Exhibit 4.6
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK FOR WHICH IS IT EXERCISABLE
(THIS WARRANT AND SUCH SHARES COLLECTIVELY, THE "SECURITIES") HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (i)
AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR (ii) AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SAID STATE LAWS PROVIDED THE COMPANY IS
GIVEN AN OPINION OF COUNSEL OR OTHER INFORMATION AND DOCUMENTATION SATISFACTORY
TO THE COMPANY THAT SUCH EXEMPTIONS ARE AVAILABLE.
July 12, 2005
Warrant to Purchase 500,000
Shares of Common Stock (the "Purchasable
Shares") at $1.00 (the "Exercise Price")
Tall Oaks Group L.L.C. ("Holder")
COMMON STOCK PURCHASE WARRANT OF DIRECT INSITE CORP.
Void after July 11, 2010
This Warrant ("Warrant") to purchase Common Stock of Direct Insite Corp., a
Delaware corporation (the "Company"), is issued by the Company on the date set
forth above (the "Issue Date") to Holder pursuant to the terms of an Amended and
Restated Reimbursement Agreement executed contemporaneously herewith. The term
"Warrant" as used herein shall include this Warrant and any warrant(s) delivered
in substitution or exchange for this Warrant in accordance with the terms
hereof.
This certifies that, for value received, Holder identified above or
his/her/its registered assigns (hereinafter, "Holder") is entitled, subject to
the terms set forth below, to purchase from the Company the Purchasable Shares,
subject to adjustment as hereinafter provided, upon surrender hereof at the
principal office of the Company identified below, with the warrant exercise form
attached hereto duly executed, and simultaneous payment therefor in lawful money
of the United States or otherwise as hereinafter provided, at the Exercise Price
set forth in Section 3 below. The number, character and Exercise Price per share
of Common Stock are subject to adjustment as provided below.
1. Certain Definitions. As used herein, the following capitalized terms
shall have the respective meanings set forth below:
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(a) "Common Stock" shall mean the common stock of the Company, par value
$0.0001 per share, and any other securities or property of the Company or of any
other person (corporate or otherwise) which the Holder at any time shall be
entitled to receive upon the exercise hereof, in lieu of or in addition to such
common stock, or which at any time shall be issuable in exchange for or in
replacement of such common stock.
(b) "Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capita stock or assets of corporations or other entities as going
concerns, and which is not affiliated with either the Company or the Holder of
any Warrant.
(b) "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 OTC Bulletin Board
or another registered national stock exchange on which the Common Stock is then
listed, or if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such date, or
(b) if the Common Stock is not listed then on the OTC Bulletin Board or any
registered national stock exchange, the closing bid price for a share of Common
Stock in the over-the-counter market, as reported by the OTC Bulletin Board or
in 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 OTC Bulletin
Board or 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 five (5) Trading Days preceding such date of
determination, 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 Independent
Appraiser selected in good faith by the Holder; provided, however, that the
Company, after receipt of the determination by such Independent Appraiser, shall
have the right to select an additional Independent Appraiser, in which case, the
fair market value shall be equal to the average of the determinations by each
such Independent Appraiser; and provided, further that all determinations of the
Per Share Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period. The determination
of fair market value by an Independent Appraiser shall be based upon the fair
market value of the Company determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
(c) "Person" means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, governmental authority or other entity of whatever nature.
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(d) "Trading Day" means (a) a day on which the Common Stock is traded on
the OTC Bulletin Board, or (b) if the Common Stock is not traded 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 Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall
mean any day except Saturday, Sunday and any day which shall be a legal holiday
or a day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.
2. Term of Warrant. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, commencing on the date hereof
(the "Exercise Commencement Date") and continuing until 5:00 p.m., Eastern Time,
on the fifth anniversary of the date hereof (the "Exercise Period"). This
Warrant shall be void following the Exercise Period. The term of this Warrant
shall commence on the date hereof and continue until the last day of the
Exercise Period (the "Term").
3. Exercise Price. The price per share of Common Stock for which this Warrant
may be exercised shall be $1.00 per share, as adjusted from time to time
pursuant to Section 13 hereof. All shares of Common Stock or other securities
issued pursuant to this Warrant shall be fully-paid and non-assessable.
4. Exercise of Warrant.
(a) During the Exercise Period, the purchase rights represented by this
Warrant shall be exercisable by Holder in whole or in part, but not for less
than five hundred (500) shares of Common Stock at a time (or such lesser number
of shares which may then constitute the maximum number purchasable pursuant to
this Warrant (such number being subject to adjustment as provided in Section 13
below), at any time, or from time to time during the Term, by the surrender of
this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder at the address of the Holder appearing on the books of the Company), upon
payment in cash or by certified or official bank check payable to the order of
the Company in the amount of the aggregate Exercise Price, or by "cashless
exercise" as provided in Section 5 below.
(b) This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date. As promptly as practicable
on or after such date and in any event within three (3) Trading Days after
exercise (the "Delivery Date"), the Company at its expense shall issue and
deliver to the person or persons entitled to receive, or as otherwise directed
by the Holder, the same a certificate or certificates for the number of shares
issuable upon such exercise. In the event that this Warrant is exercised in part
and it can thereafter be exercised for additional shares of Common Stock, the
Company at its expense will execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may thereafter be
exercised.
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(c) In addition to any other rights available to the Holder, if the Company
fails to deliver to the Holder a certificate or certificates representing the
Common Stock pursuant to an exercise on or before the Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Common Stock which the Holder
anticipated receiving upon such exercise (a "Buy-In"), then the Company shall
(1) pay 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 shares of Common Stock that the Company was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Common Stock for which such exercise was not honored or
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 hereunder. 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 an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) 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, together with applicable confirmations
and other evidence reasonably requested by the Company. Nothing herein shall
limit a Holder's right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to
timely deliver certificates representing shares of Common Stock upon exercise of
this Warrant as required pursuant to the terms hereof.
5. Exercise by Surrender of Warrant. In addition to and without limiting the
rights of the Holder, the Holder may, at its election, in lieu of paying to the
Company an amount equal to the aggregate Exercise Price for the Common Stock
being purchased, convert this Warrant into the number of shares of Common Stock
equal to the value (as determined below) of this Warrant, in which event the
Company shall issue to the Holder the number of shares of Common Stock computed
by using the following formula:
X = Y - (A)(Y)
------
B
X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock purchasable upon exercise of all
of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised.
A = the Exercise Price.
B = the Per Share Market Value of one share of Common Stock.
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6. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the Exercise Price multiplied by such
fraction.
7. Replacement of Warrant. On receipt 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, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor and amount.
8. Rights of Stockholders. Subject to Section 13 of this Warrant, the Holder
shall not be entitled to vote or receive dividends or be deemed to be a holder
of Common Stock, nor shall anything contained herein be construed to confer upon
the Holder, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised.
9. Transfer of Warrant.
(a) Warrant Register. The Company shall maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change such Holder's address
as shown on the Warrant Register by written notice to the Company requesting
such change. Any notice or written communication required or permitted to be
given to the Holder may be delivered or given by mail to such Holder as shown on
the Warrant Register and at the address shown on the Warrant Register. Until
this Warrant is transferred on the Warrant Register of the Company, the Company
may treat the Holder as shown on the Warrant Register as the absolute owner of
this Warrant for all purposes, notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 9(a) above, issuing Common Stock upon exercise hereof, exchanging or
replacing this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall be
made at the office of such agent.
(c) Transferability and Non-Negotiability of Warrant. This Warrant may not
be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if requested by the
Company). Subject to the provisions of this Warrant with respect to compliance
with the Securities Act of 1933, as amended (the "Act"), title to this Warrant
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may be transferred by endorsement (by the Holder executing the Assignment Form
annexed hereto) and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assignments and transfers contained in this Section 9, the Company at its
expense shall issue to or on the order of the Holder a new warrant or warrants
of like tenor, in the name of the Holder or as the Holder (on payment by the
Holder of any applicable transfer taxes) may direct, for the number of shares
issuable upon exercise thereof.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the securities to be issued upon exercise hereof are
being acquired solely for the Holder's own account and not as a nominee for
any other party, and for investment, and that the Holder will not offer,
sell, or otherwise dispose of this Warrant or any shares of Common Stock to
be issued upon exercise hereof except under circumstances that will not
result in a violation of the Act or any state securities laws. Upon
exercise of this Warrant, the Holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the shares
of Common Stock so purchased are being acquired solely for the Holder's own
account for investment and not as a nominee for any other party, and not
with a view toward the resale or distribution thereof.
(ii) This Warrant and certificates representing any shares of Common
Stock issuable upon exercise hereof shall bear a legend in substantially
the following form (in addition to any legend required by state securities
laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES AND ANY SECURITIES
OR SHARES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND LAWS. COPIES OF THE WARRANT COVERING THE
PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES.
10. Reservation of Stock. The Company covenants that during the Term, the
Company will reserve from its authorized Common Stock a number of shares
sufficient to provide for the issuance of such Common Stock upon the exercise of
this Warrant and, from time to time, will take all steps necessary to amend the
certificate of incorporation of the Company to ensure that there are sufficient
reserves of shares of Common Stock issuable upon exercise of this and the other
Warrants on the conditions herein provided and, from time to time, will take all
steps necessary to amend its Certificate of Incorporation (the "Certificate") to
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provide sufficient reserves of shares of Common Stock issuable upon exercise of
the Warrant. The Company further represents, warrants and covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will be free
from all taxes, liens, charges and other similar encumbrances in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the exercise of this
Warrant.
11. Notice of Adjustment.
(a) Whenever the Company is required to issue a certificate following an
adjustment pursuant to Section 13 hereof, the Company shall issue a certificate
signed by its Chief Financial Officer or Chief Executive Officer setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise
Price and number of shares purchasable hereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed (by first
class mail, postage prepaid) to the Holder of this Warrant.
(b) In case:
(i) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
entity, or any conveyance of all or substantially all of the
assets of the Company to another entity, or
(ii) of any voluntary dissolution, liquidation of winding-up of the
Company.
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, and in each such case, the Company
shall mail or cause to be mailed to the Holder or Holders a notice specifying,
as the case may be, (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed
at least fifteen (15) days prior to the date therein specified.
(c) All such notices and communications shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery, and
(ii) in the case of mailing, on the third business day following the date of
such mailing.
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12. Amendments. Any provision of this Warrant may be amended and the observance
of any provision of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the Holder. Any amendment or waiver effected in
accordance with this Section 12 shall be binding upon the Holder of this Warrant
and the Company. No waivers of or exceptions to any term, condition or provision
of this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
13. Adjustments. The Exercise Price and the Purchasable Shares hereunder are
subject to adjustment from time to time as follows:
(a) Reclassification, etc.
(i) If the Company at any time while this Warrant, or any portion
thereof, remains outstanding and unexpired shall (each, a "Triggering
Event"): (a) consolidate or merge with or into any other Person and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with
or merge into the Company and the Company shall be the continuing or
surviving Person but, in connection with such consolidation or merger, any
capital stock of the Company shall be changed into or exchanged for
securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any other
Person, or (d) effect a capital reorganization or reclassification of its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this Warrant shall be
entitled upon the exercise hereof at any time after the consummation of
such Triggering Event, to the extent this Warrant is not exercised prior to
such Triggering Event, to receive at the Exercise Price in effect at the
time immediately prior to the consummation of such Triggering Event in lieu
of the Common Stock issuable upon such exercise of this Warrant prior to
such Triggering Event, the securities, cash and property to which such
Holder would have been entitled upon the consummation of such Triggering
Event if such Holder had exercised the rights represented by this Warrant
immediately prior thereto (including the right of a shareholder to elect
the type of consideration it will receive upon a Triggering Event), subject
to adjustments (subsequent to such corporate action) as nearly equivalent
as possible to the adjustments provided for elsewhere in this Section 13.
Notwithstanding the foregoing to the contrary, this Section 13(a)(i) shall
only apply if the surviving entity pursuant to any such Triggering Event is
a public company that is registered pursuant to the Securities Exchange Act
of 1934, as amended, and its common stock is listed or quoted on a national
exchange or the OTC Bulletin Board. In the event that the surviving entity
pursuant to any such Triggering Event is not a public company that is
registered pursuant to the Securities Exchange Act of 1934, as amended, or
its common stock is not listed or quoted on a national exchange or the OTC
Bulletin Board, then the Holder shall have the right to demand that the
Company pay to the Holder an amount equal to the value of this Warrant
according to the Black-Scholes formula.
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(ii) Notwithstanding anything contained in this Warrant to the
contrary and so long as the surviving entity pursuant to any Triggering
Event is a public company that is registered pursuant to the Securities
Exchange Act of 1934, as amended, and its common stock is listed or quoted
on a national exchange or the OTC Bulletin Board, a Triggering Event shall
not be deemed to have occurred if, prior to the consummation thereof, each
Person (other than the Company) which may be required to deliver any
securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (A) the obligations of the
Company under this Warrant (and if the Company shall survive the
consummation of such Triggering Event, such assumption shall be in addition
to, and shall not release the Company from, any continuing obligations of
the Company under this Warrant) and (B) the obligation to deliver to such
Holder such Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be entitled
to receive, and such Person shall have similarly delivered to such Holder
an opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such Holder, or in the alternative, a written
acknowledgement executed by the President or Chief Financial Officer of the
Company, stating that this Warrant shall thereafter continue in full force
and effect and the terms hereof (including, without limitation, all of the
provisions of this subsection (a)) shall be applicable to the securities,
cash or property which such Person may be required to deliver upon any
exercise of this Warrant or the exercise of any rights pursuant hereto.
(b) Split, Subdivision or Combination of Shares. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Exercise Price then in
effect shall be adjusted to equal (A) the Exercise Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.
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(c) Adjustments for Dividends in Stock or Other Securities or Property. If
while this Warrant, or any portion hereof, remains outstanding and unexpired,
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible stockholders, shall have become entitled to
receive, without payment therefore: (i) cash (other than a cash dividend payable
out of earnings or earned surplus legally available for the payment of dividends
under the laws of the jurisdiction of incorporation of the Company); (ii) any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash); or (iii) any
warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property of any nature whatsoever (other than cash), then and in each case (1)
the number of shares of Common Stock for which this Warrant is exercisable shall
be adjusted to equal the product of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment
multiplied by a fraction (A) the numerator of which shall be the Per Share
Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Company and supported by an opinion from an investment banking firm of
recognized national standing acceptable to (but not affiliated with) the Holder)
of any and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (2) the Exercise Price then in effect shall be adjusted to
equal (A) the Exercise Price then in effect multiplied by the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such adjustment.
(d) Adjustment for Financing(s). Notwithstanding anything contained herein
to the contrary, the rights and terms of the Holder as set forth in this
Warrant, including, without limitation, the Exercise Price and number of shares
of Common Stock issuable upon exercise of the Warrant, shall be adjusted to
reflect any more favorable terms or rights that may be included in any financing
consummated prior to September 30, 2005, or series of related financings in
respect of such financing (irrespective of whether any such series of related
financings occurs prior to September 30, 2005), or, if no financing is
consummated prior to September 30, 2005, then in the Company's next round of
financing, or series of related financings, whichever financing is the most
favorable.
(e) Certificate as to Adjustments. The Company shall, at its expense, upon
the written request any holder of this Warrant following the occurrence of each
adjustment or readjustment pursuant to this Section 13 hereof, promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to each holder of this Warrant a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
(f) No Impairment. The Company shall not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 13 and (subject
to Section 1 above) in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder(s) of this Warrant
against impairment.
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13. Miscellaneous. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles thereof relating to the conflict of laws, except to the extent that
matters of due authorization and issuance of this Warrant or any other
securities of the Company or the rights, privileges and obligations of holders
of securities of the Company. Any action brought concerning the transactions
contemplated by this Warrant shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. The
individual(s) executing this Warrant on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Warrant is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this Warrant.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Company, the Holder hereof and (to the extent provided herein)
the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by
any such Holder or Holder of Warrant Stock. The Company stipulates that the
remedies at law of the Holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or compliance with any
of the terms of this Warrant are not and will not be adequate and that, to the
fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise
IN WITNESS WHEREOF, DIRECT INSITE CORP. has caused this Warrant to be
executed by a duly authorized officer as of the date first set forth above.
DIRECT INSITE CORP.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
11
NOTICE OF EXERCISE
To: Direct Insite Corp.
1. The undersigned hereby elects to purchase $ _____ of shares of common stock
of Direct Insite Corp., a Delaware corporation ("Common Stock"), pursuant to the
terms of the attached Warrant, and tenders herewith payment of the Exercise
Price for such shares in full.
2. In exercising this Warrant, the undersigned hereby confirms and acknowledges
that the shares of Common Stock are being acquired solely for the account of the
undersigned for investment and not as a nominee for any other party, and that
the undersigned will not offer, sell, assign, transfer, pledge, hypothecate, or
otherwise dispose of any such shares of Common Stock except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
3. Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:
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[Name]
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[Name]
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1. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
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[Name]
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[Date] [Signature]
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant:
Name of Assignee Address No. of Shares
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and does hereby irrevocably constitute and appoint ____________________ Attorney
to make such transfer on the books of Direct Insite Corp., a Delaware
corporation (the "Company"), maintained for the purpose, with full power of
substitution in the premises.
DATED: _____________________
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Signature of Holder
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(Witness)
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The Assignee acknowledges that this Warrant and the shares of stock to be
issued upon exercise hereof are being acquired for investment for Assignee's own
account for investment and not as a nominee for any other party, not with a view
toward the resale or distribution thereof, and that the undersigned will not
offer, sell, assign, transfer, pledge, hypothecate, or otherwise dispose of this
Warrant or any shares of stock to be issued on the exercise hereof except under
-i-
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws. Further, the Assignee acknowledges
that upon exercise of this Warrant, the Assignee shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
shares of stock so purchased are being acquired for investment and not with a
view toward distribution or resale.
DATED: _____________________
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Signature of Assignee
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(Witness)
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