
Market Values (as defined in Exhibit A) for 20 consecutive Trading Days is
greater than 140% of the Purchase Price (as defined in Exhibit A), (subject to
equitable adjustments for stock splits, recapitalizations and similar events)
this Warrant shall not vest with respect to any additional Warrant Shares but
will remain in effect as to any Warrant Shares which have vested prior thereto.
(b) Notwithstanding anything herein to the contrary, if on any
Vesting Date the Adjustment Price shall be less than 70% of the Purchase Price
(the "Floor Price"), then on such Vesting Date: (i) this Warrant shall vest with
respect to the Warrant Shares pursuant to Section 3(a) and (b) hereof, provided,
that the Adjustment Price pursuant to the formula set forth in Section 3(b)
shall, exclusively for purposes of this Section 3(d)(i), equal the Floor Price
(such number of Warrant Shares, the "Initial Shares") and (ii) with respect to
the Warrant Shares whose vesting would result in a vesting of Warrant Shares in
excess of the Initial Shares, the Company will have the option to elect by
written notice (the "Notice") delivered to the Holder no later than twenty (20)
Trading Days prior to the applicable Vesting Date to either (x) pay to the
Holder, in cash (the "Cash Payment"), within three (3) Trading Days from the
Vesting Date at issue, an amount equal to the product obtained by multiplying
(A) the applicable Adjustment Price and (B) the difference between the number of
Warrant Shares which would have otherwise vested on such Vesting Date pursuant
to Section 3(a) and (b) hereof and the Initial Shares (such number of Warrant
Shares, the "Subsequent Shares") or (y) allow this Warrant to vest with respect
to the Subsequent Shares. A failure by the Company to deliver the Notice to the
Holder pursuant to the terms of this Section shall constitute an election by the
Company to allow this Warrant to vest as to the Subsequent Shares pursuant to
the terms hereof. If the Company shall fail to pay the Cash Payment in full to
the Holder by the third (3rd) Trading Day from the Vesting Date at issue, then,
at the election of the Holder, the Company shall either (x) pay to the Holder
$5,000 per day until the Cash Payment and all additional payments due hereunder
are paid in full, or (y) allow this Warrant to vest with respect to the
Subsequent Shares.
(c) Notwithstanding the foregoing provisions of this Section
3, at any time during the period between the Closing Date and the Expiration
Date, within ten (10) Trading Days following the occurrence of any of the
following events (each, an "Event"), the Holder shall have the option to elect,
by providing the Company with a notice (an "Event Vesting Notice"), to have this
Warrant vest with respect to those Warrant Shares that have not yet already
vested:
(i) upon the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or "group" (as
described in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of in excess of 1/3 of the voting
securities of the Company, (ii) a replacement of more than one-half of the
members of the Company's board of directors which is not approved by those
individuals who are members of the board of directors on the date hereof in one
or a series of related transactions, (iii) the merger of the Company with or
into another entity, consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions, unless
following such transaction
25
or series of transactions, the holders of the Company's securities
prior to the first such transaction continue to hold at least 2/3 of the
securities of the surviving entity or acquirer of such assets or (iv) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii)
or (iii);
(ii) immediately prior to an assignment by the
Company for the benefit of creditors or commencement of a voluntary case under
Title 11 of the United States Code, or an entering into of an order for relief
in an involuntary case under Title 11 of the United States Code, or adoption by
the Company of a plan of liquidation or dissolution;
(iii) five (5) Business Days prior to the proposed
consummation with respect to the Company of a "Rule 13e-3 transaction" as
defined in Rule 13e-3 under the Exchange Act (or, if necessary, such earlier
date as the Company shall determine in good faith to be required in order for
the Holder to be able to participate in such transaction), it being agreed that
the Holder will receive actual notice of the 13e-3 Statement filed with the
Commission;
(iv) For any period of three (3) Trading Days (which
need not be consecutive Trading Days) commencing on or after the date of
issuance of this Warrant, there shall be no closing bid price on the Common
Stock on the Nasdaq (as defined in Exhibit A) or a Subsequent Market (as defined
in Exhibit A);
(v) The Common Stock fails to be listed or quoted for
trading on the Nasdaq or a Subsequent Market or for a period of three (3)
Trading Days (which need not be consecutive Trading Days);
(vi) After the Effective Date, a holder of
Registrable Securities (as defined in the Registration Rights Agreement) is not
permitted to sell Registrable Securities under the Underlying Shares
Registration Statement (as defined in Exhibit A) for any reason, except for a
suspension of trading permitted under Section 4 of the Registration Rights
Agreement, for five (5) or more days (whether or not consecutive); or
(vii) The Company shall fail or default in the timely
performance of any material obligation under the Transaction Documents and such
failure or default shall continue uncured for a period of five (5) Business Days
after the date on which notice of such failure or default is first given to the
Company (it being understood that no prior notice need be provided in the case
of defaults which cannot reasonably be cured within a 5-day period).
(viii) In the event the Holder delivers an Event
Vesting Notice, this Warrant shall vest with respect to the number of Warrant
Shares calculated in accordance with the formula set forth in Section 3(b),
provided, that for purposes of such calculation, (A) the Adjustment Price shall
be deemed to mean the average of the 20 lowest Per Share Market Values (which
need not occur on consecutive Trading Days) during the 30 consecutive Trading
Days preceding the date of the Event and (B) the Applicable Share Number shall
be deemed to mean 100% of the number of shares of Common Stock purchased by the
Holder pursuant to the Purchase Agreement.
26
(d) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable by the registered Holder on any Business Day before 6:30 P.M., New
York City time, at any time and from time to time on or after the date hereof to
and including the Expiration Date. At 6:30 P.M., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value.
(e) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable, either in its entirety or, from time to time, for a portion of the
number of Warrant Shares. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
4. Delivery of Warrant Shares.
(a) Upon surrender of this Warrant, with the Form of Election
to Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 12 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but in
no event later than 3 business days after the Date of Exercise (as defined
herein)) issue or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective or the Warrant Shares are
not freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) if this Warrant shall have been issued pursuant to a written agreement
between the original Holder and the Company, as required by such agreement. Any
person so designated by the Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant. The Company shall, upon request of the Holder, if available,
use its best efforts to deliver Warrant Shares hereunder electronically through
the Depository Trust Corporation or another established clearing corporation
performing similar functions.
A "Date of Exercise" means the date on which the
Holders shall have delivered to the Company (i) this Warrant (or any New
Warrant, as applicable), with the Form of Election to Purchase attached hereto
(or attached to such New Warrant) appropriately completed and duly signed, and
(ii) payment of the Exercise Price for the number of Warrant Shares so indicated
by the holder hereof to be purchased.
(b) If the Company fails to deliver to the Holder certificate
or certificates representing the Warrant Shares pursuant to Section 4(a) by the
third (3rd) Trading Day after the Date of Exercise, the Company shall pay to
such Holder, in cash, as liquidated damages and not as a
27
penalty, $5,000 for each day after such third (3rd) Trading Day until such
certificates are delivered. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to deliver certificates
representing shares of Common Stock upon exercise within the period specified
herein and the Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
(c) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder certificate or certificates
representing the Warrant Shares pursuant to Section 4(a) by the third (3rd)
Trading Day after the Date of Exercise, and if after such third (3rd) Trading
Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"),
then the Company shall pay (1) in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver pursuant to Section 4(b) to deliver to the Holder in connection with the
exercise at issue by (B) the Per Share Market Value at the time of the
obligation giving rise to such purchase obligation and (2) deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations under Section 4(b).
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with a market price on the date of exercise totaled $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. If the Company breaches its obligations under this Warrant,
then, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all costs of collection and enforcement (including reasonable attorneys fees
and expenses).
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer
28
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section. Upon each such adjustment of the Exercise
Price pursuant to this Section, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding after such event. Any adjustment made pursuant to
this Section shall become effective immediately after the record date for the
determination of stockholders
29
entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification or share exchange. The terms of any such
reclassification or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 8(b) upon any exercise following any such reclassification or share
exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(i), (ii) and (iv)), then in each such case the Exercise Price shall
be determined by multiplying the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) In case of any (1) merger or consolidation of the Company
with or into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have been
entitled. The terms of any such merger, sale or consolidation shall include such
terms so as continue to give the Holder the right to receive the securities,
cash and property set forth in this Section upon any conversion or redemption
following such event. This provision shall similarly apply to successive such
events.
30
(e) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(f) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant to
Section 8(iii) above, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser (which shall
be a nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the Appraiser
and such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.
(h) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
31
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately
available funds; or
(b) Cashless Exercise. The Holder may surrender this Warrant
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares 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 average of the closing sale prices of the
Common Stock for the five (5) trading days
immediately prior to (but not including) the Date of
Exercise as reported by Bloomberg Information
Systems, Inc. (or any successor to its function of
reporting stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
32
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon such exercise and held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common Stock in
excess of 9.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Form of Election to
Purchase for a number of Warrant Shares that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and, at the option of the Holder, either keep
the portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a Holder
(but only as to itself and not to any other Holder) upon not less than 61 days
prior notice to the Company. Other Holders shall be unaffected by any such
waiver.
(b) If the Company Stock is then listed for trading on the
Nasdaq or the Nasdaq SmallCap Market and the Company has not obtained the
Shareholder Approval (as defined below), then the Company may not issue in
excess of the product of (i) 1,728,321 Warrant Shares upon exercise of this
Warrant and (ii) the quotient obtained by dividing (x) the number of shares of
Common Stock issued and sold to the original Holder on the Closing Date by (y)
the number of shares of Common Stock issued and sold by the Company on the
Closing Date (such number of shares, the "Issuable Maximum"). The Issuable
Maximum equals 19.999% of the number of shares of Common Stock outstanding
multiplied by the quotient obtained by dividing (x) the number of shares of
Common Stock issued and sold to the original Holder on the Closing Date by (y)
the number of shares of Common Stock issued and sold by the Company on the
Closing Date. If any Holder shall no longer hold Warrants then such Holder's
remaining portion of the Issuable Maximum shall be allocated pro-rata among the
remaining Holders. If on any Date of Exercise (A) the Company Stock is listed
for trading on the Nasdaq or the Nasdaq SmallCap Market, (B) the Exercise Price
then in effect is such that the aggregate number of shares of Common Stock that
would then be issuable upon exercise in full of this Warrant, together with any
shares of Common Stock previously issued upon exercise of this Warrant, would
equal or exceed the Issuable Maximum, and (C) the Company shall not have
previously obtained the vote of shareholders, if any, as may be required by the
applicable rules
33
and regulations of the Nasdaq Stock Market to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof (the
"Shareholder Approval"), then the Company shall issue to the Holder a number of
shares of Common Stock equal to the Issuable Maximum and, with respect to the
shares whose issuance would result in an issuance of shares of Common Stock in
excess of the Issuable Maximum, (the "Excess Warrant Shares"), the Holder shall
have the option to require the Company to either (1) use its best efforts to
obtain the Shareholder Approval applicable to such issuance as soon as possible,
but in any event no later than 60 days after such request (such 60th day, the
"Target Date") or (2) pay to the Holder, within one (1) Trading Day from the
request therefor, an amount in cash equal to the product of (x) the Excess
Warrant Shares multiplied by (y) the closing sales price of the Common Stock on
(a) the Target Date or (b) the Date of Exercise giving rise to the obligation to
seek Shareholder Approval, whichever is greater (the "Cash Payment"). In the
event the Holder has elected to require the Company to seek the Shareholder
Approval pursuant to clause (1) of the immediately preceding sentence and the
Company does not obtain the Shareholder Approval on or prior to the Target Date,
then, on the Target Date, the Company shall pay the Cash Payment to the Holder.
If the Company fails to pay the Cash Payment in full pursuant to this Section
within seven (7) days after the date payable, the Company will pay interest on
such amount at a rate of 18% per annum, or such lesser maximum amount that is
permitted to be paid by applicable law, to the Holder, accruing daily from the
date payable until such amount, plus all such interest thereon, is paid in full.
The Company and the Holder understand and agree that shares of Common Stock
issued upon exercise of this Warrant and then held by the Holder or an affiliate
thereof may not cast votes or be deemed outstanding for purposes of any vote to
obtain the Shareholder Approval.
(c) Notwithstanding anything herein to the contrary, the
Company's obligation to issue Warrant Shares upon exercise of this Warrant and
that certain Closing Warrant of even date hereof issued by the Company in the
name of the Holder to purchase shares of Common Stock, is limited to a number of
Warrant Shares equal to the product of (A) 1,525,000 Warrant Shares (subject to
equitable adjustments for stock splits, recapitalizations and similar events)
and (B) the quotient obtained by dividing (x) the number of shares of Common
Stock issued and sold to the original Holder on the Closing Date by (y) the
number of shares of Common Stock issued and sold by the Company on the Closing
Date, less (C) any Warrant Shares previously issued upon exercise of this
Warrant and the Closing Warrant (the "Threshold Maximum"). If no more Warrant
Shares shall be issuable under this Warrant then such Holder's remaining portion
of the Threshold Maximum represented by such Warrant shall be allocated pro-rata
among the remaining Holders.
11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 11, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
34
12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 P.M. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 P.M. (New York City time) on any date and earlier than
11:59 P.M. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000; facsimile number
(000) 000-0000, attention Chief Financial Officer, or (ii) if to the Holder, to
the Holder at the address or facsimile number appearing on the Warrant Register
or such other address or facsimile number as the Holder may provide to the
Company in accordance with this Section.
13. Warrant Agent.
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
14. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) The corporate laws of the State of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions
35
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. The Company and the Holder hereby irrevocably submit
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
36
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
37
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To Brightstar Information Technology Group, Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock ("Common Stock"), $.001 par value per share, of
Brightstar Information Technology Group, Inc. and, if such Holder is not
utilizing the cashless exercise provisions set forth in this Warrant, encloses
herewith $________ in cash, certified or official bank check or checks, which
sum represents the aggregate Exercise Price (as defined in the Warrant) for the
number of shares of Common Stock to which this Form of Election to Purchase
relates, together with any applicable taxes payable by the undersigned pursuant
to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
--------------------------------------
-------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
-------------------------------------------------------------------------------
(Please print name and address)
Dated: , Name of Holder:
-------------- ----
Print
--------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Signature must conform in all respects to
name of holder as specified on the face of
the Warrant
38
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Brightstar
Information Technology Group, Inc. to which the within Warrant relates and
appoints ________________ attorney to transfer said right on the books of
Brightstar Information Technology Group, Inc. with full power of substitution in
the premises.
Dated:
---------------, ----
-------------------------------------
Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
-------------------------------------
Address of Transferee
-------------------------------------
-------------------------------------
In the presence of:
--------------------------
39
Exhibit A
"Adjustment Price" means the average of any 20 Per Share Market Values
(which need not occur on consecutive Trading Days) during the 30 consecutive
Trading Days preceding a Vesting Date (which may include Trading Days prior to
the Effective Date).
"Applicable Share Number" means 1/3 of the number of shares of Common
Stock purchased by the Holder pursuant to the Purchase Agreement.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York and the State of California generally are authorized or
required by law or other governmental action to close.
"Closing Date" shall have the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Effective Date" the date on which the Underlying Shares Registration
Statement is first declared effective by the Commission.
"Nasdaq" means the Nasdaq National Market.
"Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on the Nasdaq or on any
Subsequent Market on which the Common Stock is then listed or quoted, as
reported by Bloomberg Information Services, Inc. (or any successor entity
succeeding to its function of reporting prices), or if there is no such price on
such date, then the closing bid price on the Nasdaq or on such Subsequent Market
on the date nearest preceding such date, as reported by Bloomberg Information
Services, Inc. (or any successor entity succeeding to its function of reporting
prices), or (b) if the Common Stock is not then listed or quoted on the Nasdaq
or a Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the relevant conversion period,
as determined in good faith by the Holder, or (d) if the Common Stock is not
then publicly traded the fair market value of a share of Common Stock as
determined by an appraiser selected in good faith by the Holders of a majority
of the applicable Warrant Shares.
"Purchase Agreement" means the Securities Purchase Agreement, dated the
date hereof to which the Company and the original Holder are parties and
pursuant to which this Warrant was issued.
"Purchase Price" means $10.57 (which number shall be subject to
equitable adjustment for stock splits, recombinations and similar events) .
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof to which the Company and the original Holder
are parties.
"Subsequent Market" shall mean any of the New York Stock Exchange,
American Stock Exchange, Inc or Nasdaq SmallCap Market.
"Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq or on the Subsequent Market on which the Common Stock is then listed
or quoted, as the case may be, or (b) if the Common Stock s not listed on the
Nasdaq or on a Subsequent Market, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if
the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National
40
Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the event that
the Common Stock is not listed or quoted as set forth in (a), (b) and (c)
hereof, then Trading Day shall mean a Business Day.
"Transaction Documents"shall have the meaning set forth in the Purchase
Agreement.
"Underlying Shares Registration Statement" shall have the meaning
ascribed to it in the Purchase Agreement.
