1
EXHIBIT 99.3
THE SECURITIES REPRESENTED HEREBY AND ANY SHARES ISSUED UPON THE EXERCISE OF
THIS WARRANT HAVE BEEN AND WILL BE ISSUED PURSUANT TO REGULATION S ("REGULATION
S") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
HAVE NOT BEEN REGISTERED UNDER THE ACT. SUCH SECURITIES MAY NOT BE TRANSFERRED,
OFFERED OR SOLD PRIOR TO THE END OF THE RESTRICTED PERIOD CONTAINED HEREIN. THIS
WARRANT MAY NOT BE EXERCISED INTO SHARES BY OR ON BEHALF OF ANY "U.S. PERSON"
(AS DEFINED IN REGULATION S) FOLLOWING THE EXPIRATION OF THE RESTRICTED PERIOD.
THIS WARRANT AND ANY SHARES ISSUED UPON THE EXERCISE OF THIS WARRANT MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THIS WARRANT THAT THE
TRANSFEREE IS AN AFFILIATE OF THE HOLDER WITHIN THE MEANING OF RULE 144 UNDER
THE ACT AND IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF REGULATION D UNDER
THE ACT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
PINNACLE MICRO, INC.
W-((6))
This certifies that ((1)) (the "Holder"), for value received, is entitled to
purchase from Pinnacle Micro, Inc., a Delaware corporation (the "Company"),
having a place of business at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a maximum
of ((5)) fully paid and nonassessable shares of the Company's Common Stock,
$0.001 par value ("Common Stock") for cash at the Stock Purchase Price (as
defined below) at any time or from time to time up to and including 5:00 p.m.
(California time) on December 20, 1997 (the "Expiration Date"), upon surrender
to the Company at its principal office (or at such other location as the Company
may advise the Holder in writing) of this Warrant properly endorsed with the
Subscription Form attached hereto duly filled in and signed and upon payment in
cash or by check of the aggregate Stock Purchase Price for the number of shares
for which this Warrant is being exercised determined in accordance with the
provisions hereof. The "Stock Purchase Price" shall equal $4.61 per share, which
equals
2
EXHIBIT 99.3 (CONTINUED)
one hundred twenty-five percent (125%) of the closing bid price of the Company's
common stock on December 19, 1996, the trading date immediately before the date
of this Warrant. The Stock Purchase Price and the number of shares purchasable
hereunder are subject to adjustment as provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. This
Warrant is exercisable at the option of the Holder of record hereof, at any time
or from time to time after the Restricted Period (as defined below), up to the
Expiration Date for all or any part of the shares of Common Stock (but not for a
fraction of a share) which may be purchased hereunder, provided, however, that
in no event shall the Holder be entitled to exercise any portion of the Warrant
in excess of that portion of the Warrant upon exercise of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrant and the
unconverted portion of the Company's Convertible Notes issued to the Holder) and
(2) the number of shares of Common Stock issuable upon the exercise of the
portion of the Warrant with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13 D-G thereunder, except as
otherwise provided in clause (1) of such proviso. The Company agrees that the
shares of Common Stock purchased under this Warrant shall be and are deemed to
be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered,
properly endorsed, the completed, executed Subscription Form (attached as
Exhibit A) delivered and payment made for such shares. Certificates for the
shares of Common Stock so purchased, together with any other securities or
property to which the Holder hereof is entitled upon such exercise, shall be
delivered to the Holder hereof by the Company within a reasonable time after the
rights represented by this Warrant have been so exercised and will contain a
legend indicating that the shares have not been registered under the Act. In
case of a purchase of less than all the shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Common Stock as may be required by the Holder hereof and shall
be registered in the name of such Holder. The Company will not issue shares of
Common Stock resulting from the exercise of this Warrant or issue balance
Warrant or Warrants to any "U.S. Person."
3
EXHIBIT 99.3 (CONTINUED)
2. SHARES TO THE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the valid exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
free from all preemptive rights of any stockholder and free of all taxes, liens
and charges with respect to the issue thereof. The Company further covenants and
agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of authorized
but unissued Common Stock, or other securities and property, when and as
required to provide for the exercise of the rights represented by this Warrant.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The
Stock Purchase Price and the number of shares purchasable upon the exercise of
this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 3. Upon each adjustment
of the Stock Purchase Price, the Holder of this Warrant shall thereafter be
entitled to purchase, at the Stock Purchase Price resulting from such
adjustment, the number of shares obtained by multiplying the Stock Purchase
Price in effect immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Stock Purchase Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(A) Common Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution,
(B) any cash paid or payable otherwise than as a
cash dividend, or
4
EXHIBIT 99.3 (CONTINUED)
(C) Common Stock or additional stock or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, combination of shares or similar corporate rearrangement,
(other than (i) shares of Common Stock issued as a stock split, adjustments in
respect of which shall be covered by the terms of Section 3.1 above or (ii) an
event for which adjustment is otherwise made pursuant to Section 3.3 below),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including in
the cases referred to in clauses (B) and (C) above) which such Holder would hold
on the date of such exercise had he been the holder of record of such Common
Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE. If any capital reorganization of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities, or other assets or property, then, as a condition
of such reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provisions shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any
reorganization described above, appropriate provision shall be made with respect
to the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Stock Purchase Price and of the number of shares purchasable and receivable
upon the exercise of this Warrant) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume by written
instrument, executed and mailed or delivered to the registered Holder hereof at
the last address of such Holder appearing on the books of the Company, the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase.
5
EXHIBIT 99.3 (CONTINUED)
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, 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, and, in case of a Holder with an address or record outside of the
United States, by facsimile, and confirmed in writing by first class air mail.
The notice shall be signed by the Company's chief financial officer and shall
state the Stock Purchase Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
(1) the Company shall declare any cash dividend upon its
Common Stock;
(2) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other distribution
to the holders of its Common Stock;
(3) the Company shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(4) there shall be any capital reorganization or
reclassification of the capital stock of the company; or consolidation or merger
of the Company; or consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least thirty (30) days'
prior written notice (by the method set forth in Section 3.4 above) of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or for determining rights to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least thirty (30) days' prior written notice of
the date when
6
EXHIBIT 99.3 (CONTINUED)
the same shall take place; provided, however, that the Holder shall make a best
efforts attempt to respond to such notice as early as possible after the receipt
thereof. Any notice given in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto. Any
notice given in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall been entitled to exchange their
Common Stock for securities or to other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or conversion, as the case may be.
4. ISSUE TAX. The issuance of certificates for shares of Common
Stock upon the exercise of the Warrant shall be made without charge to the
Holder of the Warrant for any issue tax (other than any applicable income taxes)
in respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of any warrant or of any shares of Common
Stock issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATIONS OF LIABILITY.
Nothing contained in this Warrant shall be construed as conferring upon the
holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company or any other matters or any rights whatsoever as a
stockholder of the Company. No dividends or interest shall be payable or accrued
in respect of this Warrant or the interest represented hereby or the shares
purchasable hereunder until and only to the extent that this Warrant shall have
been exercised. No provisions hereof, in the absence of affirmative action by
the holder to purchase shares of Common Stock, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any liability
of such holder for the Stock Purchase Price or as a stockholder of the Company,
whether such liability is asserted by the Company or by its creditors.
7. TRANSFER. After ninety (90) days from the date of this Warrant
and subject to compliance with applicable federal and state securities laws,
this Warrant and all rights hereunder are transferable only to affiliates of the
Holder (as such term is defined in Rule 144 of the Act) who are not U.S. Persons
(as defined in Regulation S) and who are "accredited investors" within the
meaning of Regulation D under the Act, in whole or in part, upon surrender of
this Warrant properly endorsed. Neither this Warrant nor any rights hereunder
are transferable other than to affiliates of the Holder who are not U.S.
7
EXHIBIT 99.3 (CONTINUED)
Persons (as defined in Regulation S) and who are "accredited investors" within
the meaning of Regulation D under the Act. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Warrant shall have been so endorsed, may be treated by the Company, at
the Company's option, and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes. The Company may condition registrations of transfers on
registrations of transfers on the receipt of a certificate from transferee in a
form acceptable to the Company that contains representations and warranties
similar to those of the Holder contained in Section 9.
8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The
rights, obligations, representations and warranties of the Company, of the
holder of this Warrant and of the holder of shares of Common Stock issued upon
exercise of this Warrant referred to in Section 7 shall survive the exercise of
this Warrant.
9. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. The Holder
understands and represents and warrants to, and agrees with Company that:
(a) The Holder understands that no federal or state
agencies have passed on, or made any recommendation or endorsement with respect
to this Warrant or any of the shares of Common Stock issuable upon the exercise
of this Warrant.
(b) The Holder acknowledges, in making the decision to
acquire this Warrant and exercise this Warrant, that the Holder has relied
solely upon independent investigations made by the Holder and not upon any
representations made by the Company or with respect to the Company or with
respect to the shares of Common Stock.
(c) The Holder understands that this Warrant and the
shares of Common Stock issuable upon the exercise of this Warrant are being
offered and sold to it in reliance on specific exemptions from or
non-application of the registration requirements of federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Holder set forth herein in order to determine the applicability of such
exemptions and the suitability of the Holder.
(d) The Holder is not a U.S. Person (as defined in
Regulation S) under the Act and is not and will not be an affiliate (as defined
in the U.S. Securities Exchange Act of 1934, as amended) of the Company. The
Holder certifies under penalty of perjury
8
EXHIBIT 99.3 (CONTINUED)
that it is neither a citizen nor a resident of the United States and that its
address set forth in the Escrow Agreement, dated December 20, 1996, among the
Holder, the Company and the Escrow Agent named therein, is correct.
(e) No public offer or solicitation of this Warrant or
the shares of Common Stock issuable upon the exercise of this Warrant was made
to the Holder. No offer of this Warrant or the shares of Common Stock issuable
upon the exercise of this Warrant was made to the Holder while ▇▇▇▇▇▇ was
present in the United States. At the time Holder acquires this Warrant, the
Holder is located outside the United States.
(f) The Holder is aware that this Warrant and the Common
Stock issuable upon the exercise of this Warrant have not been and will not be
registered under the Act (except as may be required under Section 10 below) and
will only be offered or sold pursuant to registration under the Act or an
available exemption therefrom and the Holder has not, and will not, engage in
any public offering or distribution of the Warrant or the shares of Common Stock
issuable upon its exercise.
(g) The Holder (i) will not, during the period of time
commencing from the date of this Warrant and ending ninety (90) days from the
date of this Warrant (the "Restricted Period"), offer or sell or agree to sell
any of the shares of Common Stock issuable upon the exercise of this Warrant in
the United States, to a U.S. Person or for the benefit of a U.S. Person, and
(ii) will, after the expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the shares of Common Stock issuable upon the exercise of this
Warrant only pursuant to registration under the Act or an available exemption
therefrom and, in any case, in accordance with applicable federal and state
securities laws.
(h) The Holder has been advised of and is familiar with,
has complied, and will comply, with the offering restrictions, and all other
requirements, of Regulation S.
(i) The transactions contemplated by this Warrant (i)
have not been prearranged by the Holder with a purchaser located in the United
States or a U.S. Person and (ii) are not part of a plan or scheme by the Holder
to evade the registration provisions of the Act.
(j) The Holder is an "accredited investor" as defined in
the Act and will be acquiring this Warrant for its account for the purpose of
investment and not (i) with a view to, or for sale in connection with, any
distribution thereof or (ii) for the account or on behalf of any U.S. Person.
9
EXHIBIT 99.3 (CONTINUED)
(k) The Holder will acquire the shares of Common Stock
issued upon the exercise of this Warrant for the purpose of investment and not
(i) with a view to, or for sale in connection with, any distribution thereof or
(ii) for the account of or on behalf of any U.S. Person.
(l) Neither the Holder nor any of its affiliates has
entered, has any intention of entering, or will, while any portion of this
Warrant remains unexercised, enter into with any person, any put option, short
position or other similar instruments or position with respect to the shares of
Common Stock issuable upon the exercise of this Warrant or participate in any
other attempt designed to lower the trading prices of the Common Stock.
(m) The Holder shall indemnify the Company against any
loss, cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Warrant.
10. REGISTRATION RIGHTS.
10.1 "PIGGY BACK" REGISTRATION.
(a) Each time the Company shall determine to
file a registration statement under the Act (other than on Form S-4, S-8 or a
registration statement on Form S-1 covering an employee benefit plan) in
connection with the proposed offer and sale for money of any of its securities
either for its own account or on behalf of any other security holder, the
Company agrees to give prompt written notice of its determination to the Holder.
Upon the written request of the Holder given within thirty (30) days after the
receipt of such written notice from the Company, the Company agrees to cause all
Registrable Securities as to which the Holder has requested registration, to be
included in such registration statement and registered under the Act, all to the
extent requisite to permit the sale or other disposition by the Holder of the
Registrable Securities to be so registered. "Registrable Securities" shall mean
the shares of Common Stock issued to the Holder or its permitted transferee upon
exercise of the Warrant or upon any stock split, stock dividend,
recapitalization or similar event with respect to such shares; provided,
however, that Registrable Securities shall cease to be Registrable Securities
when they may be sold pursuant to Rule 144 under the Act or other exemption from
registration. Registrable Securities shall not include the Warrant.
(b) If the registration of which the Company
gives written notice pursuant to 10.1(a) is for a public offering involving an
underwriting, the Company agrees to so advise the Holder as a part of its
written notice. In such event the
10
EXHIBIT 99.3 (CONTINUED)
right of the Holder to registration pursuant to this Section 10 shall be
conditioned upon the Holder's participation in such underwriting and the
inclusion of the Holder's Registrable Securities in the underwriting to the
extent provided herein. The Holder agrees to enter into (together with the
Company and any other holders distributing their securities through such
underwriting) an underwriting agreement with the underwriter or underwriters
selected for such underwriting by the Company, provided that such underwriting
agreement is in customary form and is reasonably acceptable to the Holder.
(c) Notwithstanding any other provision of this Section
10, if the managing underwriter of an underwritten distribution advises the
Company and the Holder in writing that in its good faith judgment the number of
shares of Registrable Securities and the other securities requested to be
registered exceeds the number of shares of Registrable Securities and other
securities which can be sold in such offering, then (i) the number of shares of
Registrable Securities and other securities so requested to be included in the
offering shall be reduced to that number of shares which in the good faith
judgment of the managing underwriter can be sold in such offering (except for
shares to be included pursuant to registration rights granted by the Company,
(y) which are by their terms senior to the rights of the Holder, in an offering
initiated upon the exercise of such rights, and (z) except for shares to be
issued by the Company in an offering initiated by the Company, each of which
shall have priority over the Registrable Securities), and (ii) such reduced
number of shares shall be allocated among the Holder and the holders of other
securities in proportion, as nearly as practicable, to the respective number of
shares of Registrable Securities and other securities held by the Holder and
other holders at the time of filing the registration statement. All Registrable
Securities and other securities which are excluded from the underwriting by
reason of the underwriter's marketing limitation and all other Registrable
Securities not originally requested to be so included shall not be included in
such registration and shall be withheld from the market by the Holder for a
period, not to exceed one hundred eighty days (180), which the managing
underwriter reasonably determines is necessary to effect the underwritten public
offering.
10.2 EXPENSES OF REGISTRATION. All expenses incurred by the Company
in connection with the Holder's exercise of its registration rights under this
warrant, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company) shall be borne by
the Company. All registration and filing fees, and underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for the Holder shall be borne by the Holder.
11
EXHIBIT 99.3 (CONTINUED)
10.3 REGISTRATION ON FORM S-3. Although the Company shall
use its commercially reasonable efforts to qualify for registration on Form S-3
or any comparable or successor form or forms, or in the event that the Company
is ineligible to use such form, such form as the Company is eligible to use
under the Act, nothing in this Warrant is intended to require the Company to pay
dividends in order to use Form S-3.
Nothing in this Warrant shall be interpreted or otherwise construed to
require the Company to seek the opinion of its outside independent accountants
for the year ended December 31, 1993.
10.4 INDEMNIFICATION.
(a) Company Indemnity. The Company will
indemnify the Holder, each of its officers, directors and partners, and each
person controlling Holder, within the meaning of Section 15 of the Act and the
rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Warrant against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Act or any state securities law or in either case, any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse the Holder, each of its officers, directors and
partners, and each person controlling the Holder, for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by the Holder
or the underwriter and stated to be specifically for use therein. The indemnity
agreement contained in this Section 10.4(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. The Holder will, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, of the Company's securities
covered by such a registration
12
EXHIBIT 99.3 (CONTINUED)
statement, each person who controls the Company within the meaning of Section 15
of the Act and the rules and regulations thereunder, each other Holder (if any),
and each of their officers, directors and partners, and each person controlling
such other Holder against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, and will reimburse
the Company and such other Holders and their directors, officers and partners,
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by the Holder and stated to be specifically for use
therein, and provided that the maximum amount for which the Holder shall be
liable under this indemnity shall not exceed the net proceeds received by the
Holder from the sale of the Registrable Securities. The indemnity agreement
contained in this Section 10.4(b) shall not apply to amounts paid in settlement
of any such claims, losses, damages or liabilities if such settlement is
effected without the consent of Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to
indemnification under this Section 10.4 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim in any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 10.4 except to the extent that the Indemnifying Party is
materially and adversely affected by such failure to provide notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
13
EXHIBIT 99.3 (CONTINUED)
10.5 CONTRIBUTION. If the indemnification provided for in
Section 10.4 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than by reason
of the exceptions provided therein), then each such Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company and the Holder in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Holder as the case may be, on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Holder as the case
may be, on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and the Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Holder in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Holder, as the case may be, on the other shall be deemed to be in the same
proportion as the proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company from the
initial sale of the Registrable Securities by the Company to the Holder pursuant
to this Warrant bear to the gain realized by the Holder. The relative fault of
the Company on the one hand and of the Holder, as the case may be, on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 10.5 exceed the amount that such Indemnifying
Party would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 10.4(a) or 10.4(b) hereof had been
available under the circumstances.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 10.5 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
14
EXHIBIT 99.3 (CONTINUED)
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this section, no Holder shall be
required to contribute any amount in excess of the amount by which in the case
of the Holder, the net proceeds received by the Holder from the sale of
Registrable Securities exceeds, in any such case, the amount of any damages that
the Holder or underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
10.6 SURVIVAL. The indemnity and contribution agreements
contained in Sections 10.4 and 10.5 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Indemnified
Party or by or on behalf of the Company and the consummation of the sale or
successive resales of the Registrable Securities.
10.7 INFORMATION BY ▇▇▇▇▇▇. The Holder shall furnish to
the Company such information regarding the Holder and the distribution proposed
by the Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Warrant.
11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall be
delivered or shall be sent by certified mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefor in the first paragraph of this Warrant or such
other address as either may from time to time provide to the other and shall be
sent to each such holder located outside of the United States by facsimile
confirmed in writing by first class air mail.
13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets. All of the
obligations of the Company relating to the Common Stock issuable upon the
exercise of this Warrant shall survive the exercise and termination of this
Warrant. All of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of the Holder hereof.
15
EXHIBIT 99.3 (CONTINUED)
14. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California.
15. LOST WARRANTS. The Company represents and warrants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
16. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.
16
EXHIBIT 99.3 (CONTINUED)
IN WITNESS WHEREOF, the undersigned have caused this Warrant to be duly
executed by their respective officers, thereunto duly authorized as of the 20th
day of December, 1996.
PINNACLE MICRO, INC.,
a Delaware corporation
By:____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
or
Name: ▇▇▇▇▇ ▇▇▇
Title: Chief Financial Officer and
Executive Vice President
"Holder"
((1))
By:____________________________
Title:_________________________
17
EXHIBIT 99.3 (CONTINUED)
EXHIBIT A
SUBSCRIPTION FORM
Date:__________
______________________________
______________________________
______________________________
Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by
Pinnacle Micro, Inc. (the "Company") and dated December _____, 1996, Warrant No.
W-_____ (the "Warrant") and to purchase thereunder ____________________ shares
of the Common Stock of the Company (the "Shares") at a purchase price of
____________________ Dollars ($__________) per Share or an aggregate purchase
price of ____________________ Dollars ($________) (the "Purchase Price").
The undersigned represents and warrants that (i) all the requirements
of Regulation S promulgated under the Securities Act of 1933, as amended (the
"Act") applicable to the undersigned have been complied with by the undersigned,
(ii) the undersigned is not a "U.S. Person" as defined in Regulation S and this
Warrant is not being exercised on behalf of any "U.S. Person," (iii) the
undersigned has not engaged in any transaction or series of transactions that is
a part of or a plan or scheme to evade the registration requirements of the Act,
(iv) on the date of exercise the undersigned was located outside of the United
States, (iv) the undersigned has complied with the terms and conditions of the
Warrant and (v) the representations and warranties of the Holder set forth in
Section 9 of the Warrant are true and correct in all aspects as of the date set
forth above. Further, the undersigned represents and warrants that after giving
effect to the exercise hereby requested, the undersigned will not beneficially
own, together with its affiliates, more than 4.9% of the Company's issued and
outstanding common stock.
The undersigned represents that the Shares to be issued to the
undersigned are not being issued in a transaction involving a public offering
and are being issued pursuant to an exemption from registration under the Act.
The undersigned is acquiring the Shares for its own account, to hold
for an investment, and the undersigned will not make any sale, transfer or
disposition of the Shares in violation of the Act or the rules and regulations
promulgated by the Securities and Exchange Commission. The undersigned has been
advised that Shares have not been registered for initial issuance under the Act
or state securities laws.
18
EXHIBIT 99.3 (CONTINUED)
The undersigned has been informed that under the Act, the Shares must
be held indefinitely unless it is subsequently registered under the Act or
unless an exemption from registration is available for Shares or any proposed
transfer or disposition by the undersigned of the Shares. The undersigned
further agrees that the Company may refuse to permit the undersigned to sell,
transfer or dispose of the Shares unless there is in effect of registration
statement under the Act or unless the undersigned furnishes an opinion of
counsel satisfactory to counsel for the Company, to the effect that such
registration is not required.
The undersigned understands that the Shares may not be delivered within
the United States upon the exercise of the Warrant.
The undersigned also understands and agrees there will be placed on the
certificates for the Shares a legend stating in substance:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a Registration Statement in effect with respect
to securities under the Securities Act of 1933, as amended, or an opinion of
counsel satisfactory to the Company that such registration is not required, or
unless sold pursuant to Rule 144 of such Act."
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
______________________________
By:___________________________
Title:________________________
