XXXXXX, INC.
Common Stock Purchase Warrant
Dated as of April 28, 1998
This Warrant and any shares acquired upon the exercise of this Warrant have not
been registered under the Securities Act of 1933, as amended, and may not be
transferred, sold or otherwise disposed of except while a registration under
such Act is in effect or pursuant to an exemption therefrom under such Act. This
Warrant and such shares may be transferred only in compliance with the
conditions specified in this Warrant.
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TABLE OF CONTENTS
1. Exercise of Warrant................................................. 1
1.1 Manner of Exercise......................................... 1
1.2 When Exercise Effective.................................... 1
1.3 Delivery of Stock Certificates, etc........................ 2
1.4 Company to Reaffirm Obligations............................ 2
1.5 Payment by Application of Shares Otherwise Issuable........ 2
2. Adjustment of Common Stock Issuable Upon Exercise................... 3
2.1 General; Warrant Price.................................... 3
2.2 Adjustment of Warrant Price................................ 3
2.2.1 Issuance of Additional Shares of Common
Stock............................................. 3
2.2.2 Extraordinary Dividends and
Distributions..................................... 3
2.3 Treatment of Options and Convertible Securities............ 4
2.4 Treatment of Stock Dividends, Stock Splits, etc............ 6
2.5 Computation of Consideration............................... 6
2.6 Adjustments for Combinations, etc.......................... 8
2.7 Dilution in Case of Other Securities....................... 8
2.8 Minimum Adjustment of Warrant Price........................ 8
3. Consolidation, Merger, etc.......................................... 8
3.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc........................................ 8
3.2 Assumption of Obligations.................................. 9
4. Other Dilutive Events.............................................. 10
5. No Dilution or Impairment.......................................... 10
6. Accountants' Report as to Adjustments.............................. 10
7. Notices of Corporate Action........................................ 11
8. Registration of Common Stock....................................... 12
9. Restrictions on Transfer........................................... 12
9.1 Restrictive Legends....................................... 12
10. Availability of Information........................................ 13
11. Reservation of Stock, etc.......................................... 13
12. Registration and Transfer of Warrants, etc......................... 13
12.1 Warrant Register; Ownership of Warrants................... 13
12.2 Transfer and Exchange of Warrants......................... 14
12.3 Replacement of Warrants................................... 14
13. Registration Rights................................................ 14
14. Definitions........................................................ 14
15. Remedies........................................................... 17
16. No Rights or Liabilities as Stockholder............................ 17
17. Notices............................................................ 18
18. Amendments......................................................... 18
19. Expiration......................................................... 18
20. Descriptive Headings............................................... 18
21. GOVERNING LAW...................................................... 18
22. Judicial Proceedings; Waiver of Jury............................... 18
EXHIBIT A................................................................... 20
FORM OF SUBSCRIPTION........................................................ 21
FORM OF ASSIGNMENT.......................................................... 22
_______________________________
XXXXXX, INC.
Common Stock Purchase Warrant
No. April 28, 1998
Xxxxxx, Inc. (the "Company"), a Delaware corporation, for value received,
hereby certifies that Transactions Systems Architects, Inc. ("TSA"), or
registered assigns, is entitled to purchase from the Company [2,500,000] duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $.01 per share (the "Common Stock"), of the Company at the purchase
price per share of $3.00, at any time or from time to time prior to 5:00 P.M.,
New York City time, on March 1, 2002 (or such later date as may be determined
pursuant to section 19), all subject to the terms, conditions and adjustments
set forth below in this Warrant.
This Warrant is being issued by the Company in consideration of TSA's
performance of its obligations pursuant to the Securities Purchase Agreement
dated as of , 1998 by and between the Company and TSA (the "Securities Purchase
Agreement"). Certain capitalized terms used in this Warrant are defined in
section 14; references to an "Exhibit" are, unless otherwise specified, to one
of the Exhibits attached to this Warrant and references to a "section" are,
unless otherwise specified, to one of the sections of this Warrant.
1. Exercise of Warrant. Warrant.
1.1 Manner of Exercise. This Warrant may be exercised at any time by the holder
hereof, in whole or in part, during normal business hours on any Business Day,
by surrender of this Warrant to the Company at its principal office, accompanied
by a subscription substantially in the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such holder and accompanied by
payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in Section 1.5, in the amount obtained by
multiplying (a) the number of shares of Common Stock (without giving effect to
any adjustment thereof) designated in such subscription by (b) $3.00 and such
holder shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) determined as provided in sections 2 through 4.
1.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been surrendered to the Company as provided
in section 1.1, and at such time the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in section 1.3 shall be deemed
to have become the holder or holders of record thereof.
1.3 Delivery of Stock Certificates, etc. As soon as practicable after each
exercise of this Warrant, in whole or in part, and in any event within five
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to section 9, as such holder (upon
payment by such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such holder would otherwise
be entitled, cash in an amount equal to the same fraction of the Market
Price per share on the Business Day next preceding the date of such
exercise, and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in section 1.1.
1.4 Company to Reaffirm Obligations. The Company will, at the time of each
exercise of this Warrant, upon the request of the holder hereof, acknowledge in
writing its continuing obligation to afford to such holder all rights
(including, without limitation, any rights to registration, pursuant to the
Registration Rights Agreement referred to in section 8, of the shares of Common
Stock or Other Securities issued upon such exercise) to which such holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if the holder of this Warrant shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford such rights to such holder.
1.5 Payment by Application of Shares Otherwise Issuable. Upon any exercise of
this Warrant, the holder hereof may, at its option, instruct the Company, by
written notice accompanying the surrender of this Warrant at the time of such
exercise, to apply to the payment required by section 1.1 such number of the
shares of Common Stock otherwise issuable to such holder upon such exercise as
shall be specified in such notice, in which case an amount equal to the excess
of the aggregate Current Market Price of such specified number of shares on the
date of exercise over the portion of the payment required by section 1.1
attributable to such shares shall be deemed to have been paid to the Company and
the number of shares issuable upon such exercise shall be reduced by such
specified number.
2. Adjustment of Common Stock Issuable Upon Exercise.Exercise.
2.1 General; Warrant Price. The number of shares of Common Stock which the
holder of this Warrant shall be entitled to receive upon each exercise hereof
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this section 2) be issuable upon such
exercise, as designated by the holder hereof pursuant to section 1.1, by the
fraction of which (a) the numerator is the price then applicable pursuant to
section 1.1(b) of this Warrant and (b) the denominator is the Warrant Price in
effect on the date of such exercise. The "Warrant Price" shall initially be
$3.00 per share. The Warrant Price shall be adjusted and readjusted from time to
time as further provided in this section 2 and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by this section 2.
2.2 Adjustment of Warrant Price. of Warrant Price.
2.2.1 Issuance of Additional Shares of Common Stock. In case the Company at any
time or from time to time after the date hereof shall issue or sell Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to section 2.3 or 2.4) without consideration or for a
consideration per share less than $2.00 (subject to adjustment for stock
dividends, stock splits, or subdivisions or combinations by reclassifications or
otherwise) per share, then, and in each such case, subject to section 2.8, the
Warrant Price in effect immediately prior to such issue or sale, shall be
reduced, concurrently with such issue or sale, to a price (calculated to the
nearest .001 of a cent) equal to the consideration per share paid for such
Additional Shares of Common Stock. The Warrant Price shall not be increased as a
result of any such issue or sale.
2.2.2 Extraordinary Dividends and Distributions. In case the Company at any time
or from time to time after the date hereof shall declare, order, pay or make a
dividend or other distribution (including, without limitation, any distribution
of other or additional stock or other securities or property or Options by way
of dividend or spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than a dividend payable in (a)
Additional Shares of Common Stock or (b) cash dividends during any fiscal year
of the Company that do not exceed twenty percent (20%) of the after tax earnings
per share of the Common Stock for the immediately preceding fiscal year of the
Company, then, and in each such case, subject to section 2.8, the Warrant Price
in effect immediately prior to the close of business on the record date fixed
for the determination of holders of any class of securities entitled to receive
such dividend or distribution shall be reduced, effective as of the close of
business on such record date, to a price (calculated to the nearest .001 of a
cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price in effect
on such record date or, if the Common Stock trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, less the
amount of such dividend or distribution (as determined in good faith by the
Board of Directors of the Company, subject to confirmation by a firm of
independent certified public accountants of recognized national standing
approved by TSA applicable to one share of Common Stock, and
(y) the denominator of which shall be such Current Market Price.
2.3 Treatment of Options and Convertible Securities. In case the Company at any
time or from time to time after the date hereof shall issue, sell, grant or
assume, or shall fix a record date for the determination of holders of any class
of securities entitled to receive, any Options or Convertible Securities, then,
and in each such case, the maximum number of Additional Shares of Common Stock
(as set forth in the instrument relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), provided that such Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to section 2.5) of such shares would be less than
$2.00 (subject to adjustment for stock dividends, stock splits, or subdivisions
or combinations by reclassifications or otherwise) per share, and provided,
further, that in any such case in which Additional Shares of Common Stock are
deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon the
subsequent issue or sale of Convertible Securities or shares of Common
Stock upon the exercise of such Options or the conversion or exchange of
such Convertible Securities;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or otherwise), the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding at such
time;
(c) upon the expiration (or purchase by the Company and cancellation
or retirement) of any such Options which shall not have been exercised or
the expiration of any rights of conversion or exchange under any such
Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion
or exchange under which) shall not have been exercised, the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or sold
were the Additional Shares of Common Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or exchange
of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the consideration received by
the Company for the Additional Shares of Common Stock deemed to have
then been issued was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the Company (pursuant to section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such Options
were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subdivision (c) above.
2.4 Treatment of Stock Dividends, Stock Splits, etc. In case the Company at any
time or from time to time after the date hereof shall declare or pay any
dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
2.5 Computation of Consideration. For the purposes of this section 2,
(a) the consideration for the issue or sale of any Additional Shares
of Common Stock shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at the net amount
of cash received by the Company, without deducting any expenses paid
or incurred by the Company or any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services in connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time of
such issue or sale, as determined in good faith by the Board of
Directors of the Company (subject to confirmation by a firm of
independent certified public accountants of recognized standing
approved by TSA), and
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and
(ii) above, allocable to such Additional Shares of Common Stock, all
as determined in good faith by the Board of Directors of the Company
(subject to confirmation by a firm of independent certified public
accountants of recognized standing approved by TSA);
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration to
protect against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case computing
such consideration as provided in the foregoing subdivision (a), by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number to
protect against dilution) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to section 2.4, relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration.
2.6 Adjustments for Combinations, etc. In case the out-standing shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, the Warrant Price in effect
immediately prior to such combination or consolidation shall, concurrently with
the effectiveness of such combination or consolidation, be proportionately
increased.
2.7 Dilution in Case of Other Securities. In case any Other Securities shall be
issued or sold or shall become subject to issue or sale upon the conversion or
exchange of any stock (or Other Securities) of the Company (or any issuer of
Other Securities or any other Person referred to in section 3) or to
subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this section 2, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the Warrant Price shall be made
as nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the effect of
such dilution.
2.8 Minimum Adjustment of Warrant Price. If the amount of any adjustment of the
Warrant Price required pursuant to this section 2 would be less than one percent
(1%) of the Warrant Price in effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward and adjustment with
respect thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one percent (1%) of such Warrant Price.
3. Consolidation, Merger, etc.ger, etc.
3.1 Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc.
In case the Company after the date hereof (a) shall consolidate with or merge
into any other Person and shall not be the continuing or surviving corporation
of such consolidation or merger, or (b) shall 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, the Common Stock or Other Securities shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other property,
or (c) shall transfer all or substantially all of its properties or assets to
any other Person, (d) shall effect a capital reorganization or reclassification
of the Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock for
which adjustment in the Warrant Price is provided in section 2.2.1 or 2.2.2), or
(e) shall engage in a statutory plan of exchange in which the Common Stock or
Other Securities shall be exchanged for stock or other securities of any other
Person then, and in the case of each such transaction, 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, upon the exercise hereof at any time after
the consummation of such transaction, shall be entitled to receive (at the
aggregate Warrant Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock or Other Securities issuable
upon such exercise prior to such consummation, the highest amount of securities,
cash or other property to which such holder would actually have been entitled as
a shareholder upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in sections 2 through 4.
3.2 Assumption of Obligations. Notwithstanding anything contained in the
Warrants or in the Purchase Agreement to the contrary, the Company will not
effect any of the transactions described in clauses (a) through (e) of section
3.1 unless, prior to the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock, 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 transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant), (b) the obligations of the
Company under the Registration Rights Agreement and (c) the obligation to
deliver to such holder such shares of stock, securities, cash or property as, in
accordance with the foregoing provisions of this section 3, such holder may 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, 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 section 3) shall be applicable to the stock,
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.
4. Other Dilutive Events. In case any event shall occur as to which the
provisions of section 2 or section 3 are not strictly applicable but the failure
to make any adjustment would not fairly protect the purchase rights represented
by this Warrant in accordance with the essential intent and principles of such
sections, then, in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized national standing (such
firm to be subject to the approval of TSA), which shall give their opinion
regarding the adjustment, if any, on a basis consistent with the essential
intent and principles established in sections 2 and 3, necessary to preserve,
without dilution, the purchase rights represented by this Warrant. Upon receipt
of such opinion, the Company will promptly mail a copy thereof to the holder of
this Warrant and shall make the adjustments described therein.
5. No Dilution or Impairment. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of the
Warrants from time to time outstanding, and (c) will not take any action which
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of shares of Common Stock
(or Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such exercise.
6. Accountants' Report as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
cause independent certified public accountants of recognized standing (such firm
to be subject to the approval of TSA) selected by the Company to verify such
computation and prepare a report setting forth such adjustment or readjustment
and showing in reasonable detail the method of calculation thereof and the facts
upon which such adjustment or readjustment is based, including a statement of
(a) the consideration received or to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued,
(b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
or sale and as adjusted and readjusted (if required by section 2) on account
thereof. The Company will forthwith mail a copy of each such report to each
holder of a Warrant and will, upon the written request at any time of any holder
of a Warrant, furnish to such holder a like report setting forth the Warrant
Price at the time in effect and showing in reasonable detail how it was
calculated. The Company will also keep copies of all such reports at its
principal office and will cause the same to be available for inspection at such
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the holder thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a regular
periodic dividend payable in cash out of earned surplus in an amount
not exceeding the amount of the immediately preceding cash dividend
for such period) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any
other Person or any transfer of all or substantially all the assets of
the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 45 days prior to the date therein specified.
8. Registration of Common Stock. If any shares of Common Stock required to be
reserved for purposes of exercise of this Warrant require registration with or
approval of any governmental authority under any federal or state law (other
than the Securities Act) before such shares may be issued upon exercise, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. The shares of Common Stock (and Other Securities) issuable upon exercise of
this Warrant (or upon conversion of any shares of Common Stock issued upon such
exercise) shall constitute Registrable Securities (as such term is defined in
the Registration Rights Agreement). Each holder of this Warrant shall be
entitled to all of the benefits afforded to a holder of any such Registrable
Securities under the Registration Rights Agreement and such holder, by its
acceptance of this Warrant, agrees to be bound by and to comply with the terms
and conditions of the Registration Rights Agreement applicable to such holder as
a holder of such Registrable Securities. At any such time as Common Stock is
listed on any national securities exchange or automated quotation system, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange or quotation system, upon official notice of
issuance, the shares of Common Stock issuable upon exercise of the then
outstanding Warrants and maintain the listing of such shares after their
issuance; and the Company will also list on such national securities exchange or
quotation system, will register under the Exchange Act and will maintain such
listing of, any Other Securities that at any time are issuable upon exercise of
the Warrants, if and at the time that any securities of the same class shall be
listed on such national securities exchange or quotation system by the Company.
9. Restrictions on Transfer.Transfer.
9.1 Restrictive Legends. Except as otherwise permitted by this section 9, each
Warrant (including each Warrant issued upon the transfer of any Warrant) shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE (AND THE SHARES OF COMMON STOCK OR
OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANT) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE IN RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION THEREUNDER. THE
SALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF SUCH WARRANT (AND OF SUCH
SHARES OF COMMON STOCK OR OTHER SECURITIES) IS SUBJECT TO COMPLIANCE WITH
APPLICABLE SECURITIES LAWS AND REGULATIONS."
Except as otherwise permitted by this section 9, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE IN RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION THEREUNDER. THE SALE,
PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF SUCH SHARES IS SUBJECT TO COMPLIANCE
WITH APPLICABLE SECURITIES LAWS AND REGULATIONS."
10. Availability of Information. The Company shall timely file the reports
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information) and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with the requirements of this section 10.
11. Reservation of Stock, etc. The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock (or Other Securities) from time to time
issuable upon exercise of all Warrants at the time outstanding. All shares of
Common Stock (or Other Securities) issuable upon exercise of any Warrants shall
be duly authorized and, when issued upon such exercise, shall be validly issued
and, in the case of shares, fully paid and nonassessable with no liability on
the part of the holders thereof.
12. Registration and Transfer of Warrants, etc.nts, etc.
12.1 Warrant Register; Ownership of Warrants. The Company will keep at its
principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that, if and when any Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer thereof as the owner of such Warrant for all purposes. Subject
to section 9, a Warrant, if properly assigned, may be exercised by a new holder
without a new Warrant first having been issued.
12.2 Transfer and Exchange of Warrants. Upon surrender of any Warrant for
registration of transfer or for exchange to the Company at its principal office,
the Company at its expense will (subject to compliance with section 9, if
applicable) execute and deliver in exchange therefor a new Warrant or Warrants
of like tenor, in the name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
12.3 Replacement of Warrants. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction of any Warrant, upon delivery
of an indemnity bond in such reasonable amount as the Company may determine or,
in the case of any such mutilation, upon the surrender of such Warrant for
cancellation to the Company at its principal office, the Company at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Registration Rights. The Purchaser or any assignee of this Warrant shall be
entitled to all rights and benefits regarding the registration of Common Stock
and Registrable Securities set forth in the Registration Rights Agreement.
14. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Additional Shares of Common Stock: All shares (including treasury shares)
of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4, deemed to be
issued) by the Company after the date hereof, whether or not subsequently
reacquired or retired by the Company, other than
(a) Series B and Series D Preferred Stock;
(b) shares issued upon the exercise of the common stock purchase warrants
and non-qualified options listed in Exhibit 14(b) hereto, providing for the
purchase of an aggregate of 2,604,114 shares of Common Stock (based on the
current capitalization of the Company);
(c) shares issued upon the exercise of this Warrant,
(d) not to exceed 2,750,000 shares (subject to equitable adjustment in the
event of any combination, reclassification, stock split, dividend or
recapitalization of the Company) issued upon the exercise of options granted or
to be granted under the Company's stock option plans as in effect on the date
hereof or under any other employee stock option, compensation or purchase plan
or plans adopted or assumed after such date,
(e) such additional number of shares as may become issuable upon the
exercise of any of the securities referred to in the foregoing clauses (a)
through (d) by reason of adjustments required pursuant to anti-dilution
provisions applicable to such securities as in effect on the date hereof, but
only if and to the extent that such adjustments are required as the result of
the original issuance of the Warrants, and
(f) such additional number of shares as may become issuable upon the
exercise or conversion of any of the securities referred to in the foregoing
clauses (a) through (e) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on the date
hereof, in order to reflect any subdivision or combination of Common Stock, by
reclassification or otherwise, or any dividend on Common Stock payable in Common
Stock.
Business Day: Any day other than a Saturday or a Sunday or a day on which
commercial banking institutions in the City of New York are authorized by law to
be closed. Any reference to "days" (unless Business Days are specified) shall
mean calendar days.
Commission: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such term to
include any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
Company: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with section 3.
Convertible Securities: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock.
Current Market Price: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such date,
on which the national securities exchanges were open for trading, except that if
no Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, the Current Market Price
shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of 1934, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Market Price: On any date specified herein, the amount per share of the
Common Stock, equal to (a) the last sale price of such Common Stock, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which such
Common Stock is then listed or admitted to trading, or (b) if such Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD, the last
trading price of the Common Stock on such date, or (c) if there shall have been
no trading on such date or if the Common Stock is not so designated, the average
of the closing bid and asked prices of the Common Stock on such date as shown by
the NASD automated quotation system, or (d) if such Common Stock is not then
listed or admitted to trading on any national exchange or quoted in the
over-the-counter market, the value as determined by a firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company, and approved by TSA, as of the last day of any month ending within 30
days preceding the date as of which the determination is to be made.
NASD: The National Association of Securities Dealers, Inc.
Options: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common Stock) and other securities
of the Company or any other Person (corporate or otherwise) which the holders of
the Warrants at any time shall be entitled to receive, or shall have received,
upon the exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to section 3 or
otherwise.
Person: A corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.
Registrable Securities: As defined in Section 3 of the Registration Rights
Agreement.
Registration Rights Agreement: The Registration Rights Agreement dated as
of the date hereof, substantially in the form of Exhibit IV to the Securities
Purchase Agreement.
Securities Act: The Securities Act of 1933, or any similar federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Securities Purchase Agreement: The Securities Purchase Agreement, dated as
of the date hereof, by and between TSA and the Company.
Transfer: Any sale, assignment, pledge or other disposition of any
security, or of any interest therein, which could constitute a "sale" as that
term is defined in section 2(3) of the Securities Act.
TSA: As defined in section 1, and its successors and assigns.
Warrant Price: As defined in section 2.1.
15. Remedies. 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.
16. No Rights or Liabilities as Stockholder. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
17. Notices. All notices and other communications under this Warrant shall be in
writing and shall be delivered, or mailed by registered or certified mail,
return receipt requested, by a nationally recognized overnight courier, postage
prepaid,addressed (a) if to any holder of any Warrant, at the registered address
of such holder as set forth in the register kept at the principal office of the
Company, or (b) if to the Company, to the attention of its President at its
principal office, provided that the exercise of any Warrant shall be effective
in the manner provided in section 1.
18. Amendments. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
19. Expiration. The Company will give the holder of this Warrant not less than
six weeks nor more than twelve weeks notice of the expiration of the right to
exercise this Warrant. The right to exercise this Warrant shall expire at 5:00
p.m., New York City time, on March 1, 2002, unless the Company shall fail to
give such notice as aforesaid, in which event the right to exercise this Warrant
shall not expire until a date six weeks after the date on which the Company
shall give the holder hereof notice of the expiration of the right to exercise
this Warrant.
20. Descriptive Headings. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
21. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Judicial Proceedings; Waiver of Jury. Any judicial proceeding brought
against the Company with respect to this Warrant may be brought in any court of
competent jurisdiction in the State of New York or of the United States of
America for the Southern District of New York and, by execution and delivery of
this Agreement, the Company (a) accepts, generally and unconditionally, the
nonexclusive jurisdiction of such courts and any related appellate court, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Warrant,subject to any rights of appeal, and (b) irrevocably waives
any objection the Company may now or hereafter have as to the venue of any such
suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. The Company hereby waives personal service of process and
consents, that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address specified or determined in
accordance with the provisions of section 17, and service so made shall be
deemed completed on the third Business Day after such service is deposited in
the mail or, if earlier, when delivered. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any holder of any Warrant to bring proceedings against the Company in the
courts of any other jurisdiction. THE COMPANY HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS WARRANT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
XXXXXX, INC.
By: Xxxxx Xxxxxxx
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Title: Chief Financial Officer
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