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EXHIBIT 10.11
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED OR
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
THIS WARRANT AND THE STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT
TO RESTRICTIONS ON TRANSFER SET FORTH IN THIS WARRANT AND IN A CERTAIN WARRANT
PURCHASE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED OWNER OF THIS
WARRANT (OR SUCH OWNER'S PREDECESSOR IN INTEREST), AND SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF THE CORPORATION
DURING NORMAL BUSINESS HOURS.
BEST PROGRAMS, INC.
COMMON STOCK PURCHASE WARRANT
Special Series
Warrant No. __
Date of Issuance:___________ Right to Purchase __
Shares of Common Stock
(subject to adjustment)
Not Transferable or Exercisable
Except upon Conditions Herein Specified
Void After the Dates Specified Herein
For value received, Best Programs, Inc., a Virginia corporation (the
"Company"), hereby grants to ______________ or his registered assigns (the
"Registered Holder"), the right to purchase from the Company __ shares of the
Company's Common Stock (subject to adjustment pursuant to Section 4 hereof) at
a price of $___ per share (as adjusted pursuant to Section 3 hereof, the
"Exercise Price"). This Warrant is issued pursuant to the terms of Warrant
Purchase Agreement dated as of _________________ (the "Purchase Agreement"),
between the Company and the individual listed on Exhibit A thereto. The
amount and kind of securities purchasable pursuant to the rights granted under
this Warrant and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
1. Definitions. As used in this Warrant, the following terms
have the meanings set forth below:
"Common Stock" means the Company's Common Stock, no par value
per share.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus
the number of shares of Common Stock deemed to be outstanding pursuant to
Section 3 of this Warrant.
"Date of Issuance" shall have the meaning specified in
Section 12 of this Warrant.
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"Market Price" means as to any security the average of the
closing prices of such security's sales on all domestic securities exchanges on
which such security may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest
asked prices an all such exchanges at the end of such day, or, if on any day
such security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on such day,
or, if on any day such security is not quoted in the NASDAQ System, the average
of the high and low bid and asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which "Market Price" is
being determined and the 20 consecutive business days prior to such day;
provided that if such security is listed on any domestic securities exchange
the term "business days" as used in this sentence means business days on which
such exchange is open for trading. If at any time such security is not listed
on any domestic securities exchange or quoted in the NASDAQ System or the
domestic over-the-counter market, the "Market Price" will be the fair value
thereof determined in good faith by the Board of Directors of the Company.
Notwithstanding the foregoing, until December 23, 1993, the Market Price of the
Common Stock will be determined based on a market value of the Company equal to
at least $30,000,000.00.
"NASDAQ System" means the NASDAQ Inter-Dealer Quotation System
or such other similar inter-dealer quotation system as may in the future be
used generally by members of the National Association of Securities Dealers,
Inc., for over-the-counter transactions in securities.
"Person" means an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization and a government or any
department or agency thereof.
"Warrants" means this Warrant and all other stock purchase
warrants, special series, of the Company issued pursuant to purchase agreements
between the Company and the original holder of such Warrants that are
substantially identical to the Purchase Agreement, and all stock purchase
warrants issued in exchange therefor pursuant to the terms thereof.
"Warrant Stock" means shares of the Company's authorized but
unissued Common Stock; provided that if there is a change such that the
securities issuable upon exercise of the Warrant are issued by an entity other
than the Company or there is a change in the class of securities so issuable,
then the term "Warrant Stock" will mean one share of the security issuable upon
exercise of the Warrant if such security is issuable in shares, or will mean
the smallest unit in which such security is issuable if such security is not
issuable in shares.
2. Exercise of Warrant.
2.1 Exercise Period. The Registered Holder may exercise
this Warrant, in whole or in part (but not as to a fractional share of Warrant
Stock), at any time and from time to time after its Date of Issuance and,
except as specifically provided in Section 8, prior to the earlier to occur of
(i) 5:00 p.m. (Eastern time) on _____, or (ii) 5:00 p.m. (Eastern time) on the
day that is two (2) days prior to the consummation of the sale to an entity with
equity securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, of all or substantially all of the assets or business
of the Company, by merger, sale of assets, sale of stock or otherwise (the
"Exercise Period"). The Registered Holder will be given at least 20 days prior
written notice of the scheduled consummation date of the transaction described
in clause (ii) of the previous sentence. Such notice will be sent by first
class mail, postage pre-paid, to the address of such Registered Holder shown on
the books of the Company.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been
exercised at such time as the Company has received all of the following items
(the "Exercise Date"):
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(i) a completed Exercise Agreement, as
described below, executed by the Person exercising all
or part of the purchase rights represented by this
Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in
the name of the Purchaser, an Assignment or
Assignments in the form set forth in Exhibit I
hereto, evidencing the assignment of this Warrant to
the Purchaser; and
(iv) a check payable to the Company in an
amount equal to the product of the Exercise Price
multiplied by the number of shares of Warrant Stock
being purchased upon such exercise.
(b) Certificates for shares of Warrant Stock
purchased upon exercise of this Warrant will be delivered by the Company to the
Purchaser within 30 days after the Exercise Date. Unless this Warrant has
expired or all of the rights represented hereby have been exercised, the
Company will prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised. The Company will, within such 30-day period,
deliver such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(c) The Warrant Stock issuable upon the exercise
of this Warrant will be deemed to have been issued to the Purchaser on the
Exercise Date, and the Purchaser will be deemed for all purposes to have become
the record holder of such Warrant Stock on the Exercise Date.
(d) The issuance of certificates for shares of
Warrant Stock upon exercise of this Warrant will be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect thereof or
any other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Warrant Stock.
(e) The Company will not close its books for the
transfer of this Warrant or of any share of Warrant Stock issued or issuable
upon the exercise of this Warrant in any manner which interferes with the
timely exercise of this Warrant. The Company will from time to time take all
such action as may be necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.
(f) Notwithstanding anything in this Section 2 to
the contrary, in the event this Warrant is exercised after the notice provided
Section 2.1 is given, the Registered Holder may condition the exercise of this
Warrant on the consummation of the transaction set forth in Section 2.1(ii) by
clearly stating such conditional exercise on the completed Exercise Agreement.
In the event of such conditional exercise and if the transaction has not been
consummated within 90 days after the scheduled consummation date, the Company
shall promptly return to the Registered Holder the amount of the check
described in Subsection 2.2(a)(iv) (without interest) and the Company shall not
thereafter consummate such transaction without at least 10 days prior written
notice to the Registered Holder.
2.3 Exercise Agreement. The Exercise Agreement will be
substantially in the form set forth in Exhibit II hereto, except that, subject
to compliance with the restrictions set forth in Section 11, if the shares of
Warrant Stock are not to be issued in the name of the Registered Holder of this
Warrant, the Exercise Agreement will also state the name of the Person to whom
the certificates for the shares of Warrant Stock are to be issued, and if the
number of shares of Warrant Stock to be issued does not include all the shares
of Warrant Stock purchasable hereunder, it will also state the name of the
Person to whom a new Warrant for the unexercised portion of the rights
hereunder is to be delivered.
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2.4 Fractional Shares. If a fractional share of
Warrant Stock would, but for the provisions of Subsection 2.1, be issuable
upon exercise of the rights represented by this Warrant, the Company will,
within ten days after the Exercise Date, deliver to the Purchaser a check
payable to the Purchaser in lieu of such fractional share, in an amount equal
to the Market Price of such fractional share as of the close of business on the
Exercise Date.
3. Exercise Price.
3.1 General.
(a) The initial Exercise Price will be
$___. In order to prevent dilution of the rights granted under this Warrant,
the Exercise Price will be subject to adjustment from time to time pursuant to
this Section 3.
(b) If and whenever the Company issues
or sells, or in accordance with Subsection 3.2 below is deemed to have issued
or sold, after the later of (i) December 31, 1992, or (ii) the first day on
which the total number of shares of Common Stock outstanding or issuable
pursuant to the exercise or conversion of outstanding options, convertible
securities or other rights (other than the Warrants and without regard to any
shares owned or held by or for the account of the Company or any subsidiary of
the Company) exceeds 6,500,000 shares (as adjusted for stock splits, stock
dividends, recapitalizations and similar events), any shares of Common Stock
for a consideration per share less than the lesser of the Market Price of the
Common Stock or the Exercise Price in effect immediately prior to the time of
such issuance or sale, then immediately upon such issuance or sale the Exercise
Price will be reduced to a price determined by dividing (A) an amount equal to
the sum of (x) the Exercise Price immediately prior to such issuance or sale
multiplied by the number of shares of Common Stock Deemed Outstanding
immediately prior to such issuance or sale, plus (y) the aggregate
consideration, if any, received or to be received by the Company upon such
issuance or sale, by (B) the number of shares of Common Stock Deemed
Outstanding immediately after such issuance or sale.
3.2 Effect on Exercise Price of Certain Events.
For purposes of determining the adjusted Exercise Price under Subsection 3.1
above, the following provisions will be applicable:
(a) Issuance of Rights or Options. If
the Company in any manner grants any rights or options to subscribe for or to
purchase Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the lesser of the Market Price of the
Common Stock or the Exercise Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options will be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For purposes of this
paragraph, the "price per share for which Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" will be determined by dividing (A) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration payable
to the Company upon exercise of all such Options, plus, in the case of Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all Convertible
Securities issuable upon the exercise of such Options. Except as otherwise
provided in paragraphs (c) and (d) below, no adjustment of the Exercise Price
will be made when Convertible Securities are actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
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(b) Issuance of Convertible Securities.
If the Company in any manner issues or sells any Convertible Securities, and
the price per share for which Common Stock is issuable upon such conversion or
exchange is less than the lesser of the Market Price of the Common Stock or the
Exercise Price in effect immediately prior to the time of such issuance or
sale, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities will be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which
Common Stock is issuable upon such conversion or exchange" will be determined
by dividing (A) the total amount received or receivable by the Company as
consideration for the issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities. Except as otherwise provided in paragraphs
(c) and (d) below, no adjustment of the Exercise Price will be made when Common
Stock is actually issued upon the conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible Securities is
made upon exercise of any Options for which adjustments of the Exercise Price
had been or are to be made pursuant to other provisions of Section 3, no
further adjustment of the Exercise Price will be made by reason of such
issuance or sale.
(c) Change in Option Price or Conversion
Rate. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time (other
than under or by reason of provisions designed to protect against dilution of
the type set forth in this Section 3 and which have no more favorable effect on
the holders of such Options or Convertible Securities than this Section 3 would
have if this Section 3 were included in such Options or Convertible
Securities), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold; provided, that
such adjustment of the Exercise Price will be made only if as a result thereof
the Exercise Price then in effect would be reduced. If the purchase price
provided for in any Option, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exchangeable for Common
Stock, is reduced at any time under or by reason of provisions with respect
thereto designed to protect against dilution of the type set forth herein and
which have no more favorable effect on the holders of such Options or
Convertible Securities than the provisions hereof would have if the provisions
of this Warrant were included in such Options or Convertible Securities, then
in the case of the delivery of Common Stock upon the exercise of any such
Option or upon the conversion or exchange of any such Convertible Security, the
Exercise Price then in effect under this Warrant will forthwith be adjusted to
such respective amount as would have been obtained had such Option or
Convertible Security never been issued as to such Common Stock and had
adjustments been made in accordance with paragraph (b) above upon the issuance
of the shares of Common Stock delivered upon such exercise or conversion, but
only if as a result of such adjustment the Exercise Price then in effect under
this Warrant would be reduced.
(d) Treatment of Expired Options and
Unexercised Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the Exercise Price then in effect
hereunder will be adjusted to the Exercise Price which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities never been issued.
(e) Calculation of Consideration
Received. In case any Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for consideration part or
all of which is cash, the amount of cash consideration received therefor will
be deemed to be the net amount received by the Company therefor. In case any
Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for a consideration part or all of which is other than
cash, the amount of the consideration other than cash received by the Company
will be the fair value of such consideration as determined in good faith by the
Board of Directors of the Company, except where such consideration consists of
securities, in
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which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any merger in
which the Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving corporation as determined in good faith by
the Board of Directors of the Company as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be.
(f) Integrated Transactions. In case any Option
is issued in connection with the issuance or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
will be deemed to have been issued without consideration.
(g) Treasury Shares. The number of shares of
Common Stock Deemed Outstanding at any given time does not include shares owned
or held by or for the account of the Company or any subsidiary of the Company,
and the disposition of any shares so owned or held will be considered an
issuance or sale of Common Stock.
(h) Record Date. If the Company takes a record
of the holders of Common Stock for the purpose of entitling them (i) to receive
a dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed to have
been issued or sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
3.3 Subdivision or Combination of Common Stock and Stock
Dividends. In case the Company shall at any time after the date hereof (a)
issue any shares of Common Stock or of Convertible Securities, or any rights to
purchase Common Stock or Convertible Securities, as a dividend upon Common
Stock, or (b) issue any shares of Common Stock in subdivision of outstanding
shares of Common Stock by reclassification or otherwise, or (c) combine
outstanding shares of Common Stock, by reclassification or otherwise, the
Exercise Price which would apply if purchase rights hereunder were being
exercised immediately prior to such action by the Company shall be adjusted by
multiplying it by a fraction, the numerator of which shall be the number of
shares of Common Stock Deemed Outstanding immediately prior to such dividend,
subdivision or combination and the denominator of which shall be the number of
shares of Common Stock Deemed Outstanding immediately after such dividend,
subdivision or combination.
3.4 Certain Dividends. In case the Company shall declare
a dividend upon the Common Stock payable otherwise than out of earnings or
earned surplus and otherwise than in Common Stock or Convertible Securities,
the Exercise Price which would apply if purchase rights hereunder were being
exercised immediately prior to the declaration of such dividend shall be
reduced by an amount equal, in the case of a dividend in cash, to the amount
thereof payable per share of the Common Stock or, in the case of any other
dividend, to the fair value of such dividend per share of the Common Stock as
determined in good faith by the Board of Directors of the Company. For the
purposes of the foregoing, a dividend other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such
dividend as determined in good faith by the Board of Directors of the Company.
Such reductions shall take effect as of the date on which a record is taken for
the purpose of such dividend, or, if a record is not taken, the date as of
which the holders of Common Stock of record entitled to such dividend are to be
determined.
3.5 No Adjustments. No adjustment of the Exercise Price
shall be made if the amount of such adjustment shall be less than one cent per
share, but in such case any adjustment that would otherwise be required then to
be made shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to not less than one cent per
share.
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3.6 Other Events. If any event occurs of the type
contemplated by the provisions of this Section 3 but not expressly provided for
by such provisions, the Board of Directors of the Company will make an
appropriate adjustment in the Exercise Price so as to protect the rights of the
Registered Holders.
4. Adjustment of Number of Shares Issuable upon Exercise. Upon
each adjustment of the Exercise Price pursuant to Section 3.3 hereof, but in no
other event, the Registered Holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted Exercise
Price in effect on the date purchase rights under this Warrant are exercised,
the number of shares of Warrant Stock, calculated to the nearest full share,
determined by (a) multiplying the number of shares of Warrant Stock purchasable
hereunder immediately prior to the adjustment of the Exercise Price by the
Exercise Price in effect immediately prior to such adjustment, and (b) dividing
the product so obtained by the adjusted Exercise Price in effect on the date of
such exercise.
5. Effect of Reorganization, Reclassification, Consolidation,
Merger or Sale. Subject to Section 2.1, if at any time while this Warrant is
outstanding there shall be any reorganization or reclassification of the
capital stock of the Company (other than a subdivision or combination of shares
provided for in Subsection 3.3 hereof) or any consolidation or merger of the
Company with another corporation (other than a consolidation or merger in which
the Company is the surviving entity and which does not result in any chance in
the Common Stock), or any sale or other disposition by the Company of all or
substantially all of its assets to any other corporation, the holder of this
Warrant shall thereafter upon exercise of this Warrant be entitled to receive
the number of shares of stock or other securities or property of the Company,
or of the successor corporation resulting from such consolidation or merger, as
the case may be, to which the Warrant Stock (and any other securities and
property) of the Company, deliverable upon the exercise of this Warrant, would
have been entitled upon such reorganization, reclassification of capital stock,
consolidation, merger, sale or other disposition if this Warrant had been
exercised immediately prior to such reorganization, reclassification of capital
stock, consolidation, merger, sale or other disposition. In any such case,
appropriate adjustment (as determined in good faith by the Board of Directors
of the Company) shall be made in the application of the provisions set forth in
this Warrant with respect to the rights and interests thereafter of the holder
of this Warrant to the end that the provisions set forth in this Warrant
(including those relating to adjustments of the Exercise Price and the number
of shares issuable upon the exercise of this Warrant) shall thereafter be
applicable, as near as reasonably may be, in relation to any shares or other
property thereafter deliverable upon the exercise hereof as if this Warrant had
been exercised immediately prior to such reorganization, reclassification of
capital stock, consolidation, merger, sale or other disposition and the holder
hereof had carried out the terms of the exchange as provided for by such
reorganization, reclassification of capital stock, consolidation or merger. In
the event that in any such reorganization or reclassification, consolidation or
merger, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for or of a security
of the Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of Section 3 above with the
amount of the consideration received upon the issue thereof being determined in
good faith by the Board of Directors of the Company. The Company shall not
effect an such reorganization, consolidation or merger unless, upon or prior to
the consummation thereof, the successor corporation shall assume by written
instrument the obligation to deliver to the holder hereof such shares of stock,
securities, cash or property as such holder shall be entitled to purchase in
accordance with the foregoing provisions. Notwithstanding any other provisions
of this Warrant, in the event of sale or other disposition of all or
substantially all of the assets of the Company as a part of a plan for
liquidation of the Company, all rights to exercise the Warrant shall terminate
60 days after the Company gives written notice to the Registered Holder of this
Warrant that such sale or other disposition has been consummated.
6. Notice of Adjustments. Immediately upon any adjustment of the
Exercise Price or increase or decrease in the number of shares of Common Stock
purchasable upon exercise of this Warrant, the Company will send written notice
thereof to all Registered Holders, stating the adjusted Exercise Price and the
increased or decreased number of shares purchasable upon exercise of this
Warrant and setting forth in reasonable detail the method of calculation for
such adjustment and increase or decrease. When appropriate, such notice may be
given in advance and included as part of any notice required to be given
pursuant to Section 7 below.
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7. Prior Notice as to Certain Events. In case at any time:
(a) the Company shall pay any dividend payable in stock
upon its Common Stock or make any distribution (other than cash dividends) to
the holders of its Common Stock; or
(b) the Company shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
any other rights, or
(c) there shall be any reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with another corporation or a sale or disposition of all or substantially all
its assets (other than a transaction described in Section 2.l(ii)); or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; then, in each of said
cases, the Company shall give prior written notice, by first class mail,
postage prepaid, addressed to the Registered Holder of this Warrant at the
address of such holder as shown on the books of the Company, of the date on
which (i) the books of the Company shall close or a record shall be taken for
such stock dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place, as the case may be. A copy of each
such notice shall be sent simultaneously to each transfer agent of the
Company's Common Stock. Such notice shall also specify the date as of which
the holders of the Common Stock of record shall participate in said dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least 20 days prior to the action in question and not less than 20
days prior to the record date or the date on which the Company's transfer books
are closed in respect thereto.
8. Put Rights.
(a) In the event the Company has not had a
registration statement filed under the Securities Act of 1933, as amended (the
"Act"), covering the Company's first public offering of Common Stock declared
effective by December 23, 1993 (the "First Anniversary Date"), the Registered
Holder shall have the right until January 23, 1994 (the "First Put Date"), to
require the Company to redeem all or a part of this Warrant by paying the
Registered Holder $3.08 (as adjusted for stock splits, stock dividends,
recapitalizations and similar events) for each share of Warrant Stock then
issuable upon the exercise of this Warrant that the Registered Holder requests
to be redeemed. In the event the Company has not had a registration statement
filed under the Act covering the Company's first public offering of Common
Stock declared effective by December 23, 1997 (the "Fifth Anniversary Date")
(collectively, the First Anniversary Date and the Fifth Anniversary Date shall
be hereinafter referred to as the "Anniversary Dates"), the Registered Holder
shall have the right until January 23, 1998 (the "Second Put Date")
(collectively, the First Put Date and the Second Put Date shall be hereinafter
referred to as the "Put Dates"), to require the Company to redeem all or a part
of this Warrant by paying, subject to the proviso set forth in this sentence,
the Registered Holder the greater of (i) $3.08 (as adjusted for stock splits,
stock dividends, recapitalizations and similar events) or (ii) the difference
between $4.62 (as adjusted for stock splits, stock dividends, recapitalizations
and similar events) and the value per share of Common Stock as determined by an
appraiser mutually acceptable to the Company and the Registered Holder for each
share of Warrant Stock then issuable upon the exercise of this Warrant (without
regard to any termination of this Warrant pursuant to Section 2.l(i)) that the
Registered Holder requests to be redeemed, provided, however, that the
Registered Holder shall not have the right to receive the consideration set
forth in clause (ii) of this sentence if the number of shares of Warrant Stock
then issuable upon the exercise of this Warrant is not greater than 10,000
shares (as adjusted for stock splits, stock dividends, recapitalizations and
similar events). In the event that the Company and the Registered Holder
cannot agree on a mutually acceptable appraiser, the Company and the Registered
Holder will each select an appraiser. If the two appraisers cannot agree on
the value per share of Common Stock, the two appraisers will select a third
appraiser with knowledge and experience in the software industry, in which
event the value of per share of Common Stock will be the average of the two
highest appraisals
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submitted by the three appraisers. The cost of any appraisal under this
Section 8(a) shall be borne equally by the Company and the Registered Holder.
(b) The rights granted by this Section 8 shall be
exercised by the Registered Holder by the delivery of written notice thereof to
the Company on or prior to the applicable Put Date. In the event of the
exercise of the right granted by this Section 8, subject to clause (d) of this
Section 8 the Company shall pay to the Registered Holder the amounts payable
pursuant to this Section 8 within 120 days of the applicable Anniversary Dates.
In the event the amounts payable pursuant to this Section 8 are not paid within
120 days of the applicable anniversary dates, such amounts shall thereafter
bear annual interest at an interest rate equal to the then prime rate offered
by the Company's principal bank to its best corporate customers plus five
percentage points.
(c) Upon the exercise of any right granted by
this Section 8, this Warrant shall terminate and thereafter be of no further
force or effect with respect to the Warrant Shares requested to be redeemed by
the Registered Holder and, if there are Warrant Shares still issuable upon
exercise of this Warrant, the Company will prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this Warrant
which have not expired or been exercised.
(d) If the funds of the Company legally available
for redemption of the Warrants are insufficient to redeem the Warrants required
under this Section 8 or Section 8 of any other Warrants to be redeemed on any
Put Date, those funds which are legally available will be used to redeem the
maximum possible number of such Warrants ratably on the basis of the number of
Warrants which would be redeemed on such date if the funds of the Company
legally available therefor had been sufficient to redeem all Warrants required
to be redeemed on such date. At any time thereafter when additional funds of
the Company become legally available for the redemption of the Warrants, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of the shares which the Company was theretofore obligated to
redeem, ratably on the basis set forth in the preceding sentence.
9. Reservation of Common Stock. The Company will at all times
reserve and keep available for issuance upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants, and upon
such issuance such shares of Common Stock will be validly issued, fully paid
and nonassessable.
10. No Voting Rights; Limitations of Liability. This Warrant will
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the Registered Holder to purchase Warrant Stock, and no
enumeration in this Warrant of the rights or privileges of the Registered
Holder, will give rise to any liability of such Holder for the Exercise Price
of Warrant Stock acquirable by exercise hereof or as a stockholder of the
Company.
II. Warrant Transferable.
(a) Subject to the transfer conditions referred to in
paragraphs (b) and (c), below, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit I hereto) at the principal office of the Company.
(b) Each Registered Holder of this Warrant acknowledges
that this Warrant has not been registered under the Act, and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement as to this Warrant or such Warrant Stock under
the Act (or any similar statute then in effect), or (ii) an opinion of legal
counsel reasonably acceptable to the Company to the effect that such
registration is not, under the circumstances, required.
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(c) Each Registered Holder of this Warrant agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise without the prior written
approval of the Company, which approval may be withheld only in a case where
the transferee is a potential or actual customer, supplier, competitor or a
party whose interests are viewed as contrary to the Company's interests. In no
event shall such a sale, pledge, distribution, offer for sale, transfer or
other distribution occur without the prior solicitation of the prior written
approval of the Company, which approval may be deemed received if the Company
does not otherwise notify the Registered Holder within 10 business days after
the request for approval is received by the Company. Any dispute between the
parties relating to this Section 11(c) shall be determined by arbitration in
accordance with the Rules of the ITAA Alternative Dispute Resolution
procedures, if available, or in accordance with the commercial arbitration
rules of the American Arbitration Association, if the ITAA procedures are not
available. In either event, the arbitration shall be conducted by a single
arbitrator chosen in accordance with the applicable rules, which arbitrator
shall have knowledge and experience in the computer software industry. The
arbitration shall be conducted in Washington, D.C., or in such other location
as the parties may mutually agree. The costs of any arbitration relating to
this Section 11(c) shall be borne by the party that does not prevail in the
arbitration.
12. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants will represent such portion of such rights as is designated by the
Registered Holder at the time of such surrender. The date the Company
initially issues this Warrant will be deemed to be the "Date of Issuance" of
this Warrant regardless of the number of times new certificates representing
the unexpired and unexercised rights formerly represented by this Warrant are
issued.
13. Miscellaneous.
13.1 Amendment and Waiver. Except as otherwise provided
herein, the provisions of the Warrants 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
Registered Holder of this Warrant.
13.2 Notices. Any notices required to be sent to a
Registered Holder will be delivered to the address of such Registered Holder
shown on the books of the Company. Except as otherwise provided herein, all
notices referred to herein will be delivered in person or sent by first class
mail, postage prepaid, and will be deemed to have been given when so delivered
or sent.
13.3 Descriptive Headings; Governing Law. The descriptive
headings of the paragraphs of this Warrant are inserted for convenience only
and do not constitute a part of this Warrant. The construction, validity and
interpretation of this Warrant will be governed by the laws of the Commonwealth
of Virginia.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officers under its corporate seal.
BEST PROGRAMS, INC.
[CORPORATE SEAL] By:
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Xxxxx X. Xxxxxxxx, President
Attest:
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Secretary
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EXHIBIT I
ASSIGNMENT
FOR VALUE RECEIVED, ___________________ hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Warrant Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
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Dated:
Signature
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Witness
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EXHIBIT II
EXERCISE AGREEMENT
To:
Dated:
The undersigned, pursuant to the
provisions set forth in the within Warrant, hereby agrees to subscribe for and
purchase _____ shares of the Warrant Stock covered by such Warrant and makes
payment herewith in full for such Warrant Stock at the price per share provided
by such Warrant.
Signature
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Address
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