WARRANT TO PURCHASE COMMON STOCK OF The KEYW Holding Corporation
NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN THE
SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN (OR WILL BE, WITH
RESPECT TO THE SECURITIES ISSUABLE UPON EXERCISE HEREOF) ISSUED IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED
UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
WARRANT TO PURCHASE COMMON STOCK
OF
The KEYW
Holding Corporation
Warrant
No.: [__]
Number of
Shares of Common Stock: [____________]
Date of
Issuance: [____________] (the “Original Issuance
Date”)
The KEYW
Holding Corporation, a Maryland corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [_____________________], the registered holder
hereof or his permitted assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below), upon surrender of this Warrant to
Purchase Common Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”), on any
Exercisability Date (as defined below), but not after 11:59 p.m., New York Time,
on the Expiration Date (as defined below) [______________] fully paid and
nonassessable shares of Common Stock (as defined below) (the “Warrant
Shares”). Except as otherwise defined herein, capitalized
terms in this Warrant shall have the meanings set forth in Section
14. This Warrant is one of a series of warrants (the “Subscription
Warrants”) issued pursuant to those certain Subscription Agreements, for
this Holder executed prior to [____________] (the “Subscription Date”),
in each case by and between the Company and the Holder party thereto (the “Subscription
Agreement”).
SECTION 1. EXERCISE OF
WARRANT.
(a) Mechanics of
Exercise. Subject to the terms and conditions hereof, this
Warrant may be exercised by the Holder on any Exercisability Date, in whole or
in part (but not as to fractional shares), by (i) delivery of a written notice
in the form attached hereto as Exhibit A (the “Exercise Notice” ) of
the Holder’s election to exercise this Warrant and (ii) payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise
Price”) in cash or wire transfer of immediately available
funds. The Holder shall not be required to surrender this Warrant in
order to effect an exercise hereunder, provided that this Warrant is surrendered
to the Company on or before the second Business Day following the date on which
the Company has received each of the Exercise Notice and the Aggregate Exercise
Price (the “Exercise
Delivery Documents”). On or before the first Business Day
following the date on which the Company has received each of the Exercise
Delivery Documents, the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to the Holder and to
the Company. On or before the third Business Day following the date
on which the Company has received all of the Exercise Delivery Documents and
after the Company shall have received this Warrant (the “Share Delivery
Date”), the Company shall issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate, registered in the
Company’s share register in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise. Upon delivery of the Exercise Delivery Documents and
surrender of this Warrant, the Holder shall be deemed for all corporate purposes
to have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. If this Warrant is
submitted in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than five
Business Days after any exercise and at its own expense, issue a new Warrant (in
accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised.
(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means
$5.50 per share of Common Stock, subject to adjustment as provided
herein.
(c)
Exercisability
Date. For purposes of this Warrant, “Exercisability Date”
means any date on or after July 31, 2009, or such earlier date as the
Board of Directors of the Company may notify the Holder in writing.
(d) Notwithstanding
any provisions herein to the contrary, if the fair market value of one share of
the Company’s Common Stock is greater than the Warrant Exercise Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
for cash or cancellation of indebtedness of the Company to the Holder,
the Holder may elect a “Net Issue Exercise” pursuant to which it will
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the principal
office of the Company together with the properly
endorsed Exercise Notice in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the
following formula:
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X
=
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Y (A-B)
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A
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Where X
= the number of shares
of Common Stock to be issued to the Registered Holder
Y= the
number of shares of Common Stock purchasable under the Warrant or, if only
a portion of the Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such exercise)
A
= the fair market value of one
share of the Company’s Common Stock (as calculated below)
B
= Warrant Exercise Price
(as adjusted to the date of such exercise).
For
purposes of the above calculation, the fair market value of one share
of Common Stock shall be determined by the Company’s Board of Directors in
good faith; provided,
however, that where there is a public market for the
Company’s Common Stock, the fair market value per share shall be the
average of the closing prices of the Company’s Common Stock quoted on any
exchange on which the Common Stock is listed, whichever is applicable, over
the five (5) trading day period ending on the trading day immediately preceding
the day the Warrant is being exercised.
SECTION 2. ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF WARRANT SHARES. The Exercise Price and the
number of Warrant Shares shall be adjusted from time to time as
follows:
(a) Adjustment
upon Subdivision or Combination of shares of Common Stock. If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased. If the Company at any time on or after the Subscription
Date combines (by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination will
be proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) If
any event occurs of the type contemplated by the provisions of Section 2(a) but not
expressly provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with
equity features to the holders of the Company’s equity securities), then the
Company’s Board of Directors will make an appropriate adjustment in the Exercise
Price and the number of Warrant Shares so as to protect the rights of the
Holder; provided that no such adjustment pursuant to this Section 2(b) will
increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section
2.
SECTION 3. RIGHTS UPON DISTRIBUTION OF
ASSETS. If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at
any time after the issuance of this Warrant, then, in each such
case:
(a) the
Exercise Price shall be reduced, effective as of the close of business of the
record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution, to a price determined by multiplying the
Exercise Price by a fraction of which (i) the numerator shall be the Exercise
Price minus the value of the Distribution (as determined in good faith by the
Company’s Board of Directors) applicable to one share of Common Stock and (ii)
the denominator shall be the Exercise Price; and
(b) the
number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of
business on the record date fixed for the determination of holders of shares of
Common Stock entitled to receive the Distribution multiplied by the reciprocal
of the fraction set forth in the immediately preceding paragraph
(a).
SECTION 4. NET ISSUE
EXERCISE. This Warrant (together with all of the other
Subscription Warrants) shall be deemed to be exercised by “Net Issue
Exercise” automatically pursuant to the provisions of Section 1(d), without any
further action on the part of the Holder, upon the occurrence of any of the
following:
(a) immediately prior
to the consummation of any sale of all or substantially all of the
Company's assets;
(b) immediately prior
to the consummation the sale of more than 80% of the then outstanding
shares of the Company's stock; or
(c) immediately
prior to the consummation of any transaction that the Board and, if
applicable, the Company's stockholders have approved and
which transaction is declared by the Board to be
a "Net Issue Exercise” transaction; provided, however, that the
Holder may elect, upon written notice to the Company prior to the
consummation of the transaction under this clause (c), to retain this
Warrant and not have it be deemed to be exercised by “Net Issue Exercise”
if the transaction does not include any cash payment to
shareholders (an “Exempt Transaction”). Upon the occurrence of any
Exempt Transaction in which this Warrant is not then exercised, the provisions
of this Warrant referring the Company shall refer instead to the Successor
Entity and the Successor Entity shall assume all of the obligations of the
Company herein, and the Company shall make provisions to ensure that the Holder
will have the right to receive, upon exercise of this Warrant, an equivalent
amount of securities which, for avoidance of doubt, will not include any cash
payment.
SECTION 5. NONCIRCUMVENTION. The
Company hereby covenants and agrees that the Company will not, by amendment of
its Articles of Incorporation, Bylaws or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant and (iii) shall, so long as any
of the Subscription Warrants are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of the Subscription
Warrants, the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Subscription Warrants then outstanding
(without regard to any limitations on exercise).
SECTION 6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER.
(a) Except
as otherwise specifically provided herein, prior to the issuance to the Holder
of the Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant, the Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to (i) vote or receive dividends,
(ii) be deemed the holder of Common Stock for any purpose, (iii) any of the
rights of a stockholder of the Company (including any right to vote, give or
withhold consent to any corporate action) or (iv) receive notice of meetings,
receive dividends or subscription rights, or otherwise.
(b) Nothing
contained in this Warrant shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.
SECTION 7. REISSUANCE OF
WARRANTS.
(a) Transfer of
Warrant. This Warrant may be offered for sale, sold,
transferred or assigned without the consent of the Company, except as may
otherwise be required by applicable securities laws or the Stockholders’
Agreement. Subject to applicable securities laws, if this Warrant is
to be transferred, the Holder shall surrender this Warrant to the Company
together with all applicable transfer taxes, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the Holder and, if less then the
total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant Shares not being
transferred.
(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form or
the provision of reasonable security by the Holder to the Company and, in the
case of mutilation, upon surrender and cancellation of this Warrant, the Company
shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.
(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company together with all
applicable transfer taxes, for a new Warrant or Warrants (in accordance with
Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender; provided, however, that the Company shall not be
required to issue Warrants for fractional shares of Common Stock
hereunder.
(d) Issuance of New
Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant shall (i) be of
like tenor with this Warrant, (ii) represent, as indicated on the face of such
new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the
Warrant Shares designated by the Holder which, when added to the number of
shares of Common Stock underlying the other new Warrants issued in connection
with such issuance, does not exceed the number of Warrant Shares then underlying
this Warrant), (iii) have an issuance date as indicated on the face of such new
Warrant which is the same as the Original Issuance Date and (iv) have the same
rights and conditions as this Warrant.
SECTION 8. NOTICES. Whenever
notice is required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given by certified mail or facsimile to the Holder
or the Company at the address set forth in the Subscription Agreement between
the Company and the Holder. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including,
in reasonable detail, a description of such action and the reason or reasons
therefor. Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least ten days prior
to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, (B)
with respect to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
to holders of shares of Common Stock or (C) for determining rights to vote with
respect to any Fundamental Transaction, dissolution or liquidation.
SECTION 9. AMENDMENT AND
WAIVER. Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Required Holders;
provided that no such action may increase the exercise price of any Subscription
Warrant or decrease the number of shares or change the class of stock obtainable upon
exercise of any Subscription Warrant without the written consent of the
Holder. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Subscription Warrants then
outstanding.
SECTION 10. GOVERNING
LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of Maryland, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Maryland or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Maryland.
SECTION 11. HEADINGS. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.
SECTION 12. DISPUTE
RESOLUTION. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations to
the Holder within two Business Days of receipt of the Exercise Notice giving
rise to such dispute. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within five Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two Business Days submit (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation of the Warrant
Shares to the Company’s independent, outside accountant. The Company
shall cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Holder
of the results no later than ten Business Days from the time it receives the
disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error. The expenses of the
investment bank and accountant will be borne by the Company unless the
investment bank or accountant determines that the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares by the Holder was
incorrect, in which case the expenses of the investment bank and accountant will
be borne by the Holder.
SECTION 13. REMEDIES, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this
Warrant shall be cumulative and in addition to all other remedies available
under this Warrant and the Subscription Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive
relief).
SECTION 14. SETTLEMENT. This
Warrant is intended to be settled by the Company in unregistered shares of the
Company’s Common Stock although the Company reserves the right, at its sole
option, to settle this Warrant in registered shares of the Company’s Common
Stock. It is the Company’s intent that, once shares of the Company’s
Common Stock are registered on a national securities exchange, it will settle
this Warrant in registered shares of the Company’s Common Stock.
SECTION 15. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:
“Business Day” means
any day other than Saturday, Sunday or other day on which commercial banks in
the State of Maryland are authorized or required by law to remain
closed.
“Common Stock” means
the Company’s Common Stock, $0.001 par value per share.
“Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of
Common Stock.
“Expiration Date”
means the seventh anniversary of the Original Issuance Date or, if such date
falls on a day other than a Business Day, the next Business Day.
“Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.
“Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
“Required Holders”
means the holders of the Subscription Warrants representing at least a majority
of shares of Common Stock underlying the Subscription Warrants then
outstanding.
“Successor Entity”
means the Person formed by, resulting from or surviving any Exempt Transaction
or the Person with which such Exempt Transaction shall have been entered
into.
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to
be duly executed as of the Original Issuance Date.
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THE
KEYW HOLDING CORPORATION
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By:
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Name:
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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Title:
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Chief
Executive
Officer
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EXHIBIT
A
EXERCISE
NOTICE TO
WARRANT
TO PURCHASE COMMON STOCK OF
THE KEYW
HOLDING CORPORATION
The
undersigned holder hereby exercises the right to purchase _________________ of
the shares of Common Stock (“Warrant Shares”) of
The KEYW Holding Corporation, a Maryland corporation (the “Company”), evidenced
by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Warrant.
1. Exercise. The
Holder intends to pay the sum of $___________________ to the Company in
accordance with the terms of the Warrant in connection with the exercise of the
Warrant for _____________ Warrant Shares.
2. Delivery of Warrant
Shares. The Company shall deliver to the holder ____________
Warrant Shares in accordance with the terms of the Warrant upon receipt of the
payment referred to in Section
1.
Date:
_______________ ___, 20___
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HOLDER
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By:
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Name:
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Title:
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[state
title only if Holder is not an
individual]
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Acknowledged
and agreed:
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THE
KEYW HOLDING CORPORATION
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By:
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Name:
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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Title:
Chief Executive Officer
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