WARRANT AGREEMENT
AGREEMENT, dated as of this 16th day of April, 2001, by and among EB2B
COMMERCE, INC., a New Jersey corporation (the "Company"), AMERICAN STOCK
TRANSFER & TRUST COMPANY (the "Warrant Agent"), and COMMONWEALTH ASSOCIATES, L.
P., a New York limited partnership ("Commonwealth"), as representative of the
placement agents (the "Placement Agents").
W I T N E S S E T H
WHEREAS, in connection with a private placement (the "Bridge Financing") of
up to 100 units ("Units"), each Unit consisting of (i) $100,000 principal
amount of 117% promissory notes (the "Notes"), and (ii) 200,000 common stock
purchase warrants (the "Warrants"), each Warrant exercisable to purchase one
share of the Company's common stock (the "Common Stock"), the Company will issue
up to 20,000,000 Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the Warrants, and the
rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Call Price" shall mean the price at which the Company may, at its
option in accordance with the terms hereof, redeem the Warrants, which
price shall be $0.05 per Warrant.
(b) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in
the distributions of earnings and assets of the Company without limit as to
amount or percentage, which at the date hereof consists of 200,000,000
authorized shares of Common Stock.
(c) "Corporate Office" shall mean the office of the Warrant Agent (or
its successor) at which at any particular time its principal business shall
be administered, which office is located at 00 Xxxxxx Xxxx, Xxx Xxxx, Xxx
Xxxx 00000.
(d) "Exercise Date" shall mean, as to any Warrant, the date on which
the Warrant Agent shall have received both (a) the certificate representing
such Warrant (the "Warrant Certificate"), with the exercise form thereon
duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, and (b) if payment is to be made in cash, cash or an
official bank or certified check made payable to the Company,
of an amount in lawful money of the United States of America equal to the
Exercise Price.
(e) "Exercise Price" shall mean the purchase price to be paid upon
exercise of each Warrant in accordance with the terms hereof, which price
shall be $.93 per share, subject to adjustment from time to time pursuant
to the provisions of Section 8 hereof and subject further to the Company's
right to reduce the Exercise Price upon notice to all Registered Holders.
(f) "Initial Warrant Exercise Date" shall mean the earlier of (i) the
date on which the Company shall have obtained the Shareholder Approval, as
defined in Section 15, (ii) the date the Shareholder Approval is no longer
required, whether because the Common Stock is no longer listed on the
Nasdaq Stock Market or otherwise, or (iii) the Acceleration Date, as
defined in Section 15.
(g) "Registered Holder" shall mean the person in whose name any
certificate representing Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(h) "Transfer Agent" shall mean American Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized successor, as
such.
(i) "Warrant Expiration Date" shall mean 5:00 P.M. (New York time) on
the second anniversary of the Initial Warrant Exercise Date or, with
respect to Warrants which are outstanding as of the Optional or Mandatory
Redemption Date (as defined in Sections 11 and 15, respectively), the
applicable Redemption Date, whichever is earlier; provided that if such
date shall in the State of New York be a holiday or a day on which banks
are authorized to close, then 5:00 P.M. (New York time) on the next
following day which in the State of New York is not a holiday or a day on
which banks are authorized to close. Upon notice to all warrantholders the
Company shall have the right to extend the Warrant Expiration Date.
(j) "Warrant Shares" shall mean the shares of Common Stock deliverable
upon exercise of the Warrants, as adjusted from time to time.
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) A Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section 8.
(b) From time to time, up to the Warrant Expiration Date, the Transfer
Agent shall execute and deliver stock certificates in required whole number
denominations representing up to an aggregate of 20,000,000 shares of
Common Stock, subject to adjustment as described in Sections 8 and 15
hereof, upon the exercise of Warrants in accordance with this Agreement.
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(c) From time to time, up to the Warrant Expiration Date, the Warrant
Agent shall execute and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Warrant Exercise Date,
upon the exercise of fewer than all Warrants represented by any Warrant
Certificate, to evidence any unexercised Warrants held by the exercising
Registered Holder, (iii) those issued upon any transfer or exchange
pursuant to Section 6; (iv) those issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to Section 7; and (v)
at the option of the Company, in such form as may be approved by the its
Board of Directors, to reflect (a) any adjustment or change in the Exercise
Price or the number of shares of Common Stock purchasable upon exercise of
the Warrants, made pursuant to Section 8 hereof and (b) any acceleration of
the Initial Warrant Exercise Date pursuant to Section 15 hereof and (c)
other modifications approved in accordance with Section 18 hereof.
SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed, engraved or typed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Warrants may be listed, or to conform to usage.
The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in registered
form. Warrants shall be numbered serially with the letters BFW.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer, President or any Vice
President and by its Chief Financial Officer, Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company before the date
of issuance of the Warrant Certificates and issue and delivery thereof,
such Warrant Certificates may nevertheless be issued and delivered with the
same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company. After
execution by the Company, Warrant Certificates shall be delivered by the
Warrant Agent to the Registered Holder.
SECTION 4. EXERCISE.
(a) Each Warrant may be exercised by the Registered Holder thereof at
any time on or after the Initial Warrant Exercise Date, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on
the Exercise Date and the person entitled to receive the
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securities deliverable upon such exercise shall be treated for all
purposes as the holder upon exercise thereof as of the close of business on
the Exercise Date. As soon as practicable on or after the Exercise Date the
Warrant Agent shall deposit the proceeds received from the exercise of a
Warrant, and promptly after clearance of checks received in payment of the
Exercise Price pursuant to such Warrants, cause to be issued and delivered
by the Transfer Agent, to the person or persons entitled to receive the
same, a certificate or certificates for the securities deliverable upon
such exercise (plus a certificate for any remaining unexercised Warrants of
the Registered Holder). Notwithstanding the foregoing, in the case of
payment made in the form of a check drawn on an account of Commonwealth or
such other investment banks and brokerage houses as the Company shall
approve, certificates shall immediately be issued without any delay. Upon
the exercise of any Warrant and clearance of the funds received, the
Warrant Agent shall promptly remit the payment received for the Warrant to
the Company or as the Company may direct in writing.
(b) The Registered Holder may, at its option, exchange this Warrant on
a cashless basis, in whole or in part (a "Warrant Exchange"), into the
number of Warrant Shares determined in accordance with this Section (4)(b),
by surrendering the Warrant Certificate at the principal office of the
Company or at the office of its stock transfer agent, accompanied by an
irrevocable notice stating such Registered Holder's intent to effect such
exchange, the number of Warrant Shares to be exchanged and the date of the
notice of such intent to exchange (the "Notice of Exchange"). The
Registered Holder may send a Notice of Exchange to the Company prior to the
Initial Warrant Exercise Date. The Warrant Exchange shall take place on the
later of (i) the date the Notice of Exchange is received by the Company or
(ii) the Initial Warrant Exercise Date (the "Exchange Date"). Certificates
for the shares issuable upon such Warrant Exchange and, if applicable, a
new warrant of like tenor evidencing the balance of the shares remaining
subject to such Warrant, shall be issued as of the Exchange Date and
delivered to the Registered Holder as soon as is reasonably practicable
following the Exchange Date. In connection with any Warrant Exchange, a
Warrant shall represent the right to subscribe for and acquire the number
of Warrant Shares (rounded to the next highest integer) equal to (i) the
number of Warrant Shares specified by the Registered Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares
equal to the quotient obtained by dividing (A) the product of the Total
Number and the existing Exercise Price by (B) the current market value of a
share of Common Stock. Current market value shall have the meaning set
forth Section (10)(a) hereof, except that for purposes hereof, the date of
exercise, as used in such Section (10)(a) hereof, shall mean the date of
the Notice of Exchange.
(c) The holders of the Notes may at any time prior to the Maturity
Date present the Notes to the Company in payment of the Exercise Price of
all or any portion of the Warrants.
SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of
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Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon
exercise of the Warrants and payment of the Exercise Price shall, at the
time of delivery, be duly and validly issued, fully paid, nonassessable and
free from all taxes, liens and charges with respect to the issue thereof
(other than those which the Company shall promptly pay or discharge).
(b) The Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities laws with
respect to the exercise of the Warrants; provided, however, that the
Company shall not be obligated to file any general consent to service of
process or qualify as a foreign corporation in any jurisdiction. With
respect to any such securities laws, however, Warrants may not be exercised
by, or shares of Common Stock issued to, any Registered Holder in any state
in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance, or delivery of any shares upon exercise of
the Warrants; provided, however, that if the shares of Common Stock are to
be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to
the Warrant Agent the amount of transfer taxes or charges incident thereto,
if any.
(d) The Warrant Agent is hereby irrevocably authorized to requisition
the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock required upon exercise of the Warrants,
and the Company will authorize the Transfer Agent to comply with all such
proper requisitions.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER. Subject to the
restrictions on transfer contained in the Warrant Certificates and the
Subscription Agreements between the Company and the purchasers of Units:
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate
Office, and upon satisfaction of the terms and provisions hereof, the
Company shall execute, and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the Warrant Certificate or Certificates which
the Registered Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in which, subject
to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with its
regular practice. Upon due presentment for registration of transfer of any
Warrant Certificate at its office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or transferees a
new Warrant Certificate or Certificates representing an equal aggregate
number of Warrants.
(c) With respect to all Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription
form on the reverse thereof shall be
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duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the
Company, duly executed by the Registered Holder or his attorney-in-fact
duly authorized in writing.
(d) The Company may require payment by such holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange
in case of mutilated Warrant Certificates shall be promptly canceled by the
Warrant Agent and thereafter retained by the Warrant Agent until
termination of this Agreement or resignation of the Warrant Agent, or
disposed of or destroyed, at the direction of the Company.
(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof and of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of the Company
or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary.
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and loss, theft,
destruction or mutilation of any Warrant Certificate and (in case of loss, theft
or destruction) of indemnity satisfactory to them, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall (in the absence of notice to the Company and/or
Warrant Agent that the Warrant Certificate has been acquired by a bona fide
purchaser) countersign and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe. SECTION 8.
ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
(a) In case the Company shall hereafter (i) declare a dividend or make
a distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of such dividend or distribution or of
the effective date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the denominator of which
shall be the number of shares of Common Stock outstanding after giving
effect to such action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase
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shares of Common Stock (or securities convertible into Common Stock)
at a price (the "Subscription Price") (or having a conversion price per
share) less than the current market price on such record date or less than
the Exercise Price on such record date, the Exercise Price shall be
adjusted so that the same shall equal the lower of (i) the price determined
by multiplying the Exercise Price in effect immediately prior to the date
of such issuance by a fraction, the numerator of which shall be the sum of
(x) the number of shares of Common Stock outstanding on the record date
mentioned below and (y) the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock so offered (or the aggregate conversion price of the convertible
securities so offered) would purchase at such current market price per
share of the Common Stock, and the denominator of which shall be the sum of
(x) the number of shares of Common Stock outstanding on such record date
and (y) the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so
offered are convertible) or (ii) in the event the Subscription Price is
equal to or higher than the current market price but is less than the
Exercise Price, the price determined by multiplying the Exercise Price in
effect immediately prior to the date of issuance by a fraction, the
numerator of which shall be the sum of the (x) number of shares outstanding
on the record date mentioned below and (y) the number of additional shares
of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the Exercise Price in
effect immediately prior to the date of such issuance, and the denominator
of which shall be the sum of (x) the number of shares of Common Stock
outstanding on the record date mentioned below and (y) the number of
additional shares of Common Stock offered for subscription or purchase (or
into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever such rights or warrants are
issued and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights or warrants;
and to the extent that shares of Common Stock are not delivered (or
securities convertible into Common Stock are not delivered) after the
expiration of such rights or warrants the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made
upon the basis of delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to the holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions and dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Exercise
Price in effect thereafter shall be determined by multiplying the Exercise
Price in effect immediately prior thereto by a fraction, the numerator of
which shall be (x) the total number of shares of Common Stock outstanding
multiplied by the current market price per share of Common Stock, less (y)
the fair market value (as determined by the Company's Board of Directors)
of said assets or evidences of indebtedness so distributed or of such
rights or warrants, and the denominator of which shall be the total number
of shares of Common Stock outstanding multiplied by such current market
price per share of Common Stock. Such adjustment shall be effective at the
time any such distribution is made.
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(d) In case the Company shall hereafter issue shares of its Common
Stock (excluding shares issued (i) in any of the transactions described in
Subsection (a) above, (ii) upon exercise of options granted to the
Company's officers, directors, employees and consultants under a plan or
plans adopted by the Company's Board of Directors and approved by its
shareholders, if such shares would otherwise be included in this Subsection
(d) (but only to the extent that the aggregate number of shares excluded
hereby and issued after the date hereof shall not exceed 5% of the
Company's Common Stock outstanding, on a fully diluted basis, at the time
of any issuance unless such excess issuances are approved by the
independent (i.e., non-employee) members of the Company's Board of
Directors), (iii) upon exercise of options, rights, warrants, convertible
securities and convertible debentures outstanding as of the date hereof,
issued in transactions describe in Subsection (b) above, or upon issuance
of, subsequent exercise or conversion of or payment of in-kind interest or
dividends on, any securities issued to investors or Placement Agents and/or
their designees in the Bridge Financing or upon conversion or exercise of
such securities, (iv) to shareholders of any corporation which merges into
the Company in proportion to their stock holdings of such corporation
immediately prior to such merger, upon such merger, (v) issued in a private
placement where the Offering Price (as defined below) is at least 85% of
the current market price, (vi) issued in a bona fide public offering
pursuant to a firm commitment underwriting, or (vii) issued in connection
with an acquisition of a business or technology which has been approved by
the Company's Board of Directors but only if no adjustment is required
pursuant to any other specific subsection of this Section 8 with respect to
the transaction giving rise to such rights) for a consideration per share
(the "Offering Price") less than the current market price or less than the
Exercise Price, the Exercise Price shall be adjusted immediately thereafter
so that it shall equal the lower of (i) the price determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the sum of (x) the number of shares of Common
Stock outstanding immediately prior to the issuance of such additional
shares and (y) the number of shares of Common Stock which the aggregate
consideration received for the issuance of such additional shares would
purchase at such current market price per share of Common Stock, and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares and
(ii) in the event the Offering Price is equal to or higher than the current
market price per share but less than the Exercise Price, the price
determined by multiplying the Exercise Price in effect immediately prior to
the date of issuance by a fraction, the numerator of which shall be (x) the
number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and (y) the number of shares of Common
Stock which the aggregate consideration received (determined as provided in
Subsection (h) below) for the issuance of such additional shares would
purchase at the Exercise Price in effect immediately prior to the date of
such issuance, and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively whenever such
an issuance is made.
(e) In case the Company shall hereafter issue any securities
convertible into or exercisable or exchangeable for its Common Stock
(excluding securities issued in transactions described in Subsections (b),
(c) and (d)(i) through (vii) above) for a consideration per share of Common
Stock (the "Exchange Price") initially deliverable
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upon conversion, exercise or exchange of such securities (determined
as provided in Subsection (h) below) less than the current market price or
less than the Exercise Price, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal the lower of (i) the price
determined by multiplying the Exercise Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the sum of (x) the
number of shares of Common Stock outstanding immediately prior to the
issuance of such securities and (y) the number of shares of Common Stock
which the aggregate consideration paid for such securities (or the
aggregate exercise price if such convertible securities are options or
warrants) would purchase at such current market price per share of Common
Stock, and the denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issuance and
(y) the maximum number of shares of Common Stock of the Company deliverable
upon conversion, exercise or exchange of such securities at the initial
Exchange Price or (ii) in the event the Exchange Price is equal to or
higher than the current market price per share but less than the Exercise
Price, the price determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the numerator of
which shall be the sum of (x) the number of shares outstanding immediately
prior to the issuance of such securities and (y) the number of shares of
Common Stock which the aggregate consideration received (determined as
provided in Subsection (h) below) for such securities would purchase at the
Exercise Price in effect immediately prior to the date of such issuance,
and the denominator of which shall be the sum of (x) the number of shares
of Common Stock outstanding immediately prior to the issuance of such
securities and (y) the maximum number of shares of Common Stock of the
Company deliverable upon conversion of or in exchange for such securities
at the initial conversion or exchange price or rate. Such adjustment shall
be made successively whenever such an issuance is made.
(f) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to Subsections (a), (b), (c), (d) and (e) above or (k)
below, the number of shares of Common Stock purchasable upon exercise of
this Warrant shall simultaneously be adjusted by multiplying the number of
shares of Common Stock initially issuable upon exercise of this Warrant by
the Exercise Price in effect on the date hereof and dividing the product so
obtained by the Exercise Price, as adjusted.
(g) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents
($0.05) in such price; provided, however, that any adjustments which by
reason of this Section 8 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment required to be
made hereunder;
(h) For purposes of any computation respecting consideration received
pursuant to Subsections (d) and (e) above, the following shall apply:
(A) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection therewith;
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(B) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose
determination shall be conclusive; and
(C) in the case of the issuance of securities convertible into or
exchangeable for shares of Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by
the Company for the issuance of such securities plus the additional
minimum consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (A) and (B) of
this Subsection (h)).
(i) For the purpose of any computation under Subsections
(b), (c), (d) and (e) above and Section 15(a) below, the current
market price per share of Common Stock at any date shall be
deemed to be the higher of (i) the average of the prices for 30
consecutive business days before such date, or (ii) the average
of the prices for five consecutive business days immediately
preceding such date determined as follows: (i) If the Common
Stock is listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market, the current market value
shall be the last reported sale price of the Common Stock on such
exchange or market on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day,
the average closing bid and asked prices for such day on such
exchange or market;
(ii) If the Common Stock is not so listed or admitted to
unlisted trading privileges, but is traded on the Nasdaq SmallCap
Market, the current market value shall be the closing price for
such business day on such market and if the Common Stock is not
so traded, the current market value shall be the mean of the last
reported bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of the
exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount, not less
than book value thereof as at the end of the most recent fiscal
year of the Company ending prior to such business day, determined
in such reasonable manner as may be prescribed by the Board of
Directors of the Company.
(j) All calculations under this Section 8 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section 8 to the contrary notwithstanding, the Company
shall be entitled, but shall not be required, to make such changes in the
Excise Price, in addition to those required by this Section 8, as it shall
determine, in its sole discretion, to be advisable in order that any
dividend or
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distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter made by the
Company shall not result in any Federal Income tax liability to the holders
of Common Stock or securities convertible into Common Stock (including the
Notes and the Warrants);
(k) No adjustment under Subsections (b), (c), (d) and (e) shall be
required for issuances below the current market price if (A) the current
market price is at least 200% of the Exercise Price then in effect and (B)
a registration statement covering the Warrant Shares is in effect and
remains in effect for the 90 days after such issuance or Rule 144(k) under
the Securities Act of 1933, as amended (the "Securities Act") is available
for resale of all of the Warrant Shares.
(l) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (a) above, the Holder of this Warrant thereafter
shall become entitled to receive any shares of the Company, other than
Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Subsections (a) to
(k), inclusive above.
(m) In case of any reclassification or capital reorganization, or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the
Company is the continuing corporation and which does not result in any
reclassification or capital reorganization) or in case of any sale, lease
or conveyance to another corporation of the property of the Company as an
entirety, the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the holder of this Warrant
shall have the right thereafter upon conversion of this Warrant in
accordance with the provisions of this Section 8, to purchase the kind and
amount of shares of stock and other securities and property receivable upon
such reclassification, capital reorganization, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common Stock which
might have been received upon conversion of this Warrant immediately prior
to such reclassification, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The Company shall not effect any such consolidation, merger,
sale, transfer or other disposition, unless prior to or simultaneously with
the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing or otherwise acquiring such properties shall assume, by written
instrument executed and mailed or delivered to the holder of this Warrant
at the last address of such holder appearing on the books of the Company,
the obligation to deliver to such holder such shares of stock, securities,
cash or properties as, in accordance with the foregoing provisions, such
holder may be entitled to acquire. The above provisions of this paragraph
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
SECTION 9. REGISTRATION UNDER THE SECURITIES ACT OF 1933. The Company
agrees to register the Warrant Shares for resale under the Securities Act on the
terms
11
and subject to the conditions set forth in Article IV of the Subscription
Agreement between the Company and each of the investors in the Bridge Financing.
SECTION 10. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. If the number of
shares of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 8 hereof, the Company shall nevertheless not be required to
issue fractions of shares, upon exercise of the Warrants or otherwise, or to
distribute certificates that evidence fractional shares. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the current
market value of such fractional share, determined as follows:
(a) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market System ("NMS"), the current market
value shall be the average of the last reported sale prices of the Common
Stock on such exchange for the 10 trading days prior to the date of
exercise of this Warrant; provided that if no such sale is made on a day
within such period or no closing sale price is quoted, that day's market
value shall be the average of the closing bid and asked prices for such day
on such exchange or system; or
(b) If the Common Stock is listed in the over-the-counter market
(other than on NMS) or admitted to unlisted trading privileges, the current
market value shall be the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. for the 10 trading days
prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount determined in a reasonable manner
by the Board of Directors of the Company.
SECTION 11. OPTIONAL REDEMPTION
(a) On not less than 30 days' written notice (the "Optional Redemption
Notice") to Registered Holders of the Warrants being redeemed, the Warrants
may be redeemed, at the option of the Company, at the Call Price, provided
(i) the market price (determined in accordance with Section 10 hereof)
shall exceed 300% of the then current Exercise Price for the 20 consecutive
trading days ending on the fifth trading day prior to the date of the
Optional Redemption Notice (the "Target Price"), subject to adjustment as
set forth in Section 11(f) hereof, (ii) the Common Stock is traded on a
national securities exchange or the Nasdaq SmallCap or National Market
System, (iii) a registration statement covering the Warrant Shares filed
under the Securities Act has been declared effective and remains effective
for at least 90 days following the date fixed for redemption of the
Warrants (the "Optional Redemption Date"), and (iv) no lock-up agreement
with the Company or its underwriter or agent would prohibit the sale or
transfer of the Warrant Shares.
(b) If the conditions set forth in Section 11(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall mail
an Optional Redemption Notice to each of the Registered Holders of the
Warrants to be redeemed, first class, postage prepaid, not later than the
thirtieth day before the date fixed for redemption, at
12
their last address as shall appear on the records maintained pursuant
to Section 6(b). Any notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not the Registered
Holder receives such notice.
(c) The Optional Redemption Notice shall specify (i) the Call Price,
(ii) the Optional Redemption Date, (iii) the place where the Warrant
Certificates shall be delivered and the redemption price paid, and (iv)
that the right to exercise the Warrant shall terminate at 5:00 P.M. (New
York time) on the business day immediately preceding the Optional
Redemption Date. No failure to mail such notice nor any defect therein or
in the mailing thereof shall affect the validity of the proceedings for
such redemption except as to a Registered Holder (a) to whom notice was not
mailed or (b) whose notice was defective. An affidavit of the Warrant Agent
or of the Secretary or an Assistant Secretary of the Company that notice of
redemption has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 P.M. (New
York time) on the business day immediately preceding the Optional
Redemption Date. On and after the Optional Redemption Date, Registered
Holders of the Warrants shall have no further rights except to receive,
upon surrender of the Warrant, the Call Price.
(e) From and after the Optional Redemption Date, the Company shall, at
the place specified in the Optional Redemption Notice, upon presentation
and surrender to the Company by or on behalf of the Registered Holder
thereof of one or more Warrant Certificates evidencing Warrants to be
redeemed, deliver or cause to be delivered to or upon the written order of
such Registered Holder a sum in cash equal to the Call Price of each such
Warrant. From and after the Optional Redemption Date and upon the deposit
or setting aside by the Company of a sum sufficient to redeem all the
Warrants called for redemption, such Warrants shall expire and become void
and all rights hereunder and under the Warrant Certificates, except the
right to receive payment of the Call Price, shall cease.
SECTION 12. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or to receive dividends or subscription rights, until such
Holder shall have exercised such Warrants and been issued shares of Common Stock
in accordance with the provisions hereof.
SECTION 13. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, on his own behalf and for his own benefit,
enforce against the Company his right
13
to exercise his Warrants for the purchase of shares of Common Stock in the
manner provided in the Warrant Certificate and this Agreement.
SECTION 14. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his
acceptance thereof, consents and agrees with the Company, the Warrant Agent and
every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his attorney
duly authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the office of the Warrant
Agent, duly endorsed or accompanied by a proper instrument of transfer
satisfactory to the Warrant Agent and the Company in their sole discretion,
together with payment of any applicable transfer taxes; and
(b) The Company may deem and treat the person in whose name the
Warrant Certificate is registered as the holder and as the absolute, true
and lawful owner of the Warrants represented thereby for all purposes, and
the Company shall not be affected by any notice or knowledge to the
contrary, except as otherwise expressly provided in Section 7 hereof.
SECTION 15. SHAREHOLDER APPROVAL.
(a) If the Company shall fail to obtain shareholder approval described
in Section 7 of the Notes and Section 6(c) of the designation of rights,
powers and preferences governing the Series C Convertible Preferred Stock
issuable in connection with the Bridge Financing (the "Shareholder
Approval") in accordance with rules of the Nasdaq Stock Market on or before
September 30, 2001, then the holders of not less than 50% of the
outstanding Warrants may, by delivery of written notice to the Company,
elect to take either or both of the following actions with respect to the
Warrants:
(i) Accelerate the Initial Warrant Exercise Date to October 1,
2001 or such later date (the "Acceleration Date") as shall be
specified in the written notice to the Company; or
(ii) Cause the Company to redeem all of the Warrants at a
redemption price per Warrant equal to the greater of (1) 200% of the
Exercise Price or (2) the difference between the Exercise Price and
the market price of the Common Stock on the earlier of September 30,
2001 or the date of the meeting at which Shareholder Approval was not
obtained (the "Mandatory Redemption Price"). The Mandatory Redemption
Price shall be payable, at the option of the Company, in cash or in
Warrant Shares at the then current market price of the Company's
Common Stock, provided that (i) a registration statement covering the
Warrant Shares filed under the Securities Act has been declared
effective and remains effective for at least 90 days following the
date fixed for redemption of the Warrants (the "Mandatory Redemption
Date") and (ii) no lock-up agreement with the Company or its
underwriter or agent would prohibit the sale or transfer of the
Warrant Shares
14
(b) If the Company is required to redeem the Warrants pursuant to
Section 15(a) hereof (the "Mandatory Redemption"), then the Company
shall,
(i) within 10 days of the date the holder delivers written
notice of the election to the Company (the "Election Date"), mail
a written notice (the "Mandatory Redemption Notice") to each
Registered Holder of the Warrants, first class, postage prepaid,
at his last address as shall appear on the records by the
Company. The Mandatory Redemption Notice shall specify (1) the
Mandatory Redemption Date, which shall be 20 days after the
Election Date, (2) the Mandatory Redemption Price, (3) whether
the Warrants will be redeemed in cash or for shares of Common
Stock, (4) the place where Warrant Certificates shall be
delivered and the redemption price paid, and (5) that the right
to exercise any Warrants being redeemed shall terminate at 5:00
P.M. (New York time) on the business day preceding the Mandatory
Redemption Date;
(ii) from and after the Mandatory Redemption Date, at the
place specified in the Mandatory Redemption Notice, upon
presentation and surrender to the Company by or on behalf of the
Registered Holder thereof of one or more Warrant Certificates
evidencing Warrants to be redeemed, deliver or cause to be
delivered to or upon the written order of such Registered Holder
a sum of cash or a number of shares of Common Stock equal to the
Mandatory Redemption Price of each such Warrant. From and after
the Mandatory Redemption Date and upon the deposit or setting
aside by the Company of a sum of cash or of shares of Common
Stock sufficient to redeem all the Warrants called for
redemption, any Warrants called for redemption shall expire and
become void and all rights hereunder and under the Warrant
Certificates representing such Warrants, except the right to
receive payment of the Mandatory Redemption Price upon the
surrender of such Warrant Certificates, shall cease.
Notwithstanding anything contained in Section 15(b) to the contrary,
if the shares of Common Stock of the Company are no longer listed for
trading on the Nasdaq Stock Market or the Company has received a waiver from
Nasdaq with respect to the Conversion Limitation (as defined in Section 7 of the
Notes) and/or the Shareholder Approval, then the provisions of Subsections
15(a)(i) and (ii) shall no longer be applicable.
SECTION 16. CANCELLATION OF WARRANT CERTIFICATES. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be canceled by it and retired.
The Warrant Agent shall also cancel Common Stock following exercise of any or
all of the Warrants represented thereby or delivered to it for transfer,
splitup, combination or exchange.
15
SECTION 17. CONCERNING THE WARRANT AGENT.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder be deemed to make any
representations as to the validity, value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or
other property delivered upon exercise of any Warrant or whether any stock
issued upon exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay the Company, as provided
in Section 4, all moneys received by the Warrant Agent upon the exercise of
such Warrants. The Warrant Agent shall, upon request of the Company from
time to time, deliver to the Company such complete reports of registered
ownership of the Warrants and such complete records of transactions with
respect to the Warrants and the shares of Common Stock as the Company may
request. The Warrant Agent shall also make available to the Company for
inspection by its agents or employees, from time to time as it may request,
such original books of accounts and record (including original Warrant
Certificates surrendered to the Warrant Agent upon exercise of Warrants) as
may be maintained by the Warrant Agent in connection with the issuance and
exercise of Warrants hereunder, such inspections to occur at the Warrant
Agent's office as specified in Section 17, during normal business hours.
(c) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Exercise Price provided in this Agreement, or to
determine whether any fact exists which may require any such adjustments,
or with respect to the nature or extent of any such adjustment, when made,
or with respect to the method employed in making the same. It shall not (i)
be liable for any recital or statement of facts contained herein or for any
action taken, suffered or omitted by it in reliance on any Warrant
Certificate or other document or instrument believed by it in good faith to
be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this
Agreement or in any Warrant Certificate, or (iii) be liable for any act or
omission in connection with this Agreement except for its own negligence or
willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board, Chief Executive Officer, President,
any Vice President, its Secretary, or any Assistant Secretary (unless other
evidence in respect thereof is herein specifically prescribed). The Warrant
Agent shall not be liable for any action taken, suffered or
16
omitted by it in accordance with such notice, statement, instruction,
request, direction, order or demand believed by it to be genuine.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the Warrant
Agent and save it harmless against any and all losses, expenses and
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a result of
the Warrant Agent's negligence or wilful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or wilful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior
to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate at the Company's expense.
Upon such resignation, or any inability of the Warrant Agent to act as such
hereunder, the Company shall appoint a new warrant agent in writing. If the
Company shall fail to make such appointment within a period of 15 days
after it has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate may
apply to any court of competent jurisdiction for the appointment of a new
warrant agent. Any new warrant agent, whether appointed by the Company or
by such a court, shall be a bank or trust company having a capital and
surplus, as shown by its last published report to its stockholders, of not
less than $10,000,000 or a stock transfer company. After acceptance in
writing of such appointment by the new warrant agent is received by the
Company, such new warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act
or deed; but if for any reason it shall be necessary or expedient to
execute and deliver any further assurance, conveyance, act or deed, the
same shall be done at the expense of the Company and shall be legally and
validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file
notice thereof with the resigning Warrant Agent and shall forthwith cause a
copy of such notice to be mailed to the Registered Holder of each Warrant
Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be
a party or any corporation succeeding to the trust business of the Warrant
Agent shall be a successor warrant agent under this Agreement without any
further act, provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding
paragraph. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its
or their officers or directors, may buy and hold or sell Warrants orother
securities of the
17
Company and otherwise deal with the Company in the same manner and to
the same extent and with like effects as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 18. MODIFICATION OF AGREEMENT. The parties hereto may by
supplemental agreement make any changes or corrections in this Agreement (i)
that it shall deem appropriate to cure any ambiguity or to correct any defective
or inconsistent provision or manifest mistake or error herein contained; (ii) to
reflect an increase in the number of Warrants which are to be governed by this
Agreement resulting from an increase in the size of the Bridge Financing; (iii)
to reflect an increase in the number of Warrants which are to be governed by
this Agreement resulting from the conversion of warrants issued to the Placement
Agents or their designees in connection with the Bridge Financing; or (iv) that
it may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Warrant Certificates; provided, however, that this
Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Company, Commonwealth and the
holders of at least a majority of the outstanding Warrants except that nothing
shall prevent the Company and a Registered Holder from consenting to
modifications to this Agreement which affect or are applicable to such
Registered Holder only.
SECTION 19. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at 000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxx X. Xxxxxx, Xx., Esq.; if to the Warrant Agent, at its
Corporate Office and if to the Placement Agents, c/o Commonwealth Associates,
L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxx.
SECTION 20. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 21. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company and the Warrant Agent (and their respective
successors and assigns) and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
SECTION 22. TERMINATION. This Agreement shall terminate on the earlier to
occur of (i) the close of business on the second day following the Warrant
Expiration Date; or (ii) the date upon which all Warrants have been exercised.
SECTION 23. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
EB2B COMMERCE, INC.
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: General Counsel
COMMONWEALTH ASSOCIATES, L.P.
000000 By: Commonwealth Associates Management
Company, Inc., its general partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Secretary
19
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
UNTIL (1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO, OR (2)
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF
ANY APPLICABLE STATE SECURITIES LAWS.
No. BFW _____; ________ Warrants
VOID AFTER ____________, 200_
WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
EB2B COMMERCE, INC.
This certifies that FOR VALUE RECEIVED ________________________
or registered assigns (the "Registered Holder") is the owner of the number
of Warrants ("Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of common stock ("Common Stock") of eB2B Commerce,
Inc., a New Jersey corporation (the "Company"), at any time commencing on the
Initial Exercise Date (as defined in the Warrant Agreement) and prior to the
Expiration Date (as hereinafter defined), upon the presentation and surrender of
this Warrant Certificate with the Subscription Form on the reverse hereof duly
executed, at the corporate office of American Stock Transfer & Trust Company, as
warrant agent, or its successor (the "Warrant Agent"), accompanied by payment of
an amount equal to $.93 per share for each Warrant (the "Exercise Price") in
lawful money of the United States of America in cash or by official bank or
certified check made payable to eB2B Commerce, Inc. The Company may, at its
election, reduce the Exercise Price.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"), dated
___________, 2001 by and among the Company, the Warrant Agent and Commonwealth
Associates, L.P., as representative of the placement agents.
In the event of certain contingencies provided for in the
Warrant Agreement, the Exercise Price or the number of shares of Common
Stock subject to purchase upon the exercise of each Warrant represented hereby
are subject to modification or adjustment.
Each Warrant represented hereby is exercisable at the option
of the Registered Holder, but no fractional shares of Common Stock will be
issued. In the case of the exercise of less than all the Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall countersign, for the
balance of such Warrants.
20
The term "Expiration Date" shall mean 5:00 P.M. (New York time)
on the second anniversary of the Initial Closing Date. If such date shall
in the State of New York be a holiday or a day on which the banks are authorized
to close, then the Expiration Date shall mean 5:00 P.M. (New York time) the next
following day which in the State of New York is not a holiday or a day on which
banks are authorized to close. The Company may, at its election, extend the
Expiration Date.
This Warrant Certificate is exchangeable, upon the surrender hereof
by the Registered Holder at the corporate office of the Warrant Agent, for
a new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment with any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any of the rights of a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided in the
Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the
Company may deem and treat the Registered Holder as the absolute owner
hereof and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of the Company) for all purposes and shall not be affected by any notice to the
contrary.
The Warrants are subject to optional and mandatory redemption
by the Company under certain circumstances described in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed, manually or in facsimile by two of its officers
thereunto duly authorized and a facsimile of its corporate seal to be imprinted
hereon.
EB2B COMMERCE, INC.
Dated: May 1, 2001;
By:_____________________________
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
By:_____________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise Warrants represented by this Warrant Certificate, and to purchase
the securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
---------------------------------------
---------------------------------------
---------------------------------------
[please print or type name and address]
and be delivered to
---------------------------------------
---------------------------------------
---------------------------------------
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:______________________ Number of Warrants Exercised ___________
X______________________
__________________ Check if Cashless Exercise Election ________
(Section 4(b) of Warrant Agreement)
------------------
Address
---------------------------------
Taxpayer Identification Number
--------------------------
Signature Guaranteed
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ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
------------------------------------------
------------------------------------------
------------------------------------------
[please print or type name and address]
_________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
____________________________________ _______________________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: ____________________
X________________________
Signature Guaranteed
-------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (A BANK, STOCKBROKER, SAVINGS
AND LOAN ASSOCIATION OR CREDIT UNION WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM) PURSUANT TO RULE 17Ad-15 OF THE SECURITIES EXCHANGE
ACT OF 1934.
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