Exhibit 10.6
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is entered into as of January 8,
2003 (the "Agreement"), by and between SEEC, Inc., a Delaware corporation (the
"Company"), and KPCB Holdings, Inc., a Delaware corporation (the "Consultant").
THE PARTIES HEREBY AGREE AS FOLLOWS:
Section 1. Services.
(a) Description of Services. During the Term (as defined
herein), the Consultant agrees to perform for the Company the consulting
services specified in Exhibit A hereto (the "Services").
(b) Compensation. As consideration for the agreement of the
Consultant to perform such Services and the provision of such Services
hereunder, the Company shall issue and deliver to the Consultant, on the
Effective Date, warrants to purchase shares of the Company's capital stock as
attached hereto as Exhibit B-1, Exhibit B-2 and Exhibit B-3 (the "Warrants").
The Consultant shall not be entitled to any other compensation for rendering the
Services to the Company. The Consultant shall be entitled to certain
registration rights with respect to the Warrants and the shares of capital stock
issuable upon exercise thereof, each as set forth therein.
Section 2. Term of Agreement.
(a) Term. The term of this Agreement (the "Term") shall begin
on the Effective Date and shall run until the second anniversary of the
Effective Date, unless terminated upon an earlier date in accordance with
Section 5 hereof.
(b) Effective Date. This Agreement shall be effective upon the
satisfaction or waiver of the following conditions (the date following the
satisfaction or waiver of all such conditions, the "Effective Date"):
(i) all necessary corporate approvals of the Company
required to effect the transactions contemplated hereby shall have been obtained
including, without limitation, the approval of the Company's shareholders of (A)
the issuance of the Warrants hereunder, and (B) the amendment of the Company's
articles of incorporation to provide that the Buyer shall not be subject to
Subchapters (E) and (F) of the Pennsylvania Business Corporation Law (the
"PBCL");
(ii) all necessary permits, authorizations, consents,
notices, and approvals as may be required for the transactions contemplated
hereby under all applicable law shall have been obtained including, without
limitation, any so required under (I) the Securities Act of 1933, as amended,
(II) the Securities Exchange Act of 1934, as amended, (III) applicable state
securities or blue sky laws, (IV) the PBCL and (V) the rules, regulations
policies adopted by the National Association of Securities Dealers, Inc.
concerning companies listed on the Nasdaq Stock Market; and
(iii) the Consultant shall have received from Xxxxx &
Xxxxxxx, P.C., counsel to the Company, an opinion letter addressed to the
Consultant in the form attached hereto as Exhibit C.
Section 3. Confidential Information.
(a) Each party (the "Receiving Party") expressly acknowledges
that performing under this Agreement the other party (the "Disclosing Party")
may disclose information relating to the Disclosing Party's business or
technology which is confidential or proprietary in nature (including, without
limitation, trade secrets, patents, patent applications, copyrights, know-how,
processes, ideas, inventions (whether patentable or not), formulas, other
computer programs, databases, technical drawings, designs, algorithms,
technology, circuits, layouts, designs, interfaces, materials, schematics, names
and expertise of employees and consultants, any other technical, business,
financial, customer information, product development plans, supplier
information, forecasts, strategies and other confidential information), which to
the extent previously, presently or subsequently disclosed to the Receiving
Party is hereinafter referred to as the "Confidential Information" of the
Disclosing Party.
(b) The Receiving Party shall (i) hold the Disclosing Party's
Confidential Information in confidence and take all commercially reasonable
precautions to protect such Confidential Information (including, without
limitation, all precautions the Receiving Party usually employs with respect to
its own comparable confidential materials), (ii) except as expressly provided
herein, not disclose any such Confidential Information or any information
derived therefrom to any third person, (iii) not make any use whatsoever at any
time of such Confidential Information except as necessary to exercise its rights
and perform its obligations hereunder, and (iv) except as expressly set forth
herein, not copy or reverse engineer, or attempt to derive the composition or
underlying information, structure or ideas of any such Confidential Information.
(c) Without granting any right or license, the Disclosing
Party agrees that this Section 3 shall not apply with respect to any information
that the Receiving Party can document (i) is or becomes generally available to
the public through no improper action or inaction by the Receiving Party or any
of its affiliates, agents, consultants or employees, (ii) was properly in the
Receiving Party's possession or known by it prior to receipt from the Disclosing
Party, or (iii) was rightfully disclosed to the Receiving Party by a third party
provided the Receiving Party complies with restrictions imposed by the third
party. The Receiving Party, with prior written notice to the Disclosing Party,
may disclose such Confidential Information to the minimum extent possible that
is required to be disclosed to a governmental entity or agency, or pursuant to
the lawful requirement or request of a governmental entity or agency, provided
that reasonable measures are taken to guard against further disclosure
(including without limitation, seeking appropriate confidential treatment or a
protective order, or assisting the other party to do so), and has allowed the
Disclosing Party to participate in any proceeding that requires the disclosure.
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(d) The Receiving Party acknowledges and agrees that due to
the unique nature of the Disclosing Party's Confidential Information, there can
be no adequate remedy at law for any breach of the Receiving Party's obligations
hereunder, that any such breach or any unauthorized use or release of any
Confidential Information shall allow Receiving Party or third parties to
unfairly compete with the Disclosing Party resulting in irreparable harm to the
Disclosing Party and therefore, that upon any such breach or any threat thereof,
the Disclosing Party shall be entitled to appropriate equitable relief in
addition to whatever remedies it might have at law and to be indemnified by the
Receiving Party from any loss or harm, including, without limitation, attorney's
fees, in connection with any breach or enforcement of the Receiving Party's
obligations hereunder or the unauthorized use or release of any such
Confidential Information. The Receiving Party shall notify the Disclosing Party
in writing immediately upon the occurrence of any such unauthorized release or
other breach of which it is aware.
Section 4. Sole Remedy; Limited Liability.
(a) EXCEPT AS PROVIDED IN SECTION 3(d) HEREOF, THE COMPANY'S
SOLE REMEDY FOR ANY BREACH BY THE CONSULTANT OF ANY PROVISION OF THIS AGREEMENT
SHALL BE LIMITED TO THE COMPANY'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO
SECTION 5 HEREOF. SOLEY FOR THE AVOIDANCE OF DOUBT, THE CONSULTANT SHALL NOT BE
LIABLE IN ANY EVENT FOR LOSS OF REVENUE OR INACCURACY OF DATA OR COST OF
PROCUREMENT OF SUBSTITUTE GOODS, SERVICES OR TECHNOLOGY OR ANY CLAIM ARISING OUT
OF CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE. IN ADDITION, NEITHER PARTY
HERETO SHALL BE LIABLE TO THE OTHER FOR INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY
OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION LOSS OF PROFITS WHETHER
OR NOT FORESEEABLE AND EVEN IF THE COMPANY OR THE CONSULTANT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
(b) EXCEPT AS EXPRESSLY SET FORTH HEREIN THE SERVICES ARE
PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND (EXPRESS OR IMPLIED) INCLUDING
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT, WHICH WARRANTIES ARE EXPRESSLY DISCLAIMED.
Section 5. Termination of Agreement. This Agreement shall terminate
upon the occurrence of any of the following events: (a) bankruptcy or insolvency
of either party; (b) sale of the business of either party; (c) the mutual
agreement of the parties; or (d) the expiration of the Term. Notwithstanding any
other provision of this Agreement, either party may terminate the Term and this
Agreement by notice to the other party upon the occurrence of a material breach
of any provision hereof by the other party that remains uncured for a period of
thirty (30) days thereafter. Termination of this Agreement shall not affect the
obligations of either party arising out of events or circumstances occurring
prior to such termination.
Section 6. Miscellaneous Provisions.
(a) Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
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(b) Entire Agreement; Enforcement of Rights. This Agreement
(with all of the exhibits, attachments and appendices attached hereto) sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.
(c) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid, legal, and
enforceable under all applicable laws and regulations. If, however, any
provision of this Agreement shall be invalid, illegal, or unenforceable under
any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so modified, it shall
be invalid, illegal, or unenforceable only to the extent of such invalidity,
illegality, or limitation on enforceability without affecting the remaining
provisions of this Agreement, or the validity, legality, or enforceability of
such provision in any other jurisdiction.
(d) Notices. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the address set
forth on the signature page hereto, or such other address as a party may provide
to the other no later than ten (10) days prior to any such notice or
communication. All notices and other communications shall be effective upon the
earlier of actual receipt thereof by the person to whom notice is directed or
(i) in the case of notices and communications sent by personal delivery or
telecopy, one business day after such notice or communication arrives at the
applicable address or was successfully sent to the applicable telecopy number,
(ii) in the case of notices and communications sent by overnight delivery
service, at noon (local time) on the second business day following the day such
notice or communication was sent, and (iii) in the case of notices and
communications sent by United States mail, seven days after such notice or
communication shall have been deposited in the United States mail.
(e) Counterparts. This Agreement may be executed in any number
of counterparts, including counterparts transmitted by facsimile or electronic
transmission, each of which shall be an original, but all of which together
shall constitute one instrument.
(f) Successors and Assigns. The provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties to this Agreement. No party may
assign, except as expressly contemplated herein, any rights, obligations or
benefits under this Agreement without the prior written consent of the other
party except as expressly set forth herein.
(g) Construction; Titles; Gender. This Agreement is the result
of negotiations between and has been reviewed by each of the parties hereto and
their respective counsel, if any; accordingly, this Agreement shall be deemed to
be the product of all of the parties hereto, and no ambiguity shall
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be construed in favor of or against any one of the parties hereto. The titles
and subtitles used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement. Whenever used
herein, the singular number shall include the plural and the plural the
singular, and the use of any gender shall be applicable to all genders.
(This space intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
"COMPANY" "CONSULTANT"
SEEC, INC., a Delaware corporation KPCB HOLDINGS, INC., a Delaware corporation
By: /s/ Xxxxxxxx Xxxx By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------- ---------------------
Name: Xxxxxxxx Xxxx Name: Xxxx X. Xxxxxxxxx
Title: President and CEO Title: President
Address: Park West One, Ste. 200 Address: c/o Kleiner Xxxxxxx Xxxxxxxx & Xxxxx
Xxxxx Mine Road 0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000 Xxxxx Xxxx, XX 00000
Facsimile: 000.000.0000 Facsimile: 650.233.0378
Attention: Chief Executive Officer Attention: Xxxx X. Xxxxxxxxx
COUNTERPART SIGNATURE PAGE TO CONSULTING AGREEMENT
EXHIBIT B-1 TO CONSULTING AGREEMENT
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED
FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH WARRANT
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
TO BE PROVIDED PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR
HYPOTHECATION THAT A PROPOSED SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.
Number: CS-00__ __________, 2003
WARRANT TO PURCHASE COMMON STOCK
OF
SEEC, INC.
THIS CERTIFIES THAT, for value received, KPCB HOLDINGS, INC.,
a Delaware corporation, as nominee (the "Holder"), is entitled, upon the terms
and subject to the conditions hereinafter set forth and at its sole and absolute
discretion, to subscribe for and purchase from SEEC, INC., a Pennsylvania
corporation with its principal executive offices at Park Xxx Xxxx, Xxxxx Xxxx
Xxxx, Xxxxxxxxxx, XX 00000 (the "Company"), at any time during the period set
forth in Section 1(d) hereof, the number of shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock") set forth in Section 1(b)
hereof at the exercise price set in Section 1(c) hereof. This warrant (as
amended or otherwise modified from time to time, this "Warrant") is issued in
connection with the execution of that certain Consulting Agreement of January 8,
2003, by and between the Company and the Holder (as amended or otherwise
modified from time to time, the "Consulting Agreement").
Section 7. Warrant Purchase Rights.
(a) Type of Stock. This Warrant shall be exercisable for
shares of Common Stock (such shares, the "Warrant Stock").
(b) Number of Shares.
(i) Subject to the provisions hereof, the number of
shares of Warrant Stock issuable upon exercise hereof shall be determined as
follows:
(A) On or after February 8, 2003, the
Warrant shall represent the right
to acquire 41,667 shares of Warrant
Stock;
(B) On or after the 8th day of each
calendar month thereafter through
and including December 8, 2004, the
Warrant shall represent the right
to acquire an additional 41,667
shares of Warrant Stock; and
(C) On or after January 8, 2005, the
Warrant shall represent right to
acquire an additional 41,659
shares.
(ii) Notwithstanding the foregoing, in the event of a
Consultant Termination (as defined herein), this Warrant shall represent the
right to purchase the number of shares of Warrant Stock which were so
purchasable by the Holder on the day immediately prior to such termination. For
the purposes hereof, a "Consultant Termination" shall mean an (A) a termination
of the Consulting Agreement by the Consultant (as defined in the Consulting
Agreement) for any reason other than due to a material breach of the Consulting
Agreement by the Company that remains uncured by the Company pursuant to the
terms of the Consulting Agreement, or (B) a termination of the Consulting
Agreement by the Company due to (1) bankruptcy or insolvency of the Consultant,
(2) sale of the business of the Consultant or (3) a material breach of the
Consulting Agreement by the Consultant that remains uncured by the Consultant
pursuant to the terms of the Consulting Agreement.
(iii) Notwithstanding the foregoing, in the event of
(A) the termination of the Consulting Agreement for any reason other than a
Consultant Termination, or (B) a Change of Control (as defined herein) at any
time after the date of execution of the Consulting Agreement, then, effective as
of immediately following such termination or Change of Control, as the case may
be, the number of shares of Warrant Stock issuable upon exercise hereof shall be
1,000,000. For the purposes hereof, a "Change of Control" shall mean the
reorganization, merger or consolidation of the Company with or into any other
corporation or entity, or a sale, conveyance or encumbrance of all or
substantially all of the assets of the Company (including, without limitation,
the exclusive license of all or substantially all of the Company's intellectual
property), in which transaction or series of related transactions in which the
corporation's stockholders immediately prior to such transaction own immediately
after such transaction less than fifty percent (50%) of the voting power of the
surviving corporation or its parent.
(c) Exercise Price. The exercise price of the Warrant Stock
(the "Exercise Price") shall be $1.10 per share.
(d) Exercise Period. Subject to Section 1(b) hereof, this
Warrant may be exercised at any time from the date hereof until the fifth
anniversary of the date hereof (such period, the "Exercise Period").
Section 8. Method of Exercise; Payment.
(a) Cash Exercise. Subject to the terms hereof, the purchase
rights represented hereby may be exercised by the Holder in its sole and
absolute discretion, in whole or in part, at any time during the Exercise
Period, by the surrender of this Warrant (with a duly executed notice of
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exercise form (the "Notice of Exercise") substantially in the form attached
hereto as Exhibit A) at the principal executive offices of the Company, and by
the payment to the Company of an amount equal to the Exercise Price multiplied
by the number of shares of Warrant Stock being purchased, which amount may be
paid, at the election of the Holder, by wire transfer of immediately available
funds or certified check payable to the order of the Company. The person(s) in
whose name any certificate representing the shares of Warrant Stock issuable
upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all purposes as the record holder of, the
Warrant Stock represented thereby, and such shares of Warrant Stock shall be
deemed to have been issued, immediately prior to the close of business on the
date or dates upon which this Warrant is surrendered.
(b) Net Issue Exercise.
(i) Notwithstanding any provision herein to the
contrary, if the fair market value of one share (or other unit) of Warrant Stock
is greater than the Exercise Price, at the date of calculation as set forth
below, in lieu of a cash exercise of this Warrant in accordance with Section
2(a) hereof, the Holder may elect to receive securities equal to the value (as
determined below) of this Warrant, or the portion thereof being exercised, by
surrender of this Warrant at the principal executive offices of the Company,
together with the properly-endorsed Notice of Exercise, in which event the
Company shall issue to the Holder a number of shares of Warrant Stock computed
using the following formula:
X = Y (A-B)
A
Where X = the number of shares of
Warrant Stock to be issued to
the Holder.
Y = the number of
shares of Warrant
Stock requested to be
exercised under this
Warrant.
A = the fair market
value of one share
(or other unit) of
Warrant Stock (at the
date of such
calculation).
B = the Exercise Price
(as adjusted to the
date of such
calculation).
(ii) For purposes of this Section 2(b), the fair
market value of one share (or other unit) of Warrant Stock shall be determined
in good faith by the Company's Board of Directors; provided, however, that where
there exists a public market for shares of Common Stock at the time of such
exercise, the fair market value per share shall be the product of (A) the
average of the closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or the last reported sale price of the Common
Stock or the closing price quoted on The Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is applicable, for the
five trading days prior to the date of determination of fair market
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value, and (B) the number of shares of Common Stock into which each share of
Warrant Stock is convertible at the time of such exercise.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Warrant Stock
so purchased shall be delivered to the Holder as soon as reasonably possible
and, unless this Warrant has been fully exercised or has expired, a new Warrant
on like terms representing the shares with respect to which this Warrant shall
not have been exercised shall also be issued to the Holder within such time.
(d) No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the fair market value
of one share of Warrant Stock multiplied by such fraction.
(e) No Impairment. The Company will not, by amendment of its
certificate of incorporation or bylaws (the "Charter Documents"), or through
reorganization, consolidation, merger, dissolution, issue or sale of securities,
sale of assets 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 against impairment. Notwithstanding the foregoing, the
taking of any action by the Company for which an adjustment is made pursuant to
Section 5 hereof and which does not constitute a breach of the other terms of
this Warrant shall not be deemed to constitute a breach of the foregoing
provisions or an impairment of this Warrant.
Section 9. Due Authorization of Shares; Reservation of Shares. The
Company hereby covenants and agrees that, during the term this Warrant is
exercisable, the Company will reserve from its authorized and unissued shares a
sufficient number of shares to provide for the issuance of the Warrant Stock
upon exercise of this Warrant.
Section 10. Rights of Stockholders. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Warrant Stock
shall have the registration rights set forth on Exhibit B hereto, the terms and
conditions of which are incorporated by reference herein. Such registration
rights may be assigned by the Holder in connection with the transfer of all or
any part of this Warrant in accordance herewith.
Section 11. Adjustment.
(a) Merger or Reorganization. Prior to any recapitalization,
reorganization, consolidation, merger or other similar transaction, which in
each case is effected in such a way that the holders of the Company's capital
stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for such stock (an
"Organic Change"), the Company shall make appropriate provision, in form and
substance reasonably satisfactory to the Holder, to insure that the Holder shall
thereafter have the right to acquire and receive, in lieu of or in addition to,
as the case may be, the Warrant Stock
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immediately theretofore issuable and receivable upon the exercise hereof, such
shares of stock, securities or assets as may be issued or payable in connection
with such Organic Change with respect to or in exchange for the number of shares
of Warrant Stock immediately theretofore issuable and receivable upon exercise
of this Warrant had such Organic Change not taken place.
(b) Split, Subdivision, Combination, Consolidation,
Reclassification and the Like. If the Company, at any time while this Warrant,
or any portion hereof, remains outstanding and unexpired by split, subdivision,
combination, consolidation or reclassification of securities or otherwise, shall
change the Warrant Stock into the same or a different number and kind of
securities of any class or classes, this Warrant shall thereafter represent the
right to acquire such number and kind of such securities as would have been
issuable as the result of such change with respect to the Warrant Stock
immediately prior to such subdivision, combination, consolidation,
reclassification or other change, and the Exercise Price in respect of such
securities shall be proportionately adjusted.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If, while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive by way of dividend, without payment therefore, other or additional
stock or other securities or property (other than cash) of the Company, then and
in each case, this Warrant shall represent the right to acquire, in addition to
the number of shares of the security receivable upon exercise of this Warrant,
and without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of such security in respect of which the dividend shall
have been or be payable on the date hereof and had thereafter, during the period
from the date hereof to and including the date of such exercise, retained such
shares and/or all other additional stock available by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
the provisions of this Section 5.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 5, the Company shall compute
such adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company will cause copies of such certificate to be promptly delivered to the
Holder.
Section 12. Representations and Warranties.
(a) By the Company. The Company represents and warrants to the
Holder as follows:
(i) this Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, moratorium, reorganization and the relief of
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debtors and the rules of law or principles at equity governing specific
performance, injunctive relief and other equitable remedies (regardless of
whether enforcement is sought in equity or at law);
(ii) all shares of Warrant Stock which may be issued
upon the exercise of this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than taxes with respect to any
transfer occurring contemporaneously with such issue to a person other than the
Holder);
(iii) except for the filing of notices pursuant to
federal and state securities laws, which filings will be effected by the time
required thereby, the execution, delivery or performance of this Warrant by the
Company, and the issuance of the shares of Warrant Stock upon exercise of this
Warrant in accordance with the terms hereof shall not (A) conflict with or
result in any breach of any provision of the Charter Documents, (B) require any
material filing with, or permit, authorization, consent or approval of, any
Federal, state or local governmental authority, (C) result in a material
violation or breach of, or constitute (with or without due notice or the passage
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any material indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound, or (D)
violate any order, writ, injunction, decree, or any material statute, rule or
regulation applicable to the Company or any of its material properties or
assets; and
(iv) there are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.
(b) By the Holder. The Holder represents and warrants to the
Company as follows:
(i) the Holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant.
(ii) the Holder is acquiring this Warrant for its own
account as principal, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole or in
part, within the meaning of the Securities Act of 1933, as amended (the
"Securities Act");
(iii) the Holder understands that its acquisition of
this Warrant has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of such Holder's investment intent as expressed herein;
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(iv) the Holder shall not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Warrant or
the shares of Warrant Stock, except in compliance with the terms hereof and the
registration requirements of the Securities Act, and the rules and regulations
promulgated thereunder, or an exemption thereunder; and
(v) the Holder is an "accredited investor" as defined
in Rule 501(A) under the Securities Act.
Section 13. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and addresses of the Holder(s).
Any Holder of this Warrant or a portion hereof may change its or his address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered to such Holder as shown on the Warrant Register and
at the address shown on the Warrant Register. Until notified of a transfer in
accordance with the terms hereof, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
(b) Transferability of Warrant. The Holder further
acknowledges and understands that this Warrant and the Warrant Stock may not be
resold or otherwise transferred except in a transaction registered under the
Securities Act or unless an exemption from such registration is available. The
Holder understands that the Warrant and the certificate(s) evidencing the shares
of Warrant Stock shall be imprinted with a legend as set forth in Section 9
hereof that prohibits the transfer of such securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration under the Securities Act and, if the
Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt. The requirements of subsection (ii) above shall not apply to any
transfer of this Warrant (or the shares of Warrant Stock upon exercise thereof)
or any part hereof to any affiliate of the Holder or such other person or entity
as the Holder may determine; provided, however, that the transferee shall agree
in writing to be bound by the terms of this Warrant as if the original Holder
hereof. Any transfer, attempted transfer or other disposition in violation of
this Section 7(b) shall be deemed null and void and be of no binding effect.
(c) Exchange of Warrant Upon Transfer. On surrender of this
Warrant for exchange, subject to the provisions of this Warrant with respect to
compliance with federal and state securities laws and with the limitations on
transfers and assignments contained in this Section 7, the Company, at its
expense, shall as soon as reasonably possible issue to the Holder a new warrant
or warrants of like tenor, in the name of the Holder or as the Holder (on
payment by the Holder of any applicable transfer taxes) may direct, for the
number of securities issuable upon exercise hereof.
Section 14. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
7
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
Section 15. Legends. This Warrant and all Warrant Stock issued upon
exercise hereof or any securities issued upon conversion thereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION THAT A
PROPOSED SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE WITH THE ACT.
Section 16. Miscellaneous.
(a) Governing Law. This Warrant is made in accordance with and
shall be construed under the laws of the State of Delaware, other than the
conflicts of laws principles thereof.
(b) Successors and Assigns. The provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties to this Agreement. Neither the
Company nor the Holder may assign, except as expressly contemplated herein, any
rights, obligations or benefits under this Warrant without the prior written
consent of the other party.
(c) Entire Agreement. This Warrant, with the Consulting
Agreement and the other schedules, exhibits and documents appended hereto and
thereto, constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(d) Notices. All notices and other communications required or
permitted under this Warrant shall be given in writing and shall be mailed by
registered or certified mail, postage prepaid, sent by confirmed facsimile or
telecopy, or otherwise delivered by hand, overnight courier or by messenger,
addressed (i) if to a Holder, at the Holder's as shown on the Warrant Register,
or (ii) if to the Company, one copy should be sent to its address set forth on
the first page of this Warrant and addressed to the attention of the Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in accordance herewith of at least 10 days prior to the date of
such notice, with a copy to Xxxxx & Xxxxxxx, P.C., 00 Xxxxxxx Xx., 00xx Xxxxx,
Xxxxxxxxxx, XX 00000, Facsimile: 412.209.0672, Attention: Xxxxxx X. Xxxxxxx.
Each such notice of other communication shall be treated as effective or having
been given when delivered if delivered personally, or if sent by mail, at the
earlier of its receipt or seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and mailed as set forth above.
8
(e) Amendment, Modification and Waiver. Any term of this
Warrant may be amended and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder. The
failure by the parties to assert any right herein shall not be deemed to be a
waiver thereof.
(f) Separability. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be valid, legal, and
enforceable under all applicable laws and regulations. If, however, any
provision of this Warrant shall be invalid, illegal, or unenforceable under any
such law or regulation in any jurisdiction, it shall, as to such jurisdiction,
be deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
invalid, illegal, or unenforceable only to the extent of such invalidity,
illegality, or limitation on enforceability without affecting the remaining
provisions of this Warrant, or the validity, legality, or enforceability of such
provision in any other jurisdiction.
(g) Interpretation. When a reference is made in this Warrant
to Exhibits or Schedules, such reference shall be to an Exhibit to this Warrant
unless otherwise indicated. The words "include," "includes" and "including" when
used in this Warrant shall be deemed in each case to be followed by the words
"without limitation." The phrase "provided to," "furnished to," and terms of
similar import in this Warrant shall mean that a paper copy of the information
referred to has been furnished to the party to whom such information is to be
provided. In this Warrant, the phrases "the date hereof," "the date hereof", and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to __________, 2003. The headings contained in this Warrant are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Warrant.
(This space intentionally left blank)
9
EXHIBIT B-1 TO CONSULTING AGREEMENT
IN WITNESS WHEREOF, the undersigned has caused this Warrant to
be executed as of the date set forth above.
SEEC, INC., a Pennsylvania corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO WARRANT]
EXHIBIT B-1 TO CONSULTING AGREEMENT
EXHIBIT A
Notice of Exercise
TO: SEEC, Inc.
Park One Xxxx
Xxxxx Xxxx Xxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
1. CASH PAYMENT OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to purchase ________ shares of
Common Stock of SEEC, Inc. pursuant to the terms of this Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. NET ISSUE EXERCISE OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to effect the net issue exercise
provision of Section 2(b) of this Warrant and receive ________ shares of Common
Stock of SEEC, Inc., pursuant to the terms of this Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned as specified below:
Name:
---------------------------------
Address:
------------------------------
------------------------------
------------------------------
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares.
-------------------------------
(Print Full Name)
-------------------------------
(Sign Name)
-------------------------------
(Print Title, if applicable)
Date:
-----------------
EXHIBIT B-1 TO CONSULTING AGREEMENT
EXHIBIT B
Registration Rights
1. Registration Rights. If, at any time after the date hereof, the
Company proposes to register any shares of its capital stock under the
Securities Act for sale to the public, whether for its own account or for the
account of other securityholders or both (including, without limitation,
registration statements relating to secondary offerings of shares of the
Company's capital stock, but excluding registration statements relating solely
to the sale of securities to participants in a Company stock plan, to exchange
offers or to non-convertible debt securities or relating solely to corporate
reorganizations or other transactions pursuant to Rule 145 under the Securities
Act), the Company shall, at such time, promptly give the Holder written notice
of such registration, and will afford the Holder an opportunity to include in
such registration statement all or any of the Warrant Stock issued or issuable
hereunder (for such purposes, the "Registrable Securities"). The Holder shall,
within twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in
such registration statement. At the time the registration statement is declared
effective, the Holder shall be named as a selling securityholder therein and the
related prospectus in such a manner as to permit such Holder to deliver such
prospectus to purchasers of registered securities in accordance with applicable
law.
Section 17. Registration Procedures. In the case of a registration, and
any qualification or compliance effected by the Company pursuant to this Section
1 of this Exhibit B, Subject to provisions hereof, and until the Effectiveness
Termination Date, the Company shall take the following actions:
(a) Promptly prepare and file with the SEC the registration
statement in accordance herewith and keep the Holder advised in writing as to
the initiation of such registration, qualification and compliance and as to the
completion thereof;
(b) Use commercially reasonable efforts to cause a
registration statement to be declared effective under the Securities Act as soon
as practicable thereafter and to keep such registration statement continuously
effective under the Securities Act until the earlier of (i) the date that is the
later of (A) the second anniversary of the date hereof and (B) the date that
neither the Holder nor any of its affiliates is an affiliate of the Company,
(ii) such date as all Registrable Securities may be sold in a single three-month
period in accordance with Rule 144 under the Securities Act or (iii) such date
as all securities registered on such registration statement have been resold
(the earlier to occur of (i), (ii) and (iii) is the "Effectiveness Termination
Date");
(c) Furnish to the Holder such reasonable numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it;
11
(d) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holder for the purpose of permitting the offers and sales of
the securities in such jurisdictions, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) Notify as soon as reasonably practicable after the Company
becomes aware the Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) If for any reason it shall be necessary to amend or
supplement the registration statement or the prospectus used in connection with
such registration statement in order to correct any untrue statements, ensure
that the registration statement is not misleading or otherwise to comply with
the Securities Act, as promptly as reasonably practicable, prepare and file with
the SEC such amendments and supplements to such registration statement and the
prospectus as may be necessary to correct such untrue statements, ensure that
such registration statement is not misleading or to comply with the provisions
of the Securities Act, provided, that to the extent that any statements to be
corrected relate to any information provided by the Holder, the Company shall
not be obligated to amend the registration statement until the Company has
received such corrected information from the Holder and has had a reasonable
opportunity to amend or supplement such registration statement or prospectus;
(g) If the registration statement ceases to be effective for
any reason at any time prior to the Effectiveness Termination Date (other than
because all securities registered thereunder have been resold pursuant thereto),
use commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof;
(h) Cause all such Registrable Securities registered hereunder
to be listed or included on each securities exchange or automated quotation
system on which similar securities issued by the Company are then listed or
included; and
(i) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
In addition, in the event of any underwritten public offering, the Company shall
(I) enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering,
provided that the Holder also enters into and perform its obligations under such
an agreement, and (II) use its best efforts to furnish, at the request of the
Holder, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a
registration pursuant hereto, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (A) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given in an underwritten public offering (and reasonably acceptable
to the counsel for the Holder), addressed to the underwriters, if any, and to
the Holder, and (B) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants in an underwritten public offering
(and reasonably acceptable to the counsel for the Holder), addressed to the
underwriters, to the extent such letter is permitted under generally recognized
accounting practice.
Section 18. Selling Procedure.
(a) Following the date that the registration statement is
declared effective by the SEC, the Holder shall be permitted, subject to the
provisions hereof, to offer and sell the Registrable Securities included thereon
in the manner described in such registration statement during the period of its
effectiveness; provided, however, that the Holder arranges for delivery of a
current prospectus to the transferee of the Registrable Securities.
(b) Notwithstanding the foregoing, or anything contained
herein to the contrary, the Company may suspend offers and sales of Registrable
Securities pursuant to such registration statement if in the good faith judgment
of the Company's Board of Directors, upon the advice of counsel, (i)(A)(I) such
registration would be substantially contrary to the bests interests of the
Company because (a) it would materially interfere with a material financing plan
or other material transaction or negotiations relating thereto then pending, or
(b) it would require the disclosure of any material non-public information prior
to the time that such information would otherwise be disclosed or be required to
be disclosed, if such early disclosure would be substantially contrary to the
best interests of the Company, or (II) such registration statement contains or
may contain an untrue statement of material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the Board of Directors concludes, as a result,
that it is necessary and appropriate to defer the filing of such registration
statement at such time, and (ii) the Company shall furnish to the Holder a
certificate signed by the President or Chief Executive Officer of the Company
stating the good faith judgment of the Board of Directors to such effect, then
the Company shall have the right to defer such filing only for the period during
which such filing would be substantially contrary to the best interests of the
Company (a "Suspension"); provided, however, that the aggregate number of days
included in such periods of Suspension shall not exceed ninety (90) days in any
twelve (12) month period. In the event of any Suspension, the Holder shall
discontinue disposition of Registrable Securities covered by the registration
statement until copies of a supplemented or amended prospectus are distributed
to the Holder or until the Holder is advised in writing by the Company that the
use of the applicable prospectus may be resumed.
Section 19. Expenses of Registration. All expenses incurred in
connection with the registrations pursuant hereto (including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of one counsel for the Company and reasonable fees and
disbursements of counsel to the Holder, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration
shall be borne by the Company other than expenses relating to (a) the
compensation of regular employees of the Company, which shall be paid in any
event by the Company, and (b) all underwriting discounts and selling commissions
applicable to a sale of the Registrable Securities, which shall be borne by the
Holder.
Section 20. Indemnification.
(a) The Company shall indemnify the Holder, its officers,
directors, employees, partners, affiliates, agents, representatives and legal
counsel, and each person controlling (or deemed controlling) the Holder within
the meaning of the Securities Act, (collectively, the "Holder's Agents") with
respect to which registration, qualification or compliance has been effected
pursuant to this Exhibit B, against all claims, losses, damages and liabilities
(or actions in respect thereof), joint or several, arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other similar document or any
amendments or supplements thereto (including any related registration statement
and amendments or supplements thereto, notification or the like) incident to any
such registration, qualification or compliance, (ii) 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 in the light of the
circumstances under which they were made, or (iii) any violation by the Company
of the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any rule or regulation promulgated thereunder applicable to
the Company in connection with any such registration, qualification or
compliance, and shall reimburse the Holder, and the Holder's Agents, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred; provided, however, that the Company shall 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 an instrument duly executed by such
Holder and stated to be specifically for use therein or furnished in writing by
such Holder to the Company in response to a request by the Company stating
specifically that such information shall be used by the Company therein.
(b) The Holder shall indemnify the Company, its officers,
directors, employees, affiliates, agents, representatives, legal counsel,
independent accountant, and each person controlling the Company within the
meaning of the Securities Act (collectively, the "Company's Agents"), against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other similar document or any amendments or supplements thereto (including any
related registration statements and any amendments or supplements thereto,
notification and the like), or (ii) 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 in the light of the circumstances under which
they were made, and shall reimburse the Company and the Company's Agents for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage,
liability or action, as incurred; provided, however, 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 prospectus, offering circular
or other similar document or any amendments or supplements thereto (including
any related registration statements and any amendments or supplements thereto,
notification and the like) in reliance upon and in conformity with written
information furnished in writing to the Company by an instrument duly executed
by the Holder and stated to be specifically for use therein or furnished by the
Holder to the Company in response to a request by the Company stating
specifically that such information shall be used by the Company therein;
provided, further, that the indemnity agreement provided in this Section 5(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the prior written
consent of the Holder, which consent shall not be unreasonably withheld, unless
such consent is obtained in accordance with Section 5(c) hereof. In no event
shall the Holder's indemnification obligation exceed the net proceeds received
from its sale of Registrable Securities in such offering.
(c) Each party entitled to indemnification under this Section
5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall bear
the expense of such defense of the Indemnified Party if representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts of interest. The failure of any Indemnified Party to give notice
within a reasonable period of time as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 5, but only to the
extent that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the written consent of each Indemnified Party (which shall not be
unreasonably withheld), 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.
(d) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, however, that in no event shall any contribution by an
Holder under this Section 4 exceed the net proceeds from the offering received
by such Holder. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and the Holder under this
Section 5 shall survive the completion of any offering of the Registrable
Securities in a registration statement pursuant to this Exhibit B, any
investigation made by or on behalf of the Indemnified Party or any officer,
director or controlling person of such Indemnified Party and shall survive the
transfer of securities.
Section 21. Information by the Holder. As a condition precedent to the
obligations of the Company under this Exhibit B, the Holder shall furnish to the
Company all such information and materials regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request in
writing in connection with any registration, qualification or compliance
referred to herein. The Holder will promptly notify the Company in writing of
any changes in the information set forth in the registration statement after it
is prepared regarding the Holder or its plan of distribution to the extent
required by applicable law.
Section 22. Inclusion of Additional Securities. The Company may include
additional Company securities in any registration pursuant hereto hereof for its
own account and by other parties in amounts as determined by the Company's Board
of Directors, provided that any such inclusion does not (i) reduce the number of
Registrable Securities (or other securities of the Holder) which are included in
the registration statement filed pursuant to this Exhibit B or otherwise
materially and adversely affect the rights of the Holder hereunder, or (ii)
cause Form S-3 to be unavailable under the Securities Act for such registration
due to the nature of the additional securities to be so included.
Section 23. Allocation of Registration Opportunities. In connection
with any offering involving an underwriting of shares of the Company's capital
stock pursuant hereto, the Company shall not be required to include any of the
Registrable Securities in such underwriting unless the Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as the underwriters determine in
good faith will not jeopardize the success of the offering. If the total amount
of securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities that the underwriters
determine in good faith is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including the Registrable Securities, which the underwriters
determine in good faith will not jeopardize the success of the offering. In such
an event and to the extent necessary to comply with the foregoing, the managing
underwriter shall limit or exclude up to all of the securities of holders of
capital stock of the Company as follows: (i) first, among securities requested
to be included in such registration by any stockholder of the Company other than
(A) the Holder or (B) any holders of Company securities with a contractual right
to affirmatively require the Company to file a registration statement relating
to such holders' securities (each, a "Demand
Right Holder"); (ii) second, among the Registrable Securities requested to be
included in such registration by the Holder but in no event shall the amount of
such Registrable Securities be reduced below twenty-five percent (25%) of total
amount of securities included in such offering (calculated, for the purposes
hereof, in the aggregate with the securities held by the holder of any other
Warrant, or portion thereof, issued pursuant to the Consulting Agreement); (iii)
third, among the securities of the Company (i.e., primary shares); and (iv)
fourth, among the securities of the Demand Right Holders, if any. For purposes
of the preceding provisions concerning apportionment, for any Holder which is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single Holder for the purposes hereof, and any pro-rata reduction
with respect to such Holder shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such Holder (as described herein).
Section 24. Termination of Registration Rights. All rights and
obligations provided for in this Exhibit B (except for in Section 5 hereof,
which rights and obligations shall survive) shall terminate on the Effectiveness
Termination Date.
EXHIBIT B-2 TO CONSULTING AGREEMENT
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED
FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH WARRANT
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
TO BE PROVIDED PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR
HYPOTHECATION THAT A PROPOSED SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.
Number: CS-00__ __________, 2003
WARRANT TO PURCHASE COMMON STOCK
OF
SEEC, INC.
THIS CERTIFIES THAT, for value received, KPCB HOLDINGS, INC.,
a Delaware corporation, as nominee (the "Holder"), is entitled, upon the terms
and subject to the conditions hereinafter set forth and at its sole and absolute
discretion, to subscribe for and purchase from SEEC, INC., a Pennsylvania
corporation with its principal executive offices at Park Xxx Xxxx, Xxxxx Xxxx
Xxxx, Xxxxxxxxxx, XX 00000 (the "Company"), at any time during the period set
forth in Section 1(d) hereof, the number of shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock") set forth in Section 1(b)
hereof at the exercise price set in Section 1(c) hereof. This warrant (as
amended or otherwise modified from time to time, this "Warrant") is issued in
connection with the execution of that certain Consulting Agreement of January 8,
2003, by and between the Company and the Holder (as amended or otherwise
modified from time to time, the "Consulting Agreement").
Section 25. Warrant Purchase Rights.
(a) Type of Stock. This Warrant shall be exercisable for
shares of Common Stock (such shares, the "Warrant Stock").
(b) Number of Shares. The number of shares of Warrant Stock
issuable upon exercise hereof shall be 500,000 shares, provided that the
Company's aggregate revenues for its fiscal year 2004, calculated in accordance
with generally-accepted accounting principles and as set forth in the Company's
audited financial statements for the fiscal year ended March 31, 2004 included
in the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2004 to be filed with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are at least $16,000,000.
(c) Exercise Price. The exercise price of the Warrant Stock
(the "Exercise Price") shall be $1.35 per share.
(d) Exercise Period. Subject to Section 1(b) hereof, this
Warrant may be exercised at any time on or after April 1, 2004 until April 1,
2009 (such period, the "Exercise Period").
Section 26. Method of Exercise; Payment.
(a) Cash Exercise. Subject to the terms hereof, the purchase
rights represented hereby may be exercised by the Holder in its sole and
absolute discretion, in whole or in part, at any time during the Exercise
Period, by the surrender of this Warrant (with a duly executed notice of
exercise form (the "Notice of Exercise") substantially in the form attached
hereto as Exhibit A) at the principal executive offices of the Company, and by
the payment to the Company of an amount equal to the Exercise Price multiplied
by the number of shares of Warrant Stock being purchased, which amount may be
paid, at the election of the Holder, by wire transfer of immediately available
funds or certified check payable to the order of the Company. The person(s) in
whose name any certificate representing the shares of Warrant Stock issuable
upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all purposes as the record holder of, the
Warrant Stock represented thereby, and such shares of Warrant Stock shall be
deemed to have been issued, immediately prior to the close of business on the
date or dates upon which this Warrant is surrendered.
(b) Net Issue Exercise.
(i) Notwithstanding any provision herein to the
contrary, if the fair market value of one share (or other unit) of Warrant Stock
is greater than the Exercise Price, at the date of calculation as set forth
below, in lieu of a cash exercise of this Warrant in accordance with Section
2(a) hereof, the Holder may elect to receive securities equal to the value (as
determined below) of this Warrant, or the portion thereof being exercised, by
surrender of this Warrant at the principal executive offices of the Company,
together with the properly-endorsed Notice of Exercise, in which event the
Company shall issue to the Holder a number of shares of Warrant Stock computed
using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Warrant
Stock to be issued to the
Holder.
Y = the number of shares of
Warrant Stock requested to be
exercised under this Warrant.
A = the fair market value of one
share (or other unit) of
Warrant Stock (at the date of
such calculation).
B = the Exercise Price (as adjusted
to the date of such
calculation).
(ii) For purposes of this Section 2(b), the fair
market value of one share (or other unit) of Warrant Stock shall be determined
in good faith by the Company's Board of Directors; provided, however, that where
there exists a public market for shares of Common Stock at the time of such
exercise, the fair market value per share shall be the product of (A) the
average of the closing bid and asked prices of the Common Stock quoted in the
2
Over-The-Counter Market Summary or the last reported sale price of the Common
Stock or the closing price quoted on The Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is applicable, for the
five trading days prior to the date of determination of fair market value, and
(B) the number of shares of Common Stock into which each share of Warrant Stock
is convertible at the time of such exercise.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Warrant Stock
so purchased shall be delivered to the Holder as soon as reasonably possible
and, unless this Warrant has been fully exercised or has expired, a new Warrant
on like terms representing the shares with respect to which this Warrant shall
not have been exercised shall also be issued to the Holder within such time.
(d) No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the fair market value
of one share of Warrant Stock multiplied by such fraction.
(e) No Impairment. The Company will not, by amendment of its
certificate of incorporation or bylaws (the "Charter Documents"), or through
reorganization, consolidation, merger, dissolution, issue or sale of securities,
sale of assets 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 against impairment. Notwithstanding the foregoing, the
taking of any action by the Company for which an adjustment is made pursuant to
Section 5 hereof and which does not constitute a breach of the other terms of
this Warrant shall not be deemed to constitute a breach of the foregoing
provisions or an impairment of this Warrant.
Section 27. Due Authorization of Shares; Reservation of Shares. The
Company hereby covenants and agrees that, during the term this Warrant is
exercisable, the Company will reserve from its authorized and unissued shares a
sufficient number of shares to provide for the issuance of the Warrant Stock
upon exercise of this Warrant.
Section 28. Rights of Stockholders. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Warrant Stock
shall have the registration rights set forth on Exhibit B hereto, the terms and
conditions of which are incorporated by reference herein. Such registration
rights may be assigned by the Holder in connection with the transfer of all or
any part of this Warrant in accordance herewith.
Section 29. Adjustment.
(a) Merger or Reorganization. Prior to any recapitalization,
reorganization, consolidation, merger or other similar transaction, which in
each case is effected in such a way that the holders of the Company's capital
stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for
3
such stock (an "Organic Change"), the Company shall make appropriate provision,
in form and substance reasonably satisfactory to the Holder, to insure that the
Holder shall thereafter have the right to acquire and receive, in lieu of or in
addition to, as the case may be, the Warrant Stock immediately theretofore
issuable and receivable upon the exercise hereof, such shares of stock,
securities or assets as may be issued or payable in connection with such Organic
Change with respect to or in exchange for the number of shares of Warrant Stock
immediately theretofore issuable and receivable upon exercise of this Warrant
had such Organic Change not taken place.
(b) Split, Subdivision, Combination, Consolidation,
Reclassification and the Like. If the Company, at any time while this Warrant,
or any portion hereof, remains outstanding and unexpired by split, subdivision,
combination, consolidation or reclassification of securities or otherwise, shall
change the Warrant Stock into the same or a different number and kind of
securities of any class or classes, this Warrant shall thereafter represent the
right to acquire such number and kind of such securities as would have been
issuable as the result of such change with respect to the Warrant Stock
immediately prior to such subdivision, combination, consolidation,
reclassification or other change, and the Exercise Price in respect of such
securities shall be proportionately adjusted.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If, while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive by way of dividend, without payment therefore, other or additional
stock or other securities or property (other than cash) of the Company, then and
in each case, this Warrant shall represent the right to acquire, in addition to
the number of shares of the security receivable upon exercise of this Warrant,
and without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of such security in respect of which the dividend shall
have been or be payable on the date hereof and had thereafter, during the period
from the date hereof to and including the date of such exercise, retained such
shares and/or all other additional stock available by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
the provisions of this Section 5.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 5, the Company shall compute
such adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company will cause copies of such certificate to be promptly delivered to the
Holder.
Section 30. Representations and Warranties.
(a) By the Company. The Company represents and warrants to the
Holder as follows:
4
(i) this Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, moratorium, reorganization and the relief of
debtors and the rules of law or principles at equity governing specific
performance, injunctive relief and other equitable remedies (regardless of
whether enforcement is sought in equity or at law);
(ii) all shares of Warrant Stock which may be issued
upon the exercise of this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than taxes with respect to any
transfer occurring contemporaneously with such issue to a person other than the
Holder);
(iii) except for the filing of notices pursuant to
federal and state securities laws, which filings will be effected by the time
required thereby, the execution, delivery or performance of this Warrant by the
Company, and the issuance of the shares of Warrant Stock upon exercise of this
Warrant in accordance with the terms hereof shall not (A) conflict with or
result in any breach of any provision of the Charter Documents, (B) require any
material filing with, or permit, authorization, consent or approval of, any
Federal, state or local governmental authority, (C) result in a material
violation or breach of, or constitute (with or without due notice or the passage
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any material indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound, or (D)
violate any order, writ, injunction, decree, or any material statute, rule or
regulation applicable to the Company or any of its material properties or
assets; and
(iv) there are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.
(b) By the Holder. The Holder represents and warrants to the
Company as follows:
(i) the Holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant;
(ii) the Holder is acquiring this Warrant for its own
account as principal, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole or in
part, within the meaning of the Securities Act of 1933, as amended (the
"Securities Act");
(iii) the Holder understands that its acquisition of
this Warrant has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
5
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of such Holder's investment intent as expressed herein;
(iv) the Holder shall not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Warrant or
the shares of Warrant Stock, except in compliance with the terms hereof and the
registration requirements of the Securities Act, and the rules and regulations
promulgated thereunder, or an exemption thereunder; and
(v) the Holder is an "accredited investor" as defined
in Rule 501(A) under the Securities Act.
Section 31. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and addresses of the Holder(s).
Any Holder of this Warrant or a portion hereof may change its or his address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered to such Holder as shown on the Warrant Register and
at the address shown on the Warrant Register. Until notified of a transfer in
accordance with the terms hereof, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
(b) Transferability of Warrant. The Holder further
acknowledges and understands that this Warrant and the Warrant Stock may not be
resold or otherwise transferred except in a transaction registered under the
Securities Act or unless an exemption from such registration is available. The
Holder understands that the Warrant and the certificate(s) evidencing the shares
of Warrant Stock shall be imprinted with a legend as set forth in Section 9
hereof that prohibits the transfer of such securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration under the Securities Act and, if the
Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt. The requirements of subSection (ii) above shall not apply to any
transfer of this Warrant (or the shares of Warrant Stock upon exercise thereof)
or any part hereof to any affiliate of the Holder or such other person or entity
as the Holder may determine; provided, however, that the transferee shall agree
in writing to be bound by the terms of this Warrant as if the original Holder
hereof. Any transfer, attempted transfer or other disposition in violation of
this Section 7(b) shall be deemed null and void and be of no binding effect.
(c) Exchange of Warrant Upon Transfer. On surrender of this
Warrant for exchange, subject to the provisions of this Warrant with respect to
compliance with federal and state securities laws and with the limitations on
transfers and assignments contained in this Section 7, the Company, at its
expense, shall as soon as reasonably possible issue to the Holder a new warrant
or warrants of like tenor, in the name of the Holder or as the Holder (on
payment by the Holder of any applicable transfer taxes) may direct, for the
number of securities issuable upon exercise hereof.
6
Section 32. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.
Section 33. Legends. This Warrant and all Warrant Stock issued upon
exercise hereof or any securities issued upon conversion thereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION THAT A
PROPOSED SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE WITH THE ACT.
Section 34. Certain Covenant. With reference to the provision of the
Services (as such term is defined in the Consulting Agreement) to the Company by
the Consultant (as such term is defined therein), so long as the Company has not
terminated the Consulting Agreement due to the nonperformance by the Consultant,
the Company shall request that its board of directors, subject to its fiduciary
duties, give due consideration for providing additional compensation to the
Holder, to the extent that the Company's cash flows and liabilities for its
initial quarters, other benefits and general integration exceed the levels
anticipated as a result of the Consultant's contribution. Such compensation
would be in the form of cash or options on a number of shares. The exact value
and number or options shall be determined by a committee of the Company's board
of directors, comprised of directors that are not appointees or related with the
Holder, in its sole discretion. Nothing in this Section 10 shall provide any
remedy to the Company in the event of the Consultant's nonperformance under the
Consulting Agreement except as expressly provided therein; which remedy, solely
for the avoidance of doubt, shall be limited to the Company's right, but without
any obligation, to terminate the Consulting Agreement in accordance with Section
5 thereof. Further, nothing in this Section 10 shall provide any additional
compensation right or remedy to the Holder in the event, in the opinion of such
committee of the board, that the Company's cash flows and liabilities for its
initial quarters, other benefits and general integration do not exceed the
levels anticipated as a result of the Consultant's contribution; in such event,
solely for the avoidance of doubt, this Warrant and the warrant appended as
Exhibit B-3 to the Consulting Agreement (collectively, the "Performance
Warrants") shall be exercisable in accordance with their respective terms for
the shares of Warrant Stock as provided herein and therein.
7
Section 35. Miscellaneous.
(a) Governing Law. This Warrant is made in accordance with and
shall be construed under the laws of the State of Delaware, other than the
conflicts of laws principles thereof.
(b) Successors and Assigns. The provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties to this Agreement. Neither the
Company nor the Holder may assign, except as expressly contemplated herein, any
rights, obligations or benefits under this Warrant without the prior written
consent of the other party.
(c) Entire Agreement. This Warrant, with the Consulting
Agreement and the other schedules, exhibits and documents appended hereto and
thereto, constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(d) Notices. All notices and other communications required or
permitted under this Warrant shall be given in writing and shall be mailed by
registered or certified mail, postage prepaid, sent by confirmed facsimile or
telecopy, or otherwise delivered by hand, overnight courier or by messenger,
addressed (i) if to a Holder, at the Holder's as shown on the Warrant Register,
or (ii) if to the Company, one copy should be sent to its address set forth on
the first page of this Warrant and addressed to the attention of the Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in accordance herewith of at least 10 days prior to the date of
such notice, with a copy to Xxxxx & Xxxxxxx, P.C., 00 Xxxxxxx Xx., 00xx Xxxxx,
Xxxxxxxxxx, XX 00000, Facsimile: 412.209.0672, Attention: Xxxxxx X. Xxxxxxx.
Each such notice of other communication shall be treated as effective or having
been given when delivered if delivered personally, or if sent by mail, at the
earlier of its receipt or seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and mailed as set forth above.
(e) Amendment, Modification and Waiver. Any term of this
Warrant may be amended and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder. The
failure by the parties to assert any right herein shall not be deemed to be a
waiver thereof.
(f) Separability. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be valid, legal, and
enforceable under all applicable laws and regulations. If, however, any
provision of this Warrant shall be invalid, illegal, or unenforceable under any
such law or regulation in any jurisdiction, it shall, as to such jurisdiction,
be deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
invalid, illegal, or unenforceable only to the extent of such invalidity,
illegality, or limitation on enforceability without affecting the remaining
provisions of this Warrant, or the validity, legality, or enforceability of such
provision in any other jurisdiction.
(g) Interpretation. When a reference is made in this Warrant
to Exhibits or Schedules, such reference shall be to an Exhibit to this Warrant
unless otherwise indicated. The words "include," "includes" and
8
"including" when used in this Warrant shall be deemed in each case to be
followed by the words "without limitation." The phrase "provided to," "furnished
to," and terms of similar import in this Warrant shall mean that a paper copy of
the information referred to has been furnished to the party to whom such
information is to be provided. In this Warrant, the phrases "the date hereof,"
"the date hereof", and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to __________, 2003. The headings contained
in this Warrant are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Warrant.
(This space intentionally left blank)
9
EXHIBIT B-2 TO CONSULTING AGREEMENT
IN WITNESS WHEREOF, the undersigned has caused this Warrant to
be executed as of the date set forth above.
SEEC, INC., a Pennsylvania corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO WARRANT]
EXHIBIT B-2 TO CONSULTING AGREEMENT
EXHIBIT A
Notice of Exercise
TO: SEEC, Inc.
Park One Xxxx
Xxxxx Xxxx Xxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
1. CASH PAYMENT OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to purchase ________ shares of
Common Stock of SEEC, Inc. pursuant to the terms of this Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. NET ISSUE EXERCISE OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to effect the net issue exercise
provision of Section 2(b) of this Warrant and receive ________ shares of Common
Stock of SEEC, Inc., pursuant to the terms of this Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned as specified below:
Name:
---------------------------
Address:
---------------------------
---------------------------
---------------------------
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares.
-----------------------------------
(Print Full Name)
-----------------------------------
(Sign Name)
-----------------------------------
(Print Title, if applicable)
Date:
----------------------------
EXHIBIT B
Registration Rights
1. Registration Rights. If, at any time after the date hereof, the
Company proposes to register any shares of its capital stock under the
Securities Act for sale to the public, whether for its own account or for the
account of other securityholders or both (including, without limitation,
registration statements relating to secondary offerings of shares of the
Company's capital stock, but excluding registration statements relating solely
to the sale of securities to participants in a Company stock plan, to exchange
offers or to non-convertible debt securities or relating solely to corporate
reorganizations or other transactions pursuant to Rule 145 under the Securities
Act), the Company shall, at such time, promptly give the Holder written notice
of such registration, and will afford the Holder an opportunity to include in
such registration statement all or any of the Warrant Stock issued or issuable
hereunder (for such purposes, the "Registrable Securities"). The Holder shall,
within twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in
such registration statement. At the time the registration statement is declared
effective, the Holder shall be named as a selling securityholder therein and the
related prospectus in such a manner as to permit such Holder to deliver such
prospectus to purchasers of registered securities in accordance with applicable
law.
2. Registration Procedures. In the case of a registration, and any
qualification or compliance effected by the Company pursuant to this Section 1
of this Exhibit B, Subject to provisions hereof, and until the ---------
Effectiveness Termination Date, the Company shall take the following actions:
(a) Promptly prepare and file with the SEC the registration
statement in accordance herewith and keep the Holder advised in writing as to
the initiation of such registration, qualification and compliance and as to the
completion thereof;
(b) Use commercially reasonable efforts to cause a
registration statement to be declared effective under the Securities Act as soon
as practicable thereafter and to keep such registration statement continuously
effective under the Securities Act until the earlier of (i) the date that is the
later of (A) the second anniversary of the date hereof and (B) the date that
neither the Holder nor any of its affiliates is an affiliate of the Company,
(ii) such date as all Registrable Securities may be sold in a single three-month
period in accordance with Rule 144 under the Securities Act or (iii) such date
as all securities registered on such registration statement have been resold
(the earlier to occur of (i), (ii) and (iii) is the "Effectiveness Termination
Date");
(c) Furnish to the Holder such reasonable numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it;
(d) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holder for the purpose of permitting the offers and sales of
the securities in such jurisdictions, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) Notify as soon as reasonably practicable after the Company
becomes aware the Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) If for any reason it shall be necessary to amend or
supplement the registration statement or the prospectus used in connection with
such registration statement in order to correct any untrue statements, ensure
that the registration statement is not misleading or otherwise to comply with
the Securities Act, as promptly as reasonably practicable, prepare and file with
the SEC such amendments and supplements to such registration statement and the
prospectus as may be necessary to correct such untrue statements, ensure that
such registration statement is not misleading or to comply with the provisions
of the Securities Act, provided, that to the extent that any statements to be
corrected relate to any information provided by the Holder, the Company shall
not be obligated to amend the registration statement until the Company has
received such corrected information from the Holder and has had a reasonable
opportunity to amend or supplement such registration statement or prospectus;
(g) If the registration statement ceases to be effective for
any reason at any time prior to the Effectiveness Termination Date (other than
because all securities registered thereunder have been resold pursuant thereto),
use commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof;
(h) Cause all such Registrable Securities registered hereunder
to be listed or included on each securities exchange or automated quotation
system on which similar securities issued by the Company are then listed or
included; and
(i) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
In addition, in the event of any underwritten public offering, the Company shall
(I) enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering,
provided that the Holder also enters into and perform its obligations under such
an agreement, and (II) use its best efforts to furnish, at the request of the
Holder, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a
registration pursuant hereto, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (A) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given in an underwritten public offering (and reasonably acceptable
to the counsel for the Holder), addressed to the underwriters, if any, and to
the Holder, and (B) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants in an underwritten public offering
(and reasonably acceptable to the counsel for the Holder), addressed to the
underwriters, to the extent such letter is permitted under generally recognized
accounting practice.
3. Selling Procedure.
(a) Following the date that the registration statement is
declared effective by the SEC, the Holder shall be permitted, subject to the
provisions hereof, to offer and sell the Registrable Securities included thereon
in the manner described in such registration statement during the period of its
effectiveness; provided, however, that the Holder arranges for delivery of a
current prospectus to the transferee of the Registrable Securities.
(b) Notwithstanding the foregoing, or anything contained
herein to the contrary, the Company may suspend offers and sales of Registrable
Securities pursuant to such registration statement if in the good faith judgment
of the Company's Board of Directors, upon the advice of counsel, (i)(A)(I) such
registration would be substantially contrary to the bests interests of the
Company because (a) it would materially interfere with a material financing plan
or other material transaction or negotiations relating thereto then pending, or
(b) it would require the disclosure of any material non-public information prior
to the time that such information would otherwise be disclosed or be required to
be disclosed, if such early disclosure would be substantially contrary to the
best interests of the Company, or (II) such registration statement contains or
may contain an untrue statement of material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the Board of Directors concludes, as a result,
that it is necessary and appropriate to defer the filing of such registration
statement at such time, and (ii) the Company shall furnish to the Holder a
certificate signed by the President or Chief Executive Officer of the Company
stating the good faith judgment of the Board of Directors to such effect, then
the Company shall have the right to defer such filing only for the period during
which such filing would be substantially contrary to the best interests of the
Company (a "Suspension"); provided, however, that the aggregate number of days
included in such periods of Suspension shall not exceed ninety (90) days in any
twelve (12) month period. In the event of any Suspension, the Holder shall
discontinue disposition of Registrable Securities covered by the registration
statement until copies of a supplemented or amended prospectus are distributed
to the Holder or until the Holder is advised in writing by the Company that the
use of the applicable prospectus may be resumed.
4. Expenses of Registration. All expenses incurred in connection with
the registrations pursuant hereto (including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of one
counsel for the Company and reasonable fees and disbursements of counsel to the
Holder, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration shall be borne by the Company
other than expenses relating to (a) the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and (b) all
underwriting discounts and selling commissions applicable to a sale of the
Registrable Securities, which shall be borne by the Holder.
5. Indemnification.
(a) The Company shall indemnify the Holder, its officers,
directors, employees, partners, affiliates, agents, representatives and legal
counsel, and each person controlling (or deemed controlling) the Holder within
the meaning of the Securities Act, (collectively, the "Holder's Agents") with
respect to which registration, qualification or compliance has been effected
pursuant to this Exhibit B, against all claims, losses, damages and liabilities
(or actions in respect thereof), joint or several, arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other similar document or any
amendments or supplements thereto (including any related registration statement
and amendments or supplements thereto, notification or the like) incident to any
such registration, qualification or compliance, (ii) 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 in the light of the
circumstances under which they were made, or (iii) any violation by the Company
of the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any rule or regulation promulgated thereunder applicable to
the Company in connection with any such registration, qualification or
compliance, and shall reimburse the Holder, and the Holder's Agents, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred; provided, however, that the Company shall 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 an instrument duly executed by such
Holder and stated to be specifically for use therein or furnished in writing by
such Holder to the Company in response to a request by the Company stating
specifically that such information shall be used by the Company therein.
(b) The Holder shall indemnify the Company, its officers,
directors, employees, affiliates, agents, representatives, legal counsel,
independent accountant, and each person controlling the Company within the
meaning of the Securities Act (collectively, the "Company's Agents"), against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other similar document or any amendments or supplements thereto (including any
related registration statements and any amendments or supplements thereto,
notification and the like), or (ii) 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 in the light of the circumstances under which
they were made, and shall reimburse the Company and the Company's Agents for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, as incurred;
provided, however, 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 prospectus,
offering circular or other similar document or any amendments or supplements
thereto (including any related registration statements and any amendments or
supplements thereto, notification and the like) in reliance upon and in
conformity with written information furnished in writing to the Company by an
instrument duly executed by the Holder and stated to be specifically for use
therein or furnished by the Holder to the Company in response to a request by
the Company stating specifically that such information shall be used by the
Company therein; provided, further, that the indemnity agreement provided in
this Section 5(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the prior written consent of the Holder, which consent shall not be unreasonably
withheld, unless such consent is obtained in accordance with Section 5(c)
hereof. In no event shall the Holder's indemnification obligation exceed the net
proceeds received from its sale of Registrable Securities in such offering.
(c) Each party entitled to indemnification under this Section
5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall bear
the expense of such defense of the Indemnified Party if representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts of interest. The failure of any Indemnified Party to give notice
within a reasonable period of time as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 5, but only to the
extent that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the written consent of each Indemnified Party (which shall not be
unreasonably withheld), 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.
(d) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, however, that in no event shall any contribution by an
Holder under this Section 4 exceed the net proceeds from the offering received
by such Holder. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and the Holder under this
Section 5 shall survive the completion of any offering of the Registrable
Securities in a registration statement pursuant to this Exhibit B, any
investigation made by or on behalf of the Indemnified Party or any officer,
director or controlling person of such Indemnified Party and shall survive the
transfer of securities.
6. Information by the Holder. As a condition precedent to the
obligations of the Company under this Exhibit B, the Holder shall furnish to the
Company all such information and materials regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request in
writing in connection with any registration, qualification or compliance
referred to herein. The Holder will promptly notify the Company in writing of
any changes in the information set forth in the registration statement after it
is prepared regarding the Holder or its plan of distribution to the extent
required by applicable law.
7. Inclusion of Additional Securities. The Company may include
additional Company securities in any registration pursuant hereto hereof for its
own account and by other parties in amounts as determined by the Company's Board
of Directors, provided that any such inclusion does not (i) reduce the number of
Registrable Securities (or other securities of the Holder) which are included in
the registration statement filed pursuant to this Exhibit B or otherwise
materially and adversely affect the rights of the Holder hereunder, or (ii)
cause Form S-3 to be unavailable under the Securities Act for such registration
due to the nature of the additional securities to be so included.
8. Allocation of Registration Opportunities. In connection with any
offering involving an underwriting of shares of the Company's capital stock
pursuant hereto, the Company shall not be required to include any of the
Registrable Securities in such underwriting unless the Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as the underwriters determine in
good faith will not jeopardize the success of the offering. If the total amount
of securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities that the underwriters
determine in good faith is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including the Registrable Securities, which the underwriters
determine in good faith will not jeopardize the success of the offering. In such
an event and to the extent necessary to comply with the foregoing, the managing
underwriter shall limit or exclude up to all of the securities of holders of
capital stock of the Company as follows: (i) first, among securities requested
to be included in such registration by any stockholder of the Company other than
(A) the Holder or (B) any holders of Company securities with a contractual right
to affirmatively require the Company to file a registration statement relating
to such holders' securities (each, a "Demand Right Holder"); (ii) second, among
the Registrable Securities requested to be
included in such registration by the Holder but in no event shall the amount of
such Registrable Securities be reduced below twenty-five percent (25%) of total
amount of securities included in such offering (calculated, for the purposes
hereof, in the aggregate with the securities held by the holder of any other
Warrant, or portion thereof, issued pursuant to the Consulting Agreement); (iii)
third, among the securities of the Company (i.e., primary shares); and (iv)
fourth, among the securities of the Demand Right Holders, if any. For purposes
of the preceding provisions concerning apportionment, for any Holder which is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single Holder for the purposes hereof, and any pro-rata reduction
with respect to such Holder shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such Holder (as described herein).
9. Termination of Registration Rights. All rights and obligations
provided for in this Exhibit B (except for in Section 5 hereof, which rights and
obligations shall survive) shall terminate on the Effectiveness Termination
Date.
EXHIBIT B-3 TO CONSULTING AGREEMENT
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED
FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH WARRANT
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
TO BE PROVIDED PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR
HYPOTHECATION THAT A PROPOSED SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.
Number: CS-00__ __________, 2003
WARRANT TO PURCHASE COMMON STOCK
OF
SEEC, INC.
THIS CERTIFIES THAT, for value received, KPCB HOLDINGS, INC.,
a Delaware corporation, as nominee (the "Holder"), is entitled, upon the terms
and subject to the conditions hereinafter set forth and at its sole and absolute
discretion, to subscribe for and purchase from SEEC, INC., a Pennsylvania
corporation with its principal executive offices at Park Xxx Xxxx, Xxxxx Xxxx
Xxxx, Xxxxxxxxxx, XX 00000 (the "Company"), at any time during the period set
forth in Section 1(d) hereof, the number of shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock") set forth in Section 1(b)
hereof at the exercise price set in Section 1(c) hereof. This warrant (as
amended or otherwise modified from time to time, this "Warrant") is issued in
connection with the execution of that certain Consulting Agreement of January 8,
2003, by and between the Company and the Holder (as amended or otherwise
modified from time to time, the "Consulting Agreement").
Section 36. Warrant Purchase Rights.
(a) Type of Stock. This Warrant shall be exercisable for
shares of Common Stock (such shares, the "Warrant Stock").
(b) Number of Shares. The number of shares of Warrant Stock
issuable upon exercise hereof shall be 1,000,000 shares (the "Maximum Warrant
Shares"), provided that the Company's aggregate revenues for its fiscal year
2004, calculated in accordance with generally-accepted accounting principles and
as set forth in the Company's audited financial statements for the fiscal year
ended March 31, 2004 included in the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 2004 to be filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (such revenues, the "2004 Reported Revenue"),
are at least $20,000,000. Notwithstanding the foregoing, in the event that 2004
Reported Revenues are less than $20,000,000 but greater than $16,000,000, the
number of shares of Warrant Stock issuable upon exercise hereof shall be equal
to the number obtained by multiplying (I) the Maximum Warrant Shares by (II) a
fraction, (X) the numerator of which is equal to difference between the 2004
Reported Revenue and 16,000,000, and (Y) the denominator is equal to 4,000,000.
(c) Exercise Price. The exercise price of the Warrant Stock
(the "Exercise Price") shall be $1.80 per share.
(d) Exercise Period. Subject to Section 1(b) hereof, this
Warrant may be exercised at any time on or after April 1, 2004 until April 1,
2009 (such period, the "Exercise Period").
Section 37. Method of Exercise; Payment.
(a) Cash Exercise. Subject to the terms hereof, the purchase
rights represented hereby may be exercised by the Holder in its sole and
absolute discretion, in whole or in part, at any time during the Exercise
Period, by the surrender of this Warrant (with a duly executed notice of
exercise form (the "Notice of Exercise") substantially in the form attached
hereto as Exhibit A) at the principal executive offices of the Company, and by
the payment to the Company of an amount equal to the Exercise Price multiplied
by the number of shares of Warrant Stock being purchased, which amount may be
paid, at the election of the Holder, by wire transfer of immediately available
funds or certified check payable to the order of the Company. The person(s) in
whose name any certificate representing the shares of Warrant Stock issuable
upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all purposes as the record holder of, the
Warrant Stock represented thereby, and such shares of Warrant Stock shall be
deemed to have been issued, immediately prior to the close of business on the
date or dates upon which this Warrant is surrendered.
(b) Net Issue Exercise.
(i) Notwithstanding any provision herein to the
contrary, if the fair market value of one share (or other unit) of Warrant Stock
is greater than the Exercise Price, at the date of calculation as set forth
below, in lieu of a cash exercise of this Warrant in accordance with Section
2(a) hereof, the Holder may elect to receive securities equal to the value (as
determined below) of this Warrant, or the portion thereof being exercised, by
surrender of this Warrant at the principal executive offices of the Company,
together with the properly-endorsed Notice of Exercise, in which event the
Company shall issue to the Holder a number of shares of Warrant Stock computed
using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Warrant
Stock to be issued to the
Holder.
Y = the number of shares of Warrant
Stock requested to be exercised
under this Warrant.
A = the fair market value of one
share (or other unit) of Warrant
Stock (at the date of such
calculation).
B = the Exercise Price (as adjusted
to the date of such
calculation).
2
(ii) For purposes of this Section 2(b), the fair
market value of one share (or other unit) of Warrant Stock shall be determined
in good faith by the Company's Board of Directors; provided, however, that where
there exists a public market for shares of Common Stock at the time of such
exercise, the fair market value per share shall be the product of (A) the
average of the closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or the last reported sale price of the Common
Stock or the closing price quoted on The Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is applicable, for the
five trading days prior to the date of determination of fair market value, and
(B) the number of shares of Common Stock into which each share of Warrant Stock
is convertible at the time of such exercise.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Warrant Stock
so purchased shall be delivered to the Holder as soon as reasonably possible
and, unless this Warrant has been fully exercised or has expired, a new Warrant
on like terms representing the shares with respect to which this Warrant shall
not have been exercised shall also be issued to the Holder within such time.
(d) No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the fair market value
of one share of Warrant Stock multiplied by such fraction.
(e) No Impairment. The Company will not, by amendment of its
certificate of incorporation or bylaws (the "Charter Documents"), or through
reorganization, consolidation, merger, dissolution, issue or sale of securities,
sale of assets 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 against impairment. Notwithstanding the foregoing, the
taking of any action by the Company for which an adjustment is made pursuant to
Section 5 hereof and which does not constitute a breach of the other terms of
this Warrant shall not be deemed to constitute a breach of the foregoing
provisions or an impairment of this Warrant.
Section 38. Due Authorization of Shares; Reservation of Shares. The
Company hereby covenants and agrees that, during the term this Warrant is
exercisable, the Company will reserve from its authorized and unissued shares a
sufficient number of shares to provide for the issuance of the Warrant Stock
upon exercise of this Warrant.
Section 39. Rights of Stockholders. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Warrant Stock
shall have the registration rights set forth on Exhibit B hereto, the terms and
conditions of which are incorporated by reference herein. Such registration
rights may be assigned by the Holder in connection with the transfer of all or
any part of this Warrant in accordance herewith.
3
Section 40. Adjustment.
(a) Merger or Reorganization. Prior to any recapitalization,
reorganization, consolidation, merger or other similar transaction, which in
each case is effected in such a way that the holders of the Company's capital
stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for such stock (an
"Organic Change"), the Company shall make appropriate provision, in form and
substance reasonably satisfactory to the Holder, to insure that the Holder shall
thereafter have the right to acquire and receive, in lieu of or in addition to,
as the case may be, the Warrant Stock immediately theretofore issuable and
receivable upon the exercise hereof, such shares of stock, securities or assets
as may be issued or payable in connection with such Organic Change with respect
to or in exchange for the number of shares of Warrant Stock immediately
theretofore issuable and receivable upon exercise of this Warrant had such
Organic Change not taken place.
(b) Split, Subdivision, Combination, Consolidation,
Reclassification and the Like. If the Company, at any time while this Warrant,
or any portion hereof, remains outstanding and unexpired by split, subdivision,
combination, consolidation or reclassification of securities or otherwise, shall
change the Warrant Stock into the same or a different number and kind of
securities of any class or classes, this Warrant shall thereafter represent the
right to acquire such number and kind of such securities as would have been
issuable as the result of such change with respect to the Warrant Stock
immediately prior to such subdivision, combination, consolidation,
reclassification or other change, and the Exercise Price in respect of such
securities shall be proportionately adjusted.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If, while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive by way of dividend, without payment therefore, other or additional
stock or other securities or property (other than cash) of the Company, then and
in each case, this Warrant shall represent the right to acquire, in addition to
the number of shares of the security receivable upon exercise of this Warrant,
and without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of such security in respect of which the dividend shall
have been or be payable on the date hereof and had thereafter, during the period
from the date hereof to and including the date of such exercise, retained such
shares and/or all other additional stock available by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
the provisions of this Section 5.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 5, the Company shall compute
such adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company will cause copies of such certificate to be promptly delivered to the
Holder.
4
Section 41. Representations and Warranties.
(a) By the Company. The Company represents and warrants to the
Holder as follows:
(i) this Warrant has been duly authorized and
executed by the Company and is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, moratorium, reorganization and the relief of
debtors and the rules of law or principles at equity governing specific
performance, injunctive relief and other equitable remedies (regardless of
whether enforcement is sought in equity or at law);
(ii) all shares of Warrant Stock which may be issued
upon the exercise of this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than taxes with respect to any
transfer occurring contemporaneously with such issue to a person other than the
Holder);
(iii) except for the filing of notices pursuant to
federal and state securities laws, which filings will be effected by the time
required thereby, the execution, delivery or performance of this Warrant by the
Company, and the issuance of the shares of Warrant Stock upon exercise of this
Warrant in accordance with the terms hereof shall not (A) conflict with or
result in any breach of any provision of the Charter Documents, (B) require any
material filing with, or permit, authorization, consent or approval of, any
Federal, state or local governmental authority, (C) result in a material
violation or breach of, or constitute (with or without due notice or the passage
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any material indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound, or (D)
violate any order, writ, injunction, decree, or any material statute, rule or
regulation applicable to the Company or any of its material properties or
assets; and
(iv) there are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.
(b) By the Holder. The Holder represents and warrants to the
Company as follows:
(i) the Holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant.
(ii) the Holder is acquiring this Warrant for its own
account as principal, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole
5
or in part, within the meaning of the Securities Act of 1933, as amended (the
"Securities Act");
(iii) the Holder understands that its acquisition of
this Warrant has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of such Holder's investment intent as expressed herein;
(iv) the Holder shall not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Warrant or
the shares of Warrant Stock, except in compliance with the terms hereof and the
registration requirements of the Securities Act, and the rules and regulations
promulgated thereunder, or an exemption thereunder; and
(v) the Holder is an "accredited investor" as defined
in Rule 501(A) under the Securities Act.
Section 42. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and addresses of the Holder(s).
Any Holder of this Warrant or a portion hereof may change its or his address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered to such Holder as shown on the Warrant Register and
at the address shown on the Warrant Register. Until notified of a transfer in
accordance with the terms hereof, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
(b) Transferability of Warrant. The Holder further
acknowledges and understands that this Warrant and the Warrant Stock may not be
resold or otherwise transferred except in a transaction registered under the
Securities Act or unless an exemption from such registration is available. The
Holder understands that the Warrant and the certificate(s) evidencing the shares
of Warrant Stock shall be imprinted with a legend as set forth in Section 9
hereof that prohibits the transfer of such securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration under the Securities Act and, if the
Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt. The requirements of subSection (ii) above shall not apply to any
transfer of this Warrant (or the shares of Warrant Stock upon exercise thereof)
or any part hereof to any affiliate of the Holder or such other person or entity
as the Holder may determine; provided, however, that the transferee shall agree
in writing to be bound by the terms of this Warrant as if the original Holder
hereof. Any transfer, attempted transfer or other disposition in violation of
this Section 7(b) shall be deemed null and void and be of no binding effect.
(c) Exchange of Warrant Upon Transfer. On surrender of this
Warrant for exchange, subject to the provisions of this Warrant with respect to
compliance with federal and state securities laws and with the limitations on
transfers and assignments contained in this Section 7, the Company, at its
6
expense, shall as soon as reasonably possible issue to the Holder a new warrant
or warrants of like tenor, in the name of the Holder or as the Holder (on
payment by the Holder of any applicable transfer taxes) may direct, for the
number of securities issuable upon exercise hereof.
Section 43. Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.
Section 44. Legends. This Warrant and all Warrant Stock issued upon
exercise hereof or any securities issued upon conversion thereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. SEEC, INC.
MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION THAT A
PROPOSED SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE WITH THE ACT.
Section 45. Certain Covenant. With reference to the provision of the
Services (as such term is defined in the Consulting Agreement) to the Company by
the Consultant (as such term is defined therein), so long as the Company has not
terminated the Consulting Agreement due to the nonperformance by the Consultant,
the Company shall request that its board of directors, subject to its fiduciary
duties, give due consideration for providing additional compensation to the
Holder, to the extent that the Company's cash flows and liabilities for its
initial quarters, other benefits and general integration exceed the levels
anticipated as a result of the Consultant's contribution. Such compensation
would be in the form of cash or options on a number of shares. The exact value
and number or options shall be determined by a committee of the Company's board
of directors, comprised of directors that are not appointees or related with the
Holder, in its sole discretion. Nothing in this Section 10 shall provide any
remedy to the Company in the event of the Consultant's nonperformance under the
Consulting Agreement except as expressly provided therein; which remedy, solely
for the avoidance of doubt, shall be limited to the Company's right, but without
any obligation, to terminate the Consulting Agreement in accordance with Section
5 thereof. Further, nothing in this Section 10 shall provide any additional
compensation right or remedy to the Holder in the event, in the opinion of such
committee of the board, that the Company's cash flows and liabilities for its
initial quarters, other benefits and general integration do not exceed the
levels anticipated as a result of the Consultant's contribution; in such event,
solely for the avoidance of doubt, this Warrant and the warrant appended as
Exhibit B-2 to the Consulting Agreement (collectively, the "Performance
Warrants") shall be exercisable in accordance with their respective terms for
the shares of Warrant Stock as provided herein and therein.
7
Section 46. Miscellaneous.
(a) Governing Law. This Warrant is made in accordance with and
shall be construed under the laws of the State of Delaware, other than the
conflicts of laws principles thereof.
(b) Successors and Assigns. The provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties to this Agreement. Neither the
Company nor the Holder may assign, except as expressly contemplated herein, any
rights, obligations or benefits under this Warrant without the prior written
consent of the other party.
(c) Entire Agreement. This Warrant, with the Consulting
Agreement and the other schedules, exhibits and documents appended hereto and
thereto, constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(d) Notices. All notices and other communications required or
permitted under this Warrant shall be given in writing and shall be mailed by
registered or certified mail, postage prepaid, sent by confirmed facsimile or
telecopy, or otherwise delivered by hand, overnight courier or by messenger,
addressed (i) if to a Holder, at the Holder's as shown on the Warrant Register,
or (ii) if to the Company, one copy should be sent to its address set forth on
the first page of this Warrant and addressed to the attention of the Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in accordance herewith of at least 10 days prior to the date of
such notice, with a copy to Xxxxx & Xxxxxxx, P.C., 00 Xxxxxxx Xx., 00xx Xxxxx,
Xxxxxxxxxx, XX 00000, Facsimile: 412.209.0672, Attention: Xxxxxx X. Xxxxxxx.
Each such notice of other communication shall be treated as effective or having
been given when delivered if delivered personally, or if sent by mail, at the
earlier of its receipt or seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and mailed as set forth above.
(e) Amendment, Modification and Waiver. Any term of this
Warrant may be amended and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder. The
failure by the parties to assert any right herein shall not be deemed to be a
waiver thereof.
(f) Separability. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be valid, legal, and
enforceable under all applicable laws and regulations. If, however, any
provision of this Warrant shall be invalid, illegal, or unenforceable under any
such law or regulation in any jurisdiction, it shall, as to such jurisdiction,
be deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
invalid, illegal, or unenforceable only to the extent of such invalidity,
illegality, or limitation on enforceability without affecting the
8
remaining provisions of this Warrant, or the validity, legality, or
enforceability of such provision in any other jurisdiction.
(g) Interpretation. When a reference is made in this Warrant
to Exhibits or Schedules, such reference shall be to an Exhibit to this Warrant
unless otherwise indicated. The words "include," "includes" and "including" when
used in this Warrant shall be deemed in each case to be followed by the words
"without limitation." The phrase "provided to," "furnished to," and terms of
similar import in this Warrant shall mean that a paper copy of the information
referred to has been furnished to the party to whom such information is to be
provided. In this Warrant, the phrases "the date hereof," "the date hereof", and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to ____________, 2003. The headings contained in this Warrant are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Warrant.
(This space intentionally left blank)
9
EXHIBIT B-3 TO CONSULTING AGREEMENT
IN WITNESS WHEREOF, the undersigned has caused this Warrant to
be executed as of the date set forth above.
SEEC, INC., a Pennsylvania corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO WARRANT]
EXHIBIT B-3 TO CONSULTING AGREEMENT
EXHIBIT A
Notice of Exercise
TO: SEEC, Inc.
Park One Xxxx
Xxxxx Xxxx Xxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
1. CASH PAYMENT OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to purchase ________ shares of
Common Stock of SEEC, Inc. pursuant to the terms of this Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. NET ISSUE EXERCISE OPTION - CHECK THIS BOX [ ]
The undersigned hereby elects to effect the net issue exercise
provision of Section 2(b) of this Warrant and receive ________ shares of Common
Stock of SEEC, Inc., pursuant to the terms of this Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned as specified below:
Name:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares.
--------------------------------------
(Print Full Name)
--------------------------------------
(Sign Name)
--------------------------------------
(Print Title, if applicable)
Date:
--------------------------------
EXHIBIT B
Registration Rights
1. Registration Rights. If, at any time after the date hereof, the
Company proposes to register any shares of its capital stock under the
Securities Act for sale to the public, whether for its own account or for the
account of other securityholders or both (including, without limitation,
registration statements relating to secondary offerings of shares of the
Company's capital stock, but excluding registration statements relating solely
to the sale of securities to participants in a Company stock plan, to exchange
offers or to non-convertible debt securities or relating solely to corporate
reorganizations or other transactions pursuant to Rule 145 under the Securities
Act), the Company shall, at such time, promptly give the Holder written notice
of such registration, and will afford the Holder an opportunity to include in
such registration statement all or any of the Warrant Stock issued or issuable
hereunder (for such purposes, the "Registrable Securities"). The Holder shall,
within twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in
such registration statement. At the time the registration statement is declared
effective, the Holder shall be named as a selling securityholder therein and the
related prospectus in such a manner as to permit such Holder to deliver such
prospectus to purchasers of registered securities in accordance with applicable
law.
2. Registration Procedures. In the case of a registration, and any
qualification or compliance effected by the Company pursuant to this Section 1
of this Exhibit B, Subject to provisions hereof, and until the Effectiveness
Termination Date, the Company shall take the following actions:
(a) Promptly prepare and file with the SEC the registration
statement in accordance herewith and keep the Holder advised in writing as to
the initiation of such registration, qualification and compliance and as to the
completion thereof;
(b) Use commercially reasonable efforts to cause a
registration statement to be declared effective under the Securities Act as soon
as practicable thereafter and to keep such registration statement continuously
effective under the Securities Act until the earlier of (i) the date that is the
later of (A) the second anniversary of the date hereof and (B) the date that
neither the Holder nor any of its affiliates is an affiliate of the Company,
(ii) such date as all Registrable Securities may be sold in a single three-month
period in accordance with Rule 144 under the Securities Act or (iii) such date
as all securities registered on such registration statement have been resold
(the earlier to occur of (i), (ii) and (iii) is the "Effectiveness Termination
Date");
(c) Furnish to the Holder such reasonable numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it;
(d) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holder for the purpose of permitting the offers and sales of
the securities in such jurisdictions, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) Notify as soon as reasonably practicable after the Company
becomes aware the Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) If for any reason it shall be necessary to amend or
supplement the registration statement or the prospectus used in connection with
such registration statement in order to correct any untrue statements, ensure
that the registration statement is not misleading or otherwise to comply with
the Securities Act, as promptly as reasonably practicable, prepare and file with
the SEC such amendments and supplements to such registration statement and the
prospectus as may be necessary to correct such untrue statements, ensure that
such registration statement is not misleading or to comply with the provisions
of the Securities Act, provided, that to the extent that any statements to be
corrected relate to any information provided by the Holder, the Company shall
not be obligated to amend the registration statement until the Company has
received such corrected information from the Holder and has had a reasonable
opportunity to amend or supplement such registration statement or prospectus;
(g) If the registration statement ceases to be effective for
any reason at any time prior to the Effectiveness Termination Date (other than
because all securities registered thereunder have been resold pursuant thereto),
use commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof;
(h) Cause all such Registrable Securities registered hereunder
to be listed or included on each securities exchange or automated quotation
system on which similar securities issued by the Company are then listed or
included; and
(i) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
In addition, in the event of any underwritten public offering, the Company shall
(I) enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering,
provided that the Holder also enters into and perform its obligations under such
an agreement, and (II) use its best efforts to furnish, at the request of the
Holder, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a
registration pursuant hereto, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (A) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given in an underwritten public offering (and reasonably acceptable
to the counsel for the Holder), addressed to the underwriters, if any, and to
the Holder, and (B) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants in an underwritten public offering
(and reasonably acceptable to the counsel for the Holder), addressed to the
underwriters, to the extent such letter is permitted under generally recognized
accounting practice.
3. Selling Procedure.
(a) Following the date that the registration statement is
declared effective by the SEC, the Holder shall be permitted, subject to the
provisions hereof, to offer and sell the Registrable Securities included thereon
in the manner described in such registration statement during the period of its
effectiveness; provided, however, that the Holder arranges for delivery of a
current prospectus to the transferee of the Registrable Securities.
(b) Notwithstanding the foregoing, or anything contained
herein to the contrary, the Company may suspend offers and sales of Registrable
Securities pursuant to such registration statement if in the good faith judgment
of the Company's Board of Directors, upon the advice of counsel, (i)(A)(I) such
registration would be substantially contrary to the bests interests of the
Company because (a) it would materially interfere with a material financing plan
or other material transaction or negotiations relating thereto then pending, or
(b) it would require the disclosure of any material non-public information prior
to the time that such information would otherwise be disclosed or be required to
be disclosed, if such early disclosure would be substantially contrary to the
best interests of the Company, or (II) such registration statement contains or
may contain an untrue statement of material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the Board of Directors concludes, as a result,
that it is necessary and appropriate to defer the filing of such registration
statement at such time, and (ii) the Company shall furnish to the Holder a
certificate signed by the President or Chief Executive Officer of the Company
stating the good faith judgment of the Board of Directors to such effect, then
the Company shall have the right to defer such filing only for the period during
which such filing would be substantially contrary to the best interests of the
Company (a "Suspension"); provided, however, that the aggregate number of days
included in such periods of Suspension shall not exceed ninety (90) days in any
twelve (12) month period. In the event of any Suspension, the Holder shall
discontinue disposition of Registrable Securities covered by the registration
statement until copies of a supplemented or amended prospectus are distributed
to the Holder or until the Holder is advised in writing by the Company that the
use of the applicable prospectus may be resumed.
4. Expenses of Registration. All expenses incurred in connection with
the registrations pursuant hereto (including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of one
counsel for the Company and reasonable fees and disbursements of counsel to the
Holder, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration shall be borne by the Company
other than expenses relating to (a) the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and (b) all
underwriting discounts and selling commissions applicable to a sale of the
Registrable Securities, which shall be borne by the Holder.
5. Indemnification.
(a) The Company shall indemnify the Holder, its officers,
directors, employees, partners, affiliates, agents, representatives and legal
counsel, and each person controlling (or deemed controlling) the Holder within
the meaning of the Securities Act, (collectively, the "Holder's Agents") with
respect to which registration, qualification or compliance has been effected
pursuant to this Exhibit B, against all claims, losses, damages and liabilities
(or actions in respect thereof), joint or several, arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other similar document or any
amendments or supplements thereto (including any related registration statement
and amendments or supplements thereto, notification or the like) incident to any
such registration, qualification or compliance, (ii) 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 in the light of the
circumstances under which they were made, or (iii) any violation by the Company
of the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any rule or regulation promulgated thereunder applicable to
the Company in connection with any such registration, qualification or
compliance, and shall reimburse the Holder, and the Holder's Agents, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred; provided, however, that the Company shall 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 an instrument duly executed by such
Holder and stated to be specifically for use therein or furnished in writing by
such Holder to the Company in response to a request by the Company stating
specifically that such information shall be used by the Company therein.
(b) The Holder shall indemnify the Company, its officers,
directors, employees, affiliates, agents, representatives, legal counsel,
independent accountant, and each person controlling the Company within the
meaning of the Securities Act (collectively, the "Company's Agents"), against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other similar document or any amendments or supplements thereto (including any
related registration statements and any amendments or supplements thereto,
notification and the like), or (ii) 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 in the light of the circumstances under which
they were made, and shall reimburse the Company and the Company's Agents for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, as incurred;
provided, however, 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 prospectus,
offering circular or other similar document or any amendments or supplements
thereto (including any related registration statements and any amendments or
supplements thereto, notification and the like) in reliance upon and in
conformity with written information furnished in writing to the Company by an
instrument duly executed by the Holder and stated to be specifically for use
therein or furnished by the Holder to the Company in response to a request by
the Company stating specifically that such information shall be used by the
Company therein; provided, further, that the indemnity agreement provided in
this Section 5(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the prior written consent of the Holder, which consent shall not be unreasonably
withheld, unless such consent is obtained in accordance with Section 5(c)
hereof. In no event shall the Holder's indemnification obligation exceed the net
proceeds received from its sale of Registrable Securities in such offering.
(c) Each party entitled to indemnification under this Section
5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall bear
the expense of such defense of the Indemnified Party if representation of both
parties by the same counsel would be inappropriate due to actual or potential
conflicts of interest. The failure of any Indemnified Party to give notice
within a reasonable period of time as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 5, but only to the
extent that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the written consent of each Indemnified Party (which shall not be
unreasonably withheld), 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.
(d) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, however, that in no event shall any contribution by an
Holder under this Section 4 exceed the net proceeds from the offering received
by such Holder. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and the Holder under this
Section 5 shall survive the completion of any offering of the Registrable
Securities in a registration statement pursuant to this Exhibit B, any
investigation made by or on behalf of the Indemnified Party or any officer,
director or controlling person of such Indemnified Party and shall survive the
transfer of securities.
6. Information by the Holder. As a condition precedent to the
obligations of the Company under this Exhibit B, the Holder shall furnish to the
Company all such information and materials regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request in
writing in connection with any registration, qualification or compliance
referred to herein. The Holder will promptly notify the Company in writing of
any changes in the information set forth in the registration statement after it
is prepared regarding the Holder or its plan of distribution to the extent
required by applicable law.
7. Inclusion of Additional Securities. The Company may include
additional Company securities in any registration pursuant hereto hereof for its
own account and by other parties in amounts as determined by the Company's Board
of Directors, provided that any such inclusion does not (i) reduce the number of
Registrable Securities (or other securities of the Holder) which are included in
the registration statement filed pursuant to this Exhibit B or otherwise
materially and adversely affect the rights of the Holder hereunder, or (ii)
cause Form S-3 to be unavailable under the Securities Act for such registration
due to the nature of the additional securities to be so included.
8. Allocation of Registration Opportunities. In connection with any
offering involving an underwriting of shares of the Company's capital stock
pursuant hereto, the Company shall not be required to include any of the
Registrable Securities in such underwriting unless the Holder accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it, and then only in such quantity as the underwriters determine in
good faith will not jeopardize the success of the offering. If the total amount
of securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities that the underwriters
determine in good faith is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including the Registrable Securities, which the underwriters
determine in good faith will not jeopardize the success of the offering. In such
an event and to the extent necessary to comply with the foregoing, the managing
underwriter shall limit or exclude up to all of the securities of holders of
capital stock of the Company as follows: (i) first, among securities requested
to be included in such registration by any stockholder of the Company other than
(A) the Holder or (B) any holders of Company securities with a contractual right
to affirmatively require the Company to file a registration statement relating
to such holders' securities (each, a "Demand Right Holder"); (ii) second, among
the Registrable Securities requested to be
included in such registration by the Holder but in no event shall the amount of
such Registrable Securities be reduced below twenty-five percent (25%) of total
amount of securities included in such offering (calculated, for the purposes
hereof, in the aggregate with the securities held by the holder of any other
Warrant, or portion thereof, issued pursuant to the Consulting Agreement); (iii)
third, among the securities of the Company (i.e., primary shares); and (iv)
fourth, among the securities of the Demand Right Holders, if any. For purposes
of the preceding provisions concerning apportionment, for any Holder which is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single Holder for the purposes hereof, and any pro-rata reduction
with respect to such Holder shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such Holder (as described herein).
9. Termination of Registration Rights. All rights and obligations
provided for in this Exhibit B (except for in Section 5 hereof, which rights and
obligations shall survive) shall terminate on the Effectiveness Termination
Date.
