EXHIBIT 4.6
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
Right to Purchase 211,000 Shares of Common Stock
of Number Nine Visual Technology Corporation
Common Stock Warrant No. W-1
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS. FURTHERMORE,
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT MAY BE
SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN THIS WARRANT, COMPLETE AND CORRECT COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF NUMBER NINE VISUAL TECHNOLOGY CORPORATION,
AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS WARRANT UPON WRITTEN
REQUEST.
Number Nine Visual Technology Corporation
Common Stock Purchase Warrant
Void after 5:00 p.m., Eastern Standard Time on March 31, 2009
Number Nine Visual Technology Corporation, a Delaware corporation (together
with any corporation which shall succeed to or assume the obligations of Number
Nine Visual Technology Corporation hereunder, the "COMPANY"), hereby certifies
that, for value received, FSC Corp., a Delaware corporation, or its assigns
("FSC"), is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time after the date hereof, until the
expiration hereof pursuant to Section 2.3 hereof, up to 211,000 shares of fully
paid and non-assessable shares of Common Stock (as defined in Section 15.4
hereof), at an initial purchase price per share of $2.86 (which is equal to the
average of the daily closing market prices of the Common Stock over a period of
30 consecutive trading days prior to the date of this Warrant) (such price per
share as adjusted from time to time as provided herein is referred to herein as
the "EXERCISE PRICE"). The number and character of such shares of Common Stock
and the Exercise Price are subject to adjustment as provided herein.
This Warrant is issued pursuant to the Loan and Security Agreement (the
"LOAN AGREEMENT") dated as of March 31, 1999, between the Company and
BankBoston, N.A., a copy of which is on file at the principal office of the
Company.
1. DEFINITIONS. Certain terms used in this Warrant are specifically defined in
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Section 15 hereof.
2. EXERCISE OF WARRANT.
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2.1. Exercise. This Warrant may be exercised prior to its expiration
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pursuant to Section 2.3 hereof by the holder hereof at any time or from time to
time, by surrender of this Warrant, with the form of subscription at the end
hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, by certified or official bank check payable to the order
of the Company or by wire transfer to its account, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then
being exercised by the Exercise Price then in effect. In the event the Warrant
is not exercised in full, the Company, at its expense, will forthwith issue and
deliver to or upon the order of the holder hereof a new Warrant or Warrants of
like tenor, in the name of the holder hereof or as such holder (upon payment by
such holder of any applicable transfer taxes) may request, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
equal to the balance of the number shares then purchasable under this Warrant.
Upon any exercise of this Warrant, in whole or in part, the holder hereof may
pay the aggregate Exercise Price with respect to the shares of Common Stock for
which this Warrant is then being exercised (collectively, the "EXERCISE SHARES")
by (a) in the event the holder of this Warrant is also the holder of a
promissory note of the Company, decreasing the outstanding principal and/or
interest amount of such note by such amount, or (b) by surrendering this Warrant
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of shares of Warrant Stock
determined as follows:
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 with respect to
which this Warrant is being exercised.
A = the average of the closing sale prices of the Common Stock
for the thirty (30) trading days immediately prior to (but not
including) the exercise date.
B = the Exercise Price.
For purposes of this Section 2.1, the fair market value of one share of
Common Stock (the "FAIR MARKET VALUE") shall be equal to, at any date, and
determined as follows:
(a) If the Common Stock shall be listed or admitted for trading on any
national securities exchange or quoted on the National Quotation Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), then the Fair Market Value shall be equal to
the average of the daily closing market prices of the Common Stock over a
period of 30 consecutive trading days prior to the day on which Fair Market
Value is being determined. As used in this subparagraph (a), "market price"
for each
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such trading day shall be the average of the closing prices on such day of
the Common Stock on all domestic primary national securities exchanges on
which the Common Stock is then listed, or, if there shall have been no
sales on any such exchange on such day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or if the
Common Stock shall not be so listed, the average of the representative bid
and asked prices at the end of such trading day as reported by NASDAQ.
(b) If the Common Stock is not listed or admitted for trading on any
national securities exchange or quoted on NASDAQ, then the Fair Market
Value of one share of Common Stock shall be equal to the fair market value
of the entire capital equity of the Company taken as a whole, divided by
the number of shares of Common Stock (on a fully diluted basis) then issued
(or deemed issued) and outstanding, without premium for control and without
discount for minority interest or restriction on transfer, as determined by
the Company's Board of Directors in good faith and set forth in writing to
FSC within fifteen (15) days after the occurrence of the event which
requires the valuation, unless FSC shall object in writing within five (5)
days after receipt of the Board of Directors' determination, in which case
the Fair Market Value shall be determined (x) by a reputable independent
appraiser selected by mutual agreement of the Company and FSC and set forth
in writing to the Company and FSC within thirty (30) days after the
occurrence of the event which requires the valuation, or (y) (if the
Company and FSC shall have been unable to agree upon an appraiser within
ten (10) days after FSC's objection to the Board of Directors'
determination of Fair Market Value) as the average of the two (2) closest
appraisals by three (3) reputable independent appraisers, one chosen by the
Company, one chosen by FSC, and the third selected by the other two (2)
appraisers, set forth in writing within sixty (60) days after the
occurrence of the event which requires the valuation. If the Fair Market
Value as determined by appraisal pursuant to clause (x) above or by the
average of the appraisals determined in accordance with clause (y) above,
as the case may be, is greater than the Fair Market Value determined by the
Board of Directors, then all expenses of such appraisals shall be paid by
the Company, and in all other circumstances, such appraisal expenses shall
be paid by FSC.
2.2. Warrant Agent In the event that a bank or trust company shall have
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been appointed as trustee for the holder of the Warrant pursuant to Section 6.2
hereof, such bank or trust company shall have all the powers and duties of a
warrant agent appointed pursuant to Section 16 hereof and shall accept, in its
own name for the account of the Company or such successor entity as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 2.
2.3. Termination. This Warrant shall terminate upon the earliest to occur
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of (a) exercise in full, or (b) March 31, 2009.
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3. REGISTRATION RIGHTS.
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3.1. Definitions. As used in this Section 3:
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Holder means FSC and all Persons to whom any Registrable Securities are
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transferred in accordance with the provisions hereof. A Holder shall, for all
purposes of this Section 3, unless the context shall otherwise require, be
deemed to hold, at any particular time, all shares of Warrant Stock issuable
upon exercise of this Warrant held of record by such Holder at such time.
Register, Registered and Registration refer to a registration effected by
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preparing and filing with the Commission a registration statement in compliance
with the Securities Act (as defined in Section 15) and the declaration or
ordering by the Commission of effectiveness of such registration statement.
Registrable Securities means, at any particular time, all shares of Warrant
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Stock issuable upon exercise of this Warrant at such time, or issued and
outstanding.
3.2. Registration.
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(a) Request for Registration.
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(a) Within forty-five (45) days of the date of this Warrant, the
Company shall prepare and file with the Commission a "Shelf" registration
statement covering all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The registration statement shall be on
Form S-3 (or if the Company is not then eligible to Register for resale the
Registrable Securities on Form S-3 such Registration shall be on another
appropriate form in accordance herewith, or, in connection with an Underwritten
Offering hereunder, such other form agreed to by the Company and by the Holders
of Registrable Securities The Company shall use its best efforts to cause the
registration statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof and shall use its best efforts to
keep such registration statement continuously effective under the Securities Act
until the date which is three years after the date that such registration
statement is declared effective by the Commission or such earlier date when all
Registrable Securities covered by such registration statement have been sold or
may be sold without volume restrictions pursuant to Rule 144(k) as determined by
the counsel to the Company pursuant to a written opinion to such effect,
addressed and acceptable to the Company's transfer agent.
(b) If the Holders of a majority of the Registrable Securities
so elect and the shares are not then covered by an effective registration
statement, an offering of Registrable Securities pursuant to the registration
statement may be effected in the form of an underwritten offering. In such
event, and, if the managing underwriters advise the Company and such Holders in
writing that in their opinion the amount of Registrable Securities proposed to
be sold in such underwritten offering exceeds the amount of Registrable
Securities which can be sold in such underwritten offering, there shall be
included in such underwritten offering the amount of such
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Registrable Securities which in the opinion of such managing underwriters can be
sold. and such amount shall be allocated pro rata among the Holders proposing to
sell Registrable Securities in such underwritten offering.
(c) If any of the Registrable Securities are to be sold in an
underwritten offering, the investment banker in interest that will administer
the offering will be selected by the Company. No Holder may participate in any
underwritten offering hereunder unless such Xxxxxx (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting and other documents required under the terms of such arrangements.
3.3. Registration Procedures. If (and on each occasion that) the Company
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shall become obligated to effect any Registration of any Registrable Securities
hereunder, the Company will use its best efforts in good faith to effect the
Registration of such Registrable Securities under the Securities Act and to
permit the public offering and sale of such Registrable Securities in accordance
with the intended method of disposition thereof. and, in connection therewith,
the Company, as expeditiously as possible, will:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective (provided. that before
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filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to counsel selected by the
holders of a majority of the Registrable Securities covered by such
registration statement. copies of all such documents proposed to be filed,
which documents will be subject to the timely review of such counsel);
(b) prepare and file' with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for not more than twelve (12) months. and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such effective
period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to each Holder selling Registrable Securities such number
of copies of such registration statement. each amendment and supplement
thereto. the prospectus included in such registration statement (including
each preliminary prospectus and each prospectus filed under Rule 424 of the
Securities Act) and such other documents as each such seller may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by each such Holder:
(d) use its best efforts to Register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests.
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use its best efforts to keep each such Registration or qualification effective,
during the period such registration statement is required to be kept effective,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller; provided that
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the Company will not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph (d). (ii) to subject itself to taxation in any such jurisdiction or
(iii) to consent to general service of process in any such jurisdiction;
(e) notify each seller of such Registrable Securities, 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 contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and.
at the request of any such seller, the Company will promptly prepare (and, when
completed, give notice to each seller of Registrable Securities) a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading; provided that upon such notification by the
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Company, each seller of such Registrable Securities will not offer or sell such
Registrable Securities until the Company has notified such seller that it has
prepared a supplement or amendment to such prospectus and delivered copies of
such supplement or amendment to such seller;
(f) use its best efforts to cause all such Registrable Securities to be
listed, prior to the date of the first sale of such Registrable Securities
pursuant to such Registration. on each securities exchange on which similar
securities issued by the Company are then listed and. if not so listed, to be
listed with NASDAQ;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) make available for inspection on a confidential basis by any Holder
that is a seller of Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers. directors, employees and independent
accountants to supply on a confidential basis all information reasonably
requested by any such seller, underwriter, attorney. accountant or agent in
connection with such registration statement:
(i) permit any holder of Registrable Securities which holder. in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company within the meaning of Section 15 of the Securities Act, to
participate in the preparation of such Registration or comparable statement and
to permit the insertion therein
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of material, furnished to the Company in writing, which in the reasonable
judgment of such Holder and its counsel should be included, provided that such
material shall be furnished under such circumstances as shall cause it to be
subject to the indemnification provisions provided pursuant to Section 3.6(b)
hereof;
(j) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such registration statement for sale in
any jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order; and
3.4. Cooperation by Prospective Sellers, Etc.
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(a) Each prospective seller of Registrable Securities will furnish to
Company in writing such information as the Company may reasonably require from
such seller, and otherwise reasonably cooperate with the Company in connection
with registration statement with respect to such Registrable Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Section 3 shall not affect the obligations of the Company under this
Agreement to any remaining sellers who furnish such information and documents
unless in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the viability of the offering or the legality
of the registration statement or the underlying offering.
(c) The Holders of Registrable Securities included in any registration
statement will not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update such registration statement or prospectus; but the
obligations of the Company with respect to maintaining any registration
statement current and effective shall be extended by a period of days equal to
the period such suspension is in effect.
(d) If on any occasion of registration in which the Company proposes to
file a registration statement under the Securities Act with respect to the
proposed sale of Common Stock. and the managing underwriter shall request an
agreement by the Holders of Registrable Securities not to sell any of the shares
so held by such Holder of Registrable Securities for a period of up to 180 days
after the effectiveness of any such registration statement in order to effect an
orderly public distribution thereof. then the Holders of Registrable Securities
shall agree to enter into and execute such an agreement with such managing
underwriter and the Company pertaining to a restriction on the transfer of any
shares of capital stock of the Company then held by the Holder of Registrable
Securities during such period.
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(e) At the end of any period during which the Company is obligated to keep
any registration statement current and effective as provided by Section 3 hereof
(and any extensions thereof required by the preceding paragraph (c) of this
Section 3.4), the Holders of Registrable Securities included in such
registration statement shall discontinue sales of shares pursuant to such
registration statement upon receipt of notice from the Company of its intention
to remove from Registration the shares covered by such registration statement
which remain unsold, and such Holders shall notify the Company of the number of
shares Registered which remain unsold promptly after receipt of such notice from
the Company.
3.5. Registration Expenses.
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(a) All costs and expenses incurred or sustained in connection with or
arising out of the filing of a registration statement pursuant to Section 3.
hereof, including. without limitation, all Registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with the blue sky qualification of Registrable Securities). printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of counsel
for the Company, fees and disbursements of all independent certified public
accountants (including the expenses relating to the preparation and delivery of
any special audit or "cold comfort" letters required by or incident to such
Registration), and fees and disbursements of underwriters (excluding discounts
and commissions), the reasonable fees and expenses of any special experts
retained by the Company of its own initiative or at the request of the managing
underwriters in connection with such Registration, and fees and expenses of all
(if any) other persons retained by the Company (all such costs and expenses
being herein called, collectively, the "Registration Expenses"), will be borne
and paid by the Company. The Company will, in any case, pay its internal
expenses (including, without limitation. all salaries and expenses of its
officers and employees performing legal or accounting duties). the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the securities to be Registered on each securities exchange on which
similar securities of the Company are then listed.
(b) The Company will not bear the cost of nor pay for any stock transfer
taxes imposed in respect of the transfer of any Registrable Securities to any
purchaser thereof by any Holder of Registrable Securities in connection with any
Registration of Registrable Securities pursuant to this Section 3.
(c) To the extent that Registration Expenses incident to any Registration
are. under the terms of this Section 3, not required to be paid by the Company.
each Holder of Registrable Securities included in such Registration will pay all
Registration Expenses which are clearly solely attributable to the Registration
of such Holder's Registrable Securities so included in such Registration. and
all other Registration Expenses not so attributable to one Holder will be borne
and paid by all sellers of securities included in such Registration in
proportion to thc number of securities so included by each such seller.
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3.6. Indemnification.
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(a) Indemnification by the Company. The Company will indemnify each Holder
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requesting or joining in a Registration and each underwriter of the securities
so Registered, the officers, directors and partners of each such Person and each
Person who controls any thereof (within the meaning of the Securities Act)
against any and all claims, losses. damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any prospectus, offering
circular or other document incident to any Registration, qualification or
compliance (or in any related registration statement, notification or the like)
or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
any action or inaction required of the Company in connection with any such
Registration, qualification or compliance, and the Company will reimburse each
such Holder, underwriter. officer, director, partner and controlling person for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
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extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company in an instrument duly executed by such Xxxxxx, underwriter, officer.
director. partner or controlling person and stated to be specifically for use in
such prospectus. offering circular or other document.
(b) Indemnification by Each Holder. Each Holder requesting or joining in a
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Registration will indemnify each underwriter of the securities so Registered,
the Company and its officers and directors and each person, if any, who controls
any thereof (within the meaning of the Securities Act) and their respective
successors in title and assigns against any and all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of any material fact contained in
any prospectus, offering circular or other document incident to any
Registration. qualification or compliance (or in any related registration
statement. notification or the like) or any omission (or alleged omission) to
state therein any material fact required to be stated therein or necessary to
make the statement therein not misleading, and such Xxxxxx will reimburse each
underwriter, the Company and each other person indemnified pursuant to this
paragraph (b) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim. loss. damage,
liability or action; provided, however, that this paragraph (b) shall apply only
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if (and only to the extent that) such statement or omission was made in reliance
upon written information furnished to such underwriter or the Company in an
instrument duly executed by any such Holder and stated to be specifically for
use in such prospectus. offering circular or other document (or related
registration statement, notification or the like) or any amendment or supplement
thereto: and provided further that each Holder's liability hereunder with
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respect to any particular
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Registration shall be limited to an amount equal to the net proceeds received by
such Holder from the Registrable Securities sold by such Holder in such
Registration.
(c) Indemnification Proceedings. Each party entitled to
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indemnification pursuant to this Section 3.6 (the "indemnified party")
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shall give notice to the party required to provide indemnification pursuant to
this Section 3.8 (the "indemnifying party") promptly after such
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indemnified party acquires actual knowledge of any claim as to which indemnity
may be sought, and shall permit the indemnifying party (at its expense) to
assume the defense of any claim or any litigation resulting therefrom; provided
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that counsel for the indemnifying party, who shall conduct the defense of such
claim or litigation. shall be acceptable to the indemnified party, and the
indemnified party may participate in such defense at such party's expense; and
provided, further, that the failure by any indemnified party to give notice as
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provided in this paragraph (c) shall not relieve the indemnifying party of its
obligations under this Section 3.6 except to the extent that the failure results
in a failure of actual notice to the indemnifying party and such indemnifying
party is damaged solely as a result of the failure to give notice. No
indemnifying party. in the defense of any such claim or litigation, shall.
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. The
reimbursement required by this Section 3.6 shall be made by periodic payments
during the course of the investigation or defense, as and when bills are
received or expenses incurred.
3.7. Contribution in Lieu of Indemnification. If the indemnification
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provided for in Section 3.6 hereof is unavailable to a party that would have
been an indemnified party under any such Section in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each party that would have been an indemnifying party thereunder
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and such indemnified party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault shall be determined by reference
to. among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent. knowledge. access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Holder of Registrable Securities agree that it would not be just
and equitable if contribution pursuant to this Section 3.7 were determined by
pro rata allocation or by any other method of allocation which does not take
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account of the equitable considerations referred to above in this Section 3.7.
The amount paid or payable by an indemnified party as a result of the losses.
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 3.7 shall include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
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entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each Holder's liability hereunder with respect to any
particular Registration shall be limited to an amount equal to the net proceeds
received by such Holder from the Registrable Securities sold by such Holder in
such Registration.
3.8. Rule 144 Requirements; Form S-3. The Company will make every effort
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in good faith to take all steps necessary to ensure that the Company will be
eligible to Register securities on Form S-3 (or any comparable form adopted by
the Commission) and to make publicly available and available to the Holders of
Registrable Securities, pursuant to Rule 144 of the Commission under the
Securities Act ("Rule 144"), such information as shall be necessary to enable
the Holders of Registrable Securities to make sales of Registrable Securities
pursuant to Rule 144. The Company will furnish to any Holder of Registrable
Securities, upon request made by such Xxxxxx a written statement signed by the
Company, addressed to such Holder, describing briefly the action the Company has
taken or proposes to take to comply with the current public information
requirements of Rule 144. The Company will, at the request of any Holder of
Registrable Securities, upon receipt from such Holder of a certificate
certifying (a) that such Holder has held such Registrable Securities for a
period of not less than two (2) consecutive years, (b) that such Holder has not
been an affiliate (as defined in Rule 144) of the Company for more than the
ninety (90) preceding days, and (c) as to such other matters as may be necessary
to meet the requirements of Rule 144, remove from the stock certificates
representing such Registrable Securities that portion of any restrictive legend
which relates to the Registration provisions of the Securities Act.
3.9. Participation in Underwritten Registrations. No Holder of Registrable
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Securities may participate in any underwritten Registration pursuant to this
Section 3 unless such Holder of Registrable Securities (a) agrees to sell such
Holder's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled, under the provisions hereof, to approve such
arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required by the terms of such underwriting arrangements. Any Holder of
Registrable Securities to be included in any underwritten Registration shall be
entitled at any time to withdraw such Registrable Securities from such
Registration prior to its effective date in the event that such Holder shall
disapprove of any of the terms of the related underwriting agreement.
3.10. Miscellaneous.
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(a) Inconsistent Agreements. The Company has not previously entered
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into, and will not at any time after the date hereof enter into, any
agreement or contract (whether written or oral) with respect to any of its
securities which prevents the Company from complying in any respect with
the registration rights granted by the Company to Holders of Registrable
Securities hereunder.
(b) Amendments and Waivers. The provisions of this Section 3
----------------------
including the provisions of this paragraph (b), may not be amended,
modified or supplemented, and any waiver or consent to or any departure
from any of the provisions of this Section 3 may not
-11-
be given and shall not become or be effective, unless and until (in each
case) the Company shall have received the prior written consent of the
Holders of 51% or more of all Registrable Securities for any such
amendment, modification, supplement, waiver or consent.
(c) Term. The agreements of the Company contained in this Section 3,
----
shall terminate with respect to any particular Registrable Securities when
such Registrable Securities shall have been effectively Registered under
the Securities Act or sold pursuant to a Public Sale.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
----------------- ------------------------
4.1. Delivery. As soon as practicable after the exercise of this Warrant
--------
in full or in part, and in any event within ten (10) days thereafter, the
Company, at its expense (including the payment by it of any applicable issue
taxes), will cause to be issued in the name of and delivered to the holder
hereof, or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock (or Other Securities) to
which such holder shall be entitled on such exercise, together with any other
stock or other securities and property (including cash, where applicable) to
which such holder is entitled upon such exercise.
4.2. Fractional Shares. In the event that the exercise of this Warrant, in
-----------------
full or in part, results in the issuance of any fractional share of Common
Stock, then in such event the holder of this Warrant shall be entitled to cash
equal to the fair market value of such fractional share determined in the same
manner as for one share of Common Stock pursuant to Section 2.1 hereof.
5. ADJUSTMENTS FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS.
--------------------------------------------------------------
In case at any time or from time to time, the holders of Common Stock shall have
received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive, without
payment therefor:
(a) other or additional, or rights to acquire, stock or other
securities or property (other than cash) by way of dividend;
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company); or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate restructuring;
other than additional shares of Common Stock adjustments in respect of which are
----- ----
provided for in Section 7.1 hereof, then and in each such case, the holder of
this Warrant, on the exercise hereof as provided in Section 2 hereof, shall be
entitled to receive, in addition to the number of shares of Common Stock
receivable thereupon, and without payment of any additional consideration
therefor,
-12-
the amount of stock and other securities and property (including cash in the
cases referred to in subsections (b) and (c) of this Section 5) which such
holder would have received prior to or would have held on the date of such
exercise if on the date hereof it had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and received and retained all such other or
additional stock and other securities and property (including cash in the cases
referred to in subsections (b) and (c) of this Section 5) receivable by such
holder as aforesaid during such period, giving effect to all further adjustments
called for during such period by Sections 6 and 7 hereof.
6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. ETC.
---------------------------------------------------------
6.1. Certain Adjustments. In case at any time or from time to time, the
-------------------
Company shall (i) effect a capital reorganization, reclassification or
recapitalization, (ii) consolidate with or merge into any other person, or (iii)
transfer all or substantially all of its properties or assets to any other
person, then in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 2 hereof at any time after the consummation of
such reorganization, recapitalization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise immediately prior
to such consummation or effective date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon
such consummation (or thereafter as a result of such consummation, including in
connection with any dissolution of the Company) if such holder had so exercised
this Warrant immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 5 and 7 hereof.
6.2. Appointment of Trustee for Warrant Holders Upon Dissolution. In the
-----------------------------------------------------------
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall, at its expense, deliver or cause to be delivered the stock
and other securities and property (including cash, where applicable) receivable
by the holders of the Warrant after the effective date of such dissolution
pursuant to this Section 6 to a bank or trust company having its principal
office in Boston, Massachusetts, as trustee for the holder or holders of the
Warrant.
6.3. Continuation of Terms. Upon any reorganization, reclassification,
--------------------
recapitalization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 6, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, reclassification,
recapitalization, consolidation, merger or transfer (and the effective date of
dissolution following any such transfer), as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 8 hereof.
-13-
7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF OUTSTANDING COMMON
-------------------------------------------------------------------------
STOCK.
-----
7.1. General. If at any time there shall occur any stock split, stock
-------
dividend, reverse stock split or other subdivision of the Company's Common Stock
(a "STOCK EVENT"), then the number of shares of Common Stock to be received by
the holder of this Warrant shall be appropriately adjusted such that the
proportion of the number of shares issuable hereunder to the total number of
shares of the Company outstanding (on a fully diluted basis) prior to such Stock
Event is equal to the proportion of the number of shares issuable hereunder
after such Stock Event to the total number of shares of the Company outstanding
(on a fully diluted basis) after such Stock Event. No adjustment to the Exercise
Price shall be made in connection with any adjustment of the number of shares of
Common Stock receivable upon exercise of this Warrant, except that the Exercise
Price shall be proportionately decreased or increased upon the occurrence of any
stock split or other subdivision of the Common Stock.
7.2. Other Securities. In case any Other Securities shall have been
----------------
issued, or shall then be subject to issue, upon the conversion or exchange of
any stock (or Other Securities) of the Company (or any other issuer of Other
Securities or any other entity referred to in Section 6 hereof) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or person), the holder hereof shall
be entitled to receive upon exercise hereof such amount of Other Securities (in
lieu of or in addition to Common Stock) as is determined in accordance with the
terms hereof, treating all references to Common Stock herein as references to
Other Securities to the extent applicable, and the computations, adjustments and
readjustments provided for in this Section 7 with respect to the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be made as nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time receivable on the
exercise of the Warrant, so as to provide the holder of the Warrant with the
benefits intended by this Section 7 and the other provisions of this Warrant.
8. NO IMPAIRMENT. The Company will not, by amendment of its charter or through
-------------
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Warrant, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment. Without
limiting the generality of the foregoing, the Company (i) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of stock on the exercise
of the Warrant from time to time outstanding, and (ii) will not transfer all or
substantially all of its properties and assets to any other person (corporate or
otherwise), or consolidate with or merge into any other person or permit any
other person to consolidate with or merge into the Company (if the Company is
not the surviving entity), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
-14-
9. CERTIFICATE AS TO ADJUSTMENTS. In each case of any event that may require
-----------------------------
any adjustment or readjustment in the shares of Common Stock issuable on the
exercise of this Warrant, the Company at its expense will promptly prepare a
certificate setting forth such adjustment or readjustment, or stating the
reasons why no adjustment or readjustment is being made, and showing, in detail,
the facts upon which any such adjustment or readjustment is based, including a
statement of (i) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
issued or sold,(ii) the number of shares of Common Stock then outstanding or
deemed to be outstanding on a fully diluted basis, and (iii) the Exercise Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted and readjusted (if required by Section 7) on account thereof. The
Company will forthwith mail a copy of each such certificate to the holder of the
Warrant, and will, on the written request at any time of any holder of a
Warrant, furnish to such holder a like certificate setting forth the
calculations used to determine such adjustment or readjustment. At its option,
the holder of the Warrant may confirm the adjustment noted on the certificate by
causing such adjustment to be computed by the Company's independent accounting
firm or another independent certified public accountant at the expense of the
Company.
10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
---------------------------------------------
represents and warrants to Holder as follows:
10.1. Organization and Good Standing. The Company is duly organized and
------------------------------
existing as a corporation in good standing in the State of Delaware. The Company
is duly qualified as a foreign corporation and authorized to do business in all
other jurisdictions in which the nature of its business or property makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Warrant or
Registrable Securities or (y) adversely impair the Company's ability to perform
fully on a timely basis its obligations under the Warrant. The Company has the
corporate power to own its properties and to carry on its business as now
conducted and as proposed to be conducted.
10.2. Authorization, The execution, delivery and performance by the
-------------
Company of this Warrant, and the issuance and sale by the Company of the
Securities hereunder (a) are within the Company's corporate power and authority,
(b) have been duly authorized by all necessary corporate proceedings, and (c) do
not conflict with or result in any breach of any provision of, or the creation
of any lien upon any of the property of the Company or require any consent or
approval pursuant to, the Charter or by-laws of the Company or any law,
regulation, order, judgment, writ, injunction, license, permit, agreement or
instrument applicable to the Company.
10.3. Enforceability. The execution and delivery by the Company of this
--------------
Warrant, and the issuance and sale by the Company of the Securities hereunder,
will result in legally binding obligations of the Company, enforceable against
the Company in accordance with the respective terms and provisions hereof and
thereof, except to the extent that (a) such enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting
-15-
generally the enforcement of creditors rights, and (b) the availability of the
remedy of specific performance or in injunctive or other equitable relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
10.4. Governmental Approvals. Provided the accuracy of the representation
----------------------
in Section 11, the execution, delivery and performance by the Company of this
Warrant, and the issuance and sale of the Securities hereunder, do not require
the approval or consent of, or any filing with, any governmental authority or
agency.
10.5. Capitalization.
--------------
(a) The authorized capital stock of the Company is as set forth on
Schedule 10.5 hereto, A description of the Common Stock, other securities,
-------------
and of the voting powers, rights and privileges thereof are set forth in
the Charter.
(b) The Company's issued and outstanding securities are as set forth
on Schedule 10.5 hereto. All of the shares of issued securities of the
-------------
Company have been duly and validly issued, are fully paid and non-
assessable.
(c) Options, Etc. Other than as created pursuant to this Warrant or
------------
as disclosed on Schedule 10.5 hereto, the Company has no outstanding rights
-------------
(either preemptive or other) or options to subscribe for or purchase from
the Company and no warrants or other agreements providing for or requiring
the issuance by the Company of, any capital stock or any securities
convertible into or exchangeable for its capital stock.
(d) Reservation, Etc. Sufficient shares of authorized but unissued
----------------
Common Stock have been reserved by appropriate corporate action in
connection with the prospective exercise of this Warrant and any other
agreements disclosed on Schedule 10.5. Except as disclosed on Schedule I
------------- ----------
0.5, the issuance of this Warrant or the shares of Warrant Stock upon the
---
exercise of this Warrant will not require any further corporate action by
the stockholders or directors of the Company, will not be subject to
preemptive rights in any present or future stockholders or other securities
holders of the Company and will not conflict with any provision of any
agreement to which the Company is a party or by which it is bound, and such
Common Stock, when issued upon exercise of this Warrant in accordance with
its terms or upon conversion, will be duly authorized, validly issued,
fully paid and non-assessable.
10.6. Defaults. Except as set forth in Schedule 10.6, the Company is not
-------- -------------
in default under any provisions of its Charter or by-laws; or under any
provisions of any franchise, contract, agreement, lease or other instrument to
which it is a party or by which it or its property is bound or in violation of
any law, judgment, decree or governmental order, rule or regulation, which
default or violation could affect adversely in any material manner the business,
assets or financial condition of the Company.
-16-
10.7. Issuance of Securities. All securities of the Company to be issued
----------------------
pursuant to this Warrant when issued will have been issued in accordance with
all applicable laws and regulations, including without limitation the Securities
Act and state "blue sky" laws.
10.8. Financial Statements. All financial statements of the Company
--------------------
furnished to FSC by the Company is true and correct and fairly presents in all
material respects the financial condition and or results of operations, as the
case may be, of the Company at the close of business on the date thereof.
10.9. Representations and Warranties under Related Agreements. All
-------------------------------------------------------
representations and warranties (including all schedules relating thereto) made
by the Company in the Financing Agreements are true and correct as of the date
hereof with the same force and effect as though made on and as of the date
hereof, and such representations and warranties are hereby confirmed to FSC and
made representations and warranties of the Company hereunder as fully as if set
forth herein. To the Company's knowledge, all representations and warranties
made in the Financing Agreements by or on behalf of any party thereto other than
the Company are true and correct in all material respects.
10.10. Disclosure. No representation, warranty or statement made in this
----------
Warrant, any Financing Agreement, or any agreement, certificate, statement or
document furnished by or on behalf of the Company in connection with the
Financing Agreements contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading.
11. INVESTMENT REPRESENTATION. FSC represents and warrants to the Company that
-------------------------
FSC is (a) an "accredited investor" within the meaning of Rule 501(a)
promulgated under the Securities Act, and (b) acquiring the Securities for
investment and not with a view to selling or otherwise distributing the
Securities; provided, however, that the disposition of FSC's property shall at
--------- -------
all times be and remain in FSC's control, subject to Section 20 hereof.
12. NOTICES OF RECORD DATE. In the event of:
----------------------
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right;
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of
all or substantially all the assets of the Company to or any consolidation
or merger of the Company with or into any other Person; or
-17-
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such event, the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is anticipated to take place, and the time, if any is to be fixed, as
of which the holders of record of Common Stock (or Other Securities) shall be
entitled to exchange their shares of Common Stock (or Other Securities) for
securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date specified in such notice on which any such
action is to be taken.
13. INFORMATION RIGHTS. So long as FSC holds this Warrant and/or any of the
------------------
Exercise Shares, the Company shall deliver to FSC or BankBoston, N.A. (a)
promptly after mailing/sending, copies of all press releases, reports, financial
statements, notices or other written communications to any shareholders of the
capital stock of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing, and
(c) such other financial statements required under and in accordance with the
Loan Agreement or if there are no such requirements (or if the subject loan(s)
no longer are outstanding), then within thirty (30) days after the end of each
of the first three quarters of each fiscal year, the Company's quarterly,
unaudited financial statements.
14. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will at
----------------------------------------------------
all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, a number of shares of Common Stock equal to the total
number of shares of Common Stock from time to time issuable upon exercise of
this Warrant, and, from time to time, will take all steps necessary to amend its
Charter to provide sufficient reserves of shares of Common Stock issuable upon
exercise of this Warrant.
15. DEFINITIONS. As used herein the following terms have the following
-----------
respective meanings:
15.1. The term "AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with FSC
(or other specified Person).
15.2. "BANK AFFILIATE" See Section 19 hereof.
15.3. "BANK HOLDING COMPANY ACT" See Section 19 hereof.
15.4. The term "COMMON STOCK" includes the Company's Common Stock, $0.01
par value, and (ii) any other securities into which or for which any of the
securities described in clauses
-18-
(i) above have been converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
15.5. The term "COMMISSION" shall mean the United States Securities and
Exchange Commission
15.6. The term "CHARTER" shall include the articles or certificate of
incorporation, statute, constitution, joint venture or partnership agreement or
articles or other organizational document of any Person other than an
individual, each as from time to time amended or modified.
15.7. The term "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, or any successor federal statute or code, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
15.8. The term "FINANCING AGREEMENTS" shall include this warrant and the
loan Agreement and all present and future documents, instruments, agreements and
certificates relating to the Warrant or Loan Agreement executed and delivered to
BankBoston, N.A. and/or FSC by any' Person in connection therewith.
15.9. The term "OTHER SECURITIES" refers to any stock (other than Common
Stock) and other securities of the Company or any other Person (i) which the
holder of this Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of this Warrant, in lieu of or in addition to Common
Stock, or (ii) which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities, in each case
pursuant to Section 5 or 6 hereof.
15.10. The term "PERSON" shall mean an individual, partnership,
corporation, limited liability company, association, trust, joint venture,
unincorporated organization, and any government, governmental department or
agency or political subdivision thereof.
15.11. The term "PUBLIC Sale" shall mean any sale of Common Stock to the
public (a) pursuant to a public offering registered under the Securities Act,
(b) through a broker or market-maker pursuant to the provisions of Rule 144 (or
any successor rule) adopted under the Securities Act, or (c) pursuant to any
other public offering not required to be registered under the Securities Act.
15.12. The term "SECURITIES" shall mean, collectively, the Warrant and the
shares of Warrant Stock.
15.13. The term "Securities ACT" shall mean the Securities Act of 1933, as
amended, or any successor federal statute or code, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
-19-
15.14. The term "SMALL BUSINESS ACT" shall mean the Small Business
Investment Act of 1958, as amended, or any successor federal statute, and the
rules and regulations of the Small Business Administration thereunder, all as
the same shall be in effect from time to time.
15.15. THE term "WARRANT STOCK" shall mean the Shares of Common Stock
issuable upon exercise of the Warrant and any capital stock or Other Securities.
16. WARRANT AGENT. The Company may, by written notice to the holder of this
-------------
Warrant, appoint an agent having an office in Boston, Massachusetts for the
purpose of issuing Common Stock on the exercise of this Warrant pursuant to
Section 2 hereof, and exchanging or replacing this Warrant, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
17. REMEDIES. The Company stipulates that the remedies at law of the Holder of
--------
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
18. NOTICES. All notices and other communications from the Company to the
-------
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, or sent by overnight courier at such address as may have
been furnished to the Company in writing by such holder or, until any such
holder furnishes to the Company an address, then to, and at the address of, the
last holder of this Warrant who has so furnished an address to the Company.
19. REGULATORY RESTRICTIONS.
---------- ------------
19.1. Holding Company. No Person which is a bank holding company or a
---------------
subsidiary of a bank holding company (a "BANK AFFILIATE") as defined in the Bank
Holding Company Act of 1956, as amended, or other applicable banking laws of the
United States of America and the rules and regulations promulgated thereunder
(the "BANK HOLDING COMPANY ACT") shall acquire Common Stock, if, after giving
effect to such acquisition, the Bank Affiliate, together with its Affiliates,
would own more than five percent (5%) of the outstanding voting securities of
the Company. Notwithstanding the foregoing, shares of Common Stock may otherwise
be acquired or held by FSC or any Affiliate of FSC which is a Small Business
Investment Company consistent with and subject to the limitations contained in
the Small Business Act and, to the extent not inconsistent with the Bank Holding
Company Act, shares of Common Stock may be acquired in the event that:
(a) the Company shall vote to merge or consolidate with or into any
other Person and after giving effect to such merger or consolidation FSC or
Affiliate of FSC would not own more than five percent (5%) of the
outstanding voting securities of the surviving corporation; or
-20-
(b) said holder exercises its registration rights pursuant to
Section 3 hereof an d the registration statement resulting therefrom is
effective.
20. RESTRICTIONS ON TRANSFER.
------------------------
20.1. General Restriction. The Securities shall be transferable only upon
-------------------
the satisfaction of the conditions set forth below in this Section 20.
20.2. Restrictions on Transfer. The holder of this Warrant and each Person
------------------------
to whom this Warrant is subsequently transferred represents and warrants to the
Company (by acceptance of such transfer) that such Person will not transfer this
Warrant or any Warrant Stock except (i) pursuant to an effective registration
statement under the Securities Act, (ii) pursuant to Rule 144 under the
Securities Act (or any other rule under the Securities Act related to the
disposition of securities), (iii) transfers by or between FSC and any of its
Affiliates, or (iv) upon the delivery of an opinion of counsel reasonably
satisfactory to the Company, that such transfer is exempt from registration
under the Securities Act.
20.3. Restrictive Legends. Except as otherwise permitted by this Section
-------------------
20, each Security shall bear the legend specified for such Security in Schedule
--------
20 hereto.
--
20.4. Transferability. Subject to the provisions of this Section 20, this
---------------
Warrant and all rights hereunder are transferable, in whole or in part without
charge to the holder hereof at the office or agency of the Company by the
registered holder thereof in person or by a duly authorized attorney, upon
surrender of this Warrant together with an assignment hereof properly endorsed.
Until transfer hereof on the registration books of the Company, the Company may
treat the registered holder hereof as the owner hereof for all purposes. Any
transferee of this Warrant and any rights hereunder, by acceptance thereof,
agrees to assume all of the obligations of a holder thereunder and to be bound
by all of the applicable terms and provisions of this Warrant.
21. NO RIGHTS AS STOCKHOLDER. Except as specifically provided herein, the
------------------------
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.
22. MISCELLANEOUS. In case any provision of this Warrant shall be invalid,
-------------
illegal or unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be
enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This Warrant
and any term hereof may be changed, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. The corporation laws of the
State of Delaware shall govern all issues concerning the relative rights of the
company and its stockholders. All other questions concerning construction,
validity, enforcement and interpretation of this Warrant shall be governed by
the laws of the Commonwealth of Massachusetts, without giving effect to any
choice of law or conflict of law provision or rule (whether with the
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of the laws or any jurisdiction other than the Commonwealth of
Massachusetts. All
-21-
representations and warranties set forth in this Warrant shall survive the
execution and delivery of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. This Warrant shall take effect as an instrument under seal.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-22-
IN WITNESS WHEREOF, the parties hereto have executed this Warrant under
seal as of March 31, 1999.
--
(Corporate Seal) NUMBER NINE VISUAL TECHNOLOGY
CORPORATION
Attest: By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------
/s/ Xxxx Xxxxxxx Title: GENERAL MANAGER
---------------------------- ---------------------------
Secretary
FSC CORP.
By:______________________________
Name:____________________________
Title:___________________________
-23-
IN WITNESS WHEREOF, the parties hereto have executed this Warrant under
seal as of March 31, 1999.
--
(Corporate Seal) NUMBER NINE VISUAL TECHNOLOGY
CORPORATION
Attest: By:__________________________________
Name:________________________________
Title:_______________________________
__________________________
Secretary
FSC CORP.
By: /s/ Xxxx Xxxxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx Xxxxxx
-----------------------------
Title: Vice President
-----------------------------
NOTICE OF EXERCISE OR CONVERSION
--------------------------------
Date:_____________, _____
Number Nine Visual Technology Corporation
----------------
----------------
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise or convert the enclosed Warrant
issued to it by Number Nine Visual Technology Corporation (the "Company") and
dated as of___________ ____, ____.
The undersigned elects to:
[_] Exercise the Warrant and to purchase thereunder _________________
shares of the Common Stock of the Company (the "Shares") at an
exercise price of _________ per Share for an aggregate purchase price
of _________________ Dollars ($______) (the "Purchase Price").
Pursuant to the terms of the Warrant, the undersigned has delivered
the Purchase Price herewith in full.
[_] Convert __% of the value of the Warrant at the current Exercise Price
(as defined in the Warrant) of $______ per Share.
[_] Convert $______ of the outstanding principal and interest under that
certain [Note] dated ___________, in the face amount of $_________,
issued by the Company and held by the undersigned, at the current
Exercise Price of $______ per share.
Very truly yours,
________________________
Receipt Acknowledged:
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
By:____________________
Title:_________________
on:____________________
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
________________ of _______________________________ the right represented by the
within Common Stock Purchase Warrant to purchase _____ shares of Common Stock of
Number Nine Visual Technology Corporation, a Delaware corporation, to which the
within Common Stock Purchase Warrant relates, and appoints Attorney to transfer
such right on the books of Number Nine Visual Technology Corporation, with full
power of substitution in the premises.
Dated: _____________________ _______________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
_______________________________________
(Address)
Signed in the presence of:
____________________________
Schedule 10.5
-------------
Capitalization
--------------
See attached
SCHEDULE 10.5
-------------
CAPITALIZATION
1. The Company is authorized to issue 20,000,000 shares of common stock, $.01
par value per share ("Common Stock").
2. The Company is authorized to issue 5,000,000 shares of preferred stock, $.01
par value per share and has designated 3,700,000 shares as Series A
Convertible Preferred Stock.
3. The Company has issued one warrant to Silicon Graphics, Inc. ("SGI"), which
entitles SGI to purchase for a period of three years commencing August 11 ,
1998 at an exercise price of $2.75 per share that number of shares of Series
A Preferred Stock equal to 3% of the Company's then issued and outstanding
Common Stock at that time of exercise, as calculated on a fully diluted
basis.
4. The Company has entered into a Convertible Preferred Stock Purchase Agreement
with KA Investments, LDC ("KA Investments") whereby the Company will sell 300
shares of Series B Preferred Stock to KA Investments for the aggregate amount
of $3,000,000 (the "Series B Financing")
5. In connection with the Series B Financing, the Company will issue a warrant
to KA Investments, exercisable for a period of three years commencing on
March 29, 1999, to purchase up to 195,000 shares of Common Stock at an
exercise price of 125% of the average of the closing price of the ten (10)
day period immediately prior to the date of the Warrant.
6. In connection with the Series B Financing, the Company has agreed to issue to
Brighton Capital Ltd. a warrant to purchase for a period of three (3) years
up to 30,000 shares of Common Stock at an exercise price of 125% of the then
average of the closing price of the ten (10) day period immediately prior to
the date of the Warrant in consideration for consulting services provided to
the Company.
7. In connection with certain monies to be received by the Company in
consideration for certain non-recurring engineering costs to be performed by
the Company for S3 Incorporated ("S3"), the Company has agreed to issue to S3
a two year warrant to purchase up to 300,000 shares of Common Stock at an
exercise price equal to the average closing price of the 10 day period
immediately prior to the date of the S3 Warrant.
8. The outstanding securities of the Company are shown in the table below:
TYPE OF SECURITY NUMBER OF SHARES
---------------- ----------------
Common Stock 9,416,187
Series A convertible Preferred Stock 3,350,894
WARRANTS
--------
See items ## 5, 6 and 7 above
STOCK OPTIONS
-------------
STOCK PLAN NUMBER OF OPTIONS
---------- -----------------
1989 Employee Stock Plan 79,900
1994 Employee Stock Plan 1,012,404
1996 Employee Stock Plan 707,300
---------
1,799,604
TOTAL
2
SCHEDULE 10.6
-------------
DEFAULTS
1. The Company has defaulted on the Loan and Security Agreement dated December
10, 1992 by and between the Company and Marine Midland Bank (the "Lender"),
as the same has been amended prior to the date of these Disclosure
Schedules (the "Loan Agreement"). The Company has entered into a series of
forbearance agreements with the Lender pursuant to which the Lender has
waived such defaults. The Company and the Lender have most recently entered
into a Tenth Forbearance Agreement pursuant to which the Lender has waived
certain defaults under the Loan Agreement and has extended the Loan
Agreement until March 31, 1999. The Company is currently negotiating with
BankBoston to establish a revolving credit arrangement which would allow
the Company to pay down the loan from the Lender.
3
Schedule 20
-----------
Restrictive Legends
-------------------
Warrants
--------
"This Warrant and any shares acquired upon the exercise of this Warrant have
not been registered under the Securities Act of 1933, as amended, and may not be
sold or transferred in the absence of such registration or an exemption
therefrom under the Securities Act of 1933, as amended, or any applicable state
securities laws. Furthermore, this Warrant and any shares acquired upon the
exercise of this Warrant may be sold or otherwise transferred only in compliance
with the conditions specified in this Warrant, complete and correct copies of
which are available for inspection at the principal office of Number Nine Visual
Technology Corporation and will be furnished without charge to the holder of
this Warrant upon written request."
Warrant Stock
-------------
"The shares evidenced by this certificate have not been registered under the
Securities Act of 1933, as amended. No transfer of these shares may be made
unless a registration statement with respect to these shares has become
effective under the Securities Act of 1933, as amended, or Number Nine Visual
Technology Corporation (the "COMPANY") has been furnished with an opinion of
counsel satisfactory to the Company that such registration is not required.
These shares may be sold or otherwise transferred only in compliance with the
conditions specified in Section 20 of a certain Common Stock Purchase Warrant,
dated as of March 31, 1999, issued by the Company to FSC Corp., complete and
correct copies of which are available for inspection at the principal office of
the Company and will be furnished without charge to the holder of these shares
upon written request."
